Smt. Ushadevi S.Verma, Ahmedabad V. The ACIT.,Circle-7, Ahmedabad

ITA 732/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80421 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: J P SHAH
• Keywords: Capital asset; Business income; Depreciation; Salary income; Corroborative evidences; Valuation report; Assessment record
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 731 & 732 / AHD/ 20 1 2 (A SSESSMENT YEAR: 2008 - 09) I)SHRI MRUNAL SANTRAMDAS VARMA 307 - 308 SARTHIK SQUARE, NEAR NEW U.S. PIZZA, S.G. ROAD, AHMEDABAD PAN NO. AETPV0713J II) SMT. US HADEVI SANTRAMDAS VARMA 307 - 308 SARTHIK SQUARE, NEAR NEW U.S. PIZZA, S.G. ROAD, AHMEDABAD PAN NO. ADAPV 7308R V/S ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 7, AHMEABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.P. SHAH, A.R. RESPONDE NT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 23 - 07 - 2014 DATE OF PRONOUNCEMENT : 17 - 10 - 2014 PER BENCH, 1. THESE APPEALS ARE FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF CIT(A) - XIV, AHMEDABAD DATED 31.01.2012 FOR A.Y. 2008 - 09. 2. AT THE OUTSET THE LD A.R. SUBMITTED THAT THOUGH THE APPEALS RELATES TO 2 DIFFERENT ASSESSEE S BUT THEY BELONG TO THE SAME FAMILY AND TH E FACTS AND CIRCUMSTANCES IN BOTH THE CASES ARE IDENTICAL EXCEPT FOR THE AMOUNT. IT WAS THEREFORE SUBMITTED THAT THE SUBMISSION MADE BY HIM IN CASE OF ONE WOULD BE EQUALLY APPLICABLE TO ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 2 THE OTHER AND THEREFORE BOTH THE APPEALS CAN BE HEARD TOGETHER. W E THUS PROCEED TO DISPOSE OF THE APPEAL S BY WAY OF A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND THUS PROCEED WITH THE FACTS IN THE CASE OF ITA NO. 731/A/2012 IN THE CASE OF MRUNAL VERMA FOR CONVENIENCE . 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS AN IN DIVIDUAL STATED TO BE HAVING MAIN SOURCE OF INCOME FROM SALARY, PROFIT FROM PARTNERSHIP FI RM, CAPITAL GAINS AND O THER SOURCES. ASSESSEE FILED THE RETURN OF INCOME FOR A.Y. 08 - 09 ON 30.09.2008 DECLARING TOTAL INCOME AT RS. 25,00,220/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) VIE ORDER DATED 29.12.2 010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,02,50,480/ - . AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 31.01.2012 GRANTED PARTIAL RELIEF TO THE ASSESS EE. AGGRIEVED BY THE ORDER OF CIT (A), ASSESSE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUNDS: - 1. BOTH THE LOWER AUTHORITIES ERRED IN REJECTING THE COMPUTATION OF CAPITAL GAIN OF RS. 24,67,268/ - AS DONE BY THE ASSESSING OFFICER AND INSTEAD THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOM E TAX (APPEALS) HELD THAT HE SAME TO BE A SALE ON BUSINESS ACCOUNT AND BOTH OF THEM WRONGLY HELD THAT THE ASSESSEE HAD EARNED RS. 90,01,472/ - AS THE NET PROFIT FROM THE SALE THEREOF. 2. THE C.I.T.(APPEALS) AND THE ASSESSING OFFICER ERRED IN NOT ALLOWING AN A MOUNT OF RS.61,63,215/ - , WHICH IS COST OF IMPROVEMENT ON LAND BORNE BY THE ASSESSEE IN RESPECT OF THE ABOVE LANDS. 3. THE C.I.T.(APPEALS) FAILED TO APPRECIATE THAT WHETHER THE LAND SOLD IS ON INVESTMENT ACCOUNT OR BUSINESS ACCOUNT; THE ABOVE COST OF IMPROVEME NT WILL BE DEDUCTIBLE EXPENDITURE OR THE COST OF IMPROVEMENT EXPENDITURE. 4. THE C.I.T.(APPEALS), LIKEWISE, FAILED TO APPRECIATE THAT THE ENTIRE COMPENSATION OF RS. 1,89,342/ - RECEIVED BY THE ASSESSEE IN RESPECT OF THE PART OF THE LAND ACQUIRED BY THE STATE G OVERNMENT WILL BE TAXABLE IF AT ALL AS CAPITAL GAINS AND NOT UNDER THE HEAD OTHER SOURCES AS HAS BEEN DONE. 5. THE C.I.T.(APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE EXPENDITURE INCURRED FOR THE PURPOSES OF IMPROVEMENT OF THE SITUATION OF THE LAND WAS GENUINE EXPENDITURE AND IN THE PROCESS ERRED IN DISALLOWING THE SAID EXPENDITURE. 6. THE C.I.T.(APPEALS) OUGHT TO HAVE ACCEPTED THAT ME LAND SOLD WAS THE CAPITAL ASSET IN THE HANDS OF THE ASSESSEE AND OUGHT TO HAVE ACCEPTED THE COMPUTATION OF CAPITAL GAIN AS DONE BY THE ASSESSEE IN HIS RETURN. 5. THOUGH THE ASSESSEE HAS RAISED VARIOUS GR O UNDS BUT ALL THE GRO UNDS ARE CONSIDERED TOGETHER SINCE THEY ARE INTER CONNECTED AND RELATED . 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , A.O NOTICED THAT ASSESSEE HAD ENT ERED INTO 10 TRANSACTIONS OF SALE OF IMMOVABLE PROPERTY T HE DETAILS OF WHICH ARE LISTED PAGE 4 AND 5 OF THE ORDER. HE ALSO NOTICED THAT ALL THE PROPERTIES WHICH ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 3 WERE SOLD WERE INITIALLY PURCHASED BY 6 FAMILY MEMBERS OF THE ASSESSEE AND ALL THE PLOTS WERE N OW SOLD TO SWAGAT INFRASTRUCTURE PVT. LTD WHOSE DIRECTORS WERE ASSESSEE AND HIS OTHER FAMILY MEMBERS. HE ALSO NOTICED THAT ASSESSEE HAD ALLEGED TO HAVE INCURRED HUGE EXPENDITURE FOR DEVELOPMENT OF THE LAND OVER THE PAST 2 YEARS. A.O ALSO NOTED THAT ASSESSE E HAD NOT FILED ANY WEALTH TAX RETURN IN THE EARLIER YEARS INCLUDING THE YEAR UNDER CONSIDERATION NOR HAD DECLARED ANY AGRICULTURAL INCOME IN THE LAST 2 ASSESSMENT YEARS. THE ASSESSEE WAS THEREFORE ASKED TO EXPLAIN AS TO WHY THE PURCHASE AND SALE TRANSACT ION OF LAND NOT BE CONSIDERED AS ADVENTURE IN THE NATURE OF TRADE AND INCOME FROM SALE NOT B E CONSIDERED AS PROFIT AND GAINS OF BUSINESS INSTEAD OF CAPITAL GAINS AS CONSIDERED BY THE ASSESSEE. ASSESSEE INTERALIA S UBMITTED THAT THE LAND WHICH WERE SOL D DURING THE YEAR WAS PURCHASED IN 2003 - 04 AND THE PURPOSE OF PURCHASE WAS TO TREAT IT AS INVESTMENT AND IT WAS NEVER INTENDED FOR BUSINESS. IT WAS ALSO SUBMITTED THAT THE LAND WAS TREATED AS INVESTMENT AND NOT AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT . THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. THE REASON FOR NON ACCEPTANCE OF THE SUBMISSION OF THE ASSESSEE BY THE A.O INTERALIA WERE THAT THE ENTIRE FAMILY OF THE ASSESSEE WAS INVOLVED IN THE BUSINESS OF LAND DEVELOPMENT AND REAL ESTATE AND CONSTRUCTION BUSINESS, ASSESSEE HAD PURCHASED 13 PLOTS AT VARIOUS POINTS OF TIME BETWEEN 2003 - 04 ALONG WITH THE 5 OTHER CO - OWNERS OF THE FAMILY AND THE PLOTS OF LAND WERE SOLD TO A SINGLE ENTITY IN WHICH THE FAMILY MEMBERS AND THE ASSESSEE WERE THE DIRECTORS. A. O FURTHER NOTED THAT THE IMPROVEMENT COST SHOWN BY THE ASSESSEE IN F.Y. 06 - 07 & 07 - 08 WERE IN THE NATURE OF COST OF DEVELOPMENT OF LAND. A.O ALSO NOTED THAT THOUGH THE VALUE OF LAND WAS MORE THAN RS. 15 LAC BUT ASSESSEE HAD NOT SHOWN IT A S HER WEALTH NOR HAD FILED THE WEALTH T AX RETURN. A.O AFTER CONSIDERING THE VARIOUS DECISIONS CITED IN THE ORDER CONCLUDED THAT ASSESSEE S PURCHASE AND SALE TRANSACTION S WITH RESPECT TO LAND PROPERTIES WERE IN THE NATURE OF ADVENTURE IN TRADE AND THE PR OFITS WERE THEREFORE TO BE TAXED AS BUSINESS INCOME . A.O ALSO NOTED THAT ASSESSEE HAD SHOWN A GAIN OF RS. 1,89,342/ - WITH RESPECT TO SALE OF LAND AT HADMATIYA WHICH WAS TREATED BY THE ASSESSEE AS CAPITAL GAIN. A.O NOTED THAT SINCE THE ASSESSEE DID NOT FU RNISH ANY ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 4 SUPPORTING DOCUMENTS DESPITE VARIOUS OPPORTUNITIES THE TOTAL PROCEEDS OF THE LAND AMOUNTING TO RS. 11,36,053/ - WAS CONSIDERED AS INCOME FROM OTHER SOURCES . A.O ALSO NOTED THAT ASSESSEE HAD CLAIMED IMPROVEMENT EXPENSES IN THE COMPUTATION OF CAPI TAL GAINS. FROM THE DETAILS FURNISHED , A.O NOTICED THAT ASSESSEE DID NOT PRODUCE ORIGINAL VOUCHERS FOR VERIFICATION, ALL THE IMPROVEMENT EXPENSES WERE SHOWN WITH RESPECT TO PROPERTIES WHICH WERE CONSIDERED FOR TAX UNDER LONG TERM CAPITAL GAIN AND NO IMPROV EMENT COST WERE SHOWN WITH RESPECT TO PROPERTIES ON WHICH SHORT TERM CAPITAL GAINS WERE CLAIMED. FROM THE COPIES OF THE VOUCHERS , A.O ALSO NOTICED THAT ALL THE VOUCHERS WERE HAND WRITTEN VOUCHERS AND IT DID NOT CONTAIN THE NAME OF PERSONS AND THEIR ADDRESS ES TO WHOM THE PAYMENTS WERE MADE, THE ENTIRE IMPROVEMENT EXPENSES WERE INCURRED IN CASH AND 90% OF THE PAYMENTS WERE IN THE RANGE OF RS. 17,000/ - TO 19, 500/ - AND THE PAYMENTS WERE HOMOGENOUSLY DISTRIBUTED OVER THE PERIOD OF TIME. HE ACCORDINGLY CONCLUDED THAT THE CLAIM OF IMPROVEMENT EXPENSES WERE BOGUS AND ONLY BOOK ENTRIES. HE ACCORDINGLY IGNORED THE EXPENSES INCURRED ON THE IMPROVEMENT. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) WITH RESPECT TO THE TREATMENT OF SALE OF LAND AS BUSINESS INCOME UPHELD THE ORDE R OF A.O. BY HOLDING AS UNDER: - 2.3 DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDERS AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE FACTS SHOW THAT THE APPELLANT HAS SOLD LAND DURING THE YEAR AND HAS SHOWN CAPITAL GAIN ON THE SAME. THE LAND WAS OWNED BY THE APPELLANT ALONG WITH FIVE OTHER CO - OWNERS WHO ARE FAMILY MEMBERS. THE PRESENT CASES ARE RELATED TO SMT. USHADEVI S. VARMA & SHRI MRUNAL S. VARMA WHO IS THE SON OF SMT, USHADEVI S. VARMA. THE OTHER C O - OWNERS OF THE LAND ARE HUSBAND, OTHER SONS AND DAUGHTER IN LAW OF THE FAMILY. THE APPELLANTS HAD ALSO CLAIMED COST OF IMPROVEMENT WHICH WAS ADJUSTED BY HIM FROM THE SALE CONSIDERATION RECEIVED AT THE TIME OF COMPUTING THE CAPITAL GAIN. THE A.O. TREATED T HE ACTIVITY AS ADVENTURE IN THE NATURE OF TRADE AND ASSESSED THE INCOME AS BUSINESS INCOME. THE APPELLANTS HAVE SUBMITTED THAT THE LAND SOLD DURING THE YEAR WAS PURCHASED IN 2003 - 04 AS AN INVESTMENT. THE SAME WAS TREATED AS INVESTMENT IN THE BOOKS OF ACCOU NT O F THE APPELLANT. HE HAS FURTHER SUBMITTED THAT HE NEVER INTENDED TO TREAT THIS SALE AS BUSINESS AS HE HAS NOT CLAIMED ANY DEPRECIATION ON THE ASSETS AND HE HAS ONLY CLAIMED COST OF IMPROVEMENT OF ASSET. THE ASSESSMENT OF SMT. USHA DEVI S. VARMA WERE NOT FRAMED U N D ER SECTION 143(3) BUT THE CASES OF OTHER CO - OWNERS HAVE BEEN COMPLETED U/S. 143(3) AND THE INCOME FROM SALE OF LAND HAS BEEN ASSESSED AS CAPITAL GAIN. I HAVE CALLED FOR THE ASSESSMENT RECORDS OF BOTH THE APPELLANTS AND PERUSED THE INFORMATION AND OTHER DETAILS AVAILABLE ON THE RECORD. THE APPELLANTS IN BOTH THE CASES HAVE FILED THEIR RETURN ONLINE. A PERUSAL OF ASSESSMENT RECORD OF SMT. USHADEVI S. VARMA SHOW THAT SHE IS NOT MAINTAINING PERSONAL BOOKS OF ACOUNTS AND THEREFORE, THE BALANCE SHEET IS ALSO NOT MAINTAINED. SIMILARLY, IN THE CASE OF SHRI MRUNAL SANTRAMDAS VARMA, APPELLANT HAS NEVER FILED BALANCE SHEET. I HAVE ALSO SEEN THE EARLIER ASSESSMENT RECORDS WHEN THE PAPER RETURN HAS BEEN FILED. THERE ALSO THE BALANCE SHEET OF THE APPELLANT WA S NOT THERE. THE OTHER IMPORTANT FACT THAT IS RELEVANT TO THE PRESENT CASE IS THAT THE LAND IN QUESTION HAS BEEN SOLD BY THE APPELLANT TO M/S. SWAGAT INFRASTRUCTURE PVT. LTD. THE COMPANY IS OWNED BY THE FAMILY OF BOTH THE APPELLANTS AND SHRI MRUNAL S. VER MA IS ONE OF THE DIRECTOR OF THE COMPANY WHEREAS SHRI SANTRAMDAS K. VERMA THE HUSBAND OF THE OTHER APPELLANT IS ALSO ONE OF THE DIRECTORS. THE APPELLANTS HAD BOUGHT THE LANDS IN PIECES OVER A PERIOD OF TIME AND AFTER CONSOLIDATION INTO A SINGLE PIECE OF LA ND, IT WAS SOL D TO THE COMPANY. ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 5 AFTER DISCUSSING THE VARIOUS FACTUAL ASPECTS, THE MERITS OF THE SUBMISSION MADE BY THE APPELLANT IS TAKEN UP. THE CLAIM OF THE APPELLANT THAT THE LAND HAS BEEN SHOWN AS INVESTMENT IN THE BOOK S OF ACCOUNT AND NOT AS STOCK IN TRADE IS WITHOUT ANY SUPPORTING EVIDENCE. THE RECORDS SHOW THAT SMT. USHADEVI DOES NOT MAINTAIN PERSONAL BALANCE SHEET AND, THEREFORE, THERE IS NO QUESTION OF SHOWING THE LAND AS INVESTMENT. THE OTHER APPELLANT SHRI MRUNAL ALSO HAS NOT FILED THE BALANCE S HEET WITH THE DEPARTMENT IN SUPPORT OT ITS CLAIM. THEREFORE, THIS CLAIM IS NOT ACCEPTABLE. THE CLAIM REGARDING INTENTION IS ALSO NEGATED BY THE CIRCUMSTANTIAL EVIDENCES WHICH HAVE BEEN DISCUSSED IN DETAIL BY THE A. O. THE LAND HAS BEEN SOLD TO THE COMPANY IN WHICH ONE OF THE APPELLANT AND OTHER FAMILY MEMBERS ARE THE DIRECTORS. THE APPELLANT HAS PURCHASED SEVERAL SMALL PIECES OF LAND AND CONSOLIDATED THEM INTO SINGLE LAND. THE APPELLANT HAS PURCHASE THESE PIECES AT FOUR DIFFERENT PLACES. THIRTEEN PLOTS WERE PURCHASED AT SHILAJ. THE FACT THAT THE LANDS HAVE BEEN PURCHASED BY SIX CO - OWNERS JOINTLY AND HAVE BEEN SOLD TO ONE COMPANY WHICH IS OWNED BY THE FAMILY MEMBERS IS NOT A CO - INCIDENCE. THESE PURCHASES CANNOT BE TERMED AS ACCIDENTAL BUT THESE ARE METICU LOUSLY PLANNED PURCHASE WITH A VIEW TO SELL THE LANDS TO THE COMPANY. SINCE ONE OF THE APPELLANT IS DIRECTOR, HE MUST HAVE BEEN IN THE KNOW OF THE THINGS THAT THERE WAS A BUSINESS POTENTIAL IN THIS LAND AND CAN BE DEVELOPED IN FUTURE BY THE COMPANY AND, TH EREFORE, THESE PIECES OF LAND WERE PURCHASED IN A PLANNED MANNER. THE APPELLANT HAS FURTHER CLAIMED THAT IN THE EARLIER YEARS THE INCOME FROM SALE OF LAND HAS BEEN ACCEPTED BY THE DEPARTMENT AS CAPITAL GAIN. THIS CLAIM IS ALSO UNACCEPTABLE. IT HAS BEEN SU BMITTED BY THE APPELLANT HIMSELF THAT THE CASE OF SMT. USHADEVI HAS BEEN ASSESSED IN SCRUTINY FOR THE FIRST TIME. REGARDING THE CASE OF SHRI MRUNAL, THE APPELLANT HAS SUBMITTED COPIES OF ASSESSMENT ORDERS. IT IS SEEN THAT THE APPELLANT HAD SOLD DIFFERENT P IECES OF LAND DURING THOSE YEARS AND, THEREFORE, THE FACTS WHICH ARE APPLICABLE TO THIS LAND SALE ARE NOT IDENTICAL AND IT CANNOT BE COMPARED WITH THE SALES OF THE EARLIER YEARS. IT IS ALSO AN ACCEPTED FACT THAT PRINCIPLE OF RES - JUDICATA IS NOT APPLICABLE TO THE INCOME TAX ACT IF THE FACTS ARE ENTIRELY DIFFERENT. FOR THE PRESENT YEAR, THE A.O, HAS METICULOUSLY DISCUSSED EACH AND EVERY DETAIL OF THE SALE AND ALSO DWELT UPON THE CIRCUMSTANCES WHICH HAS LED HIM TO CONCLUDE THAT THIS WAS AN ADVENTURE IN THE NAT URE OF TRADE. THEREFORE, THE RELIANCE PLACED BY THE APPELLANT ON THE JUDGMENT OF BOMBAY HIGH CO URT IN THE CASE OF GOPAL PUROHIT IS NOT PROPER. AS HAS BEEN POINTED OUT IN THE PRECEDING DISCUSSION THAT THE APPELLANT'S ARE NOT MAINTAINING BALANCE SHEET AND, T HEREFORE, THERE IS NO QUESTION OF SHOWING THE LAND AS INVESTMENT. I AM IN COMPLETE AGREEMENT WITH THE FINDINGS GIVEN BY THE A.O BY RELYING UPON THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF G. VENKATASWAMY NAIDU & CO. VS. CIT (35 ITR 594). THE A.O HAS BRO U GHT OUT THAT THE FACTS OF THE CASE DECIDED BY HON BLE SUPREME COURT AND THE FACTS OF THE PRESENT CASE ARE IDENTICAL. THE TABLE IS REPRODUCED ON PAGE NOS. 1 8, 1 9 & 20 OF THIS ORDER IN THE PRECEDING PAGES. IT IS CLEAR FROM THE COMPARISON MADE OUT B Y THE A. O. THAT THE LAND WAS PURCHASED AS AN ADVENTURE IN THE NATURE OF TRADE AND, THEREFORE, THE INCOME FROM SALE OF LAND HAS RIGHTLY BEEN ASSESSED BY THE A. O. AS BUSINESS INCOME. THEREFORE, THE FIRST GROUND IN BOTH THE APPEALS ARE DISMISSED. 7. WITH RESP ECT TO THE COST OF IMPROVEMENT OF LAND , CIT(A) UPHELD THE ORDER OF A.O BY HOLDING AS UNDER: - 3.3 DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDERS AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE APPELLANT HAS CLAIMED COST OF IMPROVEMENT IN THE LAND PURCHASED. THE PECULIAR FACTS RELATED TO THIS CLAIM ARE WORTH MENTIONING. THE APPELLANT HAS ONLY CLAIMED THE COST OF IMPROVEMENT FOR CALCULATING LONG TERM CAPITAL GAIN, WHEREAS NO COST OF IMPROVEMENT HAS BEEN SHOWN FOR THE LAND ON WHICH SHORT TERM CAP ITAL GAIN HAS BEEN SHOWN. THE APPELLANT DID NOT PRODUCE THE ORIGINAL VOUCHERS BUT SUBMITTED THE PHOTO COPIES OF THE VOUCHERS WHICH SHOW THAT THE PAYMENTS HAVE BEEN MADE IN CASH. THE VOUCHERS HAVE BEEN WRITTEN BY ONE PERSON AS IT IS IN THE SAME HANDWRITING. ADDRESSES OF THE PERSON TO WHOM THE PAYMENTS HAVE BEEN MADE ARE NOT MENTIONED. THE APPELLANT HAS CLAIMED THAT THE PHOTO COPIES OF VOUCHERS WERE PRODUCED AND IN THE EARLIER YEARS ALSO SIMILAR CLAIM FOR COST OF IMPROVEMENT WAS ALLOWED. THE APPELLANT HAS A LSO SUBMITTED THAT IT WAS NOT NECESSARY AS PER THE INCOME TAX ACT THAT THE VOUCHERS SHOULD BE EITHER TYPE WRITTEN OR GENERATED THROUGH COMPUTER. IT CAN BE ALSO WRITTEN BY HAND. THE PAYMENTS WERE GENUINE AND MENTIONING THE ADDRESSES ON THE VOUCHER WERE NOT REQUIRED, SINCE THE PAYMENTS WERE MADE TO WORKERS AND LABOURERS AND, THEREFORE, THE PAYMENTS WERE SMALL AND WERE MADE IN CASH. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT WAS SPECIFICALLY ASKED TO PRODUCE ANY CONTEMPORARY EVIDENCE IN SUPPORT OF ITS CLAIM REGARDING IMPROVEMENT EXPENSES. THE APPELLANT DID NOT FURNISH ANY DETAIL INITIALLY, HOWEVER, AFTER SEEKING SEVERAL ADJOURNMENTS ON ONE GROUND OR THE OTHER, THE APPELLANT SUBMITTED A COPY OF VALUATION REPORT PREPARED BY SHRI N, P. PARMAR, APPR OVED VALUER AND ONE ESTIMATE OF EXPENDITURE PREPARED BY SHRI HEMENDRA H. BHATT, CIVIL ENGINEER. IN ALL THREE VALUATION REPORTS WERE SUBMITTED WHICH WERE DATED 05/03/2003, 17/06/2004 &09/01 /2005.THE ESTIMATES OF EXPENDITURE WERE ALSO SUBMITTED IN THREE SEP ARATE CERTIFICATES WHICH WERE DATED 10/03/2003,25/06/2004 &17/01/2005. THE MANNER IN WHICH THE REPORTS WERE SUBMITTED AROUSED SUSPICION AS THE REPORTS WERE PRINTED BY COMPUTERS BUT PERTAINED TO THE YEAR 2003 AND 2004. FURTHER, IT WAS ALSO NOTED THAT THE T ELEPHONE NUMBERS WHICH HAVE BEEN MENTIONED IN THE VALUATION REPORT WERE APPARENTLY NEW AND IT MIGHT BE POSSIBLE THAT THE NUMBERS WERE NOT ISSUED AT THAT TIME AT ALL. THIS CREATED SUSPICION THAT THE REPORTS HAVE BEEN BACK DATED TO CREATE SOME CONTEMPORARY E VIDENCE BY ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 6 THE APPELLANTS. ACCORDINGLY, INQUIRIES WERE MADE FROM THE TATA TELECOM COMPANY WHICH HAD ISSUED THE TELEPHONE NUMBER 65228484 WHICH WAS MENTIONED ON THE VALUATION REPORT ISSUED BY SHRI N. P. PARMAR. IT WAS INFORMED BY THE TELECOM COMPANY THAT TH E NUMBER WAS ISSUED TO SHRI PARMAR ON 14/12/2003. IT IS ALSO RELEVANT TO NOTE THAT INITIALLY THE NUMBER WAS 55228484 WHICH WAS CHANGED LATER ON AS 65228484 AFTER THREE FOUR YEARS. ACCORDINGLY, SUMMONS U/S. 131 OF THE ACT WERE ISSUED TO SHRI PARMAR AND SHRI HEMENDRA H. BHATT IN ORDER TO' VERIFY THE REPORTS ISSUED BY THEM. ON 24/01/201 2, BOTH THE PERSONS ATTENDED AND THEIR STATEMENTS WERE RECORDED ON OATH BY THE UNDERSIGNED. DURING THE COURSE OF STATEMENT, SHRI N. P. PARMAR MENTIONED THAT DURING THE YEAR TO WHICH THESE REPORTS PERTAIN, HE WAS NOT USING COMPUTER AT ALL. HE WAS ISSUING THE REPORTS ON PRE - PRINTED STATIONERY ON WHICH THE REPORT USED TO BE TYPED WITH THE HELP OF A MANUAL TYPEWRITER. HE HAS ONLY RECENTLY (8 TO 9 MONTHS BACK) BOUGHT A LAZER PRINTER WHICH IS NOW BEING USED. HE FURTHER INFORMED THAT IT MIGHT BE POSSIBLE THAT SOMEBODY ELSE HAS FORGED HIS SIGNATURES AND ISSUED THE CERTIFICATES. HE ALSO SUBMITTED COPIES OF NEWSPAPER CUTTING IN SUPPORT OF HIS CLAIM THAT THE SIMILAR THING HAS ALSO HAPPEN ED IN PAST. SHRI HEMENDRA H. BHATT, STATED THAT HE WAS WORKING FOR THE APPELLANT SINCE THE YEAR 2005. HE STATED THAT HE GOT REGISTERED AS CLERK OF WORKS ON 26/05/2003 WITH AUDA. IT IS TO BE NOTED THAT THE REPORT CONTAINS THE ISSUE DATE OF 10/03/2003. HE FURTHER STATED THAT THOUGH HE WAS REGISTERED WITH THE AUDA, HE WAS NOT DOING SUCH PRACTICE OF ISSUING CERTIFICATES. HE COULD NOT CLEARLY RECALL THE BASIS ON WHICH ESTIMATES WERE GIVEN. HE COUICI NOT PRODUCE ANY REGISTER OR ANY OTHER RECORD TO SHOW THAT THE CERTIFICATES WERE IN FACT ISSUED BY HIM IN THOSE YEARS. ONE MORE FACT WHICH IS VERY RELEVANT IS THAT ALL THE CERTIFICATES WHICH HAVE BEEN ISSUED ON THREE DIFFERENT DATES IN A GAP OF ALMOST ONE YEAR BETWEEN THE DATES OF ISSUE, CONTAINS SAME FONT AND SAME S TYLE OF PRINTING. MR. BHATT HAS ADMITTED IN THE STATEMENT THAT HE DID NOT OWN ANY COMPUTER OR PRINTER AT THAT TIME AND HE GOT THESE REPORTS PRINTED FROM MARKET. FIRST OF ALL, HE COULD NOT CORRECTLY TELL THE NAME OF THE SHOP FROM WHICH THE CERTIFICATES WERE PRINTED. SECONDLY, IT IS CLEAR FROM OBSERVING THE PRINT THAT THESE CERTIFICATES HAVE BEEN PRINTED ON THE SAME PRINTER AS THE INK SPOTS ARE IN A SIMILAR POSITION IN ALL THE THREE CERTIFICATES WHICH IS NOT POSSIBLE IF THE CERTIFICATES ARE PRINTED AT DIFFERE NT TIMES ON A DIFFERENT PRINTER AS IF IS VERY UNLIKELY THAT THE SAME DEFECT WILL BE THERE IN THE PRINTERS OVER A PERIOD OF TIME. IT IS CLEAR FROM THIS THE CERTIFICATES HAV E BEEN PRINTED ON ONE DAY. IN VIEW OF THE FINDINGS THE APPELLANT WAS ISSUED A SHOW C AUSE ASKING HIM TO GIVE HIS EXPLANATION AS THE EVIDENCE THAT WAS CLAIMED TO BE CONTEMPORARY BY HIM WAS NOT RELIABLE IN VIEW OF THE STATEMENTS RECORDED IN THIS OFFICE. THE APPELLANT HAS SUBMITTED A REPLY DATED 30/01/2012 IN WHI CH HE HAS SUBMITTED THAT SHRI PA RMAR IS A 71 YEAR OLD PERSON AND HE WAS NOT CONSISTENT IN HIS REPLIES. SIMILARLY, HE HAS CLAIMED THAT IN THE STATEMENT OF SHRI HEMENDRA H. BHATT HE HAS CONFIRMED THE FACT OF ISSUE OF CERTIFICATE. THE LAND WAS PURCHASED SEVERAL YEARS BACK AND, THEREFORE, THE EXPENDITURE WAS APPROXIMATED ON THE BASIS OF THESE REPORTS. AN EXAMINATION OF THE ABOVE SEQUENCE SHOW THAT FIRST OF ALL THE APPELLANT DID NOT PRODUCE THE VALUATION REPORTS AND CERTIFICATES IN SUPPORT OF ITS CLAIM AND NOW THE REPORT HAVE BEEN SUBMITTED. THE VALUATION REPORT ISSUED BY SHRI N. P. PARMAR, REGISTERED VALUER HAS CLEARLY BEEN PROVED TO BE EITHER BACKDATED OR A FORGED REPORT SUBMITTED BY THE APPELLANT. EVEN IF THE CLAIM OF THE APPELLANT THAT SHRI PARMAR IS 7 1 YEARS OLD AND HE WAS NOT CONSISTENT IN HIS REPLY IS ACCEPTED, THE OTHER FACTS SUCH AS MENTIONING OF NEW NUMBER IN THE OLD REPORT AND THE FACT THAT IN THAT PERIOD THE REPORTS WERE BEING ISSUED BY HIM IN TYPED FORMAT AND HE HAD NO COMPUTER AT THAT TIME CLEARLY PROVE THAT THE REPORTS HAVE BEEN BACK DATED TO CREATE AN EVIDENCE. SIMILARLY, THE ESTIMATES GIVEN BY SHRI HEMENDRA H. BHATT ALSO ARE NOT RELIABLE. THE MOST GLARING FACT IS THAT HE WAS REGISTERED WITH AUDA ON 26/05/2003 WHEREAS HE HAS ALLEGEDLY ISSUED A CERTIFICATE ON 10/03/2003 CONTAINI NG THE REGISTRATION NUMBER ISSUED BY AUDA SUBSEQUENT TO THAT DATE WHICH IS NOT POSSIBLE. HE ALSO COULD NOT PRODUCE ANY CONTEMPORARY EVIDENCE TO SHOW THAT HE HAD IN FACT ISSUED THESE CERTIFICATES. AS POINTED OUT IN THE PRECEDING DISCUSSION, THE CIRCUMSTANCE S CLEARLY SHOW THAT THE CERTIFICATES ISSUED BY SHRI BHATT ARE ALSO BACK DATED IN ORDER TO ACCOMMODATE THE APPELLANT. FURTHER, THE CERTIFICATES ISSUED BY HIM ALSO CANNOT BE RELIED AS HE IS WORKING WITH THE APPELLANT'S GROUP COMPANY SINCE LONG AS THEIR CONSTRUCTION ENGINEER AND, THEREFORE, A NY CERTIFICATE OR EVIDENCE CANNOT BE RELIED AS IT WOULD BE TAKEN TO BE ISSUED BY AN INTERESTED PERSON. FURTHER, THE REPORT ISSUED BY HIM IS ALSO SKETCHY AND USES THE INFORMATION DERIVED FROM THE VALUATION REPORT ISSU ED BY THE REGISTERED VALUER AND CONSEQUENTIAL REPORT ISSUED BY SHRI BHATT ARE IN NEAR PROXIMITY. FOR EXAMPLE, THE VALUATION REPORT IS ISSUED ON 05/03/2003 FOR THE LAND AT HADMATIYA AND THE ESTIMATE HAS BEEN ISSUED BY HIM ON 10/03/2003. THE APPELLANT HAS HI MSELF CLAIMED THAT ON THE BASIS OF VALUATION REPORT AND SUBSEQUENT REPORT BY SHRI BHATT, THE ESTIMATE FOR EXPENSES WERE MADE. THE APPELLANT HAS HIGHLIGHTED THE REPORT OF THE VALUER TO SHOW THAT THE LAND WAS DEEP AND THEN THE DEPTH MENTIONED BY THE VALUER H AS BEEN USED BY SHRI BHATT TO CREATE AN ESTIMATE OF EXPENDITURE. SINCE IT HAS BEEN PROVED BEYOND DOUBT BY THE PRECEDING FACTS AND DISCUSSION THAT THE VALUATION REPORT ISSUED BY SHRI PARMAR IS A CREATED EVIDENCE AND WERE NOT ISSUED AT THAT POINT OF TIME, TH E REPORT OF SHRI BHATT IS ALSO, THEREFORE, A BACKDATED EVIDENCE. SINCE THESE EVIDENCES ARE NOT CONTEMPORARY, SUBSEQUENTLY FABRICATED AND WERE NOT PRODUCED BEFORE THE A.O., NOR ANY MENTION OF THE SAME WAS MADE BEFORE THE A.O., THESE CANNOT BE ACCEPTED NOW A S EVIDENCE IN SUPPORT OF THE CLAIM REGARDING COST OF IMPROVEMENT INCURRED BY THE APPELLANT. AFTER DISCUSSING THE EVIDENCE PRODUCED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS, THE CLAIM OF THE APPELLANT ON MERITS WHETHER THE EXPENDITURE CLAIMED BY H IM WAS GENUINE OR NOT IS ALSO NOW EXAMINED. IT IS SEEN FROM THE EVIDENCE SUBMITTED BEFORE ME AS WELL AS BEFORE THE A. O. THAT THE PAYMENTS HAVE BEEN MADE BY THE HAND MADE VOUCHERS, AMOUNTS PAID IN CASH AND IT APPEARS THAT THE VOUCHERS HAVE BEEN WRITTEN BY A SINGLE PERSON ON ONE DAY. THE CONCLUSION REGARDING THE VOUCHERS BEING WRITTEN BY ONE DAY IS THERE AS THE VOUCHERS ARE WRITTEN IN SIMILAR MANNER AND THE PHOTO COPY SHOW TH E SIMILARITY VERY CLEARLY. HAD THE VOUCHERS BEEN ISSUED ON DIFFERENT DATES AND AT TH E ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 7 DATE ACTUALLY. MENTIONED ON THEM THERE CANNOT BE SO MUCH SIMILARITY IN THE VOUCHERS. THE OTHER IMPORTANT FACTOR WHICH IS VERY RELEVANT AND CANNOT BE IGNORED THAT THE ASSESSMENT RECORDS OF EARLIER YEARS DOES NOT SHOW ANY MENTION OF SUCH EXPENDITURE BY THE APPELLANT IN THOSE YEARS. THE APPELLANT IS NOT MAINTAINING BALANCE SHEETS AND, THEREFORE, THE APPELLANT CANNOT DERIVE SUPPORT FROM THAT STATEMENT ALSO. THE CLAIM OF THE APPELLANT THAT THE EXPENDITURE IN CASH IS SUPPORTED BY THE CASH BOOK IS ALSO NOT ACCEP TABLE AS THE APPELLANT HAS HIMSELF MENTIONED THAT THE BOOKS OF ACCOUNT IN CASE OF SMT. USHADEVI S. VERMA ARE NOT MAINTAINED AND IN RESPECT OF THE OTHER APPELLANT THERE IS NO CONTEMPORARY EVIDENCE TO PROVE THAT EXPENDITURE HAS IN FACT BEEN INCURRED. THE OBS ERVATION OF THE A. O. THAT THE APPELLANT HAS NOT CLAIMED ANY COST OF IMPROVEMENT IN RESPECT OF THE LAND WHICH HAS BEEN SOLD WITHIN THE PERIOD OF THREE YEARS IS ALSO IMPORTANT AS ALL THE LANDS ARE OF SIMILAR NATURE. INTERESTINGLY THE APPELLANT HAS ALSO NOT KEPT ANY RECORDS ABOUT THE ADDRESS OR WHEREABOUTS OF THE PERSONS TO WHOM PAYMENTS HAVE BEEN MADE IN CASH, IT HAS BEEN SIMPLY SUBMITTED BY HIM THAT THE PAYMENTS WERE MADE TO WORKERS AND LABOURERS AT THAT TIME. THE APPELLANT HAS, THEREFORE, FAILED TO KEEP A ND PRODUCE ANY EVIDENCE THROUGH WHICH HE CAN PROVE THE GENUINENESS OF THE EXPENDITURE. ANOTHER IMPORTANT POINT WHICH CANNOT BE LOST SIGHT OF IS THAT THE PURCHASE DEEDS OF THE LAND DOES NOT MENTION ANYWHERE THAT THE LAND WAS DEEP. THEREFORE, THE CIRCUMSTANC ES SHOW THAT NO EXPENDITURE HAS BEEN INCURRED FOR IMPROVEMENT OR FILING OF LAND AS CLAIMED BY THE APPELLANT. IN VIEW OF THE ABOVE MENTIONED DISCUSSION, THE ACTION OF THE A.O. IN DISALLWOING THE CLAIM OF COST OF IMPROVEMENT IN RESPECT OF SALE OF LAND IS U PHELD AND THE GROUNDS OF APPELA IN BOTH THE CASES ARE DISMISSED. 8. WITH RESPECT TO TREATING THE AMOUNT OF RS. 11,36,053/ - AS INCOME FROM OTHER SOURCES. HE GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: - 4.3 DECISION I HAVE CAREFULLY PERUSED T HE ASSESSMENT ORDERS AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE APPELLANT HAS SUBMITTED THAT THE A.O HAS ASSESSED THE GAIN ON THE LAND ACQUIRED BY THE GOVERNMENT IN THE HANDS OF BOTH THE APPELLANTS IGNORING THE FACT THAT THERE WERE SIX CO - OWNERS OF TH E LAND. HE HAS, THEREFORE, SUBMITTED THAT ONLY 1/6 TH OF THE COSIDERATION SHOULD BE TAXED IN HIS HANDS. THE CLAIM OF THE APPELLANT REGARDING OWNERSHIP IS SUPPORTED BY FACTS AND, THEREFORE, THE ASSESSMENT OF ONLY 1 /6 TH SHARE CAN BE MADE IN THE HANDS OF THE APPELLANT. THE A. O. IS ACCORDINGLY DIRECTED TO REWORK THE ADDITION MADE BY HIM. HOWEVER, SINCE THE INCOME FROM SALE OF LAND HAS BEEN HELD TO BE AS INCOME FROM BUSINESS AND LAND ACQUIRED IS PART OF THE LAND SOLD TO THE GROUP COMPANY, THE INCOME FROM THE LA ND ACQUIRED BY THE GOVERNMENT SHOULD ALSO BE TAKEN AS INCOME FROM BUSINESS FOLLOWING THE LOGIC DISCUSSED IN THE PRECEDING GROUND. THEREFORE, THE INCOME SHOULD BE ASSESSED UNDER THE HEAD BUSINESS IN PLACE OF INCOME FROM OTHER SOURCES AS ASSESSED BY THE A. O . THE A.O. IS DIRECTED ACCORDINGLY. THE GROUND IS ACCORDINGLY PARTLY ALL OWED. 9. AGGRIEVED BY THE ORDER OF LD CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. BEFORE US. LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). FROM THE CHART OF SALE OF IM MOVABLE PROPERTY REPRODUCED PAGE 4 AND 5 OF THE ASSESSMENT ORDER, H E SUBMITTED THAT THE HOLDING OF THE LAND IN EACH CASE WAS MORE THAN 3 YEARS. HE FURTHER SUBMITTED THAT THE INTENTION OF THE ASSESSEE WAS NEVER TO TREAT THE LAND FOR THE PURPOSE OF BUSINESS WHICH WAS ALSO DEMONSTRATED BY THE FACT THAT ASSSSEE HAS TREAT ED THE LAND AS INVESTMENTS IN THE BOOKS OF ACCOUNTS AND HAS NOT TREATED THE LAND AS STOCK IN TRADE . LD A.R. FURTHER SUBMITTED THAT SIMILAR TRA N S ACTI O NS WERE ENTERED BY THE ASSESSEE IN A.Y. 07 - 08 BUT THE SAME WERE TREATED AS CAPITAL GAINS. HE PLACED ON RECORD AT PAGE 136 AND 137 THE COPY OF THE ASSESSMENT ORDER PASSED U/S. 143(3) FOR A.Y. 07 - 08. HE THEREFORE SUBMITTED THAT SINCE THE TRANSACTION OF SALE WERE SI MILAR TO THAT OF EARLIER YEAR S IMILA R VIEW SHOULD BE CONSIDERED FOR THE YEAR UNDER CONSIDERATION . ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 8 HE ALSO SUBMITTED THAT A.O. AT PAGE 13 HAS NOTED THAT ALL THE PLOTS WERE PURCHASED BY THE ASSESSEE ALONG WITH 5 OTHER CO - OWNERS AND THEREFORE THE PROFIT SHOULD HAVE BEEN CONSID E RED IN THE HANDS OF AOP AND NOT AS INDIVIDUAL. HE FURTHER PLACED RELIANCE ON THE DECISION OF GOPAL PUROHIT REPORTED IN 336 ITR 237 AND SUBMITTED THAT THE AFORESAID DECISION OF BOMBAY HIGH COURT HAS BEEN UPHELD BY HON BLE APEX COURT. WITH RESPECT TO THE COST OF IMPROVEMENT , THE LD AR. S UBMITTED THAT THE DETAILS OF THE SAME ARE PLACED AT PAGE 67 TO 88 OF THE PAPER BOOK. HE SUBMITTED THAT THE ASSESSEE HAS RIGHTLY CONSIDERED THE EXPENSES FOR LAND DEVELOPMENT . WITH RESPECT TO COMPENSATION OF RS. 1,83,342/ - HE SUBMITTED THAT THI S COMPENSATION SHOULD ALSO BE TREATED AS CAPITAL GAIN INSTEAD OF BUSINESS INCOME. THE LD D.R. ON THE OTHER HAND TOOK US THROUGH THE FINDING OF A.O AND CIT(A). AND FURTHER SUBMITTED THAT LD CIT(A) AFTER PERUSING THE ASSESSMENT R ECORDS HAS NOTED THAT USHADEV I V ERMA WAS NOT MAINTAINING PERSONAL BOOK OF ACCOUNT NOR BALANCE SHEET WAS MAINTAINED IN THE CASE OF THE ASS ESEE . S HE SUBMITTED THAT CIT(A) HAS NOTED THAT ASSESSEE HAS NEVER FILED A BALANCE SHEET. SHE ALSO PLACED RELIANCE ON THE VARIOUS DECISIONS IN HER SU PPORT AND THUS SUPPORTED THE ORDER OF CIT(A) . 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE YEAR ASSESSEE HAD SOLD THE VARIOUS PIECES OF LAND TO SWAGAT INFRASTRUCTURE IN WHICH THE ASSESS EE AS WELL AS THE FAMILY MEMBERS ARE THE DIRECTORS. CIT(A) HAS NOTED THAT ASSESSEE HAD BOUGHT THE LANDS IN PIECES OVER A PERIOD OF TIME AND AFTER CONSOLIDATION THE LANDS INTO A SINGLE PIECE, THE LAND WAS SOLD TO THE COMPANY. CIT(A) HAS ALSO NOTED THAT THE CLAIM THAT THE LAND WAS SHOWN AS THE INVESTMENT AND NOT AS STOCK IN TRADE IN THE BOOKS OF ACCOUNTS IS WITHOUT ANY SUPPORTING EVIDENCE AND FURHER SMT. USHADEVI DOES NOT MAINTAIN PERSONAL BALANCE SHEET AND THEREFORE THERE IS NO QUESTION OF SHOWING OF LA ND AS INVESTMENT . W ITH RESPECT TO THE ASSESSEE , CIT(A) HAS GIVEN A FINDING THAT ASSESSEE HAS NOT FILED BY THE BALANCE SHEET WITH THE DEPARTMENT TO SUPPORT THE CLAIM. HE HAS FURTHER NOTED THAT ON EXMINATION OF ASSESSMENT RECORDS OF EARLIER YEARS, IT IS NO TICED THAT THE BALANCE SHEETS ARE NOT ON RECORD. WITH ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 9 RESPECT TO THE COST OF IMPROVEMENT OF LAND WE FIND LD CIT(A) HAS NOTED THAT ASSESSEE HAS CLAIMED COST OF IMPROVEMENT FOR CALCULATING LONG TERM CAPITAL GAINS BUT NO COST OF IMPROVEMENT HAS BEEN SHOWN FOR LAND ON WHICH SHORT TERM CAPITAL GAIN HAS BEEN SHOWN, THE EXPENSES WERE STATED TO HAVE BEEN MADE TO WORKERS AND LABOURERS AND WERE SMALL PAYMENTS IN CASH AND THE ESTIMATES FOR EXPENSES WERE MADE ON THE BASIS OF VALUATION REPORTS. THE VALUATION REPORTS FILED BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE AS EVIDENCE IN SUPPORT OF THE CLAIM FOR THE VARIOUS REASONS POINTED OUT BY CIT(A) IN THE ORDER. WE THUS FIND THAT LD. CIT(A) BY A WELL REASONED ORDER HAS UPHELD THE DECISION OF A.O BEFORE US THE FINDING S AND OBSERVATIONS OF CIT(A) HAS NOT BEEN CONTROV E RTED BY ASSESSEE BY PLACING ON RECORD ANY TANGIBLE EVIDENCE. THOUGH CIT(A) HAS POINTED VARIOUS REASONS FOR NON ACCEPTANCE OF THE INCURRING OF EXPENSES, BUT CIT(A) HAS DOUBTED THE QUANTUM OF EXPENSES. CONSIDERI NG THE FACT THAT ASSESSEE WOULD HAVE INCURRED EXPENSES FOR LAND FILLING, LEVELLING ETC AND GENERALLY SUCH EXPENSES ARE PAID TO LABOURERS IN CASH, WE ARE OF THE VIEW THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE, INSTEAD OF DISALLOWING THE ENTIRE EXPENDITU RE OF RS. 61,63,215/ - , THE ENDS OF JUSTICE SHALL BE ME T IT THE DISALLOWANCE OF EXPENSES I NCURRED IS RESTRICTED TO RS. 25 LACS BEFORE US, LD. A.R. HAS RAISED A PLEA THAT SINCE THE LAND WAS PURCHASED JOINTLY BY THE ASSESSEE ALONG WITH OTHER PERSONS, THE PROF IT SHOULD HAVE BEEN CONSIDERED OF AOP AND THEREFOE TAXED IN THE HANDS OF AOP INSTEAD OF TAXING THE ENTIRE PROFIT IN THE HANDS OF ASSESSEE. WE FIND THAT THE AFORESAID PLEA WAS NEITHER RAISED BEFORE A.O OR CI T(A) BUT HAS BEEN RAISED BEFORE US FOR THE FIRST T IME. FURTHER, APART FROM MAKING THE SUBMISSION OF TAXING THE PROFIT IN THE HANDS OF AOP NO OTHER MATERIAL HAS BEEN PLACED IN SUPPORT OF THE CONTENTION. WE THEREFORE DO NOT FIND MERIT AND THEREFORE THE CONTENTION IS NOT ACCEPTED. THUS THE G ROUNDS OF ASSESSE E IS PARTLY ALLOWED . ITA NO. 732/AHD/2012 (IN CASE OF SMT. USHADEVI SHANTRAMDAS VARMA) 11. BEFORE US, SINCE BOTH THE PARTIES HAVE SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IS IDENTICAL TO THAT OF MRUNAL VERNA, WE ITA NOS. 731 & 732/AHD/2012 . A.Y. 2008 - 09 10 THEREFORE FOR THE SIMILAR REASONS STATED HERERINABO V E WE WHILE DECIDI NG THE CASE OF MRU NAL VERMA AND FO R SIMILAR REASONS ALSO PARTLY ALLOW THE GROUNDS OF ASSESSE E . 12. IN THE RESUL T, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED . ORD ER PRONOUNCED IN OPEN COURT ON 17 - 10 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD