Sapseven Homes & Estates, Hyderabad V. Income Tax Officer, Ward-10(4), Hyderabad

ITA 857/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2587 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-06-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 07-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L R AMJI RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment; Capital asset; Business income
• Section: 2(14); 234B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC - B BENCH : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA.NO. 857/HYD/2014 ASSESSMENT YEAR 2002 - 2003 SAPSEVEN HOMES & ESTATES, HYDERABAD. PAN: ABFFS5745J VS. INCOME TAX OFFICER, WARD 10(4), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI S. RAMA RAO FOR REVENUE : SHRI L. RAMJI RAO, DR DATE OF HEARING : 11 .09.2017 DATE OF PRONOUNCEMENT : 22 .09.2017 ORDER PER D. MANMOHAN, VP. THIS IS AN APPEAL FILED ON BEHALF OF THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) - 18, MUMBAI HOLDING CONCURRENT JURISDICTION OF LD. CIT(A) - VI, HYDERABAD. THE FOLLOWING GROUNDS WERE URGED BEFORE THE TRIBUNAL: - 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT(A) (SIC) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN INITIATING THE PROCEEDINGS U/S 147 OF THE I.T. ACT WHEN THERE IS NO ESCAPEMENT OF INCOME. 3. THE LD. CIT(A) OUGHT TO HAVE SEEN THAT NO CAPITAL GAIN AROSE DURING THE PREVIOUS RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND, THEREFORE, THERE WAS NO ESCAPEMENT OF INCOME ENABLING THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS U/S 147 OF THE ACT. 4. THE LD. CIT(A) ERRED IN CONF IRMING THE ACTION OF THE ASSESSING OFFICER IN TAXING THE CAPITAL GAIN FOR THE ASSESSMENT YEAR 2002 - 2003 PARTICULARLY WHEN THE TRANSFER WAS COMPLETE DURING THE FINANCIAL YEARS 1996 - 97, 1997 - 98 AND 1998 - 99. 5. THE LD. CIT(A) ERRED IN DETERMINING THE TOTAL IN COME AT RS. 20,54,350/ - WITHOUT PROPERLY CONSIDERING THE EXPLANATIONS SUBMITTED. 6. THE LD. CIT(A) ERRED IN CONFIRMING LEVY OF INTEREST U/S 234A; 234B AND 234C OF THE ACT. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2 2. GROUNDS NO.1 AND 7 ARE GENERAL IN NATURE AND GROUND NO.6 IS CONSEQUENTIAL AND IN FACT NO ARGUMENTS WERE ADVANCE D ON THE AFOREMENTIONED GROUNDS. ACCORDINGLY, GROUNDS NO.1, 6 AND 7 ARE NOT TAKEN UP FOR CONSIDERATION. IT WAS ALSO POINTED OUT TO THE BENCH THAT SHRI P. SRINI VAS RAO SIGNED THE VERIFICATION FORM ON 4 TH DAY OF MAY, 2014 BY WHICH DATE THE PARTNERSHIP FIRM WAS NOT IN EXISTENCE. THE FIRM CONSISTED OF TWO PARTNERS I.E., ASSESSEES FATHER AND ASSESSEE. MR. SRINIVASS FATHER (P.S. RAO) HAVING EXPIRED IN 2012 AS PER SECTION 189 OF THE ACT SHRI P. SRINIVAS FILED AN APPEAL ON BEHALF OF THE FIRM IN HIS CAPACITY AS A PARTNER AND ALSO AS A LR OF THE OTHER PARTNER. HAVING REGARD TO THE CIRC UMSTANCES, I PROCEED TO HEAR THE APPEAL OF THE FIRM. 3. BRIEF FACTS , NECESSARY F OR DISPOSAL OF THE APPEAL , ARE SET OUT HEREIN. THE FIRM ORIGINALLY CONSISTED OF FOUR PARTNERS AND IT WAS ENGAGED IN REAL ESTATE BUSINESS AS PER THE PARTNERSHIP DEED EXECUTED ON 18.07.1992. SUBSEQUENTLY, SMT. P.A. DEVI AND SMT. P. JAMUNA RETIRED FROM THE PARTNERSHIP AND THUS SHRI P.S. RAO AND SHRI P. SRINIVAS CONTINUED AS PARTNERS WITH 50% SHARE EACH. FOR THE YEAR UNDER CONSIDERATION, THE PARTNERSHIP WAS IN EXISTENCE . T HOUGH BY THE TIME OF FILING OF THE APPEAL SHRI P.S. RAO EXPIRED, SHRI P. SRINIVAS RAO FILED AN APPEAL IN HIS CAPACITY AS AN EX - PARTNER U/S 189 OF THE ACT. 4. IN THE YEAR 1993, THE ASSESSEE - FIRM PURCHASED 104.38 ACRES OF LAND IN PIGILIPURAM VILLAGE, BATASINGARAM GRAM PANCHAYAT, HAYATNAGAR MANDAL FOR A CONSIDERATION OF RS. 5,24,825/ - (@ RS. 5000 / - PER ACRE ON AN AVERAGE). ACCORDING TO THE ASSESSEE - FIRM, THE AFOREMENTIONED LAND WAS SOLD TO M/S. G.P.R. HOUSING P. LTD., REAL ESTATE PROMOTERS & BUILDERS. AS PER THE COPIES OF SALE DEEDS OBTAINED FROM THE SAID COMPANY, TOTAL EXTENT OF 66.35 ACRE S WAS SOLD BETWEEN 15.10.1999 TO 27.03.2002 FOR A CONSIDERATION OF RS. 27,78,500/ - . OUT OF THIS 3 PIECES OF LAND, ADMEASURING AC 29.34 GUNTAS, WERE SOLD ON THE FOLLOWING DATES AND SALE PROCEEDS THEREOF ARE ASSESSABLE T O CAPITAL GAINS TAX. SL NO. SURVEY NO. EXTENT OF LAND DATE OF SALE CONSIDERATION 1. 51/1(A) 10.00 13.02.2002 RS.5,00,000/ - 2. 51/1 05.34 27.02.2002 RS.2,92,500/ - 3. 51/A 14.00 27.03.2002 RS.7,00,000/ - EVEN THOUGH THE SALE CONSIDERATION , FOR 66.35 ACRES , IS SHOWN AT RS. 27,78,500/ - , AS PER THE COMPANYS LETTER DATED 20.03.2006 , THE ACTUAL PAYMENT RECEIVED FROM M/S. 3 G.P.R. HOUSING P LTD., WAS RS. 51,70,000/ - . M/S. G.P.R. HOUSING P LTD., CONFIRMED THAT IT HAS PAID @ RS. 49,712/ - PER ACRE AS PER THEIR ORAL UNDERSTANDING EVEN THOUGH THE VALUE AS PER THE REGISTERED AGREEMENT OF SALE IS MUCH LESS. C HEQUES / CASH RECEIVED TO THE TUNE OF RS. 51.70 LAKHS BETWEEN 07.10.1996 TO 25.11.1998. 5. THE FACTU M OF PURCHASE OF THE ABOVE LAND AND SALE OF SUCH LAND TO M/S. G.P.R. HOUSING P LTD., HAS BEEN CONFIRMED BY THE ASSESSEE - FIRM IN THE NOTE ENCLOSED TO THE RETURN OF INCOME FILED ON 14.06.2006 FOR THE ASSESSMENT YEAR 2002 - 2003, WHICH IS THE YEAR UNDER CONSIDERATION. IN THE SAID NOTE THE MANAGING PARTN ER OF THE ASSESSEE - FIRM STATED THAT THE ACTUAL AMOUNT RECEIVED FROM M/S. G.P.R. HOUSING P LTD., WAS RS. 53,70,000/ - , INCLUDING THE ADVANC E AMOUNT OF RS. 2 LAKHS, ON SALE OF 104.38 ACRES. 6. THOUGH , AS PER THE COPIES OF SALE DEEDS EXECUTED AND THE DETAILS O F SALE CONSIDERATION FURNISHED BY M/S. G.P.R. HOUSING P LTD., CAPITAL GAINS WOULD BE CHARGEABLE TO TAX FOR THE ASSESSMENT YEARS 2000 - 01 AND 2002 - 03 , THE FIRM DID NOT FILE RETURN OF INCOME EVER SINCE IT WAS CONSTITU TED ON 18.07.1992, MUCH LESS FOR THE ASSES SMENT YEARS 2000 - 01 AND 2002 - 03 , WHEN SOME PIECE OF THIS LAND WAS SOLD. WHEN CALL ED UPON TO EXPLAIN, THE ASSESSEE CLAIMED THAT THE CAPITA L GAINS ARISING ON SALE OF LAND IS EXEMPT AS THE SAID LAND DO ES NOT FALL WITHIN THE DEFINITION OF CAPITAL ASSETS. I T WAS FURTHER STATED THAT THE ENTIRE LAND SOLD WAS AGRICULTURAL LAND AND EVEN THE POSSESSION WAS HANDED OVER TO M/S. G.P.R. HOUSING P LTD., IN 1996 ITSELF AGAINST WHICH SALE CONSIDERATION WAS RECEIVED ON DIFFERENT DATE S BETWEEN 1996 TO 1999 AND THUS NO TRANSACTION TOOK PLACE IN THIS YEAR. IT IS ALSO NOTICED THAT OUT OF A SUM OF RS. 61,20,000/ - , SAID TO HAVE BEEN PAID TO M/S. G.P.R. HOUSING P LTD., THE FIRM RECEIVED ONLY RS. 53,70,000/ - AND THE BALANCE AMOUNT OF RS. 7,50,000/ - WAS PAID TO ON E MR. BALREDDY A S COMMISSION. 7. IT WAS ALSO CONTENDED THAT THE SALE IS DEEMED TO HAVE BEEN CONCLUDED IN 1996 WHEN THE ASSESSEE - FIRM GAVE POSSESSION OF THE LAND SUBJECT TO RECEIPT OF FULL SALE CONSIDERATION ; I N JANUARY 1999 THE LAST PAYMENT WAS RECEIVED. IN OTHER WORDS, THERE IS NO TRANSACTION IN 2000 - 01 AND 2002 - 03 . ACCORDINGLY, NIL RETURNS WERE FILED FOR THE AFOREMENTIONED YEARS , IN RESPONSE TO THE NOTICES ISSUED U/S 148 OF THE ACT. 8 . THE ASSESSING OFFICER NOTICED THAT SOME OF THE SALE DEEDS WERE EXECUTED (29.34 ACRES) DURING TH E PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2002 - 2003. HOWEVER, THE 4 ASSESSEE CONTENDS THAT IT IS DEEMED TO HAVE BEEN SOLD , SINCE THE POSSESSION WAS HANDED OVER MUCH BEFORE I.E., DURING THE YEAR 1996. 9. THE ASSESSING OF FICER OBTAINED A LETTER FROM DIRECTOR, TOWN & COUNTRY PLANNING, GOVT. OF ANDHRA PRADESH REGARDING THE NATURE OF LAND AND THE SAME WAS FORWARDED TO THE ASSESSEE TO SHOW CAUSE AS TO WHY LONG TERM CAPITAL GAINS , ARISING OUT OF SALE OF LAND , SHOULD NOT BE BROUGHT TO TAX IN THE ASSESSEES CASE. SINCE THERE WAS NO RESPONSE, ANOTHER SHOW CAUSE LETTER WAS ISSUED ON 18.07.2006 , BRINGING SOME MORE FACTS TO THE NOTICE OF THE ASSESSEE. THE FACTS MENTIONED IN THE SAID SH OW CAUSE NOTICE WERE - (A) A S PER THE COPIES OF THE DEEDS SUPPLIED BY THE PARTNER, SOME OF THE LANDS WERE SOLD IN THE FYS 1999 - 2000 AND 2001 - 2002 ; (B) O N ONE HAND THE ASSESSEE ADMITS THAT THE LANDS WERE HANDED OVER TO M/S. G.P.R. HOUSING P LTD., IN 1996, I NDICATING THAT THE LANDS WERE NOT USED BY THE ASSESSEE FOR AGRICULTURAL PURPOSE S WHEREAS IN THE INDIVIDUAL RETURN OF INCOME , FOR AYS 2000 - 01 TO 2002 - 03 , SHRI P. SRINIVAS STATES THAT THE ASSESSEE - FIRM HAD GROWN CROPS IN THE SAID LANDS AND THE PRODUCE GROWN WAS SOLD WHEREFROM SHRI P. SRINIVAS RECEIVED HIS SHARE OF AGRICULTURAL INCOME OF RS. 2,25,000/ - , RS. 2,25,000/ - AND RS. 1,80,000/ - RESPECTIVELY FOR THE THR EE ASSESSMENT YEARS WHICH SHOWS CONTRADICTION IN CLAIMS ; (C) IT WAS ALSO POINTED OUT THAT AS PER THE LOCA L ENQUIRIES CONDUCTED BY THE INCOME TAX INSPECTOR (ITI) , THERE WAS NO CULTIVATION FOR THE PAST ONE DECADE AND THEY WERE LONG BACK CONVERTED INTO PLOTS AND NO SUCH CR OPS WERE GROWN ON THE SAID LAND; (D) THE VILLAGE DEVELOPMENT OFFICER (VDO), GRAM PANCHA YAT AND THE MRO, HAYATNAGAR MANDAL HAVE CONFIRMED THAT THE LAND WAS CONVERTED INTO PL OTS AND CROPS WERE NOT GROWN; (E ) IN THE CASE OF SHRI P. SRINIVAS, THE CLAIM OF AGRICULTURAL INCOME WAS REJECTED AND THE CONCLUSION DRAWN BY THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A) AGAINST WHICH THE ASSES SEE HAS NOT FILED ANY APPEAL; (F ) THE FACT THAT THE LANDS WERE PURCHASED IN 1993 AT AN AVERAGE RATE OF RS. 5000/ - PER ACRE AND SOLD AT AN EXORBITANT RATE OF RS. 49,712/ - IS ON ACCOUNT OF THE FACT THAT ASSE SSEE CONVERTED THE LAND S INTO HOUSE SITES AND (G ) THE ASSESSEE - FIRM WAS CONSTITUTED WITH THE SOLE INTENTION OF CARRYING ON THE BUSINESS OF REAL ESTATE AND THE SAME WAS ACHIEVED BY WAY OF SELLING THE LAND TO M/S. G.P.R. HOUSING P LTD., AND THUS THE LAND SOL D HAS TO BE TREATED AS AN ASSET WITHIN THE MEANING OF SECTION 2(14)(III) OF THE ACT. 5 10 . IN RESPONSE TO THE ABOVE LETTER, THE ASSESSEES AR APPEARED AND FILED WRITTEN SUBMISSIONS. THE CONTENTIONS OF THE ASSESSEE ARE - (A) CAPITAL GAINS TAX IS ATTRAC TED ONLY WHEN A LAND FALL S WITHIN 8 KMS FROM THE MUNICIPAL LIMITS OF HYDERABAD MUNICIPAL CORPORATION ; THE REPORT OF DIRECTOR, TOWN & COUNTRY PLANNING, GOVT. OF ANDHRA PRADESH REFERS TO HUDA LIMITS WHICH SHOULD NOT HAVE BEEN TAKEN INTO CONSIDERATION; (B) THE LAND WAS AGRICULTURAL IN NATURE AND IN FACT PURCHASED FROM VARIOUS RYO TS AND IT WAS MEANT TO BE CULTIVATED. THE FIRM PAID LAND REVENUE TILL THE DATE OF SALE ; (C) THE ASSESSEE HAS NOT DONE ANY PLOTTING ON THE LAND SO LONG AS THE LAND WAS IN THEIR POSSE SSION AND THE PLOTTING WAS DONE ONLY AFTER M/S. G.P.R. HOUSING P LTDS., HAD TAKEN POSSESSION; (D) THE LAND WAS SOLD IN ACRES AND NOT IN SQUARE MTRS / YARDS WHICH INDICATES THAT AT THE TIME OF SALE THE LAND IS CONSIDERED AS AGRICULTURAL LAND AND (E) BASICAL LY AGRICULTURAL LAND IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE INCOME TAX ACT. 11 . THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE. HE OBSERVED THAT IN RESPECT OF IMMOVABLE PROPERTY, THE DATE OF TRANSFER IS THE DATE OF REGISTRA TION OF THE RELEVANT DOCUMENT EVEN THOUGH THE ADVANCE SALE CONSIDERATION, IN INSTALMENTS, WAS RECEIVED BETWEEN 1996 TO 1999. SINCE REGISTRATION TOOK PLACE IN THIS YEAR, THE ASSESSING OFFICER CONCLUDED THAT THE REOPENING OF THE ASSESSMENT IS JUSTIFIED. IT MAY BE NOTICED THAT THE TRANSACTION WAS REGISTERED BETWEEN 15.10.1999 TO 27.03.2002 AND THEREFORE, THE CAPITAL GAINS HAS TO BE WORKED OUT YEAR WISE FOR THE AYS 2000 - 01 TO 2002 - 03. 12 . THE NEXT CL AIM OF THE ASSESSEE WAS THAT IT HANDED OVER THE LAND TO M/S . G.P.R. HOUSING P LTD., IN 1996 AND THE PLOTTING WAS DONE BY THE SAID COMPANY AS PER THE ORAL UNDERSTANDING BETWEEN THE ASSESSEE AND M/S. G.P.R. HOUSING P LTD. IN THIS REGARD, THE A.O. OBSERVED THAT THE LAND WAS INTENDED TO BE USED FOR REAL ESTATE PURPOS E AND LAYING OF ROADS ETC., WAS DONE IN A P HASED MANNER AND ULTIMATELY SALE TOOK PLACE IN A PHASED MANNER B EGINNING FROM FY 1999 - 2000. SINCE THE LAND WAS INTENDED TO BE USED FOR REAL ESTATE PURPOSES, THE ASSESSEE IS LIABLE TO TAX IRRESPECTIVE OF THE FACT AS TO WHETHE R THE ASSESSEE HAS DIVIDED THE LAND INTO HOUSING PLOTS OR THE PROSPECTIVE BUYER HAS UNDERTAKEN THE JOB. FURTHER, THE VDO AND THE MRO ADMITTED THAT NO AGRICULTURAL OPERATIONS WERE CARRIED ON THE SAID PLOTS AND IN FACT THE INCOME TAX INSPECTOR REPORTED THAT NO AGRICULTURAL OPERATIONS WERE CARRIED OUT. IN OTHER WORDS, THE CLAIM THAT IT WAS MEANT TO BE CULTIVATED WAS NOT ACCEPTED BY THE ASSESSING OFFICER. 6 13 . THE ASSESSEES CLAIM THAT IT HAS PAID LAND REVENUE CANNOT BE TAKEN AS A CONCLUSIVE PROOF THAT IT WAS AGRI CULTURAL LAND FALLING BEYOND 8 KMS FROM THE MUNICIPAL LIMITS OF HYDERABAD. THE A.O. ALSO OBSERVED THAT THAT THE ASSESSEES CLAIM WITH REGARD TO THE DISTANCE FROM THE MUNICIPAL LIMITS IS WRONG SINCE THE LAW STIPULATES THAT DISTANCE HAS TO BE DETERMINED BY TAKING INTO CONSIDERATION SEVERAL OTHER FACTORS AS STAT ED IN THE CASE OF SARIFABIBI MO HMED IBRAHIM VS. CIT [1993] (204 ITR 621) (SC). A.O. FURTHER OBSERVED THAT HUDA IDENTIFIED SEVERAL AREAS ADJACENT TO THE MUNICIPAL CORPORATION OF H YDERABAD FOR URBANISATION AND SO LONG AS THE LAND IS SITUATED WITHIN SUCH ZONE OR WITHIN THE RANGE OF 8 KMS FROM SUCH LIMITS , IT HAS TO BE TREATED AS CAPITAL ASSET U/S 2(14) OF THE ACT. FURTHER, WHETHER THE LAND IS AGRICULTURAL LAND OR NOT HAS TO BE DETERMINED BY TAKING INTO ACCOUNT SEVERAL OTHER FACTORS AND WE CANNOT GO BY THE NOMENCLATURE USED IN THE RECORDS. IN THE INSTANT CASE, TH E LAND WAS NEVER INTENDED TO BE UTILISED FOR AGRICULTURAL PURPOSES SINCE THE FIRM HAS PURCHASED THE LAND TO CARRY ON REAL ESTATE BUSINESS AND THE INTENTION IS MADE CLEAR IN CLAUSE - 5 OF THE PARTNERSHIP DEED. RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHMED IBRAHIM (SUPRA) IT WAS CONCLUDED THAT THE LAND WAS INTENDED TO BE DEVELOPED BY PLOTTING , BY PROVIDING ROADS AND OTHER FACILITIES AND IT WAS NEVER UTILISED FOR AGRICULTURAL PURPOSES IN WHICH EVENT IT DESERVES TO BE CO NCLUDED THAT LAND WAS HELD FOR N ON - AGRICULTURAL PURPOSES AND THUS IT HAS TO BE TREATED AS A CAPITAL ASSET, IN FACT , ASSESSEE ITSELF TREATED IT AS A CAPITAL ASSET. SINCE THE ASSESSE HELD THESE LANDS FOR MORE THAN THREE YEARS, THE SALE PROCEEDS THEREOF ARE ASSESSABLE TO TAX UNDER THE HEAD LONG TERM CAPITAL GAINS. THE ASSESSING OFFICER TOOK INTO CONSIDERATION THE EXTENT OF 29.34 ACRES WHICH WERE SOLD IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002 - 2003 AND ACCORDINGLY ARRIVED AT CAPITAL GAINS O F RS.20,54,350/ - . 14 . AGGRIEVED, ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE FIRM ACQUIRED 104.38 ACRES OF AGRICULTURAL LAND IN PIGILIPURAM VILLAGE, BATASINGARAM GRAM PANCHAYAT, HAYATNAGAR MANDAL WHICH WAS FINALLY SOLD TO M/S. G.P.R. HOUSING P LTD., B ETWEEN 1996 TO 1999 . B UT THE ASSESSING OFFICER WRONGLY TOOK INTO ACCOUNT PROPORTIONATE SALE CONSIDERATION FOR 29.34 ACRES ON THE GROUND THAT THE AGREEMENT OF SALE CUM GPA WAS EXECUTED DURING THE FY 2001 - 2002 RELEVANT TO THE ASSESSMENT YEAR 2002 - 2003 , OVERL OOKING THE FACT THAT THE ASSESSEE DID NOT DERIVE ANY INCOME FROM THE SAID LAND AND THEREFORE, T HE ASSESSEE DID NOT FILE RETURN OF INCOME FOR THIS YEAR . FURTHER, THE 7 LAND PURCHASED BY THE ASSESSEE WAS AN AGRICULTURAL LAND ; THEREFORE, THE ASSESSEE IS NOT LIA BLE FOR TAXATION ON THE SALE OF THE SAID LAND. ASSESSEE ALSO CHALLENGED THE VALIDITY OF THE REOPENING OF ASSESSMENT AND ALSO CONTENDED THAT THE CAPITAL GAINS, IF ANY, IS EXEMPT FROM TAX SIN CE THE LAND SOLD WAS AGRICULTURAL IN NATURE. 15 . THE CONTENTIONS R AISED BEFORE THE ASSESSING OFFICER WERE REITERATED BEFORE THE LD. CIT(A). LD. CIT(A) OBSERVED THAT THE ASSESSEE SOLD THE LAND LOCATED WITHIN A DISTANCE OF 8 KMS FROM HUDA LIMITS BUT DID NOT OFFER TO T AX CAPITAL GAINS THEREOF AND SO A.O. WAS JUSTIFIED IN ISSUING A NOTICE U/S 148. T HE A.O. RECORDE D THE REASONS BEFORE ISSUING NOTICE AND HE ALSO OBSERVED THAT THE ASSESSEE RECEIVED CONSIDERATION FROM M/S. G.P.R. HOUSING P LTD., IN THE YEAR UNDER CONSIDERAT ION AND THEREFORE , IT IS ASSESSABLE TO CAPITAL GAINS TAX; THE CIT (A) THUS CONCLUDE D THAT THE REOPENING OF ASSESSMENT IS VALID. AS REGARDS MERITS OF THE ADDITION, THE LD. CIT(A) OBSERVED THAT THOUGH THE ASSESSEE CLAIMED THAT THE PROPERTY W AS SOLD, MERE PA PER AGREEMENT HAS NO VALUE IN THE EYE OF LAW , BEING SELF - GENERATED DOCUMENT S. IN FACT ACTUAL REGISTRATION TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THUS JUSTIFIED THE ACTION OF THE ASSESSING OFFICER. 16 . FURTH ER AGGRIEVED, ASSESSEE - FIRM IS IN APPEAL BEFORE THE TRIBUNAL. 17 . LD COUNS EL FOR THE ASSESSEE ADVERTED MY ATTENTION TO PAGE 112 OF THE PAPER BOOK AND CONNECTED DOCUMENTS TO HIGHLIGHT THAT BY WAY OF UNREGISTERED AGREEMENT OF SALE CUM GPA , THE ASSESSEE SOLD THE AGRICULTURAL LAND TO M/S. G.P.R. HOUSING P LTD ., IN OCTOBER 1996 AND RECEIVED A SUM OF RS. 2 LAKHS AS AN ADVANCE BY WAY OF CHEQUE WITH THE CONDITION THAT THE BALANCE AMOUNT SHOULD BE PAID WITHIN 11 MONTHS AS PER THE UNDERSTANDING AND THE ADVANCE MONEY WOULD BE ADJUSTED WHEN THE TRANSACTION IS COMPLETED. LD COUNSEL FOR THE ASSESSEE ALSO REFERRED TO AGREEMENT OF SALE CUM GPA DATED 15.10.1999 TO SUBMIT THAT THE ENTIRE CONSIDERATION WAS PAID BY THE PURCHASER BY 1999. PAGE 148 REFERS TO AGREEMENT OF SALE CUM GPA BETWEEN ASSESSEE - FIRM A N D M/S. G.P.R. HOUSING P LTD., WITH RESPECT TO 10 ACRES OF LAND SITUATED IN SURVEY NO.51. SIMILARLY, PAGE 156 REFERS TO AGREEMENT OF SALE CUM GPA DATED 27.02.2002 REFER ABLE TO LAND ADMEASURING 5.34 ACRES BE ARING SURVEY NO.51. ANOTHER 14 ACRES OF LAND BEARING SURVEY NO.51 WAS ALSO SOLD BY AGREEMENT OF SALE CUM GPA DATED 27.03.2002 TO M/S. G.P.R. HOUSING P LTD. 8 18. LD COUNS EL FOR THE ASSESSEE RELIED UPON THE AGREEMENT OF SALE DATED 03.10.1996 AND THE TERMS OF UNREGISTERED AGREEM ENT AND SUBMITTED THAT THE ASSESSEE HANDED OVER PHYSICAL POSSESSION OF LAND IN 1996 WHEREAS M/S. G.P.R. HOUSING P LTD., GOT THE DOCUMENTS REGISTERED AT THEIR CONVENIENCE . AS PER SECTION 53A OF THE TRANSFER OF PROPERTY ACT , AS WELL AS SECTION 2(47) OF THE INCOME TAX ACT, 1961 , WHEN POSSESSION OF LAND IS HANDED OVER , UPON RECEIVING FULL VALUE CONSIDERATION , I T WOULD AMOUNT TO TRANSFER OF LAND AND THE SAME IS ASSESSABLE TO TAX IN THE YEAR IN WHICH THE POSSESSION WAS HANDED OVER TO THE PUR CHASER. FROM THIS PERSPECTIVE, THE AGREEMENT OF SALE HAVING BEEN ENTERED INTO ON 03.10.1996, THE TAXABILITY OF CAPITAL GAINS, IF ANY, CAN AT BEST BE CONSIDERED IN THE ASSESSMENT YEAR 1997 - 98. 19 . THE SECOND ARGUMENT OF THE LD COUNSEL FOR THE ASSESSEE IS T HAT EVEN AS PER THE SCHEDULE ATTACHED TO THE UNREGISTERED AGREEMENT OF SALE AS WELL AS REGISTERED AGREEMENT OF SALE CUM GPA, THE LAND , WHICH WAS SOLD , WAS AN AGRICULTURAL LAND, WHICH WAS LOCATED 17 KMS AWAY FROM THE NEAREST HYDERABAD MUNICIPAL LIMITS IN WH ICH EVENT IT CANNOT BE TREATED AS A CAPITAL ASSET SO AS TO BRING THE SALE PROCEEDS TO TAX. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 174 TO 177 OF THE PAPER BOOK (WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A)) AND SUBMITTED THAT THE DIRECTOR, TOWN & COUNTRY PLANNING, GOVT. OF ANDHRA PRADESH HAS MERELY STATED THAT THE LAND FALLS WITHIN 8 KMS FROM THE HUDA LIMITS WHEREAS THE LIMITS PRESCRIBED BY THE MUNICIPAL CORPORATION OF HYDERABAD ARE DIFFERENT AND , FOR THE PURPOSE OF INCOME TAX ACT, ONE HAS TO TAKE INTO CONSIDERATION THE HYDERABAD MUNICIPAL LIMITS AND NOT THE LIMITS PRESCRIBED FOR DEVELOPME NT OF URBAN LAND (HUDA LIMITS). THE VILLAGE OF PIGILIPURAM FALLS WITHIN THE REVENUE DISTRICT OF RANGA REDDY AND IT IS NOT WITHIN 8 KMS RADIUS OF MUNICIPAL CORPORATION OF HYDERABAD. RELIANCE WAS PLACED UPON THE DECISION OF THE ITAT, HYD ERABAD BENCH IN THE CASE OF SRINIVAS PANDIT (HUF) TO SUBMIT THAT PROVISIONS OF SECTION 2(14) WILL HAVE NO APPLICATION WHEN THE LANDS ARE SITUATED IN AN UNNOTIFIED AREA. 20 . IT MAY BE STATED HERE THAT LD COUNSEL FOR THE ASSESSEE HAS NOT SPECIFICALLY ADVANCED ANY ARGUMENTS W ITH REGARD TO THE VALIDITY OF THE RE - ASSESSMENT PROCEEDINGS EXCEPT STATING THAT NO TRANSFER TOOK PLACE IN THIS YEAR AND HENCE NO INCOME ESCAPED ASSESSMENT IN WHICH EVENT THE A.O. OUGHT NOT HAVE ISSUED NOTICE U/S 148 OF THE ACT. 9 21 . ON THE OTHER HAND LD D R SUBMITTED THAT THE ISSUE OF TAXABILITY OF CAPITAL GAINS IN THIS YEAR HAS TO BE EXAMINED BY TAKING INTO CONSIDERATION THE FACTUAL MATRIX OF THE CASE AS A WHOLE. IN THE INSTANT CASE, THE ASSESSEE - FIRM HAS COME INTO EXISTENCE AS A REAL ESTATE FIRM WITH A C LEAR INTENTION TO BUY ANY LAND AND TO CARRY ON REAL ESTATE BUS INESS EITHER BY CONVERSION OF LAND INTO PLOTS OR TO SELL THE LAND AS SUCH. THOUGH THE ASSESSEE SOLD MAJOR CHUNK OF THE LAND OUT OF 104 ACRES ACQUIRED IN PIGILIPURAM VILLAGE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION (BASED ON THE REGISTERED AGREEMENT OF SALE CUM GPA) , THE ASSESSEE HAVING NOT FILED THE RETURN OF INCOME , THE A.O. ISSUED A NOTICE U/S 148 OF THE ACT BY RECORDING REASONS IN THIS REGARD AND THEREFORE, REOPENING OF ASSESSMENT IS VALID. HE FURTHER SUBMITTED THAT THE AGREEMENT S ENTERED INTO ON 03.10 .1996 ARE NOT R EGISTERED DOCUMENT S WHICH CANNOT COMPLETELY BE RELIE D UPON IN THE BACK DROP OF THE FACT THAT THE VERY SAME LAND WAS SHOWN TO HAVE BEEN SOLD AT MUCH HIGHER PRICE BY WAY OF REGISTERED DOCUMENT S IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002 - 03 . LD. DR ADVERTED MY ATTENTION TO PAGE 112 OF THE PAPER BOOK I.E., UNREGISTERED AGREEMENT OF SALE , TO SUBMIT THAT AS PER THIS AGREEMENT , THE ASSE SSEE OFFERED TO SELL THE AGRICULTURAL LAND FOR A LUMP SUM CONSIDERATION OF RS. 31 LAKHS (LAND ADMEASURING 104.38 ACRES ) AND RECEIVED ADVANCE OF RS. 2 LAKHS AND THE BALANCE CONSIDERATION TO BE PAID BY THE PURCHASER WITHIN 11 MONTHS I.E., BY SEPTEMBER 1997 W HEREAS THE PAYMENT WAS RECEIVED AFTER NOVEMBER 1997 WHICH CLEARLY SHOWS THAT THE AGREEMENT WAS NOT ACTED UPON AND HENCE MUCH RELIANCE CANNOT BE PLACED UPON THE UNREGISTERED AGREE MENT OF SALE. LD DR ADVERTED MY ATTENTION TO PAGES 2 AND 3 OF THE ASSESSMENT ORDER TO SUBMI T THAT EVEN AS PER THE ASSESSEE THE P AYMENTS WERE RECEIVED UP TO 1999 A ND AS AGAINST THE ALLEGED AGREED CONSIDERATION OF RS. 31 LAKHS FURTHER AMOUNT WAS RECEIVED , EVEN AS PER THE ASSESSEES ADMISSION , WHICH CLEARLY PROVES THAT THE AGREEMENT WAS NOT ACTED UPON. SIMILARLY, UNREGIS TERED AGREEMENT OF SALE CUM GPA, ENTERED INTO IN OCTOBER 1996 , SPEAKS OF INSTANT DELIVERY OF VACANT, PHYSICAL AND PEACEFUL POSSESSION OF THE SAID PROPERTY TO THE PURCHASER WH EREIN RATE PER ACRE WAS SHOWN AT RS. 40,00 0/ - ( 8 ACRES). SIMILARLY, OTHER UNREGISTERED AGREEMENT S OF SALE CUM GPA INDICATE DIFFERENT PRICES PER AC RE. IT WAS ALSO STATED THAT PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE PURCHASER BUT THE C LAIM OF THE ASSESSEE IS CONTRARY TO WHAT HAS BEEN STATED IN THE REGISTERED AGREEMENT OF SALE CUM GPA AND HENCE, ASSESSEE CANNOT RELY UPON AN 10 UNREGISTERED DOCUMENT UNLESS SOME OTHER EVIDENCE IS PLACED TO PROVE THAT THE LAND WAS HANDED OVER TO THE PURCHASER. IN THIS REGARD LD DR ADVERTED MY ATTENTION TO PAGE 148 AT 149, PAGE 156 AT 158, PAGE 166 AT 169 TO SUBMIT THAT AS PER REGISTERE D AGREEMENT OF SALE CUM GPA, DELIVERY OF VACANT, PHYSICAL AND PEACEFUL POSSESSION OF SAID PROPERTY WAS SHOWN TO HAVE BEEN GIVEN IN FEBRUARY 2002 AND H ENCE IT CANNOT BE SAID THAT PHYSICAL POSSESSION OF THE LAND WAS HANDED OVER TO THE PURCHASER IN 1996 / 1999 , SO AS TO BRING IT WITHIN THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT OR SECTION 2( 4 7 ) OF THE INCOME TAX ACT, 1961. THE VERY FACT THAT THE CONSIDERATION MENTIONED IN THE UNREGISTERED DOCUMENT VARIES FROM THE CONSIDERATION AGREED UPON AS PER THE REGISTERED DOCUMENT INDICATES THAT THE SO CALLED AGREEMENT , AS PER UNREGISTERED AGREEMENT OF SAL E , WAS NOT ACTED UPON AND POSSESSION WAS NOT HANDED OVER. HE ADVERTED MY ATTENTION TO PAGE 120 OF THE PAPER BOOK TO SUBMIT THAT AS PER THE UNREGISTERED DOCUMENT IT WAS STATED THAT PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER TO M/S. G.P.R. HOUSING P LTD., IN 1999 IN RESPECT OF LAND ADMEASURING 8.01 ACRES ; WHEREAS THE LAND, WHICH IS THE SUBJECT MATTER OF CONSIDERATION NOW, WAS NOT HANDED OVER TILL FEBRUARY / MARCH 2002 AND THEREFORE, TRANSF ER CAN ONLY BE SAID TO HAVE TAKEN PLACE IN TH E PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2002 - 2003. 22 . LD DR ADVERTED MY ATTENTION TO PAGE 6 OF THE ASSESSMENT ORDER TO SUBMIT THAT THE ASSESSEE IS BLOWING HOT AND COL D INASMUCH AS IT CLAIMS THAT TRANSFER TOOK PLACE IN 1996 WHEREAS IT ALSO CLA IMS THAT AGRICULTURAL OPE RATIONS WERE CARRIED ON THE SAID LAND AND IT EARNED AGRICULTURAL INCOME AND DECLARED AGRICULTURAL I NCOME OF AROUND RS. 2 LAKHS FOR THE ASSESSMENT YEARS 2000 - 01 TO 2002 - 03. EVEN AS PER THE STATEMENT OF THE ASSESSEE, IRRESPECTIVE OF THE FACT AS TO WHETHER T HE AGRICULTURAL OPERATIONS WERE CARRIED ON OR NOT, IT CAN AT LEAST BE SAID THAT POSSESSION WAS NOT HANDED OVER TO M/S. G.P.R. HOUSING P LTD. AND THE UNREGISTERED AGREEMENT WAS NOT ACTED UPON. 23 . AS REGARDS THE CLAIM OF AGRICULTURAL OPERATIONS, IT WAS SUBMITTED THAT THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE WITH REGARD TO GROWING OF ANY CROP AND NO APPEAL WAS FILED BY THE ASSESSEE EVEN FOR THE EARLIER YEARS , BY WAY OF ACCEPTING THE DECISI ON OF THE ASSESSING OFFICER FOR THE AFOREMENTIONED ASSESSMENT YE ARS. IT WAS REITERATED THAT AGRICULTURAL LAN D WAS PURCHASED ONLY TO EARN PROFIT AND NOT FOR CARRYING AGRICULTURAL OPERATIONS WHICH IS EVIDENT FROM THE FACT THAT IT WAS A DRY 11 LAND AND THE ASSE SSEE - FIRM WAS SET UP WITH THE MAIN OBJECTIVE OF CARRYING ON REAL ESTATE BUSINESS AND THE LAND WAS SHOWN AS CAPITAL ASSET IN THEIR BOOKS OF ACCOUNT. FROM ALL THESE ASPECTS, IT CAN ONLY BE SAID THAT THE IMPUGNED LAND WAS NOT AN AGRICULTURAL LAND AND THE M ROS CERTIFICATE AS WELL AS THE ITI S NOTE SUPPORT THE STAND OF THE REVENUE WHEREAS NO EVIDENCE WHATSOEVER WAS FILED BY THE ASSESSEE TO PROVE THAT IT CONTINUED TO BE AGRICULTURAL LAND. 24 . IT MAY BE NOTED HERE THAT WHEN THE CASE WAS LAST POSTED FOR HEARING I.E., ON 24.1.2017, THE BENCH DIRE CTED THE PARTIES TO FURNISH DETAILS ABO UT THE RETURNS OF INCOME FOR AY 2000 - 01 AND THE STATUS THEREOF. NEITHER THE LD COUNSEL FOR THE ASSESSEE NOT THE LD DR ADVANCED ANY ARGUMENT ON THAT ASPECT. HOWEVER, IT IS NOTICED , FROM P AGE 183 OF THE PAPER BOOK THAT THE ASSESSEE CLAIMED TO HAVE SOLD AGRICULTURAL LAND ADMEASURIN G 37.01 ACRES DURING THE PERIOD 1999 AND STATED THAT IT IS EXEMPT FROM CAPITAL GAINS TAX AS THEY DO NOT FALL WITHIN THE DEFINITION OF CAPITAL ASSETS BEIN G AGRICULTURAL LAND. ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER AND THE ITAT A BENCH, HYDERABAD VIDE ITA NO.1269 /HYD/2008, DATED 11.10.2012 SET ASIDE THE ISSUE TO THE FILE OF THE LD. CIT(A) ON THE GROUND THAT THE VALIDITY OF REOPENING OF ASSESSMEN T WAS NOT PROPERLY CONSIDERED BY THE LD. CIT(A). 25 . IN REPLY TO THE ARGUMENTS ADVANCED BY THE LD DR, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SALE CONSIDERATION OF RS. 31 LAKH S REFLECTED IN UNREGISTERED AGREEMENT OF SALE IS DIFFERENT FR OM RS. 51 L AKHS REFLECTED IN REGISTERED AGREEMENT OF SALE . I N FACT WE ARE CONCERNED WITH THE THREE REGISTERED AGREEMENTS OF SALE WHEREIN THE TOTAL CONSIDERATION SHOWN IS RS. 5 LAKHS (PAGE 148, 149 LAND ADMEASURING 10 ACRES); RS.2,92,500/ - (PAGE 156 AT PAGE 147 L AND ADMEASURING 5.34 KUNTAS) AND A SUM OF RS. 7 LAKHS (PAGE 166 AT 167 TOWARDS THE LAND ADMEASURING 14 ACRES) AND THUS THE TOTAL VALUE OF CONSIDERATION RECEIVED AS PER THE REGISTERED AGREEMENT OF SALE CUM GPA WAS ONLY RS. 14,92,500/ - WHEREAS THE ASSESSEE P AID STAMP DUTY ON A VALUE OF RS. 51 LAKHS, WHICH WAS ONLY FOR REGISTRATION PURPOSES. HE THUS CONTENDED THAT THE LAND WAS IN FACT SOLD APPROXIMATELY @ RS. 50,000/ - PER ACRE AND NOT FOR A SUM OF RS. 51 LAKHS. 12 26 . HE FURTHER SUBMITTED THAT THE ASSESSEE ACTED UPON UNREGISTERED AGREEMENT OF SALE AND APART FROM REC EIVING ADVANCE OF RS. 2 LAKHS BY CHEQUE, A FURTHER SUM OF RS. 11,70,000/ - WAS RECEIVED BEFORE JULY 1997 AND THEREAFTER, BASED ON MUTUAL UNDERSTANDING BETWEEN THE PARTIES, THE REST OF THE MONEY WAS RECEIVED IN INSTALMENTS. HE ALSO SUBMITTED THAT THE ASSESSING OFFICER SHOULD NOT BLOW HOT AND COLD INASMUCH AS HE REJECTED THE CONTENTION OF THE ASSESSEE THAT NO AGRICULTURAL OPERATIONS WERE CARRIED ON AND, AT THE SAME TIME , HE HAS NOT ACCEPTED THE CONTEN TION OF THE ASSESSEE THAT THE PHYSICAL POSSESSION OF THE LAND WAS GIVEN TO THE PURCHASER. HE FURTHER SUBMITTED THAT THE A.O. TREATED IT AS CAPITAL GAINS SINCE THE LAND WAS PURCHASED AND SOLD AS SUCH WHICH ONLY INDICATES THAT THERE IS AGRICUL TURAL ACTIV ITY CARRIED ON BY ASSESSEE. SINCE A.O. ACCEPTED IT AS CAPITAL GAINS, IT CANNOT NOW BE TREATED AS BUSINESS INCOME. IN FACT, THIS WAS IN REPLY TO THE CONTENTION OF THE LD DR THAT THE ASSESSEE - FIRM HAVING COME INTO EXISTENCE WITH THE MAIN OBJECTIVE OF CARRY ING ON REAL ESTATE BUSINESS, THE PROFIT EARNED ON THE SALE OF LAND SHOUL D BE TREATED AS BUSINESS INCOME. 27 . IT MAY BE NOTICED THAT THE LD DR RELIED UPON AN UNREPORTED DECISION , IN THE CASE OF SURAJ LAMP & INDUSTRIES (P) LTD VS. STATE OF HARYANA & ANR , TO SUBMIT THAT MERE POWER OF ATTORNEY OR AGREEMENT OF SALE CANNOT BE EQUATED TO SALE OF THE SAID PROPERTY. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID DECISION WAS RENDERED IN A DIFFERENT CONTEXT WHICH WILL HAVE NO BEARING UNDER THE INCOME TAX ACT, 1961 FOR THE PURPOSE OF APPRECIATING THE FACT AS TO WHETHER THERE IS A TRANSFER UNDER THE IT ACT. 28 . I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE MAIN PLANK OF THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT IN O RDER TO TRANSFER A PROPERTY IT IS NOT NECESSARY TO ENTER INTO REGISTERED DOCUMENT OF SALE AND IT HAS TO BE DETERMINED BY THE EXPRESSION TRANSFER IN SECTION 2(47) OF THE IT ACT, 1961. ACCORDING TO LD COUNSEL FOR THE ASSESSEE, SECTION 2(47)(V) OF THE ACT S PE AKS OF TRANSACTION INVOLVING ALLOWING OF POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 WHICH WOULD AMOUNT TO TRANSFER. IN T HIS REGARD, HE RELIED UPON UNREGISTERED AGREEMENTS OF SALE THAT WERE EN TERED INTO BETWEEN 1996 TO 1999 TO SUBMIT THAT TRANSFER, IF ANY, TOOK PLACE IN THAT PERIOD AND THE PURCHASER 13 OPTED TO REGISTER THE DOCUMENT IN FEBRUARY / MARCH 2002, WHICH CANNOT BE A SOLE CONSIDERATION TO TREAT IT AS A TRANSFER OF PROPERTY IN THIS YEAR. 29 . SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, WHICH IS RELEVANT TO THIS CONTEXT IS COUCHED IN THE FOLLOWING TERMS: - 53A. PART PERFORMANCE. WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT , TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFORE BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PER SON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TE RMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 30 . FROM A CAREFUL READING OF SECTION 2(47) OF THE IT ACT, 1961 AND SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 IT IS CLEAR THAT THE PURCHASER SHOULD FULFIL HIS PART OF THE AGREEMENT BY PAYING THE CONSIDERATION AS PER THE TERMS OF AGREEMENT AND IN PART P ERFORMANCE THEREOF THE ASSESSEE SHOULD HANDOVER POSSESSION TO THE PURCHASER. IN THE INSTANT CASE, AS RIGHTLY POINTED OUT BY THE LD DR, THERE IS A DIFFERENCE BETWEEN THE RATE MENTIONED IN THE UNREGISTERED AGREEMENT OF SALE AND THE REGISTERED AGREEMENT OF S ALE APART FROM THE FACT THAT AS PER THE REGISTERED DOCUMENT IT IS CLEARLY STATED THAT THE POSSESSION OF THE PROPERTY WAS GIVEN ONLY IN THE YEAR 2002. THE ASSESSEE HAS ALSO STATED THAT HE WAS EARNING AGRICULTURAL INCOME ON THE SAID LAND UPTO 2001 - 2002 WHIC H ALSO SUGGESTS THAT THE ASSESSEE HAS NOT GIVEN POSSESSION OF THE LAND TO THE PURCHASER AS STATED IN THE UNREGISTERED AGREEMENT. IT IS A DIFFERENT ISSUE THAT THE CLAIM OF AGRICULTURAL INCOME WAS NOT ACCEPTED BY THE ASSESSING OFFICER WHICH IS MAINLY BASED UPON THE FACT THAT NO EVIDENCE WHATSOEVER COULD BE PLACED BEFORE THE A.O. OR THE LD. CIT(A) IN PROOF OF CARRYING ON AGRICULTURAL OPERATIONS, APART FROM THE FACT THAT THE ITI AS WELL AS THE STATE GOVERNMENT AUTHORITIES CATEGORICALLY OBSERVED THAT THE LA ND WAS NEVER USED FOR AGRICULTURAL PURPOSES. NOTHING WAS PLACED ON RECORD , ON BEHALF OF THE ASSESSEE, TO CONTRADICT THE FINDINGS OF THE TAX AUTHORITIES . IN FACT IT WAS STATED TO BE DRY LAND ON WHICH IT MAY BE DIFFICULT TO CARR Y ON ANY AGRICULTURAL OPERAT ION . 14 31 . SINCE THE DOCUMENT WAS REGISTERED IN FEBRUARY / MARCH 2002, THE A.O. WAS OF THE OPINION THAT TRANSFER TOOK PLACE IN THIS YEAR AND THE ASSESSEE HAVING NOT DISCLOSED ANY CAPITAL GAINS ON THE SAID TRANSACTION, HE WAS JUSTIFIED IN REOPENI NG THE ASSESSMENT. IN THE BOOKS OF THE ASSESSEE IT WAS REFLECTED AS CAPITAL ASSET AND AS PER THE CERTIFICATE OF THE VDO AS WELL AS MRO, THE LAND WAS DIVIDED INTO PLOTS MUCH BEFORE 1999 - 2000 AND THUS IT CANNOT BE TREATED AS AGRICULTURAL LAND, WHICH WAS FURTHE R CONFIRMED BY THE PHYSICAL VERIFICATION OF THE PROPERTY AND ENQUIRIES MADE BY THE ITI. A S R E G A R D S D A T E O F T R A N S F E R , THE CLAIM OF THE ASSESSEE THAT AGRICULTURAL ACTIVITIES WERE CARRIED OUT UP TO 2001 - 2002 SUGGESTS THAT PHYSICAL POSSESSION WAS NOT HANDED OVER TO M/S. G.P. R. HOUSING P LTD., BETWEEN 1996 TO 1999, AS CLAIMED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, EVEN AS PER SECTION 2(47) READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, IT HAS TO BE ASSUMED THAT TR ANSFER TOOK PLACE ONLY IN THE FINANCIAL YEAR RELEV ANT TO ASSESSMENT YEAR 2002 - 03 AND THEREFORE, I AM OF THE V IEW THAT THE ORDER PASSED BY LD. CIT(A), ON THESE ISSUES , DOES NOT CALL FOR ANY INTERFERENCE. 32 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. S D / - (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 22 ND SEPTEMBER , 2017 OKK, SR.PS COPY TO 1. SRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO.3 - 6 - 543, ST. NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. INCOME TAX OFFICER, WARD 10(4), INCOME TAX TOWERS, A.C. GUARDS, HYDERABAD. 3. CIT (A) - 18, MUMBAI. 4. CIT (A) - VI, HYDERABAD. 5. D.R. ITAT B - SMC BENCH, HYDERABAD. 6. GUARD FILE