Chiraguddin Mohd. Khatib, AOP, V. Income-tax Officer, Nashik

ITA 857/PUN/2004

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2018 (ITAT-PUNE)
• Duration Of Justice: 11 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-03-2016
• Assessment Year: 1993-1994
• Appeal Filed On: 28-05-2004
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: SANJEEV S MUTHA
• Keywords: Unexplained investment; Capital asset; Business income; Source of fund
• Section: 143(3); 142(1); 133A; 234B; 69; 148

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.857 TO 859/PN/2004 A. YRS. : 1993-94, 1996-97 & 1998-99 CHIRAGUDDIN MOHD. KHATIB, 2603, KOKANI PURA, NASHIK 422 001. PAN : N/A . APPELLANT VS. THE INCOME TAX OFFICER, WARD 2(2), NASHIK. . RESPONDENT / APPELLANT BY : SHRI SANJEEV S. MUTHA / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 03.03.2016 / DATE OF PRONOUNCEMENT: 07.04.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE ABOVE CAPTIONED THREE APPEALS HAVE BEEN PREFERR ED BY THE ASSESSEE RELATING TO ASSESSMENT YEARS 1993-94, 1996-97 & 199 8-99. ALL THE ASSESSMENT ORDERS IN APPEAL WERE PASSED SIMULTANEOUSLY BY ASSE SSING OFFICER ON 28.03.2002. SINCE THE ISSUES INVOLVED IN ALL THE A PPEALS ARE COMMON AND INTER- CONNECTED FOR THE RESPECTIVE ASSESSMENT YEARS UNDER CONSIDERATION, THEY ARE BEING DISPOSED OF IN THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. ITA NO.857/PN/2004 (A.Y. 1993-94) : 2. TO BEGIN WITH, WE SHALL TAKE-UP THE APPEAL OF TH E ASSESSEE IN ITA NO.857/PN/2004 RELATING TO ASSESSMENT YEAR 1993-94, WHICH IS AGAINST THE ORDER OF CIT(A)-II, NASHIK DATED 23.02.2004 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT T HE ACT). 2 ITA NOS.857 TO 859/PN/2004 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL AS UNDER :- 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE INCOME TAX OFFICER, WARD-1(3), NASHIK WAS HAVING VA LID JURISDICTION OVER THE CASE OF THE APPELLANT AT THE TIME OF ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ASSESSMENT ORDER SO PASSED PLEASE BE QUASHED BEING WITHOUT JURISDICTION . 3. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE AGRICULTURAL LAND IN QUESTION WAS PURCHASED BY THE APPELLANT IN DECEMBER, 1993. 4. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE CONSIDERATION OF RS.13,96,000/- FOR THE PURCHASE OF AGRICULTURAL LAND IN QUESTION WAS PAID DURING THE YEAR UNDER REVIEW. 5. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE POSSESSION OF THE AGRICULTURAL LAND IN QUESTION WAS TAKEN BY THE MEMBER OF THE SO- CALLED AOP FROM 1994-95 AND NOT FROM 1985-86 AS CLA IMED. 6. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE KABJE PAWTI OF THE AGRICULTURAL LAND IN QUESTION DATED 02.01.1996 IS NOT GENUINE. 7. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE DEPOSIT IN THE BANK ACCOUNT OF MR. IQBAL KHATIB WAS CLAIMED TO BE OUT OF AGRICULTURAL INCOME, WHEN NO SUCH CLAIM WAS MADE AN D THEREBY DENYING THE SAME AS ONE OF THE SOURCE OF INVESTMENT. 8. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN NOT CONSIDERING THE BANK WITHDRAWAL & PERSONAL INCOME OUT OF AGRICULTUR AL & DAIRY FARMING OF THE MEMBER OF THE SO-CALLED AOP AS SOME OF THE SOURCE O F INVESTMENT. 9. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE AGRICULTURAL LAND IN QUESTION WAS NOT USED FOR AGRI CULTURAL PURPOSE. 10. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT ALL THE PERSONS HAS COME TOGETHER TO PURCHASE THE AGRICULTU RAL LAND IN QUESTION IN THE MONTH OF DECEMBER 1993 FOR GETTING PROFIT AND THERE BY TAXING THE INVESTMENT IN THE AGRICULTURAL LAND IN QUESTION AS BUSINESS PROFIT ON ACCOUNT OF ADVENTURE IN THE NATURE OF TRADE. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, WHETHER THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK IS JUSTIFIED IN HOLDING THAT THE SAID INVESTMENT IN THE AGRICULTURAL LAND IN QUESTION AS ADVENTURE IN T HE NATURE OF THE TRADE. 12. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN CONFIRMING THE STATUS OF AOP. 13. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN HOLDING THAT THE 3 ITA NOS.857 TO 859/PN/2004 PURCHASE TRANSACTION OF AGRICULTURAL LAND IN QUESTI ON IS GOVERNED BY THE PROVISION OF SECTION 69 OF THE I.T. ACT, 1961. 14. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE COMMISSIONER OF INCOME TAX, APPEALS-II, NASHIK IS J USTIFIED IN ASSESSING THE INVESTMENT IN THE AGRICULTURAL LAND IN QUESTION IN THE HANDS OF AOP WHEN THE SAME INVESTMENT WAS ALSO TAXED IN THE HANDS OF RESPECTIV E CO-OWNERS IN THEIR INDIVIDUAL CAPACITY ON PROTECTIVE BASIS BUT AT LATER DATE. 15. WHETHER ON THE BASIS OF FACTS AND IN THE CIRCUM STANCES OF THE CASE, THE CHARGING OF INTEREST UNDER SECTION 234A & 234B IS J USTIFIED. 16. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COST OF THE APPEAL PLEASE BE GRANTED TO THE APPELLANT. 17. THE ASSESSEE CRAVES FOR ADDITION TO, DELETION, ALTERATION, MODIFICATION OR CHANGE ANY OF THE GROUNDS ABOVE MENTIONED. 4. THE RELEVANT FACTS, IN BRIEF, ARE THAT THE APPEL LANT HEREIN HAS BEEN ASSESSED BY THE ASSESSING OFFICER IN THE STATUS OF ASSOCIATION OF PERSONS (AOP) COMPRISING OF 16 PERSONS OF KHATIB FAMILY AS THE MEMBERS OF AOP. IN THE COURSE OF SURVEY ACTION CONDUCTED UNDER SECTION 133A OF THE ACT ON 03.08.2000 IN THE CASE OF ONE SHRI J.D. JAYBHAWE AD VOCATE, NASHIK, DOCUMENTS RELATING TO AGREEMENT OF SALE OF LAND BET WEEN FAMILY MEMBERS OF THE ASSESSEE AND M/S PAI DEVELOPERS PVT. LTD. WERE FOUND. THE AOP COMPRISING OF MEMBERS OF KHATIB FAMILY ACQUIRED CER TAIN PARCEL OF LAND SITUATED IN SURVEY NO. 49/3A & 49/3B, 50/3/2 & 49/3 . THE ASSESSING OFFICER OBSERVED THAT FROM THE DOCUMENTS FOUND IN SURVEY, I T WAS GATHERED THAT SHRI C. M. KHATIB & OTHER 15 MEMBERS INTER-ALIA JOINTLY PURCHASED PARCEL OF LAND ADMEASURING ABOUT 3 HECTOR 90 ARE RELATING TO SURVE Y NO.49 & 50 IN ANANDWALI AREA OF NASHIK. THE LAND WAS PURCHASED F ROM ONE SHRI R. S. LATH OF NASHIK AS PER AGREEMENT DATED 19.03.1993. THE A SSESSING OFFICER FURTHER NOTED THAT THE TOTAL CONSIDERATION OF LAND WAS FIXE D AT RS.13,00,000/-. IT IS THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASE CON SIDERATION OF RS.13,00,000/- WAS PAID BY THE APPELLANT AOP (16 MEMBERS) IN CASH. SHRI C. M. KHATIB IS ALSO ONE OF THE MEMBERS OF THE AOP. THE ASSESSING OFFICER OBSERVED THAT RS.9,61,000/- WAS PAID FROM TIME TO TIME IN CASH UP TO THE TIME OF REGISTRATION OF PURCHASE AGREEMENT ON 19.03.1993 AND REMAINING A MOUNT OF RS.3,39,000/- WAS PAID AT THE TIME OF REGISTRATION. IN ADDITION TO THE AFORESAID PAYMENT AGAINST PURCHASE OF LAND IN CASH, AN ADDITIONAL SUM OF RS.1,51,000/- WAS ALSO 4 ITA NOS.857 TO 859/PN/2004 PAID IN CASH AT THE TIME OF REGISTRATION ON 19.03.1 993. THIS SUM REPRESENTED CONSIDERATION FOR OTHER MOVABLE ASSETS LYING ON THE LAND LIKE AGRICULTURAL IMPLEMENT, ELECTRICAL MOTOR, STANDING CROPS, ETC.. ANOTHER PAYMENT OF RS.55,000/- IN CASH WAS ALSO PAID TOWARDS ITS SHARE OF COSTS TOWARDS REGISTRATION OF THE DOCUMENT, ETC.. HENCE, THE ASS ESSING OFFICER CONCLUDED THAT TOTAL INVESTMENT MADE BY THE AOP FOR THE PURCHASE O F THE AFORESAID PARCEL OF LAND AMOUNTED TO RS.15,06,000/-. IT WAS FURTHER NO TICED THAT OUT OF TOTAL 16 PERSONS WHO PURCHASED LAND, MAJORITY OF 13 PERSONS SURRENDERED THEIR RIGHT ON THE SAID LAND BY GIVING POWER OF ATTORNEY AS WELL A S POSSESSION TO M/S PAI DEVELOPERS PVT. LTD. ON 25.05.1995. THE ASSESSING OFFICER OBSERVED THAT AS PER DOCUMENTS FOUND IN SURVEY, IT WAS AGREED THAT T HE DEVELOPER SHALL PAY TOTAL CONSIDERATION OF RS.43,00,006/- WITHIN 3 YEARS FRO M THE DATE OF PURCHASE OF LAND FROM THE APPELLANT. THE ASSESSING OFFICER NOT ED THAT IN VIEW OF FACTS WHICH CAME TO LIGHT FROM SURVEY ACTION IN THE CASE OF ADVOCATE SHRI J.D. JAYBHAWE, IT EMERGED THAT THE AOP HAD PURCHASED PAR CEL OF LAND FOR RS.15,06,000/- IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 1993-94. IT WAS ALSO OBSERVED THAT NO SPECIFIC SHARE OF RESPECTIVE MEMBE RS WAS FOUND TO BE MENTIONED IN THE PURCHASE DEED DATED 19.03.1993. TH E LAND HAS BEEN SOLD IN THE IMMEDIATE FUTURE AS PART OF BUSINESS DEAL. THER EFORE, THE ASSESSING OFFICER CONCLUDED THAT AN INVESTMENT OF RS.15,06,000/- IN T HE ASSESSMENT YEAR 1993-94 WAS MADE IN THE CAPACITY OF AOP AND NO TAXES WERE P AID BY THE AOP. NO RETURN OF INCOME WAS FILED EITHER. HE ACCORDINGLY I SSUED NOTICE UNDER SECTION 148 OF THE ACT DATED 27.09.2000 ADDRESSED TO SHRI C . M. KHATIB (AOP) TOGETHER WITH A LIST OF 16 MEMBERS ANNEXED THERETO. IN RESPONSE TO AFORESAID NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE F ILED RETURN OF INCOME ON 01.01.2001 DECLARING TOTAL INCOME AT RS. NIL AND WI TH REMARK THAT NO JOINT BUSINESS HAS BEEN CARRIED OUT BY THE MEMBERS OF SO- CALLED AOP AND HENCE, THE INCOME IS SHOWN AT NIL. THE RETURN WAS SIGNED BY S HRI C. M. KHATIB. 4.1 THE ASSESSING OFFICER OBSERVED THAT IN RESPONSE TO QUERY REGARDING SOURCE OF INVESTMENT OF RS.15,06,000/- FOR ACQUIRIN G THE IMPUGNED LAND, THE ASSESSEE FIRSTLY OBJECTED TO A STATUS OF AOP ALLEGE DLY THRUST UPON IT AND 5 ITA NOS.857 TO 859/PN/2004 SECONDLY QUESTIONED THE JURISDICTION OF THE ASSESSI NG OFFICER OVER THE AOP AT THE TIME OF ISSUE OF NOTICE UNDER SECTION 148 OF TH E ACT. ACCORDING TO THE ASSESSEE, THE JURISDICTION OF THE ASSESSEE FALLS WI TH OTHER WARD OFFICER. AS REGARDS INVESTMENTS IN LAND, IT WAS CLARIFIED ON BE HALF OF THE ASSESSEE THAT ALL THE CO-HOLDERS OF LAND WERE AGRICULTURISTS AND IT I S ALSO NOT CORRECT TO SAY THAT PURCHASE WAS MADE ON 19.03.1993. IT IS ALSO WRONG TO ALLEGE THAT THE SAID LAND WAS PURCHASED TO DEAL IN LAND BUSINESS. IT WAS FUR THER SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT ONLY A S UM OF RS.3,39,000/- WERE PAID DURING THE YEAR UNDER CONSIDERATION RELEVANT T O ASSESSMENT YEAR 1993-94 AND BALANCE RS.9,61,000/- WAS NOT PAID DURING THE Y EAR UNDER REVIEW. THE SOURCE OF PAYMENT OF RS.3,39,000/- WAS EXPLAINED TO BE FROM INCOME EARNED FROM EXISTING AGRICULTURAL LANDS AND DAIRY BUSINESS . 4.2 THE ASSESSING OFFICER REJECTED ALL CONTENTIONS OF THE ASSESSING OFFICER. AS REGARDS THE JURISDICTION OF THE INCUMBENT OF THE ASSESSING OFFICER OVER AOP TO ENABLE IT TO ISSUE NOTICE, THE ASSESSING OFF ICER OBSERVED THAT PURSUANT TO ORDER OF THE CIT(A)-I, NASHIK, THE JURISDICTION SHIFTED FROM ITO, WARD-1(3), NASHIK AND STOOD VESTED WITH THE ITO, WARD-2(2), NA SHIK. ON RECEIPT OF CASE RECORD BY THE INCUMBENT ASSESSING OFFICER, NOTICES UNDER SECTION 143(2)/142(1) WERE ISSUED TO GIVE EFFECT TO NOTICE UNDER SECTION 148 OF THE ACT ISSUED BY THE EARLIER WARD. THE INSPECTION OF CASE RECORD WAS ALSO PROVIDED TO THE AR OF THE ASSESSEE AS DESIRED BY LETTER DATED 2 0.01.2002. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT THE OBJECTION OF T HE ASSESSEE THAT THE PRESENT WARD OF THE ASSESSING OFFICER IS NOT ENTITLED TO MA KE ASSESSMENT IS NOT TENABLE. 4.3 AS REGARDS THE OBJECTION OF THE ASSESSEE TOWARD S STATUS AS AOP, THE ASSESSING OFFICER OBSERVED THAT PURCHASE DEED OF LA ND HAS SPECIFIED 16 PERSONS OF THE KHATIB FAMILY. HOWEVER, NO SPECIFIC SHARES OF THE JOINT HOLDERS WERE MENTIONED IN THE PURCHASE DEED DATED 19.03.1993. T HUS, THESE 16 PERSONS BELONGING TO ONE FAMILY CAME TOGETHER AND JOINTLY P URCHASED LAND AND THEREFORE, THE LAND IS RIGHTLY HELD TO BE ASSET OF THE AOP. HE ALSO OBSERVED THAT 6 ITA NOS.857 TO 859/PN/2004 THE SOME DOCUMENTS FILED BY THE ASSESSEE THEMSELVES CLEARLY INDICATE THAT LAND WAS NON-AGRICULTURAL. AS SUCH, THERE WAS NO AGRICU LTURAL INCOME ARISING TO THE ASSESSEE PER SE . THE LAND WAS PURCHASED WITH THE INTENTION TO COM MERCIALLY EXPLOIT THE SAME WHICH IS VINDICATED BY SUBSEQUENT AGREEMENT WITH THE DEVELOPER IN SHORT SPAN OF TIME FOR DEVELOPMENT OF PROPERTY. 5. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSE SSEE HAS NOT GIVEN ANY DOCUMENTARY EVIDENCE IN REBUTTAL TO SHOW THAT LAND HAS BEEN PURCHASED IN EARLIER YEARS AND NOT ON 19.03.1993. MOREOVER, THE ASSESSEE HAS ALSO NOT GIVEN ANY PROOF IN SUPPORT OF ITS CLAIM THAT AMOUNT OF RS .9,61,000/- WAS NOT PAID DURING THE YEAR UNDER CONSIDERATION AND IF SO, WHEN WAS IT ACTUALLY PAID. THE ASSESSING OFFICER ALSO DID NOT FIND THE EXPLANATION TOWARDS SOURCE OF PAYMENT OF RS.3,39,000/- TO BE SATISFACTORY IN THE LIGHT OF THE FACT THAT NO AGRICULTURAL INCOME WAS GENERATED FROM THE LAND AS CLAIMED TO BE THE SOURCE THEREOF. HE ACCORDINGLY CONCLUDED THAT THE IMPUGNED INVESTMENT OF RS.15,06,000/- REMAINS UNEXPLAINED. ACCORDINGLY, THIS SUM OF RS.1 5,06,000/- WAS BROUGHT TO TAX AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF T HE ACT AS UNDISCLOSED INCOME OF THE AOP RELEVANT TO ASSESSMENT YEAR 1993- 94. 6. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 6.1 THE ASSESSEE ASSAILED THE ACTION OF THE ASSESSI NG OFFICER BROADLY ON FOLLOWING COUNTS BEFORE THE CIT(A) SUMMARIZED HEREU NDER. (I) ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT BY THE OFFICER WAS NOT CORRECT AS HE WAS NOT HOLDING THE JURISDICTION OVER THE CASE OF THE ASSESSEE. (II) THE PURCHASE OF LAND WAS WRONGLY HELD TO BE RE LATABLE TO ASSESSMENT YEAR 1993-94 MERELY ON THE BASIS OF AGRE EMENT DATED 19.03.1993 AS AGAINST THE CLAIM OF THE ASSESSEE THA T THE PURCHASE OF LAND WAS MADE BY THE ASSESSEE FAMILY BY WAY OF AN AGREEM ENT DATED 7 ITA NOS.857 TO 859/PN/2004 21.12.1985 AND THE ASSESSEE WAS IN LEGAL POSSESSION OF THE LAND BY VIRTUE OF KABJA PAWATI DATED 02.01.1986. (III) THE ASSESSING OFFICER WAS INCORRECT IN NOT AC CEPTING THE CONTENTION OF THE ASSESSEE THAT OUT OF TOTAL CONSID ERATION OF RS.15,06,000/-, RS.9,61,000/- WAS PAID IN THE EARLI ER YEARS AND ONLY RS.3,39,000/- WAS PAID AT THE TIME OF REGISTRATION DURING THE YEAR OUT OF KNOWN SOURCES OF INCOME. (IV) THE ASSESSING OFFICER WAS INCORRECT IN HOLDING THAT THE LAND BELONGS TO THE AOP AS AGAINST THE CLAIM OF THE ASSE SSEE THAT JOINT PURCHASERS OF THE AGRICULTURAL LAND WERE MERELY CO -OWNERS THEREOF. (V) THE ASSESSING OFFICER WAS INCORRECT IN HOLDING THAT IMPUGNED LAND WAS PURCHASED TO DEAL IN LAND BUSINESS AS AGAI NST THE CONTENTION OF THE ASSESSEE THAT INTENTION OF PURCHASE OF THIS LAN D WAS TO CULTIVATE IT FOR AGRICULTURAL PURPOSES AND WAS HELD AS CAPITAL ASSET . THE ASSESSEE ALSO CONTENDED BEFORE THE CIT(A) THAT THE RELEVANT DOCUM ENTS FILED BEFORE THE ASSESSING OFFICER WERE NOT TAKEN IN ACCOUNT WHI LE COMING TO THE AFORESAID CONCLUSIONS. 6.2 THE CIT(A) AFTER EXAMINING ALL THE DOCUMENTS AN D MATERIAL PLACED BEFORE HIM IN LENGTH HELD THAT THE ASSESSING OFFICE R WAS CORRECT IN EXERTING JURISDICTION OVER THE ASSESSEE AT THE TIME OF ISSUA NCE OF NOTICE AND BY THE NEXT INCUMBENT AFTER THE TRANSFER OF THE FILE BY ORDER O F THE COMMISSIONER UNDER SECTION 127 OF THE ACT. THE CIT(A) ALSO HELD THAT THE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE INCOME IN THE STATUS OF AOP. THE CIT(A) FURTHER OBSERVED ON FACTS THAT THE AOP WAS NOT POSSESSED OF IMPUGNED LAND SINCE 1985-86 AS CLAIMED. HE ENDORSED THE DOUBTS RAISED BY THE AO ON THE VERACITY OF KABJA PAVATI. THE CIT(A) OBSERVED WITH REFERENCE TO 7/12 EXTRACTS OF THE LAND THAT THE OWNERSHIP DID NOT PASS TO THE MEMBERS OF THE AO P TILL THE ASSESSMENT YEAR 1993-94 IN RESPECT OF ALL PIECES OF LAND. THE CIT( A) NEXT OBSERVED THAT THE IMPUGNED LAND WAS ACQUIRED AND TRANSFERRED IN THE N AME OF THE ASSESSEE IN ASSESSMENT YEAR 1993-94 AND THE SAID AOP SURRENDERE D THEIR RIGHTS IN THE LAND BY EFFECTING POWER OF ATTORNEY DATED 25.05.1995 AND THE POSSESSION WAS ALSO GIVEN TO THE DEVELOPER. THEREFORE, THE LAND WAS HAN DED OVER TO THE DEVELOPER/ BUILDER FOR THE PURPOSES OF DEVELOPMENT IN A VERY S HORT SPAN OF TIME. PRIOR 8 ITA NOS.857 TO 859/PN/2004 THERETO ALSO, THE ASSESSEE WAS FOUND TO BE ENGAGED IN NEGOTIATIONS WITH MANY OTHER BUILDERS FOR THE SALE OF LAND AND THEREFORE T HE INTENTION OF THE ASSESSEE TO ACQUIRE THE LAND IN IMMEDIATE FUTURE CAN BE EASILY INFERRED. THE ASSESSING OFFICER WAS RIGHT IN HOLDING THAT THE LAND WAS ACQU IRED IN THE NATURE OF STOCK- IN-TRADE OR A BUSINESS ASSET. HOWEVER, THE CIT(A) A FTER EXAMINING THE FACTS, GRANTED PARTIAL RELIEF IN QUANTUM OF UNEXPLAINED IN VESTMENT COMPUTED BY THE ASSESSING OFFICER AND REPLACED ADDITION OF RS.15,06 ,000/- BY A SUM OF RS.13,96,000/- AS PER PARA 25 26 OF ITS ORDER ON THE GROUND THAT BALANCE AMOUNT DOES NOT BELONG TO THE CURRENT YEAR WHEN THE REGISTERED DEED WAS EXECUTED. IN THE RESULT, THE CIT(A) UPHELD THE ORD ER OF THE ASSESSING OFFICER IN SUBSTANCE. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 8. IN THE COURSE OF HEARING, THE LD. AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT SEEK TO PRESS G ROUND NO.1 CONCERNING HIS OBJECTION OF ASSUMPTION OF JURISDICTION BY WRONG AS SESSING OFFICER FOR ISSUANCE OF NOTICE UNDER SECTION 148 IN VIEW OF THE ORDER OF THE CIT UNDER SECTION 127 OF THE ACT. HOWEVER, HE ADVERTED OUR A TTENTION TO ADDITIONAL GROUND OF APPEAL FILED UNDER RULE 11 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES 1963 BY A PETITION DATED 28.01.2016 WHEREBY A SSESSEE RAISED THE GROUND THAT REASONS FOR ISSUANCE OF NOTICE WERE NOT PROVID ED TO THE ASSESSEE IN SPITE OF REQUEST ON BEHALF OF THE ASSESSEE AND IN CONSEQUENC E THE ASSESSMENT ORDER IS BAD IN LAW. SINCE, THE ASSESSEE HAS RAISED LEGAL GR OUND, WE CONSIDER IT EXPEDIENT TO DISPOSE THE SAME AT THE OUTSET. ON A QUERY FROM THE BENCH, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ADMI TTED THAT THE AFORESAID OBJECTION WAS NOT RAISED AT ANY STAGE OF THE PROCEE DINGS EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A). HE ALSO AD MITTED THAT DURING THE COURSE OF HEARING, INSPECTION OF THE ENTIRE ASSESSM ENT RECORDS WERE PROVIDED TO HIM AS REQUESTED. THE STATUTORY NOTICE UNDER SECTI ON 143(2) AND 142(1) OF THE ACT WERE ISSUED FROM TIME TO TIME AND THE ASSESSEE PARTICIPATED IN THE 9 ITA NOS.857 TO 859/PN/2004 ASSESSMENT PROCEEDINGS. HE ALSO COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE TO SUPPORT HIS ASSERTION SEEKING REASONS. PERTINENT TO SAY, THE ASSESSING OFFICER IS NOT UNDER ANY OBLIGATION TO PROVIDE THE REASONS BEFORE FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 OF T HE ACT. THE ASSESSING OFFICER CANNOT BE FAULTED FOR NOT PROVIDING THE REA SONS RECORDED UNLESS THE REQUEST FOR THE SAME IS MADE BY THE ASSESSEE AFTER COMPLIANCE WITH THE NOTICE UNDER SECTION 148 OF THE ACT. THE RETURN WAS FILED ON 01.01.2001 IN COMPLIANCE WITH NOTICE UNDER S. 148 RELEVANT TO ASS ESSMENT YEAR 1993-94. NO REQUEST WAS FOUND TO BE MADE BY THE ASSESSEE SUBSEQ UENT TO THE COMPLIANCE OF NOTICE UNDER S. 148 OF THE ACT. COUPLED WITH ABOVE CIRCUMSTANCES, WE ALSO SIMULTANEOUSLY NOTICE THAT THE APPEAL WAS FILED IN THE PRESENT CASE BY APPEAL MEMO DATED 03 RD MAY, 2004 WHILE THE ASSESSEE IS COMING OUT WITH TH IS NEW ASPECT OF THE MATTER AT THIS VERY BELATED STAGE OF THE HEARING AFTER AVAILING SEVERAL OPPORTUNITIES IN THE PAST. IN THE TOTALITY OF CIRCUMSTANCES, WE DO NOT FIND ANY PLAUSIBLE BASIS FOR ADMISSION OF ADDITIONA L GROUND. ACCORDINGLY, THE REQUEST OF THE ASSESSEE STANDS DISMISSED. 9. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE NEXT CONTENDED THAT THE ENTIRE RE-ASSESSMENT PROCEEDINGS IS BAD IN LAW OWING TO THE FACT THAT NOTICE UNDER SECTION 148 OF THE ACT DATED 27.09.2000 HAS B EEN ADDRESSED TO ONE OF THE ALLEGED MEMBERS SHRI C. M. KHATIB (AOP) ONLY. THE ASSESSING OFFICER WAS REQUIRED IN LAW TO ISSUE NOTICE TO ALL THE MEMBERS OF THE PURPORTED AOP IN ORDER TO ASSUME JURISDICTION FOR MAKING ASSESSMENT PURSUANT THERETO. THIS ISSUE ALSO REQUIRES TO BE ADDRESSED AT THE THRESHOL D. WE FIND THAT NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TOGETHER WITH THE LIST OF ALL THE MEMBERS AS INTEGRAL PART OF THE IMPUGNED NOTICE. THUS, AS PER THE RECORD, ALL THE MEMBERS WERE MADE PARTY TO THE STATUTORY PROCEEDINGS. IN TH IS SCENARIO, THE PRESUMPTION IS AGAINST THE ASSESSEE THAT ALL THE MEMBERS OF THE AOP WERE NOT INFORMED OF THE PROCEEDINGS. NOTABLY, NONE OF THE MEMBER OF THE ASSESSEE AOP HAS TAKEN ANY OBJECTION IN THE REGARD IN THE COURSE OF THE AS SESSMENT PROCEEDINGS. THIS ALSO GIVES AN UNMISTAKABLE IMPRESSION THAT ALL THE MEMBERS OF THE AOP WERE DULY INFORMED. WE DECLINE TO ENTERTAIN THIS PLEA FO R ONE MORE REASON. WHEN 10 ITA NOS.857 TO 859/PN/2004 NOTICE UNDER SECTION 142(1) OF THE ACT DATED 10.08. 2001 IS READ IN CONJUNCTION AS ANNEXED AT PAGE 181 182 OF THE PAPER BOOK ADDR ESSED TO SHRI C. M. KHATIB (AOP), IT IS EVIDENT THAT NOTICE UNDER S. 14 2(1) WAS ISSUED TO EACH MEMBER SEPARATELY FOR NECESSARY COMPLIANCE. NO OBJE CTION WAS RAISED AT ANY STAGE. THE PROCEEDINGS UNDER INCOME TAX ACT IS NOT A GAME OF HIDE AND SEEK. THE INCOME-TAX PROCEEDINGS ARE NOT ADVERSARIAL PROC EEDINGS EITHER. HENCE, WE ARE OF THE CONSIDERED VIEW THAT IN THE CIRCUMSTANCE S EXISTING IN THE MATTER, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO A LL MEMBERS OF THE AOP IN COMPLIANCE OF LAW AND THEREFORE THE ARGUMENT OF THE ASSESSEE ON THIS COUNT IS ALSO WITHOUT ANY FORCE. 9.1 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE NEXT SUBMITTED THAT THE IMPUGNED AGRICULTURAL LAND WAS PURCHASED BY WAY OF TENTATIVE AGREEMENT DATED 21/12/1985 BY THE ASSESSEE FAMILY AND THE POS SESSION THEREOF WAS ALSO TAKEN ON THE SAME DATE. THE SAID AGRICULTURAL LAND WAS PURCHASED BY THE ASSESSEE FAMILY FOR AGRICULTURAL PURPOSES AND THE S AME WAS PURCHASED ALONG WITH AGRICULTURAL IMPLEMENTS ELECTRICAL MOTOR AND S TANDING CROPS ETC.. THOUGH THE ABOVE LAND CONTAINED DIFFERENT SURVEY NUMBERS B UT THE SAME ARE SITUATED AT ONE PLACE. THE AGRICULTURAL OPERATIONS WERE CARRIE D OUT REGULARLY BY THE ASSESSEE FAMILY IN THE ABOVE MENTIONED LAND FROM TH E DATE OF POSSESSION OF THE SAME. PURCHASE DEED OF THE SAID LAND WAS REGISTERE D BELATEDLY ON 19.03.1993 OWING TO SOME LEGAL DISPUTES. HOWEVER, THE SUBSTAN TIAL PAYMENT TO THE TUNE OF RS.9,61,000/- MADE IN THE EARLIER YEARS AND ONLY 3, 39,000/- WERE PAID DURING THE YEAR. HE ALSO RELIED UPON THE POSSESSION RECEI PT DATED 02.01.1986 TO SUPPORT HIS CONTENTION THAT THE LAND WAS ACTUALLY P URCHASED IN F.Y. 1985-86 AND ONLY FORMAL DOCUMENTS WERE EXECUTED IN ASSESSME NT YEAR 1993-94 AND REMAINING AMOUNT OF RS.3,39,000/- WAS PAID DURING T HE YEAR AT THE TIME OF REGISTRATION. IN ESSENCE, THE LD. AR FOR THE ASSES SEE SOUGHT TO ASSERT THAT THE LAND WAS ACQUIRED IN 1985-86 AND OWNED BY THE VARIO US FAMILY MEMBERS SUBJECT TO REGISTRATION WHICH WAS CARRIED OUT LATER IN ASSESSMENT YEAR 1993-94 AND ONLY REMAINING AMOUNT OF RS.3,39,000/- WERE PAI D IN THE ASSESSMENT YEAR 1993-94. REFERENCE WAS MADE TO 7/12 EXTRACTS AS AP PEARING AT PAGE 172 173 11 ITA NOS.857 TO 859/PN/2004 WHEREIN NAME OF ALL THE 16 FAMILY MEMBERS HAVE BEEN INCORPORATED IN THE REVENUE RECORDS ALONG WITH ORIGINAL OWNERS WHO TRAN SFERRED THE LAND IN FAVOUR OF THE FAMILY MEMBERS. THE LD. AUTHORIZED REPRESEN TATIVE FOR THE ASSESSEE CONTENDED THAT THIS DUPLICATE COPY OF 7/12 EXTRACTS DATED 20.06.1995 WOULD SHOW THAT KHATIB FAMILY WAS THE RIGHTFUL OWNER OF T HE LAND. 9.2 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE FOR THE ASSESSEE THEREAFTER CONTENDED WITH VEHEMENCE THAT SHARES OF ALL THE FAMILY MEMBERS IN THE IMPUGNED LAND IS CLEARLY IDENTIFIABLE AND SPECI FIC IN VIEW OF THE AFFIDAVIT EXECUTED IN THE MONTH OF MARCH, 2002 FILED BY THE F AMILY MEMBERS. THEREFORE, THE LAND SO PURCHASED WAS MERELY CO-OWN ED BY FAMILY MEMBERS WITH RESPECTIVE SPECIFIC SHARES WITH A VIEW TO CULT IVATE THE SAME FOR AGRICULTURAL PURPOSES AND THEREFORE THE ASSESSING O FFICER WAS NOT CORRECT IN ATTRIBUTING THE IMPUGNED TRANSACTIONS IN THE HANDS OF THE AOP. THE SHARE OF CO-OWNERSHIP IN LAND IS ASSESSABLE IN THE HANDS OF THE RESPECTIVE MEMBERS IN THEIR INDIVIDUAL CAPACITY. 9.3 HE NEXT CONTENDED THAT THE CIT(A) WAS NOT JUSTI FIED IN HOLDING THE SAID INVESTMENT IN IMPUGNED AGRICULTURAL LAND IN QUESTIO N AS BUSINESS ADVENTURE ON THE BASIS OF WRONG PREMISE. TO JUSTIFY THE LAND TO BE AGRICULTURAL ONE, HE SUBMITTED THAT AGRICULTURAL PRODUCE WERE CULTIVATED ON THE AFORESAID LAND BEFORE ITS SALE. SECONDLY, THE SAID LAND WAS TRANSF ERRED TO M/S PAI DEVELOPERS PVT. LTD. AFTER A LONG GAP. WHILE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER WAS EXECUTED ON 25.05.1995, THE SALE DEED WAS EXECUTED ON 08/05/1996. THUS, NO ASPERSION CAN BE CAST ON INTEN TION OF THE ASSESSEE TO HOLD THE LAND AS CAPITAL ASSET. HE FINALLY SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) SUFFERS FROM ERROR DUE TO IN CORRECT APPRECIATION OF FACTS ON RECORD AND IS LIABLE TO BE SET-ASIDE. 10. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BEL OW AND SUBMITTED THAT ALL THE 12 ITA NOS.857 TO 859/PN/2004 OBJECTIONS OF THE ASSESSEE HAS BEEN DEALT WITH OBJE CTIVELY AND THEREFORE NO INTERFERENCE IS CALLED FOR. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE MATERIAL PLACED ON R ECORD. THE ASSESSEE HAS AGITATED SEVERAL ISSUES AS NOTED IN THE PRECEEDING PARAS. THE ASSESSEE HAS CONTESTED THE STATUS OF AOP FOR ASSESSMENT PURPOSES AS A PRELIMINARY ISSUE. THE ASSESSEE HAS ALSO QUESTIONED THE ASSESSMENT OF INVESTMENT IN AGRICULTURAL LAND AS UNDISCLOSED INCOME UNDER SECTION 69 OF THE ACT ON MERITS. THE ACTION OF THE ASSESSING OFFICER IN HOLDING THE TRANSACTION OF PURCHASE OF IMPUGNED PARCEL OF LAND AS TRADING IN STOCK AS BUSINESS DEAL WITH AN INTENTION TO MAKE PROFITS AS BUSINESS ADVENTURE WAS ALSO IMPUGNED BY THE ASSESSEE. 12. WE SHALL ADDRESS OURSELVES WITH THE PRELIMINARY ISSUE FIRST. AS OBSERVED, THE OBJECTION ON BEHALF OF THE ASSESSEE IS THAT THE NOTICE ISSUED IN THE STATUS OF AOP IS BAD IN LAW SINCE THE PARCEL OF LAND WAS ACQU IRED JOINTLY BY THE FAMILY MEMBERS IN THE CAPACITY OF CO-OWNERS. IN THE WAKE OF CONTROVERSY, IT IS IMPERATIVE TO EXAMINE THE LEGAL POSITION BEFORE PRO CEEDING WITH THE FACTS OF THE CASE. 12.1 THE CHARGE OF INCOME IS ON EVERY PERSON AND THE EXPRESSION PERSON APPEARING IN THE CHARGING SECTION 4 IS DEFINED IN S . 2(31) OF THE ACT. THE AOP OR ASSOCIATION OF PERSON IS DEFINED AS A PERSON UND ER SECTION 2(31)(V) OF THE INCOME TAX ACT. HOWEVER, WHAT IS AN ASSOCIATION OF PERSON ITSELF IS NOT DEFINED. SINCE INCOME TAX ACT HAS NO DEFINITION , T HE MEANING OF ASSOCIATION OF PERSON HAS TO BE UNDERSTOOD FROM THE MEANING ASS IGNED TO THE TERM BY HONBLE SUPREME COURT WHICH OBSERVED IN THE CASE O F CIT V INDIRA BALKRISHNA (39 ITR 546) THAT AN ASSOCIATION OF PER SONS, MUST BE ONE IN WHICH TWO OR MORE PERSONS JOIN IN A COMMON PURPOSE OR COM MON ACTION, AND AS THE WORDS OCCUR IN A SECTION, WHICH IMPOSES A TAX ON IN COME, THE ASSOCIATION MUST BE ONE THE OBJECT OF WHICH IS TO PRODUCE INCOME, PR OFITS OR GAINS. 13 ITA NOS.857 TO 859/PN/2004 12.2 THE ANDHRA PRADESH HIGH COURT, IN THE CASE OF DECCAN WINE AND GENERAL STORES VS. CIT (106 ITR 111), LAID DOWN THE PRINCIPLES GOVERNING AN AOP BY STATING THAT IT IS CLEAR THAT AN ASSOCIATION OF PERSONS DOES NOT MEAN ANY AND EVERY COMBINATION OF PERSONS; IT IS ONLY WHEN T HEY ASSOCIATE THEMSELVES IN INCOME-PRODUCING ACTIVITY THAT THEY BECOME AN ASSOC IATION OF PERSONS. THEY MUST COMBINE TO ENGAGE IN SUCH AN ACTIVITY; THE ENG AGEMENT MUST BE PURSUANT TO THE COMBINED WILL OF THE PERSONS CONSTITUTING TH E ASSOCIATION; THERE MUST BE A MEETING OF THE MINDS, SO TO SPEAK. IN A NUTSHELL, THERE MUST BE A COMMON DESIGN TO PRODUCE INCOME. IF THERE IS NO COMMON DES IGN, THERE IS NO ASSOCIATION. COMMON INTEREST IS NOT ENOUGH. PRODUCT ION OF INCOME IS NOT ENOUGH. THE MEANING OF AOP, AS CULMINATES FROM DIFF ERENT DECISIONS OF SUPREME COURT AND HIGH COURT IS THAT AN ASSOCIATIO N OF PERSONS EXIST WHEN FOLLOWING CONDITIONS ARE SATISFIED :(I) TWO OR MORE PERSONS JOINS; (II) VOLUNTARILY FOR; (III) A COMMON PURPOSE OR COMMON A CTION WITH OBJECT TO PRODUCE PROFIT OR GAINS. HOWEVER, NOTABLY THE OBJEC T TO PRODUCE PROFIT OR GAINS IS NO LONGER A SINE QUA NON IN VIEW OF THE EXPLANATION TO SECTION 2(31); (IV) COMBINE FOR IN JOINT ENTERPRISE; AND (V) CREATES SO ME KIND OF SCHEME FOR COMMON MANAGEMENT. 12.3 TO ELABORATE, IN VIEW OF EXPLANATION INSERTED TO S. 2(31), AN ENTITY WOULD BE DEEMED TO BE AN AOP WHETHER OR NOT IT IS F ORMED WITH THE OBJECT OF EARNING INCOME, IF TWO OR MORE PERSON COME TOGETHER VOLUNTARILY AND INCOME IS PRODUCED [COMMON DESIGN] . WHAT THIS ESSENTIALLY IMPLIES IS THAT THE INTENTI ON MAY NOT BE TO PRODUCE INCOME, BUT IF INCOME IS PROD UCED, IT WOULD BE TAXED AS AN AOP. 12.4 NOW, WE PROCEED TO EXAMINE THE FACTS OF THE CA SE IN THE LIGHT OF LEGAL POSITION ENUMERATED ABOVE. WE NOTE THAT THE ASSESSE E HAS EXECUTED AN AGREEMENT FOR PURCHASE OF THE IMPUGNED LAND IN QUES TION BY A FORMAL AGREEMENT DATED 19.03.1993. WE OBSERVE THAT PURCHA SE DEED NOWHERE INDICATE ANY SPECIFIC SHARE OF RESPECTIVE CO-PURCHASERS. COU PLED WITH THIS, THE ASSERTIONS BY THE AUTHORITIES BELOW THAT ENTIRE PAY MENT TOWARDS THE PURCHASE OF 14 ITA NOS.857 TO 859/PN/2004 THE PROPERTY HAS BEEN MADE IN CASH COULD NOT BE REB UTTED BY THE ASSESSEE. THUS, SHARE OF CONTRIBUTION OF INDIVIDUAL MEMBERS P OOLING THEIR RESPECTIVE RESOURCES IS NOT ASCERTAINABLE. HENCE, THE CONTENT ION ADVANCED BY ASSESSEE CLAIMING SPECIFIC SHARE OF ALLEGED CO-PURCHASERS IN LAND IN QUESTION REMAINS AMBULATORY AND IS NOT IDENTIFIABLE AT ALL. THE ONUS LIES ON THE ASSESSEE MAKING CLAIM OF SPECIFIC SHARES OF INDIVIDUAL CO-PURCHASER S. NO TANGIBLE EVIDENCE IS ON RECORD TO PROBE THE CLAIM EXCEPT AN AFFIDAVIT EXECU TED BY THE VARIOUS MEMBERS OF THE FAMILY AT SUBSEQUENT DATE. SUCH SELF SERVING AFFIDAVIT HAS NO RATIONAL PROBATIVE VALUE TO DETERMINE SUCH A VITAL FACT IN I SSUE. WE FIND IT DIFFICULT TO ATTRIBUTE ANY PROPRIETY TO SUCH AFFIDAVIT. THE COND UCT OF THE MEMBERS OF THE ASSESSEE AOP ARE RELEVANT. NO SUCH LAND IS SHOWN TO HAVE BEEN DECLARED IN THE RETURN OF INCOME OF INDIVIDUAL ASSESSEE. NO INC OME THEREFROM IS BROUGHT ON RECORDS. THE TRANSACTIONS OF THIS SUBSTANTIAL SUM O F NEARLY RS. 15 LACS IN THE YEAR 1993 WERE STATED TO BE ROUTED IN CASH WHICH IS NONDESCRIPT AND WITHOUT ANY TRAIL. THE AMOUNT OF CONTRIBUTION OF RESPECTIVE MEMBERS, IF ANY, IS NOT KNOWN. SOURCE OF SUCH CASH PAYMENT FOR ACQUISITION OF LAND IS FOUND TO BE NOT ASCERTAINABLE IN THE PRESENT CASE. THEREFORE, SURRO UNDING CIRCUMSTANCES ARE REQUIRED TO BE WEIGHED. WE NOTICE FROM THE ORDERS O F THE AUTHORITIES BELOW THAT PURSUANT TO SURVEY UNDER SECTION 133A CONDUCTED IN THE PREMISES OF THIRD PARTY ON 03.08.2000, CERTAIN UNDISCLOSED DOCUMENTS RELATI NG TO SALE OF CERTAIN PARCEL OF LAND BETWEEN 16 PERSONS OF KHATIB FAMILY AND ONE M/S PAI DEVELOPERS PVT. LTD. WAS FOUND. AS OBSERVED EARLIER, KHATIB FAMILY HAS NOT DECLARED THE PROFIT/LOSS ARISING FROM THE TRANSACTION WITH M/S P AI DEVELOPERS PVT. LTD. AND NO RETURNS WERE FILED EITHER. WE FIND THAT NO SPECI FIC SHARE OF INDIVIDUAL MEMBERS OF THE KHATIB FAMILY IS SPECIFIED IN THE PU RCHASE AGREEMENT DATED 19.03.1993. WE ALSO NOTE THAT A CASE HAS BEEN MADE OUT BY THE REVENUE THAT THAT THE ASSESSEE WAS IN CONTACT WITH MANY BUILDERS FOR THE DEVELOPMENT OF THE PROPERTY IMMEDIATELY AFTER ACQUISITION OF THE LAND IN MARCH, 1993 FOR ITS RE- SALE. WE ALSO NOTICE OBSERVATIONS OF THE CIT(A) WIT H REFERENCE TO 7/12 EXTRACTS THAT THE IMPUGNED LAND WAS NOT USED FOR AGRICULTURE PURPOSE. IT IS ALSO NOTICED THAT SUBSTANTIAL MAJORITY OF AOP MEMBERS (13 PERSON S) OF KHATIB FAMILY SURRENDERED THEIR RIGHTS IN THE SAID LAND BY GIVING POWER OF ATTORNEY TO M/S 15 ITA NOS.857 TO 859/PN/2004 PAI DEVELOPERS PVT. LTD. IN MAY, 1995 AND THE POSSE SSION WAS ALSO GIVEN TO THE DEVELOPER. THEREFORE THE CONSENSUS AD IDEM IS CLEARLY VISIBLE IN THE CONCERTED ACTION OF THE ASSESSEE. ON THESE FACTS, WE HAVE TO ENDORSE THE OBSERVATION OF THE CIT(A) THAT THE LAND WAS ACQUIRED BY 16 MEMBERS OF THE FAMILY WHO COMBINED TOGETHER FOR A COMMON PURPOSE AND COMMON A CTION IN THEIR OWN VOLITION WITH A VIEW TO COMMERCIALLY EXPLOIT THE LA ND ACQUIRED BY RESALE THEREOF AT PROFITS. IT IS EVIDENT THAT SOON AFTER P URCHASE DEED WAS REGISTERED, THE SAME WAS HANDED OVER TO THE BUILDER FOR DEVELOPMENT AND PRIOR THERETO ALSO THE MEMBERS OF KHATIB FAMILY WERE NEGOTIATING VARIOUS B UILDERS FOR THE DISPOSAL OF THE LAND. THEREFORE, INTENTION OF ACQUISITION OF L AND WAS TO SALE THE SAME WITH A CLEAR MOTIVE TO MAKE BUSINESS PROFIT. IN THESE C IRCUMSTANCES, THE CONCLUSION OF THE CIT(A) THAT THE MEMBERS OF KHATIB FAMILY WHO CAME TOGETHER TO ACQUIRE THE LAND WITH INTENTION TO MAKE PROFIT BY SALE THER EOF AS A BUSINESS DEAL IS REQUIRED TO BE TAXED IN THE HANDS OF THE JOINT OWNE RS AS AN AOP CAN NOT BE FAULTED. WE THUS FIND NO INFIRMITY IN THE ACTION OF THE CIT(A) IN UPHOLDING THE ACTION OF THE AO EXERTING JURISDICTION OVER ASSESSE E IN THE STATUS OF AOP. THEREFORE, ACQUISITION OF LAND AND SALE THEREOF SUB SEQUENTLY HAS BEEN RIGHTLY ASSESSED IN THE HANDS OF THE AOP. THEREFORE, THE O BJECTION OF THE ASSESSEE IN THIS REGARD FAILS. 13. WE ALSO FIND THAT THE CLAIM OF THE ASSESSEE THA T AOP FAMILY MEMBERS OWNED THE LAND AND RECEIVED THE BENEFIT/INCOME SINC E 1985-86 IS IN CONTRADICTION TO THE INFORMATION RECORDED IN 7/12 E XTRACTS AS REPRODUCED IN PARA 19 OF THE CIT(A) ORDER. THE 7/12 EXTRACTS DEMONSTR ATES THAT THE MEMBERS OF THE AOP WERE IN POSSESSION OF LAND FROM 1994-95 AND ALSO A PART OF LAND REMAIN VACANT AND OFFICE WERE CONSTRUCTED ON IT. I T IS ALSO CLEAR THAT THEY WERE NO FRUIT GARDEN AT THOUGH ON A PART OF LAND, SOME S EASONAL CROP HAVE GROWN UP. THE EVIDENCE OF BASIC OPERATIONS TO CULTIVATE THE S AME IS NOT DISCERNIBLE ON RECORD. IT IS SEEN THAT IN A SMALL PORTION OF LAND, SOYABIN, WHEAT, ETC. WERE PURPORTEDLY CULTIVATED WITHOUT ANY SUBSTANTIVE PROO F IN THIS REGARD. THE OWNERSHIP DID NOT PASS TO THE MEMBERS OF THE AOP TI LL 1993-94 IN RESPECT OF THE PIECES OF LAND. THE LEGAL POSSESSION WITH KHATI B FAMILY SINCE F.Y. 1985-86 16 ITA NOS.857 TO 859/PN/2004 AS CLAIMED IS WITHOUT ANY CORROBORATIVE VALUE. AS S TATED ON BEHALF OF THE ASSESSEE ITSELF, THE OWNERSHIP OF LAND ITSELF WAS I N LEGAL DISPUTE AND NOT TRANSFERABLE. EXCEPT FOR SOME GENERIC AVERMENTS, NO COGENT EVIDENCE OF PAYMENT TOWARDS PURCHASE PURPORTEDLY MADE IN CASH I N EARLIER YEARS IS ON RECORD. SIMULTANEOUSLY, THE AVERMENTS MADE BY THE ADVOCATE, SHRI J.D. JAYBHAWE IN SURVEY PROCEEDINGS AFFIRMS THAT THE ASS ESSEE WAS MAKING CONSCIOUS EFFORTS TO NEGOTIATE SALE OF LAND WITH VA RIOUS BUILDERS DURING THE IMMEDIATE NEXT YEAR PERIOD IN 1995-96 I.E. IMMEDIAT ELY AFTER IT GOT OWNERSHIP OF MAJOR PIECE OF LAND. THE SITUS OF THE LAND IS WITHIN THE MUNICIPAL LIMITS OF NASIK AND AN URBAN LAND AT THE TIME OF ITS SALE. TH EREFORE, IT IS CLEAR IN THE PREVAILING CIRCUMSTANCES THAT ALL THE MEMBERS OF TH E AOP HAD COMBINED TOGETHER TO PURCHASE LAND WITH A PRE-CONCEIVED IDEA TO COMMERCIALLY EXPLOIT THE PROPERTY AND MAKE PROFITS BY IMMEDIATE SALE THE REOF AS A BUSINESS ADVENTURE. IN TOTALITY, THE CIRCUMSTANCES ARE WEIGH ED AGAINST THE ASSESSEE WHEN TESTED ON THE TOUCHSTONE OF PREPONDERANCE OF PROBAB ILITIES. THEREFORE, WE SEE NO ERROR IN THE ACTION OF THE REVENUE IN TREATING T HE INVESTMENT IN PURCHASE OF LAND AS UNEXPLAINED INVESTMENT UNDER S. 69 FOR THE RELEVANT ASSESSMENT YEAR 1993-94 WHICH IS RIGHTLY ASSESSED IN THE HANDS OF T HE AOP. WE ALSO DO NOT FIND ANY FAULT IN TREATING THE TRANSACTION OF PURCH ASE AND SALE AS A PART OF BUSINESS DEAL. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.857/PN/2004 RELATING TO ASSESSMENT YEAR 1993-94 IS DISMISSED. ITA NO.858/PN/2004 (A.Y. 1996-97) : 15. NOW, WE SHALL TAKE-UP THE APPEAL OF THE ASSESSE E IN ITA NO.858/PN/2004 RELATING TO ASSESSMENT YEAR 1996-97, WHICH IS AGAINST THE ORDER OF CIT(A)-II, NASHIK DATED 27.02.2004 PASSED UNDER SECTION 143(3) OF THE ACT. 17 ITA NOS.857 TO 859/PN/2004 16. IN THIS APPEAL, THE ASSESSEE HAS CONTESTED THE TAXABILITY OF SALE PROCEEDS DETERMINED BY THE ASSESSING OFFICER AT RS.43,06,413 /-. THE FACTS ARE ON THE IDENTICAL FOOTING TO THAT OF ASSESSMENT YEAR 1993-9 4. THE ASSESSEE CLAIMED THAT THE AGREEMENT FOR PURCHASE OF LAND WAS MADE ON 21.1 2.1985 AND POSSESSION OF LAND WAS TAKEN ON 02.01.1996. THE ASSESSEE ALSO CL AIMED THAT THE LAND UNDER CONSTRUCTION WAS AGRICULTURAL LAND AND THEREFORE NO T SUBJECT TO TAXATION IN THE HANDS OF THE ASSESSEE. AS NOTED IN ASSESSMENT YEAR 1993-94, IT WAS FURTHER CLAIMED THAT THE ASSESSEE WAS ENGAGED IN AGRICULTUR AL ACTIVITY AND THERE WAS NO INTENTION TO SALE THE LAND SO ACQUIRED AT THE TIME OF PURCHASE AND THEREFORE PROCEEDS RECEIVED AFTER SALE WAS MADE OUGHT NOT TO HAVE BEEN TREATED AS BUSINESS PROFIT. ANOTHER CONTENTION ON BEHALF OF T HE ASSESSEE WAS THAT THE LAND WAS PURCHASED ON CO-OWNERSHIP BASIS AND THE ASSES SING OFFICER WAS NOT JUSTIFIED IN ADOPTING THE STATUS OF AOP. THE ASSES SEE POINTED OUT THAT THE SALE TO M/S PAI DEVELOPERS PVT. LTD. WAS FOR LAND ADMEAS URING 10 ACRES AT AMOUNT OF RS.40,00,000/- BUT ONLY LAND ADMEASURING APPROXI MATELY 8.7 ACRES COULD BE SOLD DUE TO CONSENT OF 13 PERSONS ONLY. THE OTHER THREE PERSONS WERE MERE CONSENTERS TO THE DEED. ON BEHALF OF THE ASSESSEE, IT WAS FURTHER OBJECTED TO THE ADOPTION OF RS.43,06,413/- AS SALE CONSIDERATION OF IMPUGNED LAND. THE CIT(A) AFTER EXAMINING THE CLAIM OF THE ASSESSEE IN LAND OBSERVED THAT THE NEGOTIATED PRICE OF RS.43,06,413/- WAS APPLICABLE T O THE WHOLE PIECE OF LAND. HOWEVER, DURING THE YEAR UNDER CONSIDERATION, ONLY PART OF IT WAS SOLD BY THE APPELLANT/ASSESSEE. HE ACCORDINGLY DIRECTED THE AS SESSING OFFICER TO ADOPT THE SALE PRICE OF RS.28,85,000/- ON PROPORTIONATE BASIS INSTEAD OF RS.43,06,413/-. IN THE RESULT, CIT(A) EXTENDED PARTIAL RELIEF TO TH E ASSESSEE. THE RELEVANT PARAS DEALING WITH THE FACTS AND FINDINGS OF THE CIT(A) T HEREON ON THE AFORESAID OBJECTION IS REPRODUCED HEREUNDER :- 9. THE CLAIM OF APPELLANT WAS CONSIDERED WITH REFE RENCE TO THE DOCUMENTS MADE AVAILABLE BY THE A.O. AND THE APPELLANT. THE NOTIN GS OF PIECE OF PAPER ON THE BASIS OF WHICH ADDITION WAS MADE BY THE A.O. STATES AS UN DER:- PAI DEVELOPERS PVT. LTD. SURVEY NO.49/3A, 49/3B & 50/3/2 YEAR PAYMENTS MADE DATE AMOUNT 95-96 NAME I) AMIR KHATIB 540191 (BOM) 15-10-95 RS.5,00,000/- II) AMIR KHATIB 540192 (BOM) 15-10-95 RS.5,00,000/ - 96-97 TOTAL RS.33,06,413/- 18 ITA NOS.857 TO 859/PN/2004 RS.43,06,413/- I) AMIR S. KHATIB II) ANIRUDDIN S. KHATIB 9.1 THE LEARNED AUTHORIZED REPRESENTATIVE HAS OBJEC TED TO THE ADOPTION OF AMOUNT OF RS.43,06,413/- AS SALE CONSIDERATION SOLE LY RELYING UPON THE SAID PIECE OF PAPER. IT WAS STATED THAT THE AMOUNT AS ABOVE HAS NOT BEEN IDENTIFIED AS SALE PRICE. FURTHER, HE ALSO POINTED OUT THE NOTINGS (S.NO.49/3 A, 49/3B & 50/3/2) HAS BEEN MADE IN DIFFERENT INK AND DIFFERENT HAND WRITING. THE CLAIM REGARDING DIFFERENCE IN HAND WRITING AND IN INK WAS FOUND TO BE CORRECT. F URTHER, THE NOTINGS ON THE PIECE OF PAPER ONLY STATES THAT TWO CHEQUES EACH OF RS.5 LAK HS WAS PAID TO AMIR S. KHATIB AND THERE IS NO MENTION OF PAYMENT OF RS.33,06,413/ -. IT HAS ALSO BEEN MENTIONED THAT THE AMOUNT IS RELATED WITH YEAR 1996-97 I.E. I MMEDIATELY SUCCEEDING YEAR. THUS, THE AMOUNT MAY INDICATE THE PRICE OF NEGOTIAT IONS OR OTHER FACTS BUT IT DOES NOT CONCLUSIVELY PROVE THAT THE PIECE OF LAND WAS SOLD FOR ABOVE AMOUNT. 10. THE UNDERSIGNED WENT THROUGH THE CLAUSES OF PUR CHASE DEED DT.19-3-93 WHICH SHOWS THAT THE PIECE OF LAND FOLLOWING SURVEY NUMBER WERE PURCHASED :- A) 49/3A WITH AREA 1H 29R B) 49/3B WITH AREA 1H R C) 50/3/2 WITH AREA 1H 64R D) 49/2 WITH AREA 2R AS AGAINST IT, THE SALE DEED DT.8-5-96 FILED BY THE APPELLANT SHOWED THE SALE OF FOLLOWING PIECE OF LAND WITH AREA AS UNDER :- A) 49/3A 1H 17R B) 49/3B 1H 2R C) 50/3/2 1H 55R FROM THE NARRATIONS OF SURVEY NUMBER OF LAND SOLD I N THE DEED OF AGREEMENT AS ABOVE IT IS EVIDENT THAT THE PART OF PIECES OF LAND AGAIN ST ITEM NO.(A), (B), (C) AND THAT MENTIONED AGAINST ITEM NO.(D) WAS NOT SOLD. 11. THE LEARNED AUTHORIZED REPRESENTATIVE CLARIFIED THAT THE PURCHASE WAS MADE BY 16 MEMBERS OF KHATIB FAMILY BUT LATER ON 3 MEMBE R BACKED OUT AND REFUSED TO SALE THEIR SHARES. IT WAS CLAIMED THAT SAMMATI PA TRA/VYAVASTHA PATRA DT. 22- 11-1995 WAS PREPARED BETWEEN 13 MEMBERS ON ONE HAND AND 3 MEMBERS NAMELY SHRI IQBAL BURANUDDIN KHATIB, SALAUDDIN BURANUDDIN KHATIB & GULAMAHEMAD BURANUDDIN KHATIB ON THE OTHER HAND, WHEREBY THE LA ND UNDER REFERENCE WAS DIVIDED. THE FRONT PORTIONS COMPRISING OF 4235.50 SQ.MTRS. WAS AGREED TO BE OWNED BY AND HANDEDOVER TO 3 PERSONS NAMELY SHRI IQBAL BU RANUDDIN KHATIB, SALAUDDIN BURANUDDIN KHATIB & GULAMAHEMAD BURANUDDIN KHATIB. IT WAS EXPLAINED THAT THE BALANCE AREA ON THE REAR PORTION OF THE LAND PURCHA SED ABOVE WAS SOLD BY 13 MEMBERS FOR THE CONSIDERATION OF RS.28,85,000/- VID E AGREEMENT DT: 8-5-96. IT WAS ARGUED THAT AS THE SALE PRICE OF THE LAND DURING TH E YEAR UNDER CONSIDERATION WAS ONLY RS.28,85,000/- IT WAS INCORRECT ON THE PART OF THE A.O. TO ADOPT THE SALE PRICE AT RS.43,06,413/-. THE CLAIM OF BREAKUP OF 3 MEMBERS O F THE FAMILY IS SUPPORTED BY THE OBSERVATIONS OF THE A.O. IN PARA-6 OF THE ASSESSMEN T ORDER WHERE HE HAS STATED THAT 3 MEMBERS DID NOT MAKE SALE. THE A.O. THEREFORE, HA S DEDUCTED THE 10% OF THE PRICE OF LAND STATED TO BE ATTRIBUTABLE TO 3 MEMBERS. HOW EVER, WHILE DOING SO, HE HAS IGNORED TO REDUCE THE AREA OF LAND SOLD BY THE SHAR E BELONGING TO THOSE 3 MEMBERS. IT IS APPARENT FROM THE FACTS MENTIONED ABOVE THAT WHOLE AREA THE PIECE OF LAND AS PURCHASED VIDE REGISTERED DEED DT: 13-1-93 WAS NOT SOLD & THEREFORE, IT WAS NOT CORRECT ON THE PART OF THE A.O. TO ADOPT THE SALE P RICE AT RS.43,06,413/- FIGURED 19 ITA NOS.857 TO 859/PN/2004 WHICH APPEARS TO HAVE BEEN COMPUTED WITH REFERENCE TO ALL THE LAND UNDER S.NO.49/3A, 49/3B & 50/3/2. 12. FROM THE COPY OF 'SAMMATI PATRA' MADE ON 18-9-9 5 IT WAS OBSERVED THAT AFTER PURCHASE OF LAND VIDE REGISTERED DEED DT : 13-3-93, THERE WAS A SPLIT IN THE AOP CONSTITUTED BY 16 MEMBERS. AS A RESULT OF A SPL IT, 13 MEMBERS FORMED A GROUP WHO SOLD THE LAND FOR THE PRICE OF RS.28,85,000/-. THE OTHER PART WAS HELD BY SMALLER AOP FORMED AS A RESULT OF SPLIT. THE 'SAMMATI PATRA ' AND FACTS DEDUCIBLE THEREFROM, REBUTS THE CLAIM OF APPELLANT THAT ADOPTION OF AOP BY AO IS NOT JUSTIFIED. IT ALSO REBUTS THE CLAIM MADE BY APPELLANT THAT BECAUSE ONL Y 13 PERSONS HAVE DISPOSED OF THEIR SHARES IN THE SAID LAND, IT MAY BE PRESUMED T HAT THE LAND WAS PURCHASED ON CO- OWNERSHIP BASIS AND 13 PERSONS ONLY SOLD THEIR SHAR E OF LAND. IN FACT, THE ARRANGEMENT MADE BY THE 'SAMMATI PATRA' PROVES SPLI T IN THE AOP AND AS STATED ABOVE, THE AOP HAVING 13 MEMBERS SOLD THE PART OF L AND BELONGING TO OTHER FOR CONSIDERATION OF RS.28,85,000/-. 13. THE FACT AS ABOVE IS ALSO SUBSTANTIATED BY THE PHYSICAL VERIFICATION WHICH WAS MADE THE A.O. THROUGH THE CIRCLE INSPECTOR, IN RESP ONSE TO REQUEST FROM THE UNDERSIGNED. THE STATEMENT OF PURCHASER I.E. SHRI A NIL PAI, DIRECTOR PAI DEVELOPER WAS RECORDED ON 26-2-2004 WHICH WAS F ORWARDED VIDE LETTER OF SAME DATE WHICH IN TURN, FORWARDED BY THE JT.CIT VIDE HI S LETTER DT: 27-2-2004. SHRI PAI IN RESPONSE TO Q.NO. 4 & 5 HAS STATED AS UNDER:- 'Q.NO.4: IN EARLIER QUESTIONS STATED THAT YOU ARE D IRECTOR IN PAI DEVELOPERS PVT. LTD., AND MADE AN AGREEMENT TO THE KHATIB. IN WHICH DATES AND AREA OF LAND PURCHASED FOR DOING THE CONSTRUCTING THE BUNGLOW'S AT SHIRIN MEDOW ? ANS: I ENTERED INTO AGREEMENT FOR PURCHASE OF LAND SURVEY NO. 49/3A+3B AND 50/3/2 IN LOCATED AT GANGAPUR ROAD, ANANDVALI NASHI K. THAT THE TOTAL AREA OF LAND AS PER 7/12 EXTRACT WAS 9 ACRES. IN THE YEAR 1 995, THE SAID LAND WAS USED FOR PRODUCING AGRICULTURAL CROPS PRIOR TO STARTING OF T HE DEVELOPMENT FOR CONSTRUCTION. THE SAID LAND WAS PURCHASED FOR TOTAL CONSIDERATION OF RS. 43 LAKHS. THE FULL AND FINAL PAYMENT OF THE SAID LAND WAS DON E BEFORE 1996 AND CONSTRUCTION OF BUNGLOW WAS STARTED DURING THAT PER IOD AND THE POSSESSION TO THE SAID BUNGLOW IN THE SAID LAND WAS GIVEN TO RESPECTI VE PURCHASERS. AFTER THIS WE MADE VARIOUS TRANSACTION WITH OTHER LAND OWNERS IN THE A DJOINING AREA FOR DOING THE SAME KIND OF BUSINESS. WE ENTERED INTO AGREEMENT TO PURC HASE THE LAND BEARING SURVEY NO.42/1 AND 2 THE TOTAL AREA OF THIS WAS 18 ACRES O UT OF WHICH WE ENTERED INTO AGREEMENT FOR THE AREA OF 9 ACRES 12R (372R) IN THE YEAR 1997 FOR TOTAL CONSIDERATION OF RS.1,35,00,000/- (RS. ONE CRORE TH IRTY FIVE LAKHS) OUT OF WHICH WE MADE PAYMENT OF RS.32 LAKHS TO KHATIB FAMILY MEMBER S. THE DETAILS FOR WHICH HAVE ALREADY BEEN SUBMITTED TO THE DEPARTMENT AND WHICH APPEARS IN BALANCE SHEET ALSO. Q.NO.5 : PLEASE CLARIFY THE EXACT IDENTIFICATION MA RK OF THE AREA IN WHICH THE CONSTRUCTED BUNGLOW IN THE SAID LAND STATED EARLIER ANSWER ? ANS : AS PER OUR JOINT VISIT WITH INCOME-TAX INSPEC TOR ON THE SITE ON TODAY WE HAVE SHOWN SPECIFIC AREA OF SURVEY NO. 49/3A + 3B AND SU RVEY 50/3/2 WHERE THE BUNGLOWS ARE CONSTRUCTED AND HANDED OVER SO ALSO TH E VACANT LAND OF SURVEY NO. 42/1 AND 2 WHEREIN WE COULD NOT CARRY OUT ANY BUSIN ESS DUE TO THE TECHNICAL DEFECT IN THE TITLE OF THE LAND. SHOW ALSO TO PRODUCE THE PROOF OF CULTIVATION IN THE SAID LAND THE ADJOINING AREA IN THE CENTRAL OF THIS SURVEY NO . WHERE DEVELOPMENTS NOT YET STARTED AND THE CULTIVATION OF GRAPES AND VEGITABLE S GOING ON WHICH IS IN POSSESSION OF OTHER PARTNERS.' THE CLARIFICATION AS ABOVE BY THE PURCHASER CLEARLY SHOWS THAT THE NEGOTIATED PRICE OF RS.43 LAKHS WAS APPLICABLE FOR THE WHOLE PIECE OF LAND INDICATED IN SURVEY NO.49/3A, 49/3B & 50/3/2. HOWEV ER, DURING THE YEAR UNDER CONSIDERATION ONLY PART OF IT AS DISCUSSED ABOVE, W AS SOLD BY THE APPELLANT. THE REST OF THE LAND AND OTHER PIECE OF LAND WERE PURCHASED BY THE PAI DEVELOPERS IN 20 ITA NOS.857 TO 859/PN/2004 SUBSEQUENT PERIOD. THEREFORE, THE FACTS STATED IN R EGISTERED AGREEMENT DT: 8-5-96 IS CORROBORATED BY OTHER DOCUMENTS AND VERIFICATIONS M ADE BY THE CIRCLE INSPECTOR. THE A.O. COULD NOT BRING ANY OTHER EVIDENCE THAT THE PR OCEEDS OVER AND ABOVE THE AGREEMENT PRICE AS INDICATED IN THE REGISTERED AGRE EMENT WAS RECEIVED BY THE APPELLANT AOP. NO EVIDENCE OF SALE OF FURTHER LAND BY THE AOP COULD BE BROUGHT ON RECORD BY THE A.O. THEREFORE, THE AO IS DIRECTED TO ADOPT THE SALE PRICE OF LAND AT RS.28,85,000/ - INSTEAD OF RS.43,06,413/ - ADOPTED IN HIS ASSESSMENT ORDER. THE REST OF THE AMOUNT HAS TO BE INCLUDED IN THE TOTAL INCOM E OF SMALLER AOP IN THE YEAR WHEN SALE TOOK PLACE. THE NECESSARY ACTION MAY BE T AKEN ACCORDINGLY. THUS, THE PARA 8, 9 AND 10 OF APPELLANT'S GROUNDS OF APPEAL I S HEREBY DECIDED. 17. WE HAVE CONSIDERED THE ENTIRE GAMUT OF ISSUES I NVOLVED IN THE APPEAL AS NARRATED IN ITA NO.857/PN/2004 RELATING TO ASSESSME NT YEAR 1993-94. WE ALSO FIND THAT THE CIT(A) HAS DISPOSED OF THE OBJEC TION OF THE ASSESSEE RELATING TO ADOPTION OF SALE CONSIDERATION AND ARRIVED AT A SALE PRICE OF RS.28,85,000/- AS AGAINST RS.43,06,413/- AFTER OBJECTIVE APPRECIAT ION OF FACTS BY ADOPTING RATIONAL APPROACH IN THE MATTER. ACCORDINGLY, WE D O NOT FIND ANY ERROR IN THE FINDINGS OF THE CIT(A). THE REVENUE HAS NOT OBJECT ED TO THE MODIFICATION IN QUANTUM. THE GROUNDS TAKEN BY THE ASSESSEE IN THIS APPEAL ARE ANALOGOUS TO THE GROUNDS TAKEN IN ASSESSMENT YEAR 1993-94 IN ITA NO.857/PN/2004. ALL THE OBJECTIONS TAKEN ON BEHALF OF THE ASSESSEE WERE DULY ADDRESSED IN APPEAL CONCERNING ASSESSMENT YEAR 1993-94. FOR THE PARITY OF REASONING GIVEN IN THE ASSESSMENT YEAR 1993-94, WE FIND NO MERIT IN THE PR ESENT APPEAL OF THE ASSESSEE RELATING TO ASSESSMENT YEAR 1996-97. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.858/PN/2004 RELATING TO ASSESSMENT YEAR 1996-97 IS DISMISSED. ITA NO.859/PN/2004 (A.Y. 1998-99) : 19. NOW, WE SHALL TAKE-UP THE APPEAL OF THE ASSESSE E IN ITA NO.859/PN/2004 RELATING TO ASSESSMENT YEAR 1998-99, WHICH IS AGAINST THE ORDER OF CIT(A)-II, NASHIK DATED 27.02.2004 PASSED UNDER SECTION 143(3) OF THE ACT. 21 ITA NOS.857 TO 859/PN/2004 20. THE ISSUE IN CONTROVERSY BEFORE THE ASSESSING O FFICER RELATING TO ASSESSMENT YEAR 1998-99 REVOLVES AROUND YET ANOTHER LAND SIMILARLY SITUATED AT ANANDWALI AREA, VILLAGE NASHIK BEARING SURVEY NO.42 WHICH IS ALSO ALLEGEDLY TRANSFERRED TO M/S PAI DEVELOPERS PVT. LTD. AS PER DEVELOPMENT AGREEMENT DATED NIL IN THE YEAR 1997 AT NASHIK. THE APPELLAN T AOP LED BY MR. CHIRAGUDDIN MOHD. KHATIB ALONG WITH OTHER 16 FAMILY MEMBERS STATED TO HAVE JOINTLY PURCHASED LAND FROM ONE SHRI VILAS RASIKLAL SHAH BY MAKING TWO SALE DEEDS. FIRST SALE DEED WAS DATED 07.06.1987 AND AN OTHER SALE DEED WAS EXECUTED ON 28.09.1988 FOR AN AGGREGATE TOTAL AREA ADMEASURING AROUND 7 H 12 ARE. THE ASSESSING OFFICER OBSERVED THAT TOTAL INV ESTMENT IN THE PURCHASE OF LAND BY ASSESSEE AOP (KHATIB FAMILY OF 17 MEMBERS) WAS ABOUT RS.10,60,000/-. THE RIGHTS IN THE AFORESAID LAND W ERE SURRENDERED BY THE ASSESSEE AOP BY EXECUTING POWER OF ATTORNEY DATED 2 0.09.1997 AND POSSESSION IN FAVOUR OF M/S PAI DEVELOPERS PVT. LTD . FOR DEVELOPMENT OF LAND. THE EXECUTION OF DEVELOPMENT AGREEMENT WAS FOR A TO TAL CONSIDERATION WHICH WAS FIXED AT RS.1,50,00,000/-. THE POSSESSION OF L AND WAS STATED TO BE GIVEN BY POSSESSION RECEIPT DATED 22.09.1997. THE DEVELO PER WAS REQUIRED TO PAY RS.1.35 CRORE IN CASH/ CHEQUE TO THE ASSESSEE AOP. THE DEVELOPER WAS ALSO REQUIRED TO CONSTRUCT TWO BUNGALOWS ON THE LAYOUT W ORTH RS.15 LAKHS ON BEHALF OF THE ASSESSEE. IT WAS ALSO NOTICED BY THE ASSESS ING OFFICER THAT THE DEVELOPER HAS ALREADY PAID RS.32,00,000/- IN AGGREGATE BY WAY OF CERTAIN CHEQUES BETWEEN APRIL, 1997 TO SEPTEMBER, 1997. THE ASSESS ING OFFICER VIEWED THE ENTIRE TRANSACTIONS OF PURCHASE AND TRANSFER TOWARD S DEVELOPMENT AS BUSINESS DEAL IN THE HANDS OF THE AOP FOR THE REASONS ANALOG OUS TO ASSESSMENT YEARS 1993-94 AND 1996-97. THE ASSESSING OFFICER NOTED T HAT THE AFORESAID LAND WAS PURCHASED BY THE AOP WITHOUT ANY SPECIFIC SHARES AS SIGNED TO ANY AOP MEMBER IN THE PURCHASE DEED. THE LAND WAS SUBSEQUE NTLY TRANSFERRED TO THE DEVELOPER FOR COMMERCIAL EXPLOITATION WITH A MOTIVE OF PROFIT WHICH NOTHING BUT A BUSINESS TRANSACTIONS. HE ACCORDINGLY DETERM INED THE BUSINESS INCOME EMANATING FROM THE DEVELOPMENT AGREEMENT AT RS.1,40 ,46,000/- ON PROPORTIONATE BASIS HAVING REGARD TO THE FACT THAT OUT OF 17 MEMBERS, ONLY 14 MEMBERS HAVE TRANSFERRED THEIR RIGHTS IN THE AFORES AID LAND IN FAVOUR OF THE 22 ITA NOS.857 TO 859/PN/2004 DEVELOPER IN THE ASSESSMENT YEAR RELEVANT TO ASSESS MENT YEAR 1998-99. THE ASSESSING OFFICER ALSO VOCIFEROUSLY OBSERVED THAT H E DID NOT GET DESIRED COOPERATION FROM THE ASSESSEE IN THE ASSESSMENT PRO CEEDINGS. IN VIEW OF THE DEVELOPMENT AGREEMENT, POWER OF ATTORNEY AND POSSES SION RECEIPT AS REFERRED ABOVE, THE INCOME OF THE ASSESSEE AOP FROM THE AFOR ESAID TRANSACTIONS WAS COMPUTED AT RS.1,40,46,000/- BY THE ASSESSING OFFIC ER AND BROUGHT TO TAX. 21. THE CIT(A) CONCURRED WITH THE ACTION OF THE ASS ESSING OFFICER IN ASSESSING THE INCOME IN THE HANDS OF THE ASSESSEE A OP AND ALSO HELD THAT THE ACTIVITIES CONSTITUTE BUSINESS INCOME ON IDENTICAL BASIS ADOPTED IN THE OTHER ASSESSMENT YEARS VIZ. 1993-94 AND 1996-97. HOWEVER , THE CIT(A) FOUND THAT POSSESSION OF LAND BEARING SURVEY NO.42 IS CONTINUI NG WITH THE ASSESSEE AND THE AFORESAID TRANSACTIONS EXECUTED THROUGH DEVELOP MENT AGREEMENT AND POWER OF ATTORNEY COULD NOT ACHIEVE FINALITY AS THE DEVEL OPER FAILED TO MEET THE TERMS AND CONDITIONS OF THE AGREEMENT. THE CIT(A) ALSO N OTED ON FACTS THAT THE POSSESSION RECEIPT DATED 22.09.1997 WAS FABRICATED AND THE POSSESSION WAS NEVER PASSED TO THE DEVELOPER IN TERMS OF THE AFORE SAID DOCUMENTS. HENCE, THE CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF RS. 32,00,000/- BEING UPFRONT CONSIDERATION RECEIVED BY THE ASSESSEE AGAINST THE EXECUTION OF THE DEVELOPMENT AGREEMENT, POWER OF ATTORNEY, ETC. WHIC H WAS FORFEITED FOR NON- COMPLIANCE OF TERMS OF DEVELOPMENT AGREEMENT. HE A LSO HELD THE SAME AS THE BUSINESS INCOME OF THE ASSESSEE. THUS, THE BUSINES S INCOME COMPUTED BY ASSESSING OFFICER AT RS.140.46 LACS WAS SUBSTITUTED BY RS.32 LAKHS BY CIT(A). HE ACCORDINGLY GRANTED PARTIAL RELIEF WHILE DETERMI NING THE QUANTUM OF ADDITION AND DISMISSED ALL OTHER OBJECTIONS OF THE ASSESSEE IN TANDEM WITH REASONINGS GIVEN IN ASSESSMENT YEARS 1993-94 AND 19 96-97. 22. WE FIND THAT THE FACTS ARE SIMILAR TO THE FACTS CONCERNING IN BOTH THE ASSESSMENT YEARS 1993-94 AND 1996-97 EXCEPT SURVEY NUMBER. FROM THE UNDATED DEVELOPMENT AGREEMENT READ WITH POWER OF AT TORNEY, WE FIND THAT A CONTRACT WAS ENTERED FOR DEVELOPMENT OF LAND SITUAT ED AT SURVEY NO.42 AT AN AGREED PRICE OF RS.150.00 LACS WHICH DID NOT SAIL T HROUGH. THE PROPERTY WAS 23 ITA NOS.857 TO 859/PN/2004 ADMITTEDLY SITUATED IN THE RESIDENTIAL ZONE OF NASH IK MUNICIPAL CORPORATION. THE DEVELOPMENT AGREEMENT WAS EXECUTED WITH AN INTE NTION TO COMMERCIALLY EXPLOIT THE LAND BY CONSTRUCTION OF RESIDENTIAL UNI TS/ BUNGALOWS/ ROW HOUSES, ETC.. A BARE READING OF DEVELOPMENT AGREEMENT CLEA RLY SHOWS THAT THE TRANSACTIONS BETWEEN THE ASSESSEE AND THE DEVELOPER WAS CLEARLY IN THE NATURE OF BUSINESS DEAL, PROFITS AROSE WHEREFROM BY WAY OF FORFEITURE OF ADVANCE RECEIPT. WE ARE OF THE VIEW THAT AMOUNT FORFEITED OWING TO BREACH OF CONTRACT ENTERED IN THE PURSUIT OF BUSINESS IS A TAXABLE BUS INESS INCOME. ALSO, IN OUR CONSIDERED VIEW, THE CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION TO THE EXTENT OF AMOUNT RETAINED AND GAINED ON ACCOUNT OF FORFEITURE DUE TO NON-PERFORMANCE OF BUSINESS CONTRACT. THEREFORE, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE CIT(A). ALL OTHER GRIEVANCES OF THE ASSESSEE RAISE D BY WAY OF GROUNDS OF APPEAL CONCERNING THIS ASSESSMENT YEAR ARE DISMISSE D IN PARITY WITH ITA NO.857/PN/2004 AND ITA NO.858//PN/2004 RELATING TO ASSESSMENT YEARS 1993- 94 AND 1996-97 RESPECTIVELY. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.859/PN/2004 RELATING TO ASSESSMENT YEAR 1998-99 IS DISMISSED. 24. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE A SSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 07 TH DAY OF APRIL, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 07 TH APRIL, 2016. 24 ITA NOS.857 TO 859/PN/2004 % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE