Shri Kirti Ishwarlal Patel, Kalol V. The Dy. Commissioner of Income Tax, Circle-1(2), Ahmedabad

ITSSA 185/AHD/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4070 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Capital asset converted into stock in trade; Business income; Question of law; Initiation of penalty proceedings; Set aside; Capital Gains
• Section: 143(3); 153A; 143(1); 143(2); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER (SS) . /IT(SS)A NOS. 185, 186 & 187/AHD/2016 ( / ASSESSMENT YEARS : 2009-10, 2012-13 & 2013-14 RESPECTIVELY ) 1-3.SHRI KIRTI ISHWARLAL PATEL 22, SHRI HARI SOCIETY HIGHWAY, KALOL / VS. 1-3. DCIT CENTRAL CIRCLE- 1(2) AHMEDABAD ./ ./ PAN/GIR NO. : ABIPP 8133 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PARIN SHAH, AR / RESPONDENT BY : MS. VIBHA BHALLA, CIT-DR / DATE OF HEARING 22/01/2019 !'# / DATE OF PRONOUNCEMENT 11/03/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE COMMISS IONER OF INCOME TAX (APPEALS)11, AHMEDABAD [CIT(A) IN SHORT] VIDE APPE AL NO.CIT(A)- 11/814, 815 & 816-A/CC-1(2)/2014-15 DATED 17/03/20 16 ARISING IN THE ASSESSMENT ORDERS PASSED UNDER S.143(3) R.W.S.153A/ B(1)(B) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 11/03/2015 RELEVANT TO ASSESSMENT YEARS (AYS) 2009- 10, 20012-13 & 2013-14 RESPECTIVELY. 2. FIRST, WE TAKE UP IT(SS)A NO.185/AHD/2016 FOR A Y 2009-10 AN APPEAL FILED BY THE ASSESSEE. IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 2 - 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. LD. CIT(A) ERRED IN LAW IN AND ON FACTS CONFIRMING ACTION OF AO TREATING LONG TERM CAPITAL GAIN OF RS.33,04,354/ - AT RS.33,53,983/- AND SHORT TERM CAPITAL GAIN OF RS.20 ,38,042/- ON SALE OF PLOTS AT VILLAGE SAIJ AS INCOME FROM BUS INESS. LTD. CIT(A) OUGHT TO HAVE HELD GAIN ON SALE OF PLOTS AS LONG TERM CAPITAL GAIN & SHORT TERM CAPITAL GAIN RESPECTIVELY . 2. LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO HOLDING THAT APPELLANT ACQUIRED LAND WITH A VIEW TO SELL AFTER DEVELOPING THE SAME. LD. CIT(A) FAILED TO AP PRECIATE THAT APPELLANT UNABLE TO SELL LAND AS EITHER AGRICULTURA L OR INDUSTRIAL LAND, DIVIDED IT IN SMALL PLOTS TO FACILITATE SALE FOR RESIDENTIAL PURPOSE WITHOUT UNDERTAKING ANY DEVELOPMENT OR IMPR OVEMENT. 3. LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING ACTI VITY OF THE APPELLANT AS ACTIVITY IN THE NATURE OF TRADE. LD. CIT(A) OUGHT TO HAVE APPRECIATED AND HELD THAT INCOME ON SALE OF AG RICULTURAL LAND ACQUIRED FOR FARMING BUT LATER DIVIDED INTO SM ALL RESIDENTIAL PLOTS WITHOUT ANY DEVELOPMENT ACTIVITY WILL NOT CONSTITUTE IT AS ADVENTURE IN THE NATURE OF TRADE. 4. LD. CIT(A) ERRED IN LAW AND ON FACTS IN REFRAINING FROM ADJUDICATING GROUND CHALLENGING ACTION OF AO NOT CO NSIDERING ALTERNATE CONTENTION THAT IMPUGNED LAND BE TREATED AS CONVERTED INTO STOCK IN TRADE ON THE DATE OF APPROV AL OF PLAN AND PROFIT ON SALE OF PLOTS BE WORKED OUT AS PER PR OVISIONS OF SEC.45(2) OF THE ACT. 5. LEVY OF INTEREST U/S.234A, 234B, 234C & 234D OF THE ACT IS UNJUSTIFIED. 6. INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS UNJUSTIFIED. IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 3 - 4. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND OF APPEAL VIDE LETTER DATED NIL AS REPRODUCED AS UNDER: APPELLANT CRAVES LEAVE TO RAISE THIS ADDITIONAL GR OUND OF APPEAL BEFORE THE HONBLE ITAT. THIS IS A LEGAL GROUND AN D THEREFORE AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CA SE OF NATIONAL THERMAL POWER (229 ITR 383) IT CAN BE RAISED BEFORE THE HONBLE ITAT. 1. BOTH THE LOWER AUTHORITIES ERRED IN LAW AND ON FAC TS IN FRAMING ASSESSMENT UNDER SECTION 143(3) R.W.S.153A IGNORING THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING COU RSE OF SEARCH AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S.14 3(2) OF THE ACT HAD ALSO EXPIRED BEFORE THE DATE OF SEARCH. HE NCE ASSESSMENT FRAMED U/S.153A IS REQUIRED TO BE QUASHE D CONSIDERING THE SAME AS CONCLUDED ASSESSMENT MODIFI ED AS PER ORIGINAL RETURN OF INCOME. IT BE SO HELD NOW. APPELLANT ALSO CRAVES LEAVE TO ADD, AMEND, ALTER, C HANGE, DELETE AND EDIT THE ABOVE GROUND OF APPEAL BEFORE OR AT TH E TIME OF THE HEARING OF THE APPEAL. 5. THE ASSESSEE IN THE ADDITIONAL GROUND OF APPE AL HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 153 A R.W.S 143(3) OF THE ACT ON THE GROUND THAT THERE WAS NO INCRIMINATING M ATERIAL FOUND DURING THE COURSE OF THE SEARCH. 6. AT THE OUTSET, THE LD. AR BEFORE US PRAYED FOR THE ADMISSION OF THE ADDITIONAL GROUND OF APPEAL RAISED THE FIRST TIME. AS PER THE LD. AR, THE ADDITIONAL GROUND OF APPEAL IS LEGAL IN NATURE, AND THE RELEVANT FACTS FOR THE ADJUDICATION OF SUCH LEGAL GROUND ARE AVAILABLE IN THE ORDER OF THE IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 4 - AUTHORITIES BELOW. AS SUCH THERE WAS NO NEED TO MAK E ANY REFERENCE TO ANY ADDITIONAL DOCUMENTS FOR THE ADJUDICATION OF SU CH LEGAL GROUND. 7. ON THE OTHER HAND, THE LD. DR DID NOT OBJE CT TO THE ADMISSION OF ADDITIONAL GROUND RAISED BY THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS SETTLED A LAW THAT THE ASSESSEE IS ENTITLED TO RAISE ANY ADDITIONAL GROUND OF APPEAL WHICH IS LEGA L IN NATURE AT ANY STAGE BEFORE THE HIGHER FORUM. REGARDING THIS, WE EXTEND OUR RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF NT PC VS. CIT REPORTED IN 229 ITR 383 WHEREIN IT WAS HELD AS UNDE R: IN THE INSTANT CASE, THEREFORE, THE TRIBUNAL HAD J URISDICTION TO EXAMINE A QUESTION OF LAW WHICH AROSE FROM THE FACT S AS FOUND BY THE LOWER AUTHORITIES AND HAVING A BEARING ON THE TAX L IABILITY OF THE ASSESSEE. 8.1. BESIDES THE ABOVE, WE ALSO FIND THAT THE J URISDICTIONAL ITAT IN THE GROUP CASE OF THE ASSESSEE IN THE CASE OF SHRI DHIR EN B. PATEL IN ITA NO. 188/AHD/2016 HAS ADMITTED THE ADDITIONAL GROUND OF APPEAL. THEREFORE, WE HAVE NO HESITATION IN ADMITTING THE ADDITIONAL G ROUND RAISED BY THE ASSESSEE. THUS, WE ADMIT THE ADDITIONAL GROUND OF A PPEAL OF THE ASSESSEE AND PROCEED TO ADJUDICATE THE SAME. 9. THERE WAS A SEARCH CONDUCTED UNDER SECTION 132 OF THE ACT DATED 6 TH NOVEMBER 2012 IN THE CASE OF KALOL-PRAJAPATI GROUP. THE ASSESSEE IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 5 - WAS ALSO COVERED UNDER SUCH SEARCH. ACCORDINGLY, THE NOTICE UNDER SECTION 153A OF THE ACT WAS ALSO ISSUED UPON THE AS SESSEE. 10. AT THE OUTSET, THE LD. AR BEFORE US SUBMIT TED THAT THE YEAR INVOLVED UNDER CONSIDERATION WAS NOT PENDING FOR AS SESSMENT AS ON THE DATE OF SEARCH. AS SUCH THE TIME LIMIT FOR THE ISSU ANCE OF NOTICE UNDER SECTION 143(2) OF THE ACT WAS ALSO EXPIRED. THUS TH E YEAR UNDER CONSIDERATION BEING UNABATED CAN BE DISTURBED UNDER THE PROCEDURES OF SECTION 153(A) OF THE ACT IF THERE WERE UNEARTHED I NCRIMINATING DOCUMENTS DURING THE COURSE OF THE SEARCH. 11. THE LD. AR FURTHER SUBMITTED THAT THE AO IN T HE YEAR UNDER CONSIDERATION HAD TREATED THE INCOME DECLARED BY TH E ASSESSEE UNDER THE HEAD LONG-TERM CAPITAL GAIN/SHORT-TERM CAPITAL GAIN AS BUSINESS INCOME. THEREFORE, IN THE ABSENCE OF ANY INCRIMINATING DOC UMENT THE PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION CANNOT BE REOPENED UNDER SECTION 153A OF THE ACT. THE LD. AR IN SUPPORT OF HIS CONTENTION RELIED ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAUMYA CONSTRUCTION (P.) LTD. REPORTED IN 387 ITR 529 (GUJ ). 12. ON THE OTHER HAND, THE LD. DR VEHEMENTLY S UPPORTED THE ORDERS OF AUTHORITIES BELOW. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS O F BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 6 - THERE WAS NO INCRIMINATING DOCUMENT FOUND DURING TH E COURSE OF THE SEARCH FOR THE YEAR UNDER CONSIDERATION. THERE IS A LSO NO AMBIGUITY THAT THE TIME LIMIT FOR THE ISSUE OF NOTICE UNDER SECTIO N 143(2) OF THE ACT WAS EXPIRED AT THE TIME OF THE SEARCH. THEREFORE IN OUR CONSIDERED VIEW, THE PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION HAVE R EACHED TO ITS FINALITY. THUS THE SAME CANNOT BE DISTURBED UNDER THE PROVISI ONS OF SECTION 153(A) OF THE ACT. 13.1. WE ALSO NOTE THAT IN THE IDENTICAL FACTS A ND CIRCUMSTANCES THIS TRIBUNAL IN THE GROUP CASE OF THE ASSESSEE SUPRA HAS DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE. THE RELEVANT EXTRACT IS REPR ODUCED AS UNDER. 9. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND CASE L AW CITED. THE SCOPE OF APPLICABILITY OF SECTION 153A CONCERNI NG SEARCH ASSESSMENT IS IN QUESTION. IT IS THE CASE ON BEHAL F OF THE ASSESSEE THAT RE-ALIGNMENT OF TAXABILITY OF INCOME OFFERED FROM ONE HEAD TO ANOTHER ARE SUBJECT MATTER OF REGULAR A SSESSMENT AND DO NOT RESONATE WITH THE SCHEME OF SEARCH ASSES SMENT UNDER S. 153A OF THE ACT DE HORS REFERENCE TO ANY INCRIMI NATING MATERIAL IN THIS REGARD. FURTHER EMPHASIS IS LEAD ON BEHALF OF THE ASSESSEE THAT IN THE ABSENCE OF ANY INCRIMINATI NG MATERIAL, NO ADJUSTMENT OF REGULAR INCOME OFFERED IN THE RETU RNED INCOME IS PERMISSIBLE UNDER S.153A OF THE ACT. AS NOTED A BOVE, IT IS POINTED OUT ON BEHALF OF THE ASSESSEE THAT IMPUGNED RETURN FOR AY 2009-10 OF THE ASSESSEE-DHIREN B. PATEL WERE NOT PENDING FOR ASSESSMENT AT THE TIME OF SEARCH AND CONSEQUENTLY, THE REGULAR ASSESSMENT/DEEMED ASSESSMENT STAND CONCLUDED AT THE TIME OF SEARCH RELATING TO THE ASSESSMENT YEAR IN QUESTION AND THUS SURVIVES AND DID NOT GET ABATED. IT IS THUS THE CA SE ON BEHALF OF THE ASSESSEE THAT IN THESE FACTS, IT IS NOT PERMISS IBLE FOR THE AO TO INVOKE AUTHORITY VESTED UNDER S.153A OF THE ACT TO INDULGE IN MAKING ROUTINE EXAMINATION OF VARIOUS ITEMS OF INCO ME AND EXPENDITURE FILED AND DECLARED IN THE RETURN WHICH HAS NO NEXUS TO THE INCRIMINATING MATERIAL FOUND IN THE COURSE O F SEARCH, IF IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 7 - ANY. IN ESSENCE, IT IS THE CASE OF THE ASSESSEE TH AT ADDITIONS/DISALLOWANCES COULD NOT BE MADE IN THE AS SESSMENT FRAMED UNDER S.153A OF THE ACT DE HORS REFERENCE TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H WHERE THE RETURN FILED PRIOR TO SEARCH SURVIVES AND DO NOT GE T ABATED BY OPERATION OF LAW. 10. THE APPEAL OF THE ASSESSEE THUS HINGES AROUND O NE PERTINENT LEGAL POINT AS TO WHETHER THE REVENUE IS ENTITLED TO INTERFERE WITH THE ASSESSMENT CONCLUDED EITHER UNDE R S. 143(1) OR UNDER S. 143(3) OF THE ACT AND NOT PENDING AT TH E TIME OF SEARCH IN THE ABSENCE OF ANY INCRIMINATING MATERIAL UNEARTHED AS A RESULT OF SEARCH. 11. ON A BARE PERUSAL OF THE ASSESSMENT ORDER PASSE D UNDER S. 153A, WE FIND A TOTAL ABSENCE OF REFERENCE TO ANY I NCRIMINATING MATERIAL WHICH MAY HAVE ANY BEARING TO THE RE-ALIGN MENT OF HEAD OF INCOME TOWARDS GAIN ARISING ON SALE OF PLOT TED LAND. THE RETURN FOR THE ASSESSMENT YEAR IN QUESTION SO F ILED WAS ACCEPTED UNDER S.143(1) OF THE ACT AND / OR ASSESSE D UNDER S.143(3) OF THE ACT PRIOR TO SEARCH AND, AS SUCH, N O ASSESSMENT WAS EVENTUALLY PENDING ON THE DATE OF INITIATION OF SEARCH WHICH MAY GET ABATED IN CONSEQUENCE OF SEARCH. IN THESE FACTS, THE POSITION OF LAW HAS BEEN EVOLVED OVER TIME BY JUDIC IAL PRECEDENTS. IN THE LIGHT OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF SAUMYA CONSTRUCTION (P.) LTD. (SUPRA ) AND THE DECISION OF THE HONBLE DELHI HIGH COURT RENDERED I N THE CASE OF KABUL CHAWLA 380 ITR 572 (DELHI), WE ARE OF THE VIE W THAT VARIOUS ADDITIONS/DISALLOWANCES MADE BY THE AO ARE CLEARLY BEYOND THE SCOPE OF THE AUTHORITY VESTED UNDER S. 1 53A OF THE ACT OWING TO ABSENCE OF ANY INCRIMINATING MATERIAL OR E VIDENCE DEDUCED AS A RESULT OF SEARCH. NO REFERENCE OF SUCH INCRIMINATING MATERIAL, IF ANY, IS FOUND IN THE ASS ESSMENT YEAR. 12. IN VIEW OF THE LONG LINE OF JUDICIAL PRECEDENTS GOVERNING THE FIELD, WE HOLD THAT ROUTINE ADJUSTMENTS IN THE NATURE OF CHANGE OF HEAD OF INCOME OF REPORTED INCOME WITHOUT ANY NEXUS TO INCRIMINATING MATERIAL FOUND, IF ANY, AS A RESUL T OF SEARCH OPERATIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW I N SECTION 153A PROCEEDINGS. HENCE, THE RE-ALIGNMENT OF HEAD OF IN COME TOWARDS GAIN ON SALE OF LAND FOR THE PURPOSES OF TAXABILITY REQUIRES TO BE QUASHED. THUS, WE FIND MERIT IN THE LEGAL GROUND R AISED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE DO NOT IN TEND TO ADJUDICATE THE MERITS OF THE ADJUSTMENTS / RE-ALIGN MENT. IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 8 - 14. IN VIEW OF THE ABOVE, WE HOLD THAT THE PRO CEEDINGS INITIATED UNDER SECTION 153(A) OF THE ACT ARE NOT SUSTAINABLE. HENC E THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED ON THIS PRELIMINARY ISSU E. ACCORDINGLY, WE REFRAIN OURSELVES FROM ADJUDICATING THE ISSUE RAISE D BY THE ASSESSEE ON MERIT. HENCE THE GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. COMING TO IT(SS)A NO. 186/AHD/2016 FOR AY 2012-13 16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. LD. CIT(A) ERRED IN LAW IN AND ON FACTS CONFIRMING ACTION OF AO TREATING LONG TERM CAPITAL GAIN OF RS.4,63,315/- AT RS.5,04,290/- ON SALE OF PLOTS AT VILLAGE SAIJ AS I NCOME FROM BUSINESS. LD. CIT(A) OUGHT TO HAVE HELD GAIN ON SA LE OF PLOTS AS LONG TERM CAPITAL GAIN. 2. LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO HOLDING THAT APPELLANT ACQUIRED LAND WITH A VIEW TO SELL AFTER DEVELOPING THE SAME. LD. CIT(A) FAILED TO AP PRECIATE THAT APPELLANT UNABLE TO SELL LAND AS EITHER AGRICULTURA L OR INDUSTRIAL LAND, DIVIDED IT IN SMALL PLOTS TO FACILITATE SALE FOR RESIDENTIAL PURPOSE WITHOUT UNDERTAKING ANY DEVELOPMENT OR IMPR OVEMENT. 3. LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING ACTI VITY OF THE APPELLANT AS ACTIVITY IN THE NATURE OF TRADE. LD. CIT(A) OUGHT TO HAVE APPRECIATED AND HELD THAT INCOME ON SALE OF AG RICULTURAL LAND ACQUIRED FOR FARMING BUT LATER DIVIDED INTO SM ALL RESIDENTIAL PLOTS WITHOUT ANY DEVELOPMENT ACTIVITY WILL NOT CONSTITUTE IT AS ADVENTURE IN THE NATURE OF TRADE. IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 9 - 4. LD. CIT(A) ERRED IN LAW AND ON FACTS IN REFRAINING FROM ADJUDICATING GROUND CHALLENGING ACTION OF AO NOT CO NSIDERING ALTERNATE CONTENTION THAT IMPUGNED LAND BE TREATED AS CONVERTED INTO STOCK IN TRADE ON THE DATE OF APPROV AL OF PLAN AND PROFIT ON SALE OF PLOTS BE WORKED OUT AS PER PR OVISIONS OF SEC.45(2) OF THE ACT. 5. LEVY OF INTEREST U/S.234A, 234B, 234C & 234D OF THE ACT IS UNJUSTIFIED. 6. INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS UNJUSTIFIED. 17. THE ONLY INTERCONNECTED ISSUE RAISED BY TH E ASSESSEE IS THAT LD.CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO BY TREATING THE INCOME DECLARED UNDER THE HEAD CAPITAL GAIN AS INCO ME FROM THE BUSINESS. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS DE CLARED CAPITAL GAIN AMOUNTING TO RUPEES 4,63,315/- WHICH WAS TREATED A S INCOME UNDER THE HEAD BUSINESS BY THE AO ON THE GROUND THAT THE ASSE SSEE IS ENGAGED IN DEVELOPING THE AGRICULTURAL LAND AS PLOTS AFTER TAK ING PERMISSION FROM AUDA. 18. THE AGGRIEVED ASSESSEE, PREFERRED AN APPEAL TO LD.CIT (A) WHO HAS CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER : 5.3. THE FACTS OF THE CASE, SUBMISSION OF THE A PPELLANT AND POSITION OF LAW HAVE BEEN EXAMINED. ADMITTEDLY THE ASSESSEE PURCHASED AGRICULTURAL LAND WHICH HE GOT CONVERTED INTO THE STATUS OF NON AGRICULTURAL LAND, DIVIDING THE SAME INTO PL OTS AND SOLD THESE PLOTS AS SEPARATE UNITS AND EARNED PROFIT AFT ER CARRYING OUT ALL THESE ACTIVITIES. AFTER HAVING REGARD TO ALL T HE FACTS OF THE CASE, IN MY OPINION, THE ACTIVITY OF THE ASSESSEE WAS ADV ENTURE IN THE NATURE OF TRADE. THEREFORE, THE INCOME EARNED FR OM THESE IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 10 - ACTIVITIES WAS INCOME FROM BUSINESS ACTIVITY. IN V IEW OF THE ABOVE, THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED. 19. BEING AGGRIEVED BY THE ORDER OF LD.CIT (A), T HE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR BEFORE US SUBMITTED TH AT THE TRIBUNAL IN ONE OF THE GROUP CASE OF THE ASSESSEE AS MENTIONED IN P ARA 8.1 HAD DECIDED THE IDENTICAL ISSUE IN FAVOR OF THE ASSESSEE AS DIS CUSSED ABOVE. THEREFORE THE ACTIVITY OF THE ASSESSEE CANNOT BE REGARDED AS IN THE NATURE OF BUSINESS ACTIVITY. 20. ON THE OTHER HAND, THE LD. DR VEHEMENTLY SUP PORTED THE ORDER OF AUTHORITIES BELOW. 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NOTE THAT TH E TRIBUNAL IN THE GROUP CASE OF THE ASSESSEE INVOLVING IDENTICAL ISSUE HAS DECIDED THE MATTER IN FAVOR OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 17. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE CASE LAW CITED. THE SUBSTANTIVE ISSUE IN THE PRESENT APPEAL IS WHETHER GAINS ARISING ON SALE OF PLOTS BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR IN QUESTION IS REQU IRED TO BE TAXED UNDER THE HEAD CAPITAL GAINS AS OFFERED BY THE ASSESSEE OR IS TO BE TREATED AS BUSINESS INCOME OF THE ASS ESSEE. THE QUESTION IS ESSENTIALLY FACTUAL IN NATURE AND DEPEN DS ON THE FACTS PREVALENT IN A GIVEN CASE. THE ASSESSEE HAS ADVANC ED JUSTIFICATION FOR TAXABILITY UNDER THE HEAD CAPITA L GAINS ON THE GROUND THAT THE ASSESSEE BEING A FARMER HAS ACQUIRE D AGRICULTURAL LAND. HOWEVER, DUE TO CHANGE IN THE G OVERNMENT POLICY, THE LAND FELL INTO RESIDENTIAL ZONE WHERE T HE ASSESSEE FOUND IT DIFFICULT TO CARRY ON AGRICULTURAL ACTIVIT Y DUE TO ON- IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 11 - GOING CONSTRUCTION AND DEVELOPMENT. DUE TO THE LAR GE SIZE OF THE LAND, IT WAS DIVIDED AND SUB-DIVIDED AND SOLD T O THE INTERESTED CUSTOMERS. THESE FACTS DO NOT EXCLUSIVE LY SUGGEST THAT THE ENTIRE EXERCISE WAS TO EXPLOIT THE LAND COMMERC IALLY IN THE NATURE OF ADVENTURE WHICH IS AKIN TO THE BUSINESS. IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF PREMJI GOPALBHAI (SUPRA) AND THE DECISION OF AHMEDA BAD TRIBUNAL IN THE CASE OF HITESHKUMAR ASHOKKUMAR VASW ANI (SUPRA), WE FIND MERIT IN THE PLEA OF THE ASSESSEE FOR TREATING THE SAME TO BE GAIN ARISING FOR CAPITAL NATURE AND THUS , ASSESSABLE UNDER THE HEAD OF CAPITAL GAINS. WE ALSO TAKE NO TE OF THE DECISION OF THE CO-ORDINATE BENCH OF TRIBUNAL IN 19 3/AHD/2016 & ORS. ORDER DATED 04.07.2018 WHERE THE IDENTICAL ISS UE ON SAME FACTS ARISING IN SAME SEARCH. THE IDENTICAL ISSUE WAS ADJUDICATED IN FAVOUR OF THE ASSESSEE. IN PARITY, WE THEREFORE CANCEL AND SET ASIDE THE ORDER OF THE CIT(A) IN THI S REGARD AND RESTORE THE TREATMENT GIVEN BY THE ASSESSEE IN ITS RETURN OF INCOME ON THIS ACCOUNT. 22. THE FACTS OF THE CASE ON HAND ARE IDENTICA L TO THE FACTS OF THE CASE AS DISCUSSED ABOVE. THEREFORE RESPECTFULLY FOLLOWIN G THE SAME WE REVERSE THE ORDER OF AUTHORITIES BELOW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT (A) AND DIRECT THE AO TO TREAT THE IMPUGNED INCOME UNDER THE HEAD CAPITAL GAIN. HENCE, THE GROUND OF APPEAL OF T HE ASSESSEE IS ALLOWED. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. COMING TO IT(SS)A NO. 187/AHD/2016 FOR AY 2013-14 24. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. LD. CIT(A) ERRED IN LAW IN AND ON FACTS CONFIRMING ACTION OF AO TREATING LONG TERM CAPITAL GAIN OF RS.10,43,949/ - AT IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 12 - RS.18,62,600/- ON SALE OF PLOTS AT VILLAGE SAIJ AS INCOME FROM BUSINESS. LD. CIT(A) OUGHT TO HAVE HELD GAIN ON SA LE OF PLOTS AS LONG TERM CAPITAL GAIN. 2. LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO HOLDING THAT APPELLANT ACQUIRED LAND WITH A VIE W TO SELL AFTER DEVELOPING THE SAME. LD. CIT(A) FAILED TO AP PRECIATE THAT APPELLANT UNABLE TO SELL LAND AS EITHER AGRICULTURA L OR INDUSTRIAL LAND, DIVIDED IT IN SMALL PLOTS TO FACILITATE SALE FOR RESIDENTIAL PURPOSE WITHOUT UNDERTAKING ANY DEVELOPMENT OR IMPR OVEMENT. 3. LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING ACTI VITY OF THE APPELLANT AS ACTIVITY IN THE NATURE OF TRADE. LD. CIT(A) OUGHT TO HAVE APPRECIATED AND HELD THAT INCOME ON SALE OF AG RICULTURAL LAND ACQUIRED FOR FARMING BUT LATER DIVIDED INTO SM ALL RESIDENTIAL PLOTS WITHOUT ANY DEVELOPMENT ACTIVITY WILL NOT CONSTITUTE IT AS ADVENTURE IN THE NATURE OF TRADE. 4. LD. CIT(A) ERRED IN LAW AND ON FACTS IN REFRAINING FROM ADJUDICATING GROUND CHALLENGING ACTION OF AO NOT CO NSIDERING ALTERNATE CONTENTION THAT IMPUGNED LAND BE TREATED AS CONVERTED INTO STOCK IN TRADE ON THE DATE OF APPROV AL OF PLAN AND PROFIT ON SALE OF PLOTS BE WORKED OUT AS PER PR OVISIONS OF SEC.45(2) OF THE ACT. 5. LEVY OF INTEREST U/S.234A, 234B, 234C & 234D OF THE ACT IS UNJUSTIFIED. 6. INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS UNJUSTIFIED. 25. AT THE OUTSET, WE NOTE THAT THE ISSUE INVOLV ES IN THE IMPUGNED APPEAL IS SIMILAR TO THE APPEAL OF THE ASSESSEE BEA RING IT(SS)A 186/AHD/2016 WHICH WE HAVE DECIDED IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARAGRAPH NUMBERS 13, 13.1 & 14 OF THIS ORDER. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE ALL OW THE GROUND OF APPEAL OF THE ASSESSEE. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. IT(SS)A NOS.185, 186 & 187/AHD/2016 SHRI KIRTI ISHWARLAL PATEL VS. DCIT ASST.YEARS 2009-10, 2012-13, & 2013-14 - 13 - 27. IN THE COMBINED RESULT, ALL THE THREE APPEA LS OF THE ASSESSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 11/03/2019 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11/03/2019 &.., .(.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-11, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD 1. DATE OF DICTATION 4.3.19 (WORD PROCESSED BY HON BLE AM IN HIS COMPUTER BY DRAGON) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 6.3.19 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.12.3.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 12.3.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER