Shri Kiritkumar Dayabhai Patel, Kalol V. The Dy. Commissioner of Income Tax, Central Circle-1(2), Ahmedabad

ITSSA 191/AHD/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 8330 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHU PRAKASH CIT D R
• Keywords: Capital asset; Business income
• Section: 143(3); 153A

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T(SS).A. NOS. 188 TO 190/AHD/2016 ( ASSESSMENT YEARS: 2009-10, 2012-13 & 2013-14) SHRI DHIREN BHOLIDAS PATEL 39, VARDHMAN NAGAR SOCIETY, NEAR GARDEN, KALOL / VS. DCIT, CENTRAL CIRCLE 1(2), AHMEDABAD ././ PAN/GIR NO. : ABIPP7371G ( APPELLANT ) .. ( !' / RESPONDENT ) & ./ I.T(SS).A. NOS. 191 & 192/AHD/2016 ( ASSESSMENT YEARS : 2007-08 & 2008-09) SHRI KIRITKUMAR DAYABHAI PATEL B-52, ISHWARKRUPA SOCIETY, PANCHVATI AREA, HIGWAUY, KALOL / VS. DCIT, CENTRAL CIRCLE 1(2), AHMEDABAD ././ PAN/GIR NO. : ABIPP7368K ( APPELLANT ) .. ( !' / RESPONDENT ) ASSESSEE BY : SMT. URVASHI SHODHAN, A.R. REVENUE BY : SHRI ANSHU PRAKASH, CIT. D.R. &'( DATE OF HEARING 03/10/2018 )*+ '( / DATE OF PRONOUNCEMENT 04/10/2018 IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 2 - / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE RE SPECTIVE ASSESSEES NAMED ABOVE FOR DIFFERENT ASSESSMENT YEAR S TABULATED HEREIN: SL. NO. IT(SS)A NO. NAME OF ASSESSEE AY CIT(A) ORDER DATED ASSESSMENT ORDER PASSED UNDER S.143 (3) R.W.S. 153A (1)(B) OF THE INCOME TAX ACT, 1961 (THE ACT) DATED 1 188/AHD/2016 SHRI DHIREN B. PATEL 2009-10 17.03.2016 18.03.2015 2 189/AHD/2016 SHRI DHIREN B. PATEL 2012-13 17.03.2016 18.03.2015 3 190/AHD/2016 SHRI DHIREN B. PATEL 2013-14 17.03.2016 26.03.2015 4 191/AHD/2016 SHRI KIRITKUMAR D. PATEL 2007-08 17.03.2016 11.03.2015 5 192/AHD/2016 SHRI KIRITKUMAR D. PATEL 2008-09 17.03.2016 11.03.2015 2. AT THE TIME OF HEARING, IT WAS SUBMITTED ON BEHA LF OF THE ASSESSEE THAT ALL THE CASES ARE INTER-CONNECTED AND GIVE RISE THE SIMILAR GRIEVANCE PERMEATING OVER DIFFERENT ASSESSM ENT YEARS AND THEREFORE, IT WILL BE CONVENIENT TO HEAR ALL THE AP PEALS TOGETHER. WE ACCORDINGLY HAVE HEARD ALL THE APPEALS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 3. WE SHALL FIRST TAKE APPEAL IN IT(SS)A NO. 188/AH D/2016 FOR ADJUDICATION PURPOSES. IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 3 - IT(SS)A NO. 188/AHD/2016 (SHRI DHIREN B. PATEL) (A. Y. 2009-10) 4. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS S OUGHT TO CHALLENGE THE ACTION OF CIT(A) IN CONFIRMING THE AS SESSMENT FRAMED UNDER S.153A OF THE ACT WHEREBY THE HEAD OF INCOME FOR THE PURPOSES OF ASSESSMENT OF GAIN ARISING ON SALE OF P LOT OF LANDS HAS BEEN CHANGED FROM CAPITAL GAINS OFFERED BY THE AS SESSEE TO BUSINESS INCOME ASSESSED BY THE AO. 5. APART FROM THE CHALLENGE TO THE ACTION OF THE RE VENUE AUTHORITIES ON MERITS, THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEAL IN TERMS OF THE RULE 11 OF THE IN COME TAX (APPELLATE TRIBUNAL) RULES, 1963 WHICH READS AS UND ER: 1. BOTH THE LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN FRAMING ASSESSMENT UNDER SECTION 143(3) R.W.S. 153A IGNORING THE FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING COURSE OF SEARCH AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD ALSO EXPIRED BEFOR E THE DATE OF SEARCH. HENCE ASSESSMENT FRAMED U/S 153A IS REQUIRED TO QUA SHED CONSIDERING THE SAME AS CONCLUDED ASSESSMENT MODIFIED AS PER ORIGIN AL RETURN OF INCOME. IT BE SO HELD NOW. 6. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUND ESSEN TIALLY IS LEGAL IN NATURE AND CONCERNS JURISDICTIONAL ASPECT OF THE SE ARCH ASSESSMENT AND THUS GOES TO THE ROOT OF THE MATTER. SHE SIMULT ANEOUSLY SUBMITTED THAT THE JURISDICTIONAL DEFECT PROPOSED T O BE URGED BY WAY OF ADDITIONAL GROUND CAN BE DECIDED ON THE BASIS OF FACTS OF MATERIAL ALREADY AVAILABLE ON RECORD AND DOES NOT REQUIRE EX AMINATION OF ANY FRESH FACTS. WE FIND MERIT IN THE PLEA RAISED ON B EHALF OF THE ASSESSEE FOR ADMISSION OF ADDITIONAL GROUND CONCERN ING JURISDICTIONAL ISSUE AS IT STRIKES TO THE ROOT OF T HE CONTROVERSY IN HAND. WE THEREFORE CONSIDER IT EXPEDIENT TO ADMIT THE ADDITIONAL GROUND RAISED AS NOTED ABOVE. IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 4 - 7. ADDRESSING THE LEGAL ISSUE RAISED BY WAY OF ADDI TIONAL GROUND, LEARNED AR POINTED OUT THAT A SEARCH ACTION UNDER S .132 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CONDUCTED IN THE CASE OF KALOL- PRAJAPATI GROUP ON 06.11.2012. CONSEQUENT UPON THE SEARCH, PROCEEDINGS UNDER S. 153A WERE INITIATED IN THE CAS E OF GROUP ASSESSEES INCLUDING THE ASSESSEE HEREIN. IN RESPON SE THEREOF, THE ASSESSEE FILED RETURN OF INCOME UNDER S.153A OF THE ACT. THE AFORESAID RETURN WAS SUBJECTED TO SCRUTINY ASSESSME NT. THE LEARNED AR THEREAFTER REFERRED TO THE ASSESSMENT ORDER PASS ED UNDER S. 153A OF THE ACT AND SUBMITTED THAT IN THE COURSE OF ASSE SSMENT PROCEEDINGS UNDER S.153A, THE AO OBSERVED THAT CERT AIN INCOME AMOUNTING TO RS.20,38,042/- ARISING ON SALE OF PLOT TED LAND AT SANAVAD HAS BEEN SHOWN UNDER THE HEAD CAPITAL GAIN S. LIKEWISE, SIMILAR GAIN ON SALE OF LAND IN OTHER ASSESSMENT YE ARS IN DIFFERENT APPEALS CAPTIONED ABOVE HAVE BEEN SHOWN UNDER THE H EAD CAPITAL GAINS. THIS ACTION OF RE-ALIGNMENT BY WAY OF CHAN GE OF HEAD OF INCOME IN SEARCH ASSESSMENT IS IN CONTROVERSY. THE LEARNED AR THEREAFTER REFERRED TO THE SHOW CAUSE NOTICE DATED 13.02.2015 (PAGE NO.5 OF THE PAPER BOOK) ISSUED BY THE AO IN THIS RE GARD. AS PER THE AFORESAID SHOW CAUSE NOTICE, THE AO OBSERVED THAT T HE ASSESSEE PURCHASED AGRICULTURAL LAND AND CONVERTED THE SAME INTO NON- AGRICULTURAL LAND, DONE PLOTTING AND SOLD THE SAME TO VARIOUS CUSTOMERS. THE AO SHOW CAUSED THE ASSESSEE TO TREA T THE AFORESAID ACTIVITY TO BE A BUSINESS ACTIVITY SPANNING OVER VARIOUS ASSESSMENT YEARS IN APPEAL. AFTER CONSIDERING THE DETAILED RE PLY OF THE ASSESSEE TO COUNTER THE SHOW CAUSE NOTICE, THE AO CONTINUED TO BELIEVE THAT THE ACTIVITY OF THE ASSESSEE OF DIVIDING AND SUB-DI VIDING THE LAND AFTER CONVERSION INTO NON-AGRICULTURAL LAND AND SAL E THEREOF TO VARIOUS CUSTOMERS IS AKIN TO BUSINESS ACTIVITY. TH E AO ACCORDINGLY HELD THAT THE INCOME ARISING ON SALE OF PLOTTED LAN D IS REQUIRED TO BE IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 5 - ASSESSED UNDER THE HEAD BUSINESS INCOME INSTEAD O F CAPITAL GAINS. IN THIS BACKDROP, THE LEARNED AR SUBMITTED THAT BY VIRTUE OF THE AFORESAID ACTION, THE AO HAS CHANGED THE TAXABLE HE AD OF INCOME IN THE COURSE OF SEARCH ASSESSMENT. THE LEARNED AR, A T THIS JUNCTURE, VOCIFEROUSLY SUBMITTED THAT WHILE DOING SO AND WHIL E ASSESSING THE INCOME ALREADY OFFERED UNDER THE DIFFERENT HEAD OF INCOME, THE AO HAS NOT MADE ANY REFERENCE TO ANY INCRIMINATING MAT ERIAL AS EVIDENT FROM THE SHOW CAUSE NOTICE AS WELL AS THE ASSESSMEN T ORDER. THE LEARNED AR THUS SUBMITTED THAT IN THE ABSENCE OF AN Y INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH, THE ACTION OF THE AO TO MERELY CHANGE AND ALTER THE HEAD OF ASSESSAIBILITY OF INCOME IS A COMPLETE NON-STARTER. THE LEARNED AR SUBMITTED THA T THERE ARE LONG LINE OF JUDICIAL PRECEDENTS WHEREIN IT HAS BEEN CAT EGORICALLY HELD THAT WHERE NO INCRIMINATING MATERIAL WAS FOUND DURI NG THE COURSE OF SEARCH AND ASSESSMENT FOR RELEVANT ASSESSMENT YEAR IS ALREADY STOOD COMPLETED ON THE DATE OF SEARCH (AND IT DID NOT ABA TE IN TERMS OF 2 ND PROVISO TO S.153A), NO ADDITIONS CAN BE MADE ON THE BASIS OF RE- APPRECIATION OF REGULAR ACCOUNT OF THE ASSESSEE. T HE LEARNED AR CONTENDED THAT A RETURN WAS FILED EARLIER PRIOR TO SEARCH AND THE ASSESSMENT PROCEEDINGS IN PURSUANCE THERETO IS DEEM ED TO HAVE BEEN CONCLUDED ON EXPIRY OF THE TIME LIMIT PROVIDED FOR INITIATION OF ASSESSMENT PROCEEDINGS. THE TIME LIMIT FOR ISSUANC E OF NOTICE UNDER S.143(2) STOOD EXPIRED AT THE TIME OF SEARCH AND IN THE ABSENCE OF ANY PENDING ASSESSMENT, THE ASSESSMENT FOR AY 2009- 10 PURSUANT TO THE ORIGINAL RETURN ACHIEVED FINALITY. THE LEARNED AR ACCORDINGLY SUBMITTED THAT THE ASSESSMENT OF INCOME UNDER S. 14 3(3) R.W.S. 153A MUST HAVE NEXUS TO THE INCRIMINATING MATERIAL, IF A NY, FOUND IN THE COURSE OF SEARCH IN VIEW OF SEVERAL DECISIONS ON TH IS SCORE. THE LEARNED AR SUBMITTED THAT IN THE ABSENCE OF ANY INC RIMINATING MATERIAL REFERRED TO IN THE ASSESSMENT ORDER, THE A CTION OF THE IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 6 - AO/CIT(A) IN MAKING ADJUSTMENTS IN THE RETURN OF IN COME IN THE COURSE OF SEARCH ASSESSMENT UNDER S.153A IS WITHOUT SANCTION OF LAW IN VIEW OF SEVERAL DECISIONS OF THE HONBLE GUJARAT HIGH COURT INCLUDING THE CASE OF PR.CIT VS. SAUMYA CONSTRUCTIO N (P.) LTD. 387 ITR 529 (GUJ). THE LEARNED AR CONTENDED THAT THE A CTION OF THE REVENUE IN ALTERING THE HEAD OF ASSESSMENT IN THE I NSTANT CASE IS A MATTER OF REGULAR ASSESSMENT. SUCH ACTION IN THE C OURSE OF SEARCH ASSESSMENT IS BAD IN LAW AND THUS REQUIRES TO BE SE T ASIDE. 8. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AO AND CIT(A) AND SUBMITTED IN FURTHERANCE THAT THE AO HAS CLEARLY DEMONSTRATED ON FACTS THAT ACTIVITY OF THE ASSESSEE TOWARDS SALE OF PLOTTED LAND TO NUMEROUS CUSTOMERS IS A BUSINESS AC TIVITY INDEED. THE LEARNED DR ACCORDINGLY SUBMITTED THAT NO INTERF ERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. 9. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS A ND PERUSED THE MATERIAL AVAILABLE ON RECORD AND CASE LAW CITED . THE SCOPE OF APPLICABILITY OF SECTION 153A CONCERNING SEARCH ASS ESSMENT IS IN QUESTION. IT IS THE CASE ON BEHALF OF THE ASSESSEE THAT RE-ALIGNMENT OF TAXABILITY OF INCOME OFFERED FROM ONE HEAD TO AN OTHER ARE SUBJECT MATTER OF REGULAR ASSESSMENT AND DO NOT RESONATE WI TH THE SCHEME OF SEARCH ASSESSMENT UNDER S. 153A OF THE ACT DE HORS REFERENCE TO ANY INCRIMINATING MATERIAL IN THIS REGARD. FURTHER EMP HASIS IS LEAD ON BEHALF OF THE ASSESSEE THAT IN THE ABSENCE OF ANY I NCRIMINATING MATERIAL, NO ADJUSTMENT OF REGULAR INCOME OFFERED I N THE RETURNED INCOME IS PERMISSIBLE UNDER S.153A OF THE ACT. AS NOTED ABOVE, IT IS POINTED OUT ON BEHALF OF THE ASSESSEE THAT IMPUG NED RETURN FOR AY 2009-10 OF THE ASSESSEE-DHIREN B. PATEL WERE NOT PE NDING FOR ASSESSMENT AT THE TIME OF SEARCH AND CONSEQUENTLY, THE REGULAR IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 7 - ASSESSMENT/DEEMED ASSESSMENT STAND CONCLUDED AT THE TIME OF SEARCH RELATING TO THE ASSESSMENT YEAR IN QUESTION AND THU S SURVIVES AND DID NOT GET ABATED. IT IS THUS THE CASE ON BEHALF OF T HE ASSESSEE THAT IN THESE FACTS, IT IS NOT PERMISSIBLE FOR THE AO TO IN VOKE AUTHORITY VESTED UNDER S.153A OF THE ACT TO INDULGE IN MAKING ROUTINE EXAMINATION OF VARIOUS ITEMS OF INCOME AND EXPENDIT URE FILED AND DECLARED IN THE RETURN WHICH HAS NO NEXUS TO THE IN CRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH, IF ANY. IN ESSENCE, IT IS THE CASE OF THE ASSESSEE THAT ADDITIONS/DISALLOWANCES C OULD NOT BE MADE IN THE ASSESSMENT FRAMED UNDER S.153A OF THE ACT DE HORS REFERENCE TO ANY INCRIMINATING MATERIAL FOUND IN THE COURSE O F SEARCH WHERE THE RETURN FILED PRIOR TO SEARCH SURVIVES AND DO NO T GET 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 T O INTERFERE WITH THE ASSESSMENT CONCLUDED EITHER UNDER S. 143(1) OR UNDER S. 143(3) OF THE ACT AND NOT PENDING AT THE 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 PLOTTED LAND . THE RETURN FOR THE ASSESSMENT YEAR IN QUESTION SO FILED WAS ACCEPT ED UNDER S.143(1) OF THE ACT AND / OR ASSESSED UNDER S.143(3) OF THE ACT PRIOR TO SEARCH AND, AS SUCH, NO ASSESSMENT WAS EVENTUALLY PENDING ON THE DATE OF INITIATION OF SEARCH WHICH MAY GET ABATED IN CONSEQ UENCE OF SEARCH. IN THESE FACTS, THE POSITION OF LAW HAS BEEN EVOLVE D OVER TIME BY JUDICIAL PRECEDENTS. IN THE LIGHT OF THE HONBLE JU RISDICTIONAL HIGH IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 8 - 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. 153A OF THE ACT OWING TO ABSENCE OF ANY INCRIMINATING MATERIAL OR EVIDENCE D EDUCED AS A RESULT OF SEARCH. NO REFERENCE OF SUCH INCRIMINATIN G MATERIAL, IF ANY, IS FOUND IN THE ASSESSMENT YEAR. 12. IN VIEW OF THE LONG LINE OF JUDICIAL PRECEDENTS GOVERNING THE FIELD, WE HOLD THAT ROUTINE ADJUSTMENTS IN THE NATU RE OF CHANGE OF HEAD OF INCOME OF REPORTED INCOME WITHOUT ANY NEXUS TO INCRIMINATING MATERIAL FOUND, IF ANY, AS A RESULT O F SEARCH OPERATIONS ARE NOT SUSTAINABLE IN THE EYES OF LAW IN SECTION 1 53A PROCEEDINGS. HENCE, THE RE-ALIGNMENT OF HEAD OF INCOME TOWARDS G AIN ON SALE OF LAND FOR THE PURPOSES OF TAXABILITY REQUIRES TO BE QUASHED. THUS, WE FIND MERIT IN THE LEGAL GROUND RAISED BY THE ASSESS EE. IN THIS VIEW OF THE MATTER, WE DO NOT INTEND TO ADJUDICATE THE MERI TS OF THE ADJUSTMENTS / RE-ALIGNMENT. 13. IN THE RESULT, THE CAPTIONED APPEAL OF THE ASSE SSEE IN IT(SS)A NO.188/AHD/2016 [IN CASE OF SHRI DHIREN BHOLIDAS PA TEL] FOR AY 2009-10 IS ALLOWED. 14. IN IT(SS)A NOS. 191 & 192/AHD/2016 [IN CASE OF SHRI KIRITKUMAR D. PATEL] FOR AYS 2007-08 & 2008-09 ALSO , THE RESPECTIVE ASSESSEES HAVE FILED ADDITIONAL GROUND C HALLENGING THE JURISDICTION OF THE AO TO ALTER THE HEAD OF INCOME IN RESPECT OF ALREADY INCLUDED IN THE REGULAR RETURN AND IN THE A BSENT OF ANY REFERENCE TO ANY INCRIMINATING MATERIAL. WE FIND T HAT THE FACTS AND ISSUES INVOLVED IN THESE APPEALS ARE IDENTICAL IN M ATERIAL RESPECT TO IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 9 - APPEAL IN IT(SS)A NO.188/AHD/2016 (SUPRA). ACCORDI NGLY, IN PARITY, THE CAPTIONED APPEALS ARE ALSO REQUIRED TO BE ALLOWED IN FAVOUR OF THE ASSESSEE FOR SIMILAR REASONINGS. 15. IN THE RESULT, IT(SS)A NOS. 191 & 192/AHD/2016 [IN CASE OF SHRI KIRITKUMAR D. PATEL] FOR AYS 2007-08 & 2008-09 ARE ALLOWED. 16. WE SHALL NOW ADVERT TO IT(SS)A NOS. 189 & 190/A HD/2016 IN RESPECT OF SHRI DHIREN B. PATEL FOR A.YS. 2012-13 & 2013-14; RESPECTIVELY. 16.1 THE ASSESSEE IN THE INSTANT CASE HAS CHALLENGE D THE ACTION OF THE AO ON MERITS IN ASSESSING CAPITAL GAINS ARISING FROM THE SALE OF SANAVAD LAND UNDER THE HEAD OF BUSINESS INCOME. 16.2. BRIEFLY STATED, IN THE COURSE OF ASSESSMENT P ROCEEDINGS UNDER S.153A R.W.S. 143(3), THE AO FOUND THAT ASSESSEE HA S DISCLOSED A SUM OF RS.1,45,157/- FOR AY 2012-13 ON SALE OF PLOT OF SANAVAD LAND UNDER THE HEAD SHORT TERM CAPITAL GAIN. SIM ILARLY, ANOTHER SUM OF RS.9,57,297/- WAS DISCLOSED UNDER THE HEAD LONG TERM CAPITAL GAIN FOR AY 2013-14. THE AO OBSERVED THAT THE ASSESSEE HOLDING THE AGRICULTURAL LAND CONVERTED THE SAME IN TO NON- AGRICULTURAL LAND AND DIVIDED AND SUB-DIVIDED THE L AND BY PLOTTING THEREOF. THE DIVIDED LAND (PLOT) WAS SOLD TO VARIOU S CUSTOMERS. THE AO HELD THE SAME TO BE A BUSINESS ACTIVITY AS AGAIN ST ACCRETION TO THE CAPITAL ASSET AT THE TIME OF SALE. THEREFORE, THE AO HELD THAT THE INCOME ARISING ON SALE OF PLOTS IS REQUIRED TO BE A SSESSED AT A HIGHER RATE OF TAXATION UNDER THE HEAD BUSINESS INCOME A ND THUS, DENIED THE CONCESSIONAL TREATMENT CLAIMED BY THE ASSESSEE UNDER THE HEAD CAPITAL GAINS. IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 10 - 16.3 THE CIT(A) CONFIRMED THE AFORESAID ACTION OF T HE AO IN FIRST APPEAL. 16.4 AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL B EFORE THE TRIBUNAL. 16.5 LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A FARMER AND HIS ANCESTRALS WERE ALSO DOING FARMING A CTIVITY. THE ASSESSEE HEREIN PURCHASED LAND AT VILLAGE SANAVAD A LONGWITH FAMILY MEMBERS AND RELATIVES WHO ARE FARMERS WITH AN INTEN TION TO USE IT FOR AGRICULTURAL PURPOSE. HOWEVER, DUE TO NEW ZONI NG, ALL SURVEY NUMBERS OF VILLAGE SANAVAD FELL UNDER RESIDENTIAL Z ONE DESPITE BEING AGRICULTURAL LAND. THE AGRICULTURAL ACTIVITY WAS THUS SEVERALLY EFFECTED DUE TO SPURT IN DEVELOPMENT ACTIVITY IN TH E AREA. THE LAND ADMEASURING 10218 SQ.MTRS. BEING HUGE AREA COULD NO T BE SOLD AS A WHOLE. THEREFORE, THE LAND WAS DIVIDED INTO PIECES IN SMALL PLOT FOR WHICH THE APPROVAL FROM AUDA WAS TAKEN ON 06.06.200 7 FOR WHICH NA CHARGES ETC. WERE PAID TO DDO. THE LAND WAS THU S SUB-DIVIDED INTO 43 PLOTS WHILE NO DEVELOPMENT ACTIVITY WAS CAR RIED OUT BY THE LAND OWNERS. THE LEARNED AR ACCORDINGLY SUBMITTED THAT WHERE NO DEVELOPMENT ACTIVITY WAS CARRIED OUT BY THE LAND OW NERS ACCEPT PAYING REQUIRED CHARGES TO THE GOVERNMENT AGENCIES FOR APPROVAL. THE SELLING OF LAND BY SUB-DIVIDING IN PLOTS DOES N OT CONSTITUTE BUSINESS ACTIVITY. THE LEARNED AR FURTHER SUBMITTE D THAT GAIN ON SALE OF SUCH PLOTS HAS BEEN OFFERED AS SHORT TERM C APITAL GAINS IN THE INCOME TAX RETURN FILED WHERE THE TAX RATE IS NO DI FFERENT. THUS, THERE IS ADVANTAGE TO ASSESSEE PER SE. THE LEARNED AR ACCORDINGLY SUBMITTED THAT INCOME OFFERED UNDER THE HEAD CAPIT AL GAINS HAS A RATIONAL BASIS AND THE ACTION OF AO IS DEVOID OF AN Y SATISFACTION TO ASSESS IT UNDER HEAD BUSINESS INCOME. IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 11 - 16.6 THE LEARNED AR THEREAFTER RELIED UPON THE DECI SION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. P REMJI GOPALBHAI 113 ITR 785 (GUJ) AND OF THE CO-ORDINATE BENCH IN H ITESHKUMAR ASHOKKUMAR VASWANI VS. JT.CIT (2017) 165 ITD 505 (A HMEDABAD) TO SUPPORT ITS THE CLAIM OF TAXABILITY OF GAINS UN DER THE HEAD CAPITAL GAINS. 16.7 THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AO AND CIT(A). 17. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE CASE LAW CITED. THE SUBSTANTIVE ISSUE IN THE P RESENT APPEAL IS WHETHER GAINS ARISING ON SALE OF PLOTS BY THE ASSES SEE IN THE RELEVANT ASSESSMENT YEAR IN QUESTION IS REQUIRED TO BE TAXED UNDER THE HEAD CAPITAL GAINS AS OFFERED BY THE ASSESSEE OR IS TO BE TREATED AS BUSINESS INCOME OF THE ASSESSEE. THE QUESTION IS ESSENTIALLY FACTUAL IN NATURE AND DEPENDS ON THE FACTS PREVALEN T IN A GIVEN CASE. THE ASSESSEE HAS ADVANCED JUSTIFICATION FOR TAXABIL ITY UNDER THE HEAD CAPITAL GAINS ON THE GROUND THAT THE ASSESSEE BEI NG A FARMER HAS ACQUIRED AGRICULTURAL LAND. HOWEVER, DUE TO CHANGE IN THE GOVERNMENT POLICY, THE LAND FELL INTO RESIDENTIAL Z ONE WHERE THE ASSESSEE FOUND IT DIFFICULT TO CARRY ON AGRICULTURA L ACTIVITY DUE TO ON- GOING CONSTRUCTION AND DEVELOPMENT. DUE TO THE LAR GE SIZE OF THE LAND, IT WAS DIVIDED AND SUB-DIVIDED AND SOLD TO TH E INTERESTED CUSTOMERS. THESE FACTS DO NOT EXCLUSIVELY SUGGEST THAT THE ENTIRE EXERCISE WAS TO EXPLOIT THE LAND COMMERCIALLY IN TH E NATURE OF ADVENTURE WHICH IS AKIN TO THE BUSINESS. IN THE LI GHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PR EMJI GOPALBHAI (SUPRA) AND THE DECISION OF AHMEDABAD TRIBUNAL IN T HE CASE OF HITESHKUMAR ASHOKKUMAR VASWANI (SUPRA), WE FIND MER IT IN THE PLEA IT(SS)A NOS. 188 TO 192/AHD/16 [DHIREN B PATEL & SHRI KIRITKUMAR DAYABHAI PATEL VS. DCIT] - 12 - OF THE ASSESSEE FOR TREATING THE SAME TO BE GAIN AR ISING FOR CAPITAL NATURE AND THUS, ASSESSABLE UNDER THE HEAD OF CAPI TAL GAINS. WE ALSO TAKE NOTE OF THE DECISION OF THE CO-ORDINATE B ENCH OF TRIBUNAL IN 193/AHD/2016 & ORS. ORDER DATED 04.07.2018 WHERE THE IDENTICAL ISSUE ON SAME FACTS ARISING IN SAME SEARCH. THE ID ENTICAL ISSUE WAS ADJUDICATED IN FAVOUR OF THE ASSESSEE. IN PARITY, WE THEREFORE CANCEL AND SET ASIDE THE ORDER OF THE CIT(A) IN THIS REGAR D AND RESTORE THE TREATMENT GIVEN BY THE ASSESSEE IN ITS RETURN OF IN COME ON THIS ACCOUNT. 18. IN THE RESULT, THE CAPTIONED APPEALS OF THE ASS ESSEE IN IT(SS)A NOS. 189 & 190/AHD/2016 IN RESPECT OF SHRI DHIREN B . PATEL FOR A.YS. 2012-13 & 2013-14; RESPECTIVELY ARE ALLOWED. 19. IN THE COMBINED RESULT, ALL THE CAPTIONED APPEA LS ARE ALLOWED. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/10/2018 S. K. SINHA / COPY OF ORDER FORWARDED TO:- -. / REVENUE 2. / ASSESSEE /. ( 0( / CONCERNED CIT 4. 0(- / CIT (A) 3.456!7(7 8 8 / DR, ITAT, AHMEDABAD 9.6:; / GUARD FILE. BY ORDER / 8 / 8 THIS ORDER PRONOUNCED IN OPEN COURT ON 04/10/20 18