Smt. Darshnaben Harshadbhai Savalia, Ahmedabad V. The Dy.CIT, Central Circle-2(1), Ahmedabad

ITSSA 79/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9313 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Question of law; Revised return; Bonafide mistake; Reassessment proceedings; TDS; Set aside; Capital Gains
• Section: 143(3); 50C; 153A; 143(1); 64; 147; 148; 132; 15; 139

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER () . / I.T.(SS)A. NOS. 82, 83, 84 & 889/AHD/2015 ( ASSESSMENT YEAR : 2008-09, 2009-10, 2010-11 & 2011-12) BHANUBEN KANTIBHAI SAVALIA 10/203, SATYAGRAH CHHAVANI, OPP: RANGOLI RESTAURANT, SATELLITE, AHMEDABAD / VS. THE DCIT CENTRAL CIRCLE 2(1), AHMEDABAD ./ ./ PAN/GIR NO. : ACWPS4723L ( APPELLANT ) .. ( / RESPONDENT ) & () . / I.T.(SS)A. NOS. 79, 80, 81 & 888/AHD/2015 ( ASSESSMENT YEAR : 2008-09, 2009-10, 2010-11 & 2011-12) DARSHNABEN HARSHADBHAI SAVALIA 702, SURMOUNT COMPLEX, ISCON TEMPLE, S. G. HIGHWAY, AHMEDABAD / VS. THE DCIT CENTRAL CIRCLE 2(1), AHMEDABAD ./ ./ PAN/GIR NO. : AFQPS4024R ( APPELLANT ) .. ( / RESPONDENT ) & IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 2 - () . / I.T.(SS)A. NOS. 76, 77, 78 & 887/AHD/2015 ( ASSESSMENT YEAR : 2008-09, 2009-10, 2010-11 & 2011-12) SMT. KAPILABEN S. SAVALIA 10/203, SATYAGRAH CHHAVANI, OPP: RANGOLI RESTAURANT, SATELLITE, AHMEDABAD / VS. THE DCIT CENTRAL CIRCLE 2(1), AHMEDABAD ./ ./ PAN/GIR NO. : ABBPV5065E ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : NUPUR SHAH, A.R. / RESPONDENT BY : SHRI ALOK SINGH, CIT.D.R. !' DATE OF HEARING 25/07/2019 #$%& !' / DATE OF PRONOUNCEMENT 17/09/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS AT THE INSTANCE OF ASSESSEE A RISE FROM THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) (CIT(A)) AGAINST RESPECTIVE ASSESSMENT ORDERS FOR DIFFERENT ASSESSMENT YEARS AS TABULATED BELOW: IT(SS)A NOS. NAME OF ASSESSEE AY CIT(A)S ORDER DATED AOS ORDER DATED AOS ORDER UNDER SECTION 82/AHD/15 BHANUBEN KANTIBHAI SAVALIA 2008-09 27.01.2015 21.03.2013 153A R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 83/AHD/15 -DO- 2009-10 -DO- -DO- -DO- 84/AHD/15 -DO- 2010-11 -DO- -DO- -DO- 889/AHD/15 -DO- 2011-12 -DO- -DO- 143(3) OF THE ACT 79/AHD/15 DARSHNABEN 2008-09 -DO- -DO- 153A R.W.S. IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 3 - HARSHADBHAI SAVALIA 143(3) OF THE ACT 80/AHD/15 -DO- 2009-10 -DO- -DO- -DO- 81/AHD/15 -DO- 2010-11 -DO- -DO- -DO- 888/AHD/15 -DO- 2011-12 -DO- -DO- 143(3) OF THE ACT 76/AHD/15 SMT. KAPILABEN S. SAVALIA 2008-09 -DO- -DO- 153A R.W.S. 143(3) OF THE ACT 77/AHD/15 -DO- 2009-10 -DO- -DO- -DO- 78/AHD/15 -DO- 2010-11 -DO- -DO- -DO- 887/AHD/15 -DO- 2011-12 -DO- -DO- 143(3) OF THE ACT 2. WE FIRST TAKE UP IT(SS)A NO. 82/AHD/2015 CONCERN ING AY 2008-09 FOR ADJUDICATION PURPOSES. IT(SS)A NO. 82/AHD/2015-AY- 2008-09 (BHANUBEN K. SA VALIA) 3. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE ACTION OF THE REVENUE IN TREATING LAND AT THALTEJ, AHMEDAB AD AS CAPITAL ASSET INSTEAD OF STOCK-IN-TRADE BEING CONSIDERED BY THE ASSESSEE. 4. THE RELEVANT FACTS FOR DETERMINATION OF THE ISSU E RAISED BY THE ASSESSEE ARE NOTED AS UNDER: 4.1 THE ASSESSEE FILED RETURN OF INCOME FOR AY 2008 -09 ON 05.12.2008 UNDER S.139 OF THE ACT DECLARING TOTAL INCOME OF RS .21,49,200/-. A SEARCH ACTION UNDER S.132 OF THE ACT WAS CARRIED OUT IN TH E GROUP CASES OF SAVALIA GROUP. A SEARCH ACTION WAS ALSO CARRIED OUT ON 06. 01.2011 IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AT AHMEDABAD. IN PURSUANCE OF THE SEARCH, A NOTICE UNDER S.153A(1) OF THE ACT WAS ISS UED ON 27.07.2012. IN RESPONSE THEREOF, THE ASSESSEE FILED RETURN OF INCO ME UNDER S.153A OF THE ACT DECLARING TOTAL INCOME OF RS.21,48,450/-. IN T HE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER S.153A OF THE ACT, IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD INITIALLY DECLARED INCOME FROM SALE OF LAND/PLOT NAMED KRISH VILLA AS SHORT TERM CAPITAL GAIN IN THE AY 2009-10 AND OTHER YEARS WHEN THE PLOTS WERE SOLD. THE INVESTME NT IN THALTEJ LAND (KRISH VILLA) WAS SHOWN IN THE ACCOUNTS AS PLOT AT THALTEJ OF RS.1,00,28,418/- (1/3 RD SHARE) AS INVESTMENT/CAPITAL ASSET AT THE TIME O F FILING OF RETURN PRIOR TO SEARCH UNDER S.139 OF THE ACT. HOWEVER, THE IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 4 - POSITION WAS ALTERED IN THE RETURN OF INCOME FILED SUBSEQUENT TO SEARCH AND THE AFORESAID CO-OWNERSHIP LAND (OTHER CO-OWNERS NA MELY SMT. DARSHNABEN H. SAVALIA AND SMT. KAPILABEN S. SAVALIA) WAS SHOWN AS STOCK-IN- TRADE/CURRENT ASSET (INSTEAD OF CAPITAL ASSET) IN THE RETURN FILED PURSUANT TO NOTICE UNDER S.153A OF THE ACT. AS A CONSEQUENCE O F SUCH CHANGE IN THE CLASSIFICATION AND CHARACTERIZATION OF LAND HELD BY THE ASSESSEE AT THE END OF THE FY 2007-08 CONCERNING AY 2008-09, THE RESULT ANT GAINS ARISING ON SALE OF PLOT/LAND WERE ALSO DECLARED AS BUSINESS I NCOME (AS AGAINST THE CAPITAL GAINS IN THE RETURN FILED PRIOR TO SEARCH) IN THE RESPECTIVE RETURNS FILED PURSUANT TO SEARCH ACTION. THE AO OBSERVED T HAT THE ASSESSEE HAS SOLD THE LAND OR A PART THEREOF IN AYS. 2009-10, 2010-11 AND 2011-12 AND THE GAINS THEREON HAVE BEEN DECLARED UNDER THE HEAD BU SINESS INCOME IN RESPECTIVE ASSESSMENT YEARS WHEREAS THE GAINS FROM SUCH SALE WAS EARLIER SHOWN TO BE CAPITAL GAINS IN THE ORIGINAL RETURN. THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE HER CLAIM THAT KRISH VILLA IS IN THE NATURE OF ADVENTURE IN THE NATURE OF TRADE AND CONS EQUENTLY, THE PROFIT ARISING ON SALE OF LAND IS REQUIRED TO BE TAXED AS BUSINESS INCOME AND IT WAS A BONAFIDE MISTAKE AT THE TIME OF ORIGINAL RETU RN TO SHOW THE SALE CONSIDERATION FROM THE LAND PARCELS AS SHORT TERM C APITAL GAIN. THE AO HOWEVER DISPUTED THE ASSESSEES CLAIM THAT INCOME F ROM SALE OF PLOT/ PART OF LAND IS AKIN TO ADVENTURE IN THE NATURE OF TRADE . THE AO CONTENDED THAT THE ASSESSEE KEPT ON SHOWING INCOME FROM KRISH VILL A PLOTS AS SHORT TERM CAPITAL GAINS UNTIL A DISTINCT PROCEEDING STARTED C ONSEQUENT TO SEARCH ACTION. IT WAS NOTED THAT THE ORIGINAL RETURN FOR AY 2010-11 WAS ALSO FILED UNDER S.139 OF THE ACT PRIOR TO SEARCH ON 05.01.201 1 AND TILL THAT DATE ALL THE PLOTS OF KRISH VILLA WERE ALREADY SOLD. DESPIT E THIS, THE ASSESSEE HAS SHOWN INCOME FROM KRISH VILLA AS SHORT TERM CAPITAL GAIN AND THEREFORE IT CANNOT BE TREATED AS GENUINE MISTAKE OF THE ASSESSE E ORIGINALLY. NO REVISED RETURNS WERE FILED FOR AYS. 2008-09 TO 2010-11. CO NSEQUENT UPON THE FRESH PROCEEDINGS UNDER S. 153A, THE ASSESSEE HAS WRONGLY TRIED TO TAKE THE BENEFIT OF INCOME TAX PROVISIONS BY SHOWING THIS IN COME AS BUSINESS INCOME. THE AO FURTHER OBSERVED THAT THE OBJECT OF FRESH FILING OF RETURN OF INCOME UNDER S.153A OF THE ACT IS TO ENABLE THE ASSESSEE TO DISCLOSE HER CORRECT INCOME AFTER TAKING INTO ACCOUNT MATERIAL S EIZED DURING THE COURSE IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 5 - OF SEARCH. IT WAS CONTENDED THAT THE AFORESAID SEC TION 153A OF THE ACT IS NOT MEANT TO PROVIDE FRESH OPPORTUNITY TO THE ASSES SEE TO TAKE ANY KIND OF BENEFIT QUA THE ORIGINAL RETURN. THE AO FURTHER NOTED THAT ALL THE RETURN OF INCOME FROM AYS. 2008-09 TO 2010-11 WERE FILED UNDE R S.153A OF THE ACT ON 21.08.2012. THE AO ALSO NOTED THAT THE ASSESSEE AFTER CHANGING THE NATURE AND CHARACTER OF INCOME ARISING FROM SALE OF PLOTS (KRISH VILLA) FROM CAPITAL GAINS (DECLARED ORIGINALLY PRIOR TO SEARC H) TO BUSINESS INCOME IN THE RETURN OF FILED AFTER SEARCH, GOT HER ACCOUNTS AUDITED AND SUBMITTED THE AUDIT REPORT ALONGWITH RETURN FILED UNDER S.153A OF THE ACT. IT WAS THUS NOTED THAT THE ENTIRE ACTION OF THE ASSESSEE WAS AN AFTERTHOUGHT OF THE SEARCH ACTION WITH AN INTENTION TO TAKE BENEFIT OF THE TAX PROVISIONS WHICH IS CONTRARY TO THE MANDATE OF LAW. THE PLOTS/LAND SHOWN TO BE HELD AS TRADING ASSET IN THE REVISED RETURN UNDER S.153A OF THE ACT WERE SOLD IN THE LATER YEAR AT A PRICE BELOW THE STAMP DUTY RATE . THE ASSESSEE HAS SIMPLY INDULGED IN MIS-REPRESENTATION OF FACTS WITH A VIEW TO LABEL THE TRANSACTIONS TO BE OF BUSINESS NATURE TO ESCAPE THE APPLICATION OF SECTION 50C OF THE ACT. IT WAS FURTHER NOTED THAT THE ASSESSEE WAS EN GAGED IN THE SIMILAR KIND OF ACTIVITY IN THE PREVIOUS YEARS AND ALSO IN THE S UBSEQUENT YEARS (SHILAJ LAND) WHERE THE ASSESSEE HAS DECLARED INCOME BY WAY OF CAPITAL GAINS ON SALE OF PLOT. THE AO THUS OBSERVED THAT THE ACTIVI TY OF SALE OF PLOTS IN KRISH VILLA CANNOT BE TREATED DIFFERENTLY. THE AO ACCORDINGLY DECLINED TO ACCEPT THE CHANGE IN THE NATURE AND CHARACTER OF IN VESTMENT IN KRISH VILLA PLOT AND INCOME ARISING THEREFROM. THE AO ACCORDING LY TREATED KRISH VILLA, THALTEJ LAND AS CAPITAL ASSET IN TUNE WITH ORIGINAL RETURN AND DECLINED THE REVISED CLAIM OF ASSESSEE TO TREAT THE SAME AS STOC K-IN-TRADE FOR AY 2008- 09 AND CONSEQUENT PROFIT ARISING FROM SALE OF PLOT AS BUSINESS INCOME OF THE ASSESSEE. IN ESSENCE, THE AO THUS TREATED THE LAND AT THALTEJ AS CAPITAL ASSET FOR AY 2008-09 IN QUESTION AND APPLIED THE PR OVISIONS RELATING TO CAPITAL GAINS FOR THE PURPOSES OF THE ABILITY OF GA INS IN THE SUBSEQUENT ASSESSMENT YEARS IN APPEAL. 5. AGGRIEVED BY THE RE-CHARACTERIZATION OF INVESTME NT IN LAND (AY 2008-09) AND SUBSEQUENT INCOME OF SALE (AYS. 2009-1 0, 2010-11 & 2011- 12), THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A ). IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 6 - 6. THE CIT(A) HOWEVER WAS NOT IMPRESSED BY THE DEFE NSE OFFERED BY THE ASSESSEE. THE RELEVANT PARAS DEALING WITH THE ISSU E BY THE CIT(A) IN ITS COMMON ORDER FOR AY 2008-09 TO 2011-12 IS REPRODUCE D HEREUNDER: 10. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER, SUBMISSION OF THE APPELLANT AND MATERIAL AVAILABLE ON RECORD. THE AP PELLANT IS AN INDIVIDUAL ASSESSEE WHO WAS SEARCHED U/S 132 OF THE ACT ON 06.01.2011 ALONG WITH THE SAVALIA GROUP. THE ORIGINAL RETURNS OF INCOME U/S 139 FOR THE AYS 2008-09 TO 2010-11 WERE FILED BEFORE THE SE ARCH SHOWING RECEIPT FROM SALE OF KRISH VILLA PLOTS AS CAPITAL GAIN. ALL PLOTS OF KRISH VILLA WERE SOLD BEFORE THE DATE OF SEARCH. 10.1 THE APPELLANT FILED RETURN OF INCOME U/S 153A FOR AY 2008- 09, 2009-10, 2010-11 AND 2011-12 IN RESPONSE TO NOT ICE U/S 153A(1)(A) ON 21.08.2012. IN THE RETURN FILED U/S 153A IN TH ESE YEARS, THE APPELLANT CHANGED THE HEAD OF INCOME OF RECEIPT FROM SALE OF KRISH VILLA PLOT FROM CAPITAL GAIN TO BUSINESS INCOME. HOWEVER ON OR BEF ORE THE DATE OF SEARCH CARRIED OUT, APPELLANT DID NOT REVISE ANY OF TH E RETURNS OF INCOME FILED U/S 139 OF THE ACT FOR AY 2008-09 TO AY 2010-11. T HUS IT IS EVIDENT THAT THE APPELLANT KNOWINGFULLY SHOWN THE RECEIPT FROM SALE OF KRISH VILLA PLOTS AS CAPITAL GAIN IN RETURN FILED U/S. 139 AND NO MISTAKE WAS COMMITTED IN SHOWING THE CAPITAL ASSETS AND CAPITA L GAIN AS THIS IS NOT AN ISOLATED INCIDENT. THE APPELLANT KNOWINGFULLY SHOW N THE SAME AS CAPITAL ASSETS AND CAPITAL GAIN IN THREE YEARS I.E. A.Y. 20 .08-09 TO A.Y. 2010-11. I 10.2 THE APPELLANT HAS ARGUED THAT THE AO HAS PLACE D RELIANCE ON THE ASSESSMENT ORDER U/S 143(3) OF THE ACT DATED 3.11.2 011 AS THE SAID ORDER IS WITHOUT JURISDICTION AS PER THE PROVISO TO SEC. 153A(1) OF THE ACT AND THUS NULL AND VOID AB INITIO. IT IS SEEN THAT THE AO HAS MERELY REFERRED THE ASSESSMENT ORDER U/S 143(3) OF THE A CT DATED 3.11.2011 AND MENTIONED THAT EVEN DURING THE ASSESSMENT PROCEED ING U/S 143(3) IN AY 2010-11, THE ASSESSEE WAS SHOWING THE ASSETS A S CAPITAL ASSETS AND RECEIPT FROM THE SALE OF PLOT AS CAPITAL GAIN ONLY. IT IS CLEAR THAT THE AO DISCUSSED AND REFERRED THE ASSESSMENT ORDER JUST TO .SHOW THE INTENTION OF THE ASSESSEE AND PROVE THAT SHE INTENTIONALLY AND DELIBERATELY SHOWN THE SAME AS CAPITAL ASSETS AND CAPITAL GAIN AND DID NOT COMMIT A BONAFIED MISTAKE. THUS THE ARGUMENT OF THE APPELLANT HOLD NO MERIT. 10.3 NOW THE QUESTION ARISES AS TO WHETHER THE APPE LLANT CAN REVISE THE HEAD OF INCOME DECLARED IN THE ORIGINAL RETURNS OF INCOME FILED U/S 139 OF THE ACT FOR AY 2008-09 TO AY 2010-11 AFTER THE SEAR CH IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT WHERE THE PERIOD O F FILING OF REVISED RETURN HAS ALREADY BEEN OVER, ON THE GROUND THAT DU E TO BONAFIED MISTAKE, RECEIPT FROM SALE OF KRISH VILLA PLOTS WAS SHOWN AS CAPITAL GAIN THOUGH THE TRUE NATURE OF THE ACTIVITIES ARE ADVENTURE IN NATURE. 10.4 IT IS SEEN THAT THE ORIGINAL RETURN U/S 139 OF THE ACT FOR AY 2008- 09, A.Y.2009-10 AND A.Y 2010-11 WERE FILED ON 05.1 2.2008, 30.10.2009 AND 12.10.2010 AND THE CAPITAL ASSETS AND THE PROFI T FROM SALE OF 13 PLOTS OF KRISH VILLA WAS SHOWN AS SHORT TERM CAPITAL GA IN IN BOTH YEARS AND THE COMPUTATION OF CAPITAL GAIN SHOWS C OST OF LAND INCLUSIVE OF DEVELOPMENT EXPENSES. HOWEVER WHILE FILING THE RETURN OF INCOME IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 7 - AFTER SEARCH U/S 153A OF THE IT ACT FOR AY 2008-09 TO 2010-11 THE APPELLANT CHANGED THE NATURE OF ASSETS AND INCOME F ROM CAPITAL ASSETS AND CAPITAL GAIN TO BUSINESS ASSETS AND BUSINESS INCOME . IN RETURN FILED U/S 153A OF THE ACT ASSETS IN THE BALANCE SHEET WAS S HOWN AS 1/3RD SHARE IN THE PLOT AT THALTEJ OF RS.1,00,28,418/- BUT NO S EPARATE BIFURCATIONS OF FIXED ASSETS AND WIP/ STOCK-IN-TRADE WAS GIVEN. IT IS ALSO IMPORTANT TO NOTE THAT NO BALANCE SHEET OR STATEMENT OF AFFAIRS SHOWING THE NATURE OF ASSETS WAS FILED BEFORE SEARCH IN ANY PROCEEDING BE FORE THE REVENUE. THE APPELLANT FILED HER BALANCE SHEET FIRST TIME DU RING THE ASSESSMENT PROCEEDING U/S 153A AFTER THE SEARCH ONLY. IT IS SE EN THAT THE APPELLANT WAS ALSO INVOLVED IN THE SIMILAR ACTIVITIES OF BUYI NG AND SELLING OF PLOTS IN THE EARLIER YEARS ALSO AND INCOME SALE OF PLOTS AND LANDS WERE SHOWN AS CAPITAL GAIN IN THOSE YEARS. 10.5 IT IS SEEN THAT AUDIT REPORT IN AY 2009-10 TO 2010-11 WERE PREPARED ON 18,06.2012 MUCH AFTER THE SEARCH AND THE NATURE OF INCOME WAS CHANGED IN THE RETURN OF INCOME FILED U/S 153A OF T HE ACT. THE RETURN OF INCOME U/S 139 FOR AY 2011-12 WAS FILED AFTER SEARC H IN THIS ALSO AUDIT REPORT WAS PREPARED ON- 21.08.2012 ONLY. DURING PRE -SEARCH PERIOD THE APPELLANT CONSCIOUSLY ACTED AS INVESTOR AND CONTINU OUSLY SHOWN CAPITAL ASSETS AND CAPITAL GAIN IN THE RETURN OF INCOME FIL ED U/S 139 OF THE ACT IN ALL THE YEARS. 10.6 THERE ARE SOME BASIC PREREQUISITE AS PER THE L AW OF LAND TO RUN ANY BUSINESS ACTIVITY. IT IS NECESSARY FOR ANY ENTREPRENEUR TO HAVE PROFESSIONAL TAX NUMBER, TAN AND TDS ON PAYMENT F ROM THE SECOND YEAR ONWARD , SALES TAX REGISTRATION , MAINTENANCE O F ACCOUNTS AND BOOKS, STATUTORY AUDIT OF ACCOUNTS WHEN TURNOVER IS ABOVE 40 LAKHS, OFFICE LICENCE ETC. HOWEVER THE APPELLANT DID NOT COMPLETE ANY OF THE ABOVE FORMALITIES. IT IS ALSO SEEN THAT THE APPELLANT H AS NOT EMPLOYED AND NOT INCURRED ANY EXPENDITURE FOR OFFICE STAFF/ P ERSONNEL WHO LOOKS AFTER THE BUSINESS , OFFICE AND ACCOUNTS ETC WHICH INDICA TES THAT APPELLANT WAS NOT DOING ANY BUSINESS AND HER ACTIVITIES WERE NOT AT ALL ADVENTURE IN NATURE. THUS THE TRUE NATURE OF ACTIVITIES AS PER T HE DOCUMENTS AND RECORDS IS INVESTMENT ONLY. THEREFORE IT IS CLEAR T HAT THE APPELLANT KNOWING FULLY WELL ABOUT HER ACTIVITIES, SHOWN/DECL ARED INCOME FROM SALE OF KRISH VILLA PLOT AS CAPITAL GAIN IN THE RETURN O F INCOME FILED U/S 139 OF THE ACT. ; 10.7 THE FACTS AND RECORDS SHOWS THAT IT WAS A CONS CIOUS DECISION ON PART OF THE APPELLANT TO SHOW DEVELOPMENT CHARGE AS COST OF LAND AND INCOME FROM SALE OF KRISH VILLA PLOT AS CAPITAL GAI N. IT CAN BE SEEN THAT THIS IS NOT AN ISOLATED INCIDENCE AS THE SAME TREAT MENT WAS GIVEN IN AY 2008-09 TO 2010-11 BEFORE THE SEARCH AND NATURE OF ASSETS WAS CHANGED AFTER THE SEARCH THEREFORE CANNOT BE ACCEPTED AS BO NAFIED MISTAKE COMMITTED. HAD IT BEEN A BONAFIED MISTAKE APPELLANT WOULD HAVE REVISED THE ORIGINAL RETURN FILED U/S 139 OF THE ACT BY WAY OF FILING A REVISED RETURN BUT THE FACT IS THAT THE APPELLANT DID NOT R EVISE ANY OF THE RETURN OF INCOME WITHIN THE PRESCRIBED TIME PRIOR TO DATE OF SEARCH CARRIED OUT ON 06.01.2011. 10.8 THEREFORE THE BASIC CONTENTION OF THE APPELLAN T THAT THE ACTUAL NATURE OF TRANSACTION IS ADVENTURE IN THE NATURE OF TRADE AND DUE TO THE BONAFIDES MISTAKE SAME WAS WRONGLY SHOWN AS CAPITAL GAIN IN THE ORIGINAL IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 8 - RETURN OF INCOME FILED UNDER SECTION 139 OF THE IT ACT IN AY 2008-09, 2009-10, 2010-11, DO NOT HOLD ANY MERIT AND THE RET URN FILED U/S 153A OF THE ACT AND THE CHANGE OF HEAD OF INCOME CAN NOT BE TREATED BONAFIED. HOWEVER IT REFLECTS THE MALAFIED INTENTION OF THE A PPELLANT THAT TO AVOID PROVISION OF SECTION 50C OF THE IT ACT THE HEAD OF INCOME WAS CHANGED. 10.9 THE APPELLANT HAS RELIED ON VARIOUS CASE LAWS HOWEVER FACTS ARE DIFFERENT AND DISTINGUISHABLE FROM THE APPEALS UNDE R CONSIDERATION. THE CASES RELIED UPON DEAL WITH THE NATURE OF TRANSACTI ON WHETHER ITS NATURE OF TRADE OR CAPITAL GAIN HOWEVER THE ISSUE INVOLVE IN THE APPEALS UNDER CONSIDERATION IS WHETHER THE APPELLANT CAN CHANGE H EAD OF INCOME IN THE RETURN FILED U/S 153A THOUGH IN THE ORIGINAL RETURN SHOWN IN DIFFERENT HEAD AND WHETHER ANY BENEFIT CAN BE GIVEN TO THE APPELLA NT IN RETURN FILED U/S 153A OF THE ACT. THEREFORE THESE DECISIONS ARE NO T APPLICABLE IN THE APPEAL UNDER CONSIDERATION. 10.10 THE ASSESSMENT PROCEDURE, IN THE CASES WHERE SEARCH IS CONDUCTED U/S 132 OF THE ACT, HAS BEEN AMENDED W.E.F. 01.06.2 003 AND IN SUCH SEARCH CASES ASSESSMENT SHALL BE COMPLETED AS PER THE PROV ISION OF SECTION 153A OF THE ACT. THE SECTION 153A READS AS UNDER : [ASSESSMENT IN CASE OF SEARCH OR REQUISITION. '153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASS ETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A)ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FUR NISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETU RN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLOUSE (B), IN THE PRESCRIBED FORM A ND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN R EQUIRED TO BE FURNISHED UNDER SECTION 139; (B)ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSES SMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITI ON IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSES S THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FAL LING WITHIN SUCH SIX ASSESSMENT YEARS : PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON TH E DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKIN G OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE . (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN AN NULLED IN IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 9 - APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITH STANDING ANYTHING CONTAINED IN SUB-SECTION (1) OR SECTION 15 3, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSME NT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER : PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF S UCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT, (I)SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECT ION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHAL L APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II)IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPEC T OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL B E CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR.' 10.11 IT IS CLEAR FROM BARE READING OF THE SECTION ITSELF THAT ASSESSES IS NOT FREE TO FILE RETURN OF INCOME U/S 153A OF THE A CT OWN HER OWN AND CAN FILE RETURN OF INCOME U/S 153A OF THE ACT IN RESPON SE TO NOTICE ISSUED U/S 153A (1)(A) BY THE AO ONLY. THEREAFTER THE AO SHALL ASSESS OR REASSESS THE RETURN OF INCOME FILED U/S 153A OF THE ACT. THUS TH E PROVISION OF THIS SECTION IS NOT FOR THE BENEFIT OF THE ASSESSEE AND ASSESSEE CANNOT BE ALLOWED TO REVISE / RECTIFY THE MISTAKE COMMITTED I N THE ORIGINAL RETURN OF INCOME. 10.12 THERE IS PERFECT SIMILARITY IN THE ASSESSMENT MADE U/S 147 AND 153A OF THE ACT SECTION 147 OF THE ACT EMPOWER THE AO TO ASSESS UNDISCLOSED ESCAPED INCOME AND SECTION 153A ALSO EMPOWER THE AO TO ASSESS TOTAL INCOME INCLUDING ESCAPED AND UNDISCLOSED INCOME. TH US IT CAN BE SEEN THAT THE PRIME INTENTION AND PURPOSE OF ASSESSMENT U/S 153A AND ASSESSMENT U/S 147 IS SAME AND BOTH SECTIONS EMPOWE R THE REVENUE TO ASSESS OR REASSESS THE ESCAPED AND UNDISCLOSED INCO ME OF THE ASSESSSEE. 10.13 IT IS CLEAR FROM THE FACTS OF THE APPEAL UNDE R CONSIDERATION THAT HAD THE SEARCH HAS NOT BEEN CONDUCTED IN THE CASE OF TH E APPELLANT SHE WOULD NOT HAVE BEEN ABLE TO FILE THE RETURN U/S 153A AND WOULD NOT HAVE BEEN ABLE TO REVISE OR RECTIFY THE SO CALLED BONAFIDE MI STAKES COMMITTED IN THE ORIGINAL RETURN OF INCOME FILED U/S 139 OF THE ACT. 10.14 THE ISSUE OF REVISION OF THE ORIGINAL RETURN FILED U/S 139 OF THE ACT DURING REASSESSMENT PROCEEDING U/S 147 WAS RAISED B EFORE THE HONBLE SUPREME COURT. THE HON'BLE APEX COURT IN THE CASE O F CIT V. SUN ENGINEERING WORKS (P.) LTD. [1992] 64 TAXMANN 442 ( SC) HAS CONSIDERED THE FOLLOWING QUESTION OF LAW 'WHERE AN ITEM UNCONNECTED WITH THE ESCAPEMENT OF I NCOME HAS BEEN CONCLUDED FINALLY AGAINST THE ASSESSEE HOW FAR IN REASSESSMENT ON AN ESCAPED ITEM OF INCOME IT IS OPEN TO THE ASSE SSEE TO SEEK A REVIEW OF THE CONCLUDED ITEM FOR THE PURPOSE OF COM PUTATION OF THE ESCAPED INCOME?' IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 10 - THE HON'BLE SC HAS ANALYZED THE LEGAL POSITION OF S ECTION 147 AND INCOME ESCAPED ASSESSMENT IN DETAIL AND LAID DOWN SOME PRI NCIPLE WHICH ARE EQUALLY APPLICABLE IN THE SEARCH ASSESSMENT U/S 153 A OF THE IT ACT AS BOTH SECTIONS FUNDAMENTALLY DEAL WITH THE ESCAPED A ND UNDISCLOSED INCOME. THE HON'BLE SUPREME COURT HELD THAT HELD TH AT SINCE THE PROCEEDINGS UNDER SECTION 147 ARE FOR THE BENEFIT O F THE REVENUE AND NOT AN ASSESSEE AND ARE AIMED AT GATHERING THE 'ESCAPED INCOME' OF AN ASSESSEE, THE SAME CANNOT BE ALLOWED TO BE CONVERTE D AS 'REVISIONAL' OR 'REVIEW' PROCEEDINGS AT THE INSTANCE OF THE ASSESSE E, THEREBY MAKING THE MACHINERY UNWORKABLE. IT WAS SPECIFICALLY MENTIONED IN PARA 39 THAT THE AO IS NOT EMPOWER TO ENTERTAIN SUCH CLAIM AND HELD THAT 'THE ITO CANNOT MAKE AN ORDER OF REASSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT MATTER OF PROCEEDINGS UNDER SECTION 147' 10.15 THE PRINCIPLE LAID DOWN BY THE HON'BFE SUPREM E COURT ARE AS UNDER- '38. ALTHOUGH, SECTION 147 IS PART OF A TAXING STAT UTE, IT IMPOSES NO CHARGE ON THE SUBJECT BUT DEALS MERELY WITH THE MAC HINERY OF ASSESSMENT AND IN INTERPRETING A PROVISION OF THAT KIND, THE RULE IS THAT CONSTRUCTION SHOULD BE PREFERRED WHICH MAKES T HE MACHINERY WORKABLE. SINCE THE PROCEEDINGS UNDER SECTION 147 A RE FOR THE BENEFIT OF THE REVENUE AND NOT FOR ON ASSESSEE AND ARE AIMED AT GARNERING THE 'ESCAPED INCOME' OF AN ASSESSEE, THE SAME CANNOT BE ALLOWED TO BE CONVERTED AS 'REVISIONAL' OR 'REVIEW' PROCEEDINGS AT THE INSTANCE OF THE ASSESSEE, THEREBY MAKING THE MA CHINERY UNWORKABLE. 39. AS A RESULT OF THE AFORESAID DISCUSSION WE FIND THAT IN PROCEEDINGS UNDER SECTION 147 THE ITO MAY BRING TO CHARGE ITEMS OF INCOME WHICH HAD ESCAPED ASSESSMENT OTHER THAN O R IN ADDITION TO THAT ITEM OR ITEMS WHICH HAVE LED TO THE ISSUANC E OF NOTICE UNDER SECTION 148 AND WHERE REASSESSMENT IS MADE UNDER SE CTION 147 IN RESPECT OF INCOME WHICH HAS ESCAPED TAX, THE ITQ'S JURISDICTION IS CONFINED TO ONLY SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDER-ASSESSED AND DOES NOT EXTEND TO REVISING, REO PENING OR RECONSIDERING THE WHOLE ASSESSMENT OR PERMITTING TH E ASSESSEE TO REAGITATE QUESTIONS WHICH HAD BEEN DECIDED IN TH E ORIGINAL ASSESSMENT PROCEEDINGS. IT IS ONLY THE UNDERASSESSM ENT WHICH IS SET ASIDE AND NOT THE ENTIRE ASSESSMENT WHEN REASSESSME NT PROCEEDINGS ARE INITIATED. THE ITO CANNOT MAKE AN ORDER OF REASSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT MATTER OF PROCEED INGS UNDER SECTION 147. AN ASSESSEE CANNOT RESIST VALIDLY INITIATED REASSESSMENT PROCEEDINGS UNDER THIS SECTION MERELY BY SHOWING THAT OTHER INCOME WHICH HAD BEEN ASSESSED ORIGINALLY WAS AT TOO HIGH A FIGURE EXCEPT IN CASES UNDER SECTION 152(2). THE WO RDS 'SUCH INCOME' IN SECTION 147 CLEARLY REFER TO THE INCOME WHICH IS CHARGEABLE TO TAX BUT HAS 'ESCAPED ASSESSMENT' AND THE ITO'S JURISDICTION UNDER THE SECTION IS CONFINED ONLY TO SUCH INCOME WHICH HAS ESCAPED ASSESSMENT. IT DOES NOT EXTEND TO RECON SIDERING GENERALLY THE CONCLUDED EARLIER ASSESSMENT. CLAIMS WHICH HAVE BEEN DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDI NG CANNOT BE IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 11 - PERMITTED TO BE REAGITATED ON THE ASSESSMENT BEING REOPENED FOR BRINGING TO TAX CERTAIN INCOME WHICH HAD ESCAPED AS SESSMENT BECAUSE THE CONTROVERSY ON REASSESSMENT IS CONFINED TO MATTERS WHICH ARE RELEVANT ONLY IN RESPECT OF THE INCOME WH ICH HAD NOT BEEN BROUGHT TO TAX DURING THE COURSE OF THE ORIGIN AL ASSESSMENT. A MATTER NOT AGITATED IN THE CONCLUDED ORIGINAL ASSES SMENT PROCEEDINGS ALSO CANNOT BE PERMITTED TO BE AGITATED IN THE REASSESSMENT PROCEEDINGS UNLESS RELATABLE TO THE IT EM SOUGHT TO BE TAXED AS 'ESCAPED INCOME' . INDEED, IN THE REASSESSMENT PROCEEDINGS FOR BRINGING TO TAX ITEMS WHICH HAD ESCAPED ASSESSM ENT, IT WOULD BE OPEN TO AN ASSESSEE TO PUT FORWARD CLAIMS FOR DEDUC TION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON-TA XABILITY OF THE ITEMS AT ALL. KEEPING IN VIEW THE OBJECT AND PURPOSE OF THE PROCEEDINGS UNDER SECTION 147 WHICH ARE FOR THE BEN EFIT OF THE REVENUE AND NOT AN ASSESSEE, AN ASSESSEE CANNOT BE PERMITTED TO CONVERT THE REASSESSMENT PROCEEDINGS AS HIS APPEAL OR REVISION, IN DISGUISE AND SEEK RELIEF IN RESPECT OF ITEMS EARLIE R REJECTED OR CLAIM RELIEF IN RESPECT OF ITEMS NOT CLAIMED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, UNLESS RELATABLE TO 'ESCAPE D INCOME', AND REAGITATE THE CONCLUDED MATTERS. EVEN IN CASES WHERE THE CLAIMS OF THE OSSESSEE DURING THE COURSE OF REASSESSMENT PROC EEDINGS RELATED TO THE ESCAPED ASSESSMENT ARE ACCEPTED, STILL THE A LLOWANCE OF SUCH CLAIMS HAS TO BE LIMITED TO THE EXTENT TO WHICH THE Y REDUCE THE INCOME TO THAT ORIGINALLY ASSESSED. THE INCOME FOR PURPOSES OF 'REASSESSMENT' CANNOT BE REDUCED BEYOND THE INCOME ORIGINALLY ASSESSED. 40. IT WOULD BE SEEN THAT WHEREAS IN THE CASE OF AN GLO FRENCH TEXTILE CO. LTD. (SUPRA) THE QUESTION AS TO THE RIG HTS OF AN ASSESSEE TO CLAIM 'REDOING', 'REVISING' OR 'RECOMPUTING' EN TIRE INCOME DURING THE REASSESSMENT PROCEEDINGS WAS LEFT OPEN, THAT QU ESTION DID NOT COME UP FOR CONSIDERATION IN THE CASE OF H.R. SHRI RAMULU (SUPRA) OR H.M. ESUFALI H.M. ABDULAHI (SUPRA) OR EVEN IN V. JAGANMOHAN RAO'S CASE (SUPRA). SOME OF THE HIGH COURTS, THEREFORE, FELL IN ERROR IN READING THOSE JUDGMENTS, DIVORCED FROM THE CONTEXT IN WHICH THE PRECISE QUESTIONS CAME UP FOR CONSIDERATI ON IN THOSE CASES, AND TO HOLD THAT THE ASSESSEE COULD 'REAGITA TE' THE CONCLUDED ISSUES AND CLAIM RELIEF IN RESPECT OF ITE MS, FINALLY CONCLUDED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, D URING THE REASSESSMENT PROCEEDINGS, UNCONNECTED WITH THE ESCA PEMENT OF INCOME . WE CANNOT, THEREFORE, APPROVE IN BROAD PROPOSITI ONS LAID IN THAT REGARD IN INDIAN REFRIGERATION INDUSTRIES ( P.) LTD.'S CASE (SUPRA), RAMSEVAK PAUL'S CASE (SUPRA ), ASSAM OIL C O. LTD. 'S CASE (SUPRA). STANDARD MOTOR PRODUCTS OF INDIA LTD. 'S C ASE (SUPRA), RANGNATH BANGUR'S CASE (SUPRA), STATE BONK OF HYDER ABAD'S CASE (SUPRA) AND INDIAN RARE EARTH LTD. 'S CASE (SUPRA). 41. KEEPING IN VIEW THE ABOVE PRINCIPLES, WE MAY NO W TURN OUR ATTENTION TO THE QUEST/ON FORMULATED BY THE HIGH CO URT AS NOTICED IN THE EARLIER PART OF THE JUDGMENT 42. THE TRIBUNAL RIGHTLY FOUND THAT THE LOSS WHICH THE ASSSSSEE WANTED TO BE SET OFF AGAINST THE 'ESCAPED INCOME' C OULD NOT BE ALLOWED TO BE SO SET OFF BECAUSE IN THE ORIGINAL AS SESSMENT IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 12 - PROCEEDINGS, NO 'SET OFF WAS CLAIMED OR PERMITTED A ND THE ORIGINAL ASSESSMENT HAD ACQUIRED FINALITY WHEN THE APPEAL AG AINST THE ORDER OF ASSESSMENT FAILED BEFORE THE AAC AND THE A SSESSEE TOOK NO FURTHER STEPS TO AGITATE THE ISSUE. THE TRIBUNAL WAS ALSO RIGHT IN CONCLUDING THAT THE ITEMS WHICH THE ASSESSEE WAN TED TO BE TAKEN INTO ACCOUNT IN THE PROCEEDINGS UNDER SECTION 147 W ERE UNCONNECTED WITH THE ESCAPEMENT OF INCOME. THE HIGH COURT CLEARLY FELL IN ERROR IN HOLDING OTHERWISE. SINCE T HE ORIGINAL ASSESSMENT HAD BEEN CONCLUDED FINALLY AGAINST THE A SSESSEE, IT WAS NOT PERMISSIBLE FOR THE ASSESSEE IN THE REASSESSMEN T PROCEEDINGS TO SEEK A REVIEW/REVISION OF THE CONCLUDED ASSESSME NT FOR THE PURPOSE OF COMPUTATION OF THE ESCAPED INCOME. THE HIGH COURT CLEARLY FELL IN ERROR BY PERMITTING THE ASSESSEE TO REAGITATE, IN THE REASSESSMENT PROCEEDINGS UNDER SECTION 147(A), THE FINALLY CONCLUDED ASSESSMENT PROCEEDINGS AND TO GRANT TO HI M RELIEF IN RESPECT OF ITEMS NOT ONLY EARLIER REJECTED, BUT ALS O UNCONNECTED WITH THE ESCAPEMENT OF INCOME BY ASSUMING AS IF THE ORIGINAL ASSESSMENT HAD NOT BEEN CONCLUDED OR WAS 'STILL OPE N'. 43. THEREFORE, OUR ANSWER TO THE QUESTION FORMULATE D BY THE HIGH COURT AND NOTICED IN THE EARLIER PART OF THIS JUDGM ENT IS THAT IN THE REASSESSMENT PROCEEDINGS IT IS NOT OPEN TO AN ASSES SES TO SEEK A REVIEW OF THE CONCLUDED ITEM, UNCONNECTED WITH THE ESCAPEMENT OF INCOME, FOR THE OF COMPUTATION OF THE ESCAPED INCOM E.' 10.16 THE EXACT ISSUE AS AGITATED BY THE APPELLANT I.E. REVISION OF MISTAKE COMMITTED IN THE ORIGINAL RETURN U/S 139 AND THEREA FTER RECTIFYING IN RETURN FILED U/S 153A OF THE IT ACT, HAS BEEN DECID ED BY THE HON'BLE ITAT B BENCH DELHI IN THE CASE OF CHARCHIT AGARWAL V. AC IT*, CENTRAL CIRCLE 12, NEW DELHI [2009] 34 SOT 348 (DELHI). THE HONBLE ITAT B BENCH DELHI HAS CONSIDERED AND DECIDED THE ISSUE OF MISTA KE COMMITTED IN THE ORIGINAL RETURN AND THEREAFTER RECTIFYING IN RETURN FILED U/S 153A OF THE IT ACT AND FOLLOWED THE PRINCIPLE LAID DOWN BY THE APE X COURT IN THE CASE OF SUN ENGINEERING WORKS (P.) LTD. [1992] 64 TAXMAN 44 2 (SC), THE HON'BLE ITAT HAS HELD THAT- '7, WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF HEARING, IT WAS CLARIFIED BY THE LD. AR OF THE ASSESSEE THAT FOR ASSESSMENT Y EARS 2001-02 TO 2005-06, THE BOOKS OF ACCOUNT WERE AUDITED BY THE A UDITORS. THE TAX AUDIT REPORT IN FORM NO. BCD HAS BEEN PLACED ON REC ORD. IT WAS ALSO SUBMITTED THAT FOR ASSESSMENT YEAR 2000-01, NO TAX AUDIT WAS CARRIED OUT BY THE AUDITORS. THE ASSESSEE HIMSELF HAD VALUED THE CLOSING STOCK FOR ASSESSMENT YEAR 2000-01 AT COST. WE HAVE GONE THROUGH THE TAX AUDIT REPORT FOR ASSESSMENT YEAR 20 01-02. AS PER THE TAX AUDIT IN FORM NO. 3CD, THE METHOD OF VALUAT ION OF DOSING STOCK EMPLOYED IN THE ASSESSMENT YEARS 2001-02 TO 2 005-06 WAS IS 'AT COST'. 8. THE ORIGINAL RETURNS OF INCOME FOR ASSESSMENT YE ARS 2000-01 TO 2005-06 WERE WITHIN THE TIME ALLOWED FILED UNDER SE CTION 139(1} OF THE ACT. THE SEARCH UNDER SECTION 132 OF THE ACT IN THE CASE OF THE ASSESSEE WAS CARRIED OUT ON 9-12-2005 AND ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 153A ON 2-11-2007 FOR ASSESSMENT YEARS 2000-01 TO 2005-06- FURTHER, THE A SSESSEE COULD IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 13 - HAVE REVISED RETURNS WITHIN THE PERIOD OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR OR BEFORE COMPLETION OF AS SESSMENT WHICHEVER WAS EARLIER. ADMITTEDLY THE ASSESSES DID NOT REVISE ANY OF THE RETURNS FOR ASSESSMENT YEARS UNDER CONSIDERATIO N PRIOR TO DATE OF SEARCH CARRIED OUT IN THE CASE OF THE ASSESSEE. NOW QUESTION ARISES AS TO WHETHER THE ASSESSEE CAN REVISE THE RETURNS OF INCOME FOR ALL THE SIX ASSESSMENT YEARS COVERED UNDER THE SEARCH PERIOD WHICH INCIDENTALLY INCLUDES THE RETURN OF INCOME FO R THE VERY FIRST YEAR OF BUSINESS OF THE ASSESSEE ON THE GROUND THAT VALUATION OF THE CLOSING STOCK WAS MADE ON ESTIMATED BASIS. IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 13 2 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003 ASSESS MENT HAS TO BE MADE UNDER SECTION 153A OF THE ACT. SECTION 153A WA S INSERTED IN THE STATUTE BY THE FINANCE ACT, 2003 WITH EFFECT FR OM 1-6-2003 READS AS UNDER : '153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASS ETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN S IX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTH ER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE 'TOTAL INCOME OF SIX ASS ESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITI ON IS MADE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FAL LING WITHIN SUCH SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUB-SECTION PENDING ON TH E DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKIN G OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE . (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASS ESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN AN NULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITH STANDING ANYTHING CONTAINED IN SUB-SECTION (1) OR SECTION 15 3, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSME NT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER: IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 14 - PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFECT, IF S UCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT, (I)SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECT ION 1538 AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHAL L APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II)IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPEC T OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL B E CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR, ' 9. SECTION 153A(1) CONTAINS NON OBSTANTE CLAUSE AND HENCE PROVISIONS OF THIS SECTION WILL OVERRIDE THE PROVIS IONS OF SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153 OF THE ACT. UNDER SECTION 153A(1) THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICES TO THE ASSESSEE SEARCHED FOR A PERIOD OF SIX YEARS IN ORDER TO ASSESS THE INCOME ON THE BASI S OF MATERIAL FOUND DURING THE COURSE OF SEARCH. THE SECOND PROVI SO TO SECTION 153A(1) PROVIDES THAT THE ASSESSMENT OR REASSESSMEN T, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN SECTION 153A(1) PEN DING ON THE DATE OF INITIATION OF SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE. THEREFORE, AFTER INITIATION OF SEARCH NO ASSESSMENT IN RESPECT OF PE NDING ASSESSMENT SHALL BE MADE AND ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE UNDER SECTION 153A TO ASSESS OR RE-ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING ASSESSMENT Y EAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH WAS CONDU CTED OR REQUISITION WAS MADE. THE ASSESSEE HAD VALUED THE D OSING STOCK FOR ASSESSMENT YEARS 2000-01 TO 2005-06 ON AVERAGE COST METHOD WHICH HAS RESULTED IN REDUCTION OF TAXABLE INCOME IN ALL THE YEARS RANGING FROM RS. 8,975 IN ASSESSMENT YEAR 2001-02 TO RS. 9, 00,797 IN ASSESSMENT YEAR 2005-06. THE CONTENTION OF THE ASSE SSEE THAT IN THE CASE OF JEWELLERS, IT IS IMPOSSIBLE TO VALUE THE CL OSING STOCK ON THE BASIS OF MARKET COST AS THE ITEMS OF CLOSING STOCK CANNOT BE IDENTIFIED WITH REFERENCE TO VARIOUS PURCHASES MADE DURING THE YEAR. HOWEVER, THE FACT REMAINS THAT THE ASSESSEE H AD BEEN VALUING THE CLOSING STOCK AT 'COST' AS CERTIFIED BY TAX AUD ITORS. IT IS A FACT THAT ALL THE ASSESSEE ARE REQUIRED TO MAINTAIN THE STOCK REGISTERS DURING THE COURSE OF NORMAL BUSINESS ACTIVITIES. IT IS NOT DIFFICULT TO IDENTIFY THE ITEMS PURCHASED, THE DATE OF PURCHASE AND THEIR COSTS. HENCE WE DO NOT FIND ANY SUBSTANCE IN THE ARGUMENT OF THE ASSESSEE THAT IT IS IMPOSSIBLE TO VALUE THE CLOSING STOCK AT 'ACTUAL COST' PARTICULARLY IN VIEW OF THE FACT THAT THE ASSESSEE HAD BEEN VALUING THE CLOSING STOCK AT COST PRICE FROM VERY BEGINNING OF THE BUSINESS. 10. MOREOVER, THE CHANGE OF METHOD OF VALUATION OF THE CLOSING STOCK IS ALLOWED IF SUCH CHANGE IS BONA FIDE AND TH E ASSESSEE HAS PROPER REASONS FOR SUCH CHANGE. THE CONCLUDED PROCE EDINGS CANNOT BE REOPENED ON THE GROUND THAT THE ASSESSEE HAD INC ORRECTLY VALUED THE CLOSING STOCK IN THOSE YEARS. THE ASSESSEE HAD FILED RETURNS OF IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 15 - INCOME FOR ALL THE SIX ASSESSMENT YEARS UNDER SECTI ON 139(1). THE ASSESSMENTS OR REASSESSMENTS CANNOT BE MADE IN THES E YEARS BY INVOKING THE PROVISIONS OF SECTION 147 AFTER INITIA TION OF SEARCH PROCEEDINGS IN VIEW OF SECOND PROVISO TO SECTION 15 3A(1) OF THE ACT. FROM THE FACTS GIVEN ABOVE IT IS CLEAR THAT TH E ASSESSEE HAD CHANGED THE METHOD OF VALUATION OF THE CLOSING STOCKS FOR ALL ASSESSMENT YEARS TO REDUCE THE PROFITS AND HENCE TH E CHANGE IN THE METHOD OF VALUATION IS NOT BONA FIDE. AS REGARDS TH E CONTENTION OF THE ASSESSEE THAT IT IS IMPOSSIBLE TO VALUE THE CLO SING STOCK AT COST PRICE IN THE CASE OF JEWELLERS, THIS IS A SWEEPING GENERALIZATION WITHOUT HAVING ANY MATERIAL ON RECORDS TO PROVE. TH E ASSESSEE HAD NOT FILED ANY EVIDENCE TO SUPPORT ITS CONTENTION AN D HENCE DESERVES TO BE REJECTED. 11. THE PROVISIONS OF SECTION 153A ARE DIRECTED TO ASSESS OR REASSESS THE INCOME FOR SIX ASSESSMENT YEARS BASED ON SEARCH PROCEEDINGS AND HENCE THE ASSESSMENT PROCEEDINGS UN DER SECTION 1S3A ARE BENEFICIAL TO THE REVENUE. IN OTHER WORDS THE PROCEEDINGS UNDER SECTION 153A ARE INITIATED TO ASS ESS OR REASSESS THE UNDISCLOSED INCOME. IN THE CASE OF CIT V. SUN E NGG. WORKS (P.) LTD. [1992] 198 ITR 297 HON'BLE SUPREME COURT HAS HELD THAT SECTION 147 BEING FOR THE BENEFITS OF THE REVENUE A ND NOT FOR THE ASSESSEE, ASSESSEE CANNOT BE PERMITTED TO CONVERT T HE REASSESSMENT PROCEEDINGS INTO AN APPEAL OR REVISION IN DISGUISE AND SEEK RELIEF IN RESPECT OF ITEMS EARLIER REJECTED OR CLAIMED REL IEF IN RESPECT OF ITEMS NOT CLAIMED IN THE ORIGINAL ASSESSMENT PROCEE DINGS UNLESS REFUTABLE TO ESCAPED INCOME EVEN IN CASES WHERE THE CLAIMS OF THE ASSESSEE DURING THE COURSE OF REASSESSMENT PROCEEDI NGS RELATING TO THE ESCAPED INCOME ARE ACCEPTED, STILL THE ALLOWANC E OF SUCH CLAIM HAS TO BE LIMITED TO THE EXTENT TO WHICH THEY REDUC E THE INCOME TO THE LEVEL ORIGINALLY ASSESSED. THE INCOME, FOR THE PURPOSE OF REASSESSMENT CANNOT BE REDUCED BEYOND THE INCOME OR IGINALLY ASSESSED. IN THE ASSESSMENT YEARS BEFORE US, RETURN S OF INCOME FOR ASSESSMENT YEARS 2000-01 TO 2005-06 HAVE BEEN ACCEP TED UNDER SECTION 143(1) AND, THEREFORE, IN VIEW OF THE DECIS ION OF HON'BLE SUPREME COURT IN THE CASE OF SUN ENGG. WORKS (P.) L TD. (SUPRA), THE ASSESSEE CANNOT BE PERMITTED TO CLAIM THE BENEF IT OF CLOSING STOCK BY CHANGING THE METHOD OF VALUATION AS IT BEC OMES FAVOURABLE TO THE ASSESSEE. 13. WE HAVE ALSO GONE THROUGH THE OTHER DECISIONS R ELIED UPON BY THE ID. AR OF THE ASSESSEE BUT DA NOT FIND ANY DECI SION WHICH IS DIRECT ON THE ISSUE BEFORE US. DURING THE COURSE OF HEARING, LD. AR OF THE ASSESSES COULD NOT CITE A SINGLE CASE LAW AC CORDINGLY TO WHICH ASSESSEE COULD HAVE FILED RETURNS FOR EARLIER YEARS REVISING THE VALUATION OF CLOSING STOCK FOR WHICH ASSESSMENT S HAD ALREADY BEEN FINALIZED. THEREFORE, IN VIEW OF ABOVE DISCUSSIONS IN SEARCH PROCEEDINGS UNDER SECTION 153A, WHICH ARE FOR THE B ENEFIT OF THE REVENUE, ASSESSEE IS NOT PERMITTED TO VALUE THE CLO SING STOCK FOR CONCLUDED YEARS AT AVERAGE COST PRICE . ACCORDINGLY, THE ASSESSING OFFICER AS WELL AS COMMISSIONER OF INCOME-TAX (APPE ALS) WAS JUSTIFIED IN REJECTING THE CHANGE IN METHOD OF VALU ATION ADOPTED BY THE ASSESSEE FOR ALL THESE YEARS. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER OF INCOME-T AX (APPEALS), IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 16 - CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFI CER DUE TO CHANGE OF METHOD OF VALUATION.' 10.17 IN VIEW OF THE ABOVE MENTIONED FACTS AND PRIN CIPLE LAID DOWN BY THE HON'BLE APEX COURT AND THE DECISION OF HON'BLE DELH I ITAT, IT IS ESTABLISHED THAT THE SEARCH PROCEEDINGS UNDER SECTI ON 153A IS FOR THE BENEFIT OF THE REVENUE. AS PER THE PROVISION THE AO IS NOT EMPOWER TO GIVE ANY BENEFIT TO THE ASSESSEE IN RETURN FILED U/S 153 A OF THE ACT. THE CONTENTION OF THE APPELLANT THAT IT WAS A BONAFIDE MISTAKE IS DEVOID OF MERIT AS THE ISSUE OF CAPITAL GAIN CAME TO THE N OTICE TO THE DEPARTMENT DUE TO SEARCH THEREFORE THE NATURE OF RECEIPT AND HEAD OF INCOME WAS CHANGED AFTER SEARCH ONLY IN THE RETURN FILED U/S 153A OF THE ACT. THUS THE AO IS JUSTIFIED IN NOT ALLOWING THE CHANGE OF H EAD OF INCOME FROM CAPITAL GAIN TO BUSINESS INCOME IN RETURN FILED U/S 153A AND HAS RIGHTLY TREATED THE LAND AT THALTEJ -KRISH VILLA PLOT AS C APITAL ASSET AS SHOWN IN THE RETURN OF INCOME FILED U/S 139 OF THE ACT FOR AY 2008-09, 2009-10 AND 2010-11 . 10.18 SINCE THE LAND AT THALTEJ-KRISH VILLA PLOTS I S A CAPITAL ASSETS AND TAXABLE UNDER THE CAPITAL GAIN AND THE APPELLANT HA D SOLD THIS LAND IN LESS THAN THE JANTRI PRICE, THE PROVISION IN SECTION 50C OF THE ACT BECOMES APPLICABLE IN THE CASE OF THE APPELLANT. THE PROVIS IONS IN SECTION 50C IS A SPECIAL PROVISION INSERTED W.E.F 1.4.2003 AND IS A DEEMING PROVISION WHICH ALLOWS THE AO TO TAKE FULL VALUE OF CONSIDERATION W HERE THE CONSIDERATION RECEIVED BY THE ASSESSEE IS LESS THAN THE VALUE ADO PTED OR ASSESSED BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSE OF PA YMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ARID TREATED THE VALUE ADO PTED OR ASSESSED AS FULL VALUE OF CONSIDERATION RECEIVED. 10.19 THEREFORE THE ACTION OF THE AO OF ADOPTING TH E DEEMED VALUE OF CONSIDERATION OF THALTEJ-KRISH VILLA PLOTS U/S 50C( 1) OF THE ACT IN AY 2009-10 AT RS.1,18,59,863/- IS FOUND JUSTIFIED. THU S THE FINDING OF THE AO TREATING THE PROFIT OF RS, 51,54,873 (BEING 1/3 SHA RE) FROM SALE OF THLATEJ KRISH VILLA PLOTS AS SHORT TERM CAPITAL GAIN U/S 50 C OF THE ACT AS AGAINST THE BUSINESS INCOME SHOWN BY THE APPELLANT OF RS.29 ,43,804/- IS CONFIRMED. 10.20 SINCE THE SAME ISSUE WAS INVOLVED IN AY 2010- 11 AND 2011-12 IN THE APPEAL FILED BY THE APPELLANT THEREFORE AS PER THE FINDING GIVEN IN A.Y. 2008-09 AND 2009-10, THE CLAIM OF THE APPELLANT IN A.YS. 2010-11 AND 2011-12 OF CHANGING THE NATURE OF INCOME FROM CAPIT AL GAIN TO BUSINESS INCOME IS NOT ALLOWED AND ACTION OF THE AO OF TREAT ING THE 1/3RD PROFIT FROM SALE OF PLOTS AS SHORT TERM CAPITAL GAIN U/S 5 0C OF THE ACT AGAINST THE BUSINESS INCOME SHOWN BY THE APPELLANT IS CONFI RMED. 10.21 BASED ON THE DECISION GIVEN IN THE CASE OF DA RSHANABEN SAVALIA FOR A.Y. 2008-09 TO AY 2011-12 BEING FACTS AND CIRCUMST ANCES AND SUBMISSIONS ARE IDENTICAL, THE FINDINGS OF THE AO T REATING THE ASSETS AND INCOME AS CAPITAL ASSETS AND CAPITAL GAINS IN A.Y. 2008-09 TO A.Y. 2011-12 AND TREATING THE PROFIT (BEING 1/3 SHARE) FROM SALE OF PLOTS AS SHORT TERM CAPITAL GAIN U/S 50C OF THE ACT AGAINST THE BUSINES S INCOME SHOWN BY THE APPELLANT ARE CONFIRMED. IN NUTSHELL, THE FINDINGS OF CAPITAL ASSETS AND AMOUNT OF SHORT TERM CAPITAL GAIN U/S 50C OF THE AC T CONFIRMED IN EACH CASE ARE AS FOLLOWS: IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 17 - SR. NO. NAME OF THE APPELLANT FINDINGS CONFIRMED 1/3 RD SHARE OF SHORT TERM CAPITAL GAIN U/S 50C CONFIRMED IN THE HAND OF EACH APPELLANT AY 2008-09 AY2009-10 AY2010-11 AY2011-12 1. DARSHANABEN SAVALIA TREATMENT OF CAPITAL ASSET RS.51, 54,873/- RS.23,23,938/- RS.62,96,637/- 2. KAPILABEN S SAVALIA TREATM ENT OF CAPITAL ASSET RS.51,B4,873/- RS.23,23,938/- RS.62,96,637/- 3. BHANUBEN K. SAVALIA TREATMENT OF CAPITAL ASSET RS.51,54,873/- RS.23,23,938/- RS.62,96,637/- IN SHORT, THE CIT(A) DECLINED TO ENTERTAIN CLAIM OF THE ASSESSEE THAT LAND AT THALTEJ WAS HELD AS TRADING ASSET AND CONSEQUENTLY DECLINED TO AGREE WITH THE PLEA OF THE ASSESSEE THAT PROFITS ARISING FROM SALE OF LAND AT THALTEJ AS BUSINESS INCOME OF THE ASSESSEE. 7. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 8. THE LEARNED AR FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT BOTH THE AUTHORITIES BELOW HAVE MIS-DIRECTED THEMSELVES IN A PPRECIATION OF FACTS AND WRONGLY APPLIED THE LAW. THE LEARNED AR POINTED OU T THAT THE ASSESSEE ALONGWITH TWO OTHER CO-OWNERS NAMELY SMT. DARSHANAB EN SAVALIA & SMT. KAPILABEN S. SAVALIA PURCHASED CERTAIN PARCELS OF A GRICULTURAL LAND AT THALTEJ ADMEASURING ABOUT 15902 SQ.MTRS. AS CO-OWNE RS IN FY 2007-08 AND FY 2008-09 BETWEEN MARCH 2008 TO JUNE 2008 IMMEDIAT ELY THEREAFTER, THE ASSESSEE AND THE CO-OWNERS GOT THE SAID LAND CONVER TED INTO NON- AGRICULTURAL LAND IN AUGUST 2008 I.E. BARELY FEW MO NTHS LATER AND PUT UP THE RESIDENTIAL HOUSING PLOT SCHEME KNOWN AS KRISH VIL LA WHILE PROVIDING FOR COMMON INFRASTRUCTURE AND INTERNAL ROADS. THE LEAR NED AR REFERRED TO COLLECTORS LETTER DATED 18.08.2008 SHOWING THE REQ UISITE PERMISSION FOR USING THE LAND FOR NON-AGRICULTURAL USE. IT CLEARL Y REVEALS THE IDEA AND INTENTION OF COMMERCIAL EXPLOITATION OF THE LAND NO TWITHSTANDING ERRONEOUS ENTRIES IN THE BOOKS. IT WAS FURTHER POINTED OUT T HAT THE ASSESSEE AND THE CO-OWNERS ALSO RECEIVED COMMENCEMENT LETTER FROM AH MEDABAD MUNICIPAL CORPORATION (AMC) DATED 07.02.2009. THE LAY OUT PL AN OF PLOTTING DONE BY THE ASSESSEE ALONGWITH OTHER TWO CO-OWNERS IN THE A FORESAID SCHEME KRISH IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 18 - VILLA DATED 07.02.2009 WAS ALSO REFERRED TO AND RE LIED UPON. A BROACHER OF THE RESIDENTIAL HOUSING SCHEME (KRISH VILLA) WAS ALSO STATED TO BE PUBLISHED FOR SALE TO PUBLIC. IT WAS POINTED OUT T HAT DEVELOPMENT WAS CARRIED OUT ON THE SAID PARCELS OF LAND AND EXPENDI TURE WERE INCURRED IN THE SUBSEQUENT FY 2008-09 ONWARDS AND THE RESIDENTIAL H OUSING PLOT SCHEME WAS COMPLETED IN MARCH 2011 OR THEREABOUT. THE SUB -DIVIDED PLOTS IN THE SAID SCHEME WERE SOLD TO RESPECTIVE MEMBERS BY EXEC UTING THE CONVEYANCE DEED FROM FY 2008-09 TILL FY 2010-11. IT WAS POINTE D OUT THAT THE ABOVE SEQUENCE OF EVENT AND CONTINUITY IN ACTION AND SCAL E OF ACTIVITY WOULD CLEARLY SHOW THE EMINENT INTENT OF THE ASSESSEE AND CO-OWNERS TO REAP BUSINESS PROFITS BY EXPLORATION WITH COMMERCIAL MOT IVE. CONSEQUENTLY, THE MISTAKE COMMITTED IN THE RETURN FILED EARLIER WAS C ORRECTED AND THE INCOME WAS REALIGNED FROM THE HEAD CAPITAL GAINS TO BUS INESS INCOME HAVING REGARD TO THE TRUE NATURE OF ACTIVITY. IT WAS NEXT POINTED OUT THAT THE INCOME WAS OFFERED AS SHORT TERM CAPITAL GAINS EARL IER THE TAX RATE OF WHICH IS AT PAR WITH THE BUSINESS INCOME. 8.1 THE LEARNED AR REITERATED THAT IT IS NOT A CASE WHERE THE LAND WAS HELD IN THE CUSTODY OF THE ASSESSEE FOR A LONG TIME WITHOUT ANY ACTION. THE CONDUCT OF THE ASSESSEE AS POINTED OUT ABOVE WOULD CLEARLY SHOW THAT THE PARCELS OF LAND IN QUESTION WERE ACQUIRED WITH COMM ERCIAL MOTIVES ATTACHED. IT WAS NEXT SUBMITTED THAT IT WAS INCORR ECT FOR THE LOWER AUTHORITIES TO COMPARE THE TRANSACTION AT THALTEJ L AND (KRISH VILLA) WITH CHANDKHEDA LAND OR SHILAJ LAND. IT WAS POINTED OUT THAT IN CASE OF CHANDKHEDA LAND, THE ASSESSEE HAS NOT CARRIED OUT A NY DEVELOPMENT WORK. THE ASSESSEE WAS SIMPLICITOR SOLD OF THE LAND TO BE PROSPECTIVE BUYERS AND SHE RECEIVED THE CONSIDERATION FOR SALE OF LAND ALO NE. SAME IS TRUE FOR SHILAJ LAND. THUS, THE NATURE OF INCOME CHANDKHEDA LAND AND SHILAJ LAND WAS RIGHTLY OFFERED AS CAPITAL GAIN AND THE AFORESA ID TRANSACTION OF SALE OF LAND CANNOT BE CO-RELATED AND TREATED AT PAR WITH T HE SYSTEMATIC COMMERCIAL EXPLOITATION OF PLOTS OF KRISH VILLA SCHEME BY THE ASSESSEE. IT WAS SUBMITTED THAT A BONAFIDE AND INADVERTENT MISTAKE O F SHOWING THE PROFITS ON SALE OF PLOTS OF LAND OF KRISH VILLA SCHEME CAME TO THE NOTICE OF THE IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 19 - ASSESSEE AFTER SEARCH AND CONSEQUENTLY, THE RETURN FILED UNDER S.153A OF THE ACT WAS CARRIED DECLARATION OF INCOME UNDER APPROPR IATE HEAD. 8.2 TO BUTTRESS THE ACTIVITY OF THE ASSESSEE TO BE A BUSINESS VENTURE (BY WAY OF CONVERSION OF AGRICULTURAL LAND, PROVIDING T HE INTERNAL ROADS AND COMMON INFRASTRUCTURE, OBTAINING THE NECESSARY PERM ISSION FROM THE AMC AND OBTAINING THE APPROVED PLAN ETC.), THE LEARNED AR REFERRED TO THE ACCOUNT OF BUSINESS DEVELOPMENT EXPENSES, CORRESPON DENCES WITH AMC, BROACHERS PUBLISHED ETC. THE LEARNED AR VEHEMENTLY STRESSED THAT PATTERN AND SEQUENCE OF EVENT WOULD CLEARLY SHOW THE ASSESS EE INTENDED TO EXPLOIT THE LAND PARCELS (WITH AN IDEA TO MAXIMIZE PROFITS) SO ACQUIRED AS A BUSINESS VENTURE OR SOMETHING AKIN TO IT. THE LEARN ED AR ALSO REFERRED TO AND RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAJA J. RAMESHWAR RAO VS. CIT (1961) 42 ITR 179 (SC ) WHEREIN IT WAS HELD BY THE HONBLE SUPREME COURT THAT WHERE IS LAND IS PURCHASED THEN DEVELOPED AND LATER SOLD IN BITS, IT IS A BUSINESS VENTURE. 8.3 THE LEANED AR THEREAFTER REFERRED TO THE PROVIS IONS OF SECTION 153A OF THE ACT AND SUBMITTED THAT IN VIEW OF SPECIFIC P ROVISIONS OF SECTION 153A OF THE ACT, THE RETURN OF INCOME FILED IN RESP ONSE TO NOTICE UNDER S.153A OF THE ACT IS TO BE CONSIDERED AS RETURN FIL ED UNDER S.139 OF THE ACT. THE LEARNED AR FOR THE ASSESSEE RELIED UPON THE DEC ISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF KIRIT DAHYABHAI PATEL VS. ACIT 280 ITR 216 (GUJ) FOR THE PROPOSITION THAT RETURN FILED UNDER S.153A OF THE ACT ACQUIRES THE COLOUR AND TENOR OF RETURN FILED UNDER S.139 OF THE ACT. THE LEARNED AR ALSO REFERRED TO THE DECISION OF THE HON BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS. B. G. SHIRKE CONSTRUCTION TECHNOLOGY (P) LTD. (2017) 79 TAXMANN.COM 306 (BOMBAY) WHERE HONBLE HIGH COURT ECHOED THE SIMILAR VIEW AND HELD THAT RETURN FILED UNDER S.153A(1) OF THE ACT IS AKIN TO A RETURN FURNISHED UNDER S.139 OF TH E ACT AND THEREFORE PROVISIONS OF ACT AS APPLICABLE IN THE CASE OF RETU RN FILED IN REGULAR COURSE UNDER S.139(1) OF THE ACT WOULD ALSO CONTINUE TO AP PLY IN CASE OF RETURN FILED UNDER S.153A OF THE ACT IN SIMILAR MANNER. T HE LEARNED AR REFERRED TO THE DECISION OF THE CO-ORDINATE BENCH IN ACIT VS. V. N. DEVADOSS (2013) IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 20 - 32 TAXMANN.COM 133 (CHENNAI) WHEREIN THE ASSESSEE MADE A FRESH CLAIM OF DEDUCTION UNDER S.80IB(10) OF THE ACT IN A RETURN F ILED UNDER S.153A OF THE ACT. THE CO-ORDINATE BENCH HELD THAT SUCH DEDUCTIO N CANNOT BE DENIED ON THE GROUND THAT CLAIM WAS NOT MADE EARLIER IN A RET URN FILED UNDER S.139(1) OF THE ACT AND A RETURN FILED IN PURSUANCE OF A NOT ICE ISSUED UNDER S.153A OF THE ACT IS AS GOOD AS A RETURN FILED UNDER S.139 OF THE ACT AND MORE PARTICULARLY UNDER S.139(1) OF THE ACT. THE LEARNE D AR THUS SUBMITTED THAT WHERE THE DEMONSTRABLE FACTORS EXIST INDICATING VEN TURE IN THE NATURE OF TRADE, A MERE FACT THAT THE TRANSACTIONS WERE WRONG LY REFLECTED IN THE EARLIER RETURN WOULD NOT TAKE AWAY THE LEGAL RIGHTS OF THE ASSESSEE TO CORRECT THE ERROR AND REFLECT TRUE STATE OF AFFAIRS IN THE RETU RN FILED IN PURSUANCE OF NOTICE ISSUED UNDER S.153A OF THE ACT CONSEQUENT UP ON SEARCH. THE LEARNED AR THUS SUBMITTED THAT THE ACTION OF THE ASSESSEE R EQUIRES TO BE UPHELD AND THE ORDER OF THE AO/CIT(A) REQUIRES TO BE MODIFIED. 8.4 THE LEARNED AR THEREAFTER REITERATED ONCE AGAIN THAT THERE IS NO UNDER REPORTING OF INCOME IN THE RETURN FILED UNDER S.153 A OF THE ACT WHICH STOOD SUBSTITUTED TO THE RETURN ORIGINALLY FILED UNDER S. 139 OF THE ACT. THE ASSESSEE HAS MERELY RE-ALIGNED THE INCOME UNDER THE APPROPRIATE HEAD HAVING REGARD TO THE GROUND REALITIES AND CONDUCT O F THE ASSESSEE AS VENTURE IN THE NATURE OF TRADE. 8.5 THE LEARNED AR NEXT SUBMITTED THAT IT IS WELL E STABLISHED THAT THERE IS NO ESTOPPEL AGAINST LAW AND AN ERRONEOUS CLAIM ON F IGURES OR APPROPRIATE CLASSIFICATION COULD BE REVISED SO LONG AS THE RELE VANT FACTS ARE AVAILABLE ON RECORD. THE LEARNED AR SUBMITTED IN ELABORATION THA T IF AN ASSESSEE UNDER A MISTAKE, MIS-CONCEPTION OR NOT BEING PROPERLY INSTR UCTED IS OVER ASSESSED, THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO ENSUR E THAT ONLY LEGITIMATE TAX DUES ARE COLLECTED. TO SUPPORT SUCH VIEW, THE LEAN ED AR FOR THE ASSESSEE REFERRED TO THE DECISION OF THE HONBLE GUJARAT HIG H COURT IN THE CASE OF S. R. KOSHTI VS. CIT (2005) 276 ITR 165 (GUJ), CIT VS. PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOMBAY) ETC. IT WAS THUS CONTENDED THAT THE ASSESSEE WAS ENTITLED AND DUTY B OUND TO REPORT TRUE IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 21 - INCOME UNDER PROPER HEAD IN THE RETURN FILED UNDER S.153A OF THE ACT WHICH ASSESSEE DID. 9. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ORDERS OF THE AO AND CIT(A) AND SUBMITTED THAT THE IN VIEW OF THE REASONED ORDER, NO INTERFERENCE THEREOF IS CALLED FOR. THE L EARNED DR REFERRED TO THE DECISION OF THE HONBLE MP HIGH COURT IN THE CASE O F CIT VS. SURESH CHAND GOYAL (2008) 298 ITR 277 (MP) TO SUBMIT THAT SELLING OF OWN LAND AFTER PLOTTING IT OUT IN ORDER TO SECURE PROPER PRICE IS NOT AN ADVENTURE IN NATURE OF TRADING OR BUSINESS. IT WAS FURTHER POINTED OUT THAT THE ASSESSEE IS NOT ENTITLED TO TAKE ADVANTAGE OF ITS OWN WRONG, IF ANY , IN THE RETURN FILED IN PURSUANCE OF SEARCH PROCEEDINGS. IT WAS SUBMITTED THAT SUCH RETURNS ARE INTENDED FOR THE BENEFIT OF THE REVENUE AND NOT FOR THE BENEFIT OF THE ASSESSEE. FOR THIS PROPOSITION, THE LEARNED DR FOR THE REVENUE RELIED UPON THE DECISION OF SUN ENGINEERING WORKS PVT. LTD. (1992) 198 ITR 297 (SC). 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND THE ASSESSMENT ORDERS AS WELL AS THE ORDER OF THE CIT(A ) APPEALED AGAINST. THE MATERIAL REFERRED TO AND RELIED UPON AS WELL AS CAS E LAWS CITED HAVE ALSO BEEN LOOKED INTO. THE SUBSTANTIVE ISSUE IN THE PRE SENT CASE IS WHETHER THE ASSESSEE HELD THE LAND PARCELS AT THALTEJ AS CAPITA L ASSET PRIOR TO ITS SALE AND WHETHER GAINS ARISING ON SALE OF PLOT/LAND TO V ARIOUS CUSTOMERS AFTER CARRYING OUT VARIOUS AMENDS IN THE NATURE OF LAND A ND OTHER INCURRING SOME DEVELOPMENT EXPENSES BY THE ASSESSEE IN THE RELEVAN T ASSESSMENT ORDERS IS REQUIRED TO BE TAXED UNDER THE HEAD BUSINESS INCOM E AS OFFERED BY THE ASSESSEE IN THE RETURN FILED UNDER S.153A OF THE AC T OR IS TO BE TREATED AS CAPITAL GAINS OF THE ASSESSEE AS ORIGINALLY DECLA RED IN THE RETURN FILED PRIOR TO SEARCH. THE INCIDENTAL ISSUE ALSO ARISES AS TO WHETHER THE ASSESSEE IS ENTITLED IN LAW TO TAKE A DIFFERENT POSITION ABO UT THE CHARACTER OF INCOME IN THE RETURN FILED UNDER S.153A OF THE ACT OR NOT. WHILE SUBSTANTIVE ISSUE IS ESSENTIALLY FACTUAL IN NATURE AND DEPENDS ON THE FACTS AND CIRCUMSTANCES PREVALENT IN A GIVEN CASE, THE INCIDENTAL ISSUE NOT ED ABOVE IS ABSTRACT IN NATURE AND INVOLVES A QUESTION OF LAW. IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 22 - 10.1 IT IS THE CASE OF THE ASSESSEE THAT CERTAIN PA RCELS OF AGRICULTURAL LAND ADMEASURING 15902 SQ.MTRS. WERE ACQUIRED/PURCHASED AT THALTEJ, AHMEDABAD BETWEEN MARCH 2008 TO JUNE 2008 JOINTLY A LONGWITH TWO CO- OWNERS NAMELY SMT. DARSHNABEN H. SAVALIA AND SMT. K APILABEN S. SAVALIA WHO ARE ALSO APPELLANTS IN THIS GROUP OF APPEALS. THE PURCHASES HAVE TAKEN PLACE IN FY 2007-08 & FY 2008-09 AS NOTED ABOVE. IT IS THE CASE OF THE ASSESSEE THAT AFORESAID PARCELS OF LAND WERE IMMEDI ATELY CONVERTED INTO NON-AGRICULTURAL LAND WITHIN TWO MONTHS FROM THE LA ST PURCHASE AND THE ASSESSEE INCURRED VARIOUS DEVELOPMENT EXPENSES TO P UT UP THE RESIDENTIAL HOUSING PLOT SCHEME KNOWN AS KRISH VILLA WHILE PR OVIDING FOR COMMON INFRASTRUCTURE AND INTERNAL ROADS. THE ASSESSEE HA S ALSO RECEIVED COMMENCEMENT LETTER FOR SUCH ACT FROM AMC IN FEBRUA RY 2009 I.E. IN 8-9 MONTHS TIME. THE LAY OUT PLAN OF PLOTTING DONE BY THE ASSESSEE ALONGWITH CO-OWNERS, BROACHERS OF THE RESIDENTIAL HOUSING SCH EME WAS REFERRED AND RELIED UPON TO SUPPORT ITS REVISED POSITION THAT TH E ASSESSEE ACQUIRED PARCELS OF LAND WITH A SOLE INTENTION TO EXPLOIT TH E LAND PORTFOLIO WITH COMMERCIAL MOTIVE AND CONSEQUENTLY THE GAINS ARISIN G IN THE PROCESS GIVES RISE TO BUSINESS INCOME HAVING REGARD TO THE INCLUS IVE DEFINITION OF SECTION 2(13) OF THE ACT R.W.S. 28 OF THE ACT. ON PERUSAL OF THE SEQUENCE OF EVENT NARRATED ON BEHALF OF THE ASSESSEE AT LENGTH AS NOT ED IN PRECEDING PARAS, WE OBSERVE THAT THE ASSESSEE AS ACTED IN A SYNCHRONIZE D MANNER WITH CONTINUITY. AS NOTED, THE LAND WAS CONVERTED INTO NONAGRICULTURAL LAND TO PAVE THE WAY FOR ITS COMMERCIAL UTILIZATION. THE C OMPONENT AUTHORITIES WERE APPROACHED IMMEDIATELY ON PURCHASE OF LAND FOR CONVERSION AND DEMARCATION OF LAY OUT. THE ASSESSEE HAS DEMONSTRA TED CARRYING OUT DEVELOPMENT OF THE LAND PARCELS AND INCURRING OF EX PENDITURE THEREON. THE COLLECTORS LETTER GRANTING PERMISSION FOR CONVERSI ON AND COMMENCEMENT LETTER FROM AMC PROVES THE CASE IN POINT TOWARDS CO MMERCIAL MOTIVE. THE LAY OUT PLAN SUGGESTS THE DEMARCATION OF COMMON INF RASTRUCTURE AND INTERNAL ROADS IN THE HOUSING PLOT SCHEME NAMED KR ISH VILLA. IT IS ALSO OBSERVED THAT THE APPELLANTS HEREIN HAVE SOLD THE P LOT IN THE SAID SCHEME TO DIFFERENT MEMBERS SPANNING OVER FY 2008-09 TO FY 20 10-11 AFTER PUTTING UP THE RESIDENTIAL HOUSING PLOT SCHEME AS APPROVED. THE APPELLANTS HAVE ISSUED BROACHERS FOR SALE OF PLOT TO POTENTIAL BUYE RS. IN THE AY 2011-12, IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 23 - THE ASSESSEE HAS ALSO DECLARED THE PROFIT OF SALE O N PLOTS UNDER THE HEAD BUSINESS INCOME AS PER HER PROPORTIONATE SHARE. 10.2 THE ABOVE NARRATED SEQUENTIAL ACTION CLEARLY S EEKS TO PRONOUNCE THE INDOMITABLE INTENTION OF THE APPELLANTS TO ACQUIRE/ APPROACH LAND PARCELS WITH COMMERCIAL MOTIVES. FROM THE REAL, SUBSTANTIV E AND SYSTEMATIC COURSE OF ACTIVITY OR CONDUCT WITH A SET PURPOSE CLEARLY U NDERSCORES THE REAL INTENT OF THE ASSESSEE. THE CONCRETE MATERIAL ON RECORD L EAVES NO MANNER OF DOUBT THAT THE ACQUISITION OF LAND UNDER SALE WAS INDUCED BY COMMERCIAL SPIRIT. AT THIS JUNCTURE, IT WILL BE PERTINENT TO OBSERVE T HAT THE INTENTION OF THE ASSESSEE IS TO BE JUDGED NOT WITH REFERENCE TO THE INCOME DECLARED UNDER A PARTICULAR HEAD OF INCOME AS PRESCRIBED IN THE STAT UTE, BUT IS REQUIRED TO BE DECIDED ON THE BASIS OF COMMERCIAL PRINCIPLES. THE ASSESSEE HAS MOVED SWIFTLY AND DID EVERYTHING POSSIBLE TO EXPLOIT THE DIVIDED LAND COMMERCIALLY AT THE FIRST AVAILABLE OPPORTUNITY. T HIS TYPE OF ACTIVITY CANNOT BE, IN OUR CONSIDERED OPINION, REGARDED AS C APITAL ACQUISITION TAXABLE UNDER THE HEAD CAPITAL GAINS. SUCH ORGAN IZED COURSE OF COMMERCIAL EXPLOITATION OF LAND PORTFOLIO CARRIES A LL TRAPPINGS OF ADVENTURE IN THE NATURE OF TRADE, COMMERCE ETC. AND THUS FALL S WITHIN THE AMBIT OF EXPRESSION BUSINESS AS DEFINED UNDER S.2(13) OF T HE ACT. AS A SEQUEL THERETO, THE PROFITS ARISING FROM SUCH ADVENTURE CA N BE TAXED AS BUSINESS INCOME UNDER S.28 OF THE ACT AS RIGHTLY CLAIMED ON BEHALF OF THE ASSESSEE. WHILE CONSIDERING, WHETHER A PARTICULAR TRANSACTION WAS ENTERED FOR COMMERCIAL GAINS OR NOT, THE SALUTARY INTENTION OF THE PERSON IS DETERMINATIVE. IT IS WELL SETTLED THAT SUCH INTENT ION HAS TO BE DECIDED ON THE BASIS OF SURROUNDING CIRCUMSTANCES, EXISTENCE O F COMMERCIALITY IN RELATIONSHIP OF PARTIES TO THE TRANSACTION, MOTIVES GOVERNING THE ACTION OF THE ASSESSEE IN BRINGING ABOUT THE TRANSACTION AND SUBSEQUENT CONDUCT. THUS, THE DRIVING FORCE FOR ENTERING INTO A TRANSAC TION WOULD BE DETERMINATIVE OF THE REAL NATURE AND CHARACTER OF S UCH TRANSACTION. THE ENTIRE EXPLANATION FOR INITIAL INTENTION TO ACQUIRE LAND WITH COMMERCIAL OBJECTIVES IS THUS SPECIFIC AND VERIFIABLE NOTWITHS TANDING INCORRECT DECLARATION IN THE RETURN FILED ORIGINALLY PRIOR TO SEARCH. THE ACTION OF THE ASSESSEE COINCIDE WITH A NORMAL BEHAVIOR OF A PERSO N INDULGED IN A IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 24 - COMMERCIAL ACT. A PERSON INTENDING TO HOLD A LAND OF THIS VALUE FOR ITS OWN EXPLOITATION AND ENJOYMENT WOULD NOT ORDINARILY ENG AGE HIMSELF IN A QUITE CONTRADICTORY CONDUCT AND THE GOVERNING FEATURES NA RRATED ABOVE CANNOT BE BRUSHED ASIDE AND PRIMACY CANNOT BE ACCORDED TO THE ENTRIES MADE TO THE BOOKS OF ACCOUNTS/RETURN OF INCOME. THE CONDUCT OF THE ASSESSEE UNEQUIVOCALLY SHOWS THE INTENTION OF THE ASSESSEE A ND ATTENDANT FACTS CLEARLY POINTS OUT THAT THE ASSESSEE WAS INTERESTED IN EXPLOITING COMMERCIAL OPPORTUNITY FOR QUICK GAINS IN A VERY SHORT TIME HO RIZON. IN THE LIGHT OF THE SEQUENTIAL EVENTS NOTED ABOVE, THE CLAIM OF THE REV ENUE THAT LAND WAS INTENDED FOR INVESTMENT AS PERSONAL USE AND FOR APP RECIATION WITH EFFLUX OF TIME AS CAPITAL ASSET IS UTTERLY IMPROBABLE. IT IS APPARENT THAT THE ACTION OF THE REVENUE WAS SIMPLY GUIDED BY CONSIDERATIONS OF THE REVENUE ALONE TO COLLECT MORE TAXES BY HOLDING THE INCOME TO BE TAXA BLE UNDER THE HEAD CAPITAL GAINS AND CONSEQUENTLY, BRINGING THE TRAN SACTIONS UNDER THE UMBRELLA OF SECTION 50C OF THE ACT. AT THIS STAGE, WE ALSO NOTE THE ASSERTIONS MADE ON BEHALF OF THE ASSESSEE IN AFFIRM ATIVE AND THAT TRANSACTIONS OF ACQUISITION AND EXPLOITATION LAND A T CHANDKHEDA & SHILAJ IS NOT COMPARABLE WITH THE TRANSACTIONS OF LAND AT THA LTEJ IN QUESTION HAVING REGARD TO THE IMMEDIATE POST ACQUISITION CONDUCT. A COMBINED READING OF ALL THE CONNECTED FACTS WARRANT FOR AN INESCAPABLE CONCLUSION THAT MOTIVE FOR PURCHASE OF LAND PARCELS AT THALTEJ WAS FOR EMB ARKING AN ADVENTURE IN THE NATURE OF TRADE, COMMERCE ETC. 10.3 WHILE COMING TO SUCH CONCLUSION, IT WILL BE RE LEVANT TO NOTE THAT HONBLE SUPREME COURT IN SOMEWHAT IDENTICAL FACT SI TUATION DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HONBLE SUPREM E COURT IN RAJA J. RAMESHWAR RAO VS. CIT (1961) 42 ITR 179 (SC) HELD THAT WHERE LAND WAS ACQUIRED FOR CONSTRUCTION OF A MARKET THEREON AND S URPLUS LAND WAS DIVIDED IN PLOTS AND SOLD, TRANSACTION OF SALE OF LAND WAS ADVENTURE IN THE NATURE OF TRADE. IT WAS INTER ALIA OBSERVED BY HONBLE SUPREME COURT THAT WHEN A PERSON ACQUIRES A LAND WITH A VIEW TO SELL IT LATER AFTER DEVELOPING IT, HE IS CARRYING ON AN ACTIVITY RESULTING IN PROFIT AND THE ACTIVITY CAN ONLY BE DESCRIBED AS BUSINESS ADVENTURE. WHERE A PERSON GO ES FURTHER AND DIVIDES THE LAND IN THE PLOTS DEVELOPS THE AREA TO MAKE IT MORE ATTRACTIVE AND SALES IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 25 - THE LAND NOT AS A SINGLE UNIT AS HE BOUGHT IT BUT I N PARCELS, HE IS DEALING WITH LAND AS HIS STOCK-IN-TRADE. HE IS CARRYING ON BUSINESS AND MAKING A PROFIT. THIS IS EXACTLY WHAT HAD HAPPENED IN THE I NSTANT CASE. HERE ALSO, THE ASSESSEE SOON AFTER PURCHASING LAND DEVELOPED I T AND STARTED SELLING SUB-DIVIDED PLOTS WITHIN TWO YEARS OF PURCHASE. SI MILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE SUPREME COURT IN P. M. MOHAMMED MEERAKHAN VS CIT [1969] 73 ITR 735 (SC) WHEREIN DIVISION OF THE LAND INTO PLOTS AND SALE THEREOF TO VARIOUS PARCELS INVOLVING SCHEMING AND ORGANIZATION ON THE PART OF THE ASSESSEE WAS CONSTITUTED TO BE AN ADVEN TURE IN THE NATURE OF TRADE WHICH IS SUSCEPTIBLE TO CHARGEABILITY UNDER T HE HEAD BUSINESS INCOME AS PER SECTION 28 OF THE ACT. THE ASSESSEE HAS RELIED UPON MANY OTHER DECISIONS EXPRESSING THE SIMILAR VIEW WHICH W E DO NOT INTEND TO DEAL WITH HAVING REGARD TO THE EXPRESS VIEW AVAILABLE FR OM THE HONBLE SUPREME COURT. 11. WE SHALL NOW TURN TO THE INCIDENTAL POINT INVOL VING QUESTION OF LAW ARISING IN THE SUBJECT MATTER OF APPEAL I.E. WHETHE R THE ASSESSEE IS ENTITLED TO REVISE ITS POSITION IN DEPARTURE WITH THE ORIGIN AL STAND (TAKEN IN THE RETURN FILED UNDER S.139 OF THE ACT PRIOR TO SEARCH ) AND CLAIM THE PROFITS AND GAINS ARISING FROM DEVELOPMENT AND SALE OF LAND PARCELS AS CHARGEABLE UNDER S.28 OF THE ACT UNDER THE HEAD PROFITS & GAI NS OF BUSINESS AS AGAINST INITIAL CLAIM OF ITS CHARGEABILITY UNDER S. 45 OF THE ACT UNDER THE HEAD CAPITAL GAINS OR NOT. THE QUESTION IS NO LO NGER RES INTEGRA. IN SO FAR AS THE TAXABILITY OF AN INCOME UNDER THE APPROPRIAT E HEAD IS CONCERNED, THE QUESTION IS ANSWERED BY THE HONBLE GUJARAT HIGH CO URT IN THE CASE CIT VS. PRANJAY MERCANTILE LTD. 361 ITR 462 (GUJ). IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT, IT IS TRITE THAT TH E INCOME OF THE ASSESSEE IS TO BE ASSESSED UNDER DIFFERENT HEADS ENUMERATED IN SECTION AS PER THE TRUE NATURE AND CHARACTER OF INCOME AND NOT MERELY ON TH E BASIS OF CLASSIFICATION GIVEN BY THE ASSESSEE. 12. WE NOW TURN TO ANOTHER ASPECT AS TO WHETHER THE ASSESSEE IS ENTITLED TO REVISE ITS CLAIM AND ALTER ITS ORIGINAL POSITION IN ACCORDANCE WITH LAW OR NOT. THE HONBLE GUJARAT HIGH COURT IN CIT VS. MITESH IMPEX 270 CTR 66 IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 26 - HAS INTER ALIA OBSERVED THAT THE INCOME TAX PROCEEDINGS ARE NOT A DVERSARIAL IN NATURE AND THE OBJECT OF THE REVENUE WOULD BE TO TAX REAL INCOME. THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383 (SC) NOTED THAT THERE IS NO REASON WHY ASSESSEE SHOULD BE PREVENTED FROM RAISING A QUESTION OF LAW BEFORE THE TRIBUNAL FOR THE FIRST TIME SO LONG AS RELEVANT FACTS ARE ON REC ORD IN RESPECT OF THE ITEM CONCERNED. FROM A READING OF LONG LINE OF JUDICIAL PRECEDENTS, IT IS APPARENT THAT THE AUTHORITIES UNDER THE ACT ARE UND ER SACROSANCT OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX COULD BE COLLEC TED AS PROVIDED UNDER THE ACT. IF AN ASSESSEE, UNDER A MISTAKE, MISCONCE PTION OR NOT BEING PROPERLY INSTRUCTED, IS OVER ASSESSED, THE AUTHORIT IES UNDER THE ACT ARE REQUIRED TO ENSURE THAT ONLY LEGITIMATE TAX DUES AR E COLLECTED. THIS IS THE VIEW WHICH FLOWS FROM ENUMERABLE JUDGMENTS INCLUDIN G CIT VS. SHELLY PRODUCTS (2003) 262 ITR 367 (SC), S. R. KOSHTI VS. CIT (2005) 276 ITR 165 (GUJ), CIT VS. PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOMBAY), CIT VS. B. G. SHIRKE CONSTRUCTION TEC HNOLOGY (P) LTD. (2017) 395 ITR 371 (BOMBAY) AND SO ON. THEREFORE, THE ASSESSEE IS WITHIN ITS LEGITIMATE RIGHT TO ALTER A WRONG POSITION TAKE N EARLIER IN THE COURSE OF PROCEEDINGS. IN THE INSTANT CASE, THE ASSESSEE HAS ALTERED ITS POSITION IN THE RETURN FILED UNDER S.153A OF THE ACT FILED IN PURSU ANCE OF SEARCH PROCEEDINGS WHEREIN THE ASSESSEE HAS SOUGHT TAXABIL ITY OF INCOME GENERATED FROM SALE OF LAND PARCELS UNDER THE HEAD BUSINESS INCOME WHICH ACTION IS PERMISSIBLE PROVIDED SUCH CLAIMS IS JUSTIFIED WHEN TESTED UNDER THE PROVISIONS OF ACT. 13. WE THUS FIND CONSIDERABLE MERIT IN THE PLEA OF THE ASSESSEE HEREIN FOR ELIGIBILITY OF CLAIM OF THE ASSESSEE FOR TAXABILITY OF PROFITS ARISING ON SALE OF PLOTS UNDER THE HEAD BUSINESS INCOME AS CLAIME D IN THE RETURN FILED UNDER S.153A OF THE ACT. 14. WE HOWEVER NOW TURN TO THE YET ANOTHER RELATED ASPECT IN CONTROVERSY. IT IS THE CASE OF THE REVENUE THAT TH E PROVISIONS OF SECTION 153A OF THE ACT ARE FOR THE BENEFIT OF THE REVENUE IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF SUN ENGINEERING WORKS IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 27 - PVT. LTD. (1992) 198 ITR 297 (SC) . IT IS THUS CLAIMED ON BEHALF OF THE REVENUE THAT ASSESSEE IS NOT PERMITTED TO MAKE A FR ESH CLAIM OR ALTER ITS ORIGINAL STAND TO ITS ADVANTAGE IN THE COURSE OF AS SESSMENT PROCEEDINGS PURSUANCE TO SEARCH. WE DO NOT SEE ANY FORCE IN SU CH PLEA EITHER. THE DECISION OF THE HONBLE SUPREME COURT IN SUN ENGINEERING (SUPRA) WAS RENDERED IN THE CONTEXT OF SECTION 147 OF THE ACT W HICH SEEKS TO ASSESS THE CHARGEABLE INCOME ESCAPED ASSESSMENT. KEEPING IN V IEW THE OBJECT AND PURPOSE OF THE PROCEEDINGS UNDER S.147 OF THE ACT, IT WAS HELD BY THE HONBLE SUPREME COURT THAT SUCH PROVISION IS ENACTE D FOR THE BENEFIT OF REVENUE AND NOT THE ASSESSEE. IN TOTAL CONTRAST TO SECTION 147/148, A SPECIAL PROCEDURE HAS BEEN PROVIDED UNDER CHAPTER X IV FOR ASSESSMENT IN SEARCH CASES. THE ASSESSMENTS OF SEARCH CASES ARE REQUIRED TO BE MADE AS PER SECTION 153A OF THE ACT. UNLIKE SECTION 147, T HE SCOPE OF SECTION 153A OF THE ACT IS NOT NECESSARILY RELATABLE TO ONL Y UNDISCLOSED INCOME. THE SCHEME OF ASSESSMENT UNDER S.153A OF THE ACT AP PEARS TO BE QUITE DIFFERENT QUA SECTION 147 OF THE ACT ON THE FACE OF IT. SECTION 153A OF THE ACT BEGINS WITH NON OBSTANTE CLAUSE WHICH HAS AN OVERRIDE EFFECT OVER SECTION 147 OF THE ACT AMONG OTHERS. AT THIS POINT , IT WILL RELEVANT TO TAKE NOTE OF THE DECISION RENDERED BY THE HONBLE GUJARA T HIGH COURT IN CASE OF KIRIT DAHYABHAI PATEL VS. ACIT (2017) 80 TAXMANN.CO M 162 (GUJ) WHEREIN THE HONBLE GUJARAT HIGH COURT HAS INTER ALIA OBSERVED THAT RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER S.153A OF THE ACT IS TO BE CONSIDERED AS RETURN FILED UNDER S.139 OF THE ACT. SIMILARLY, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHRIKANT MOHTA VS. CIT ITAT NO. 19 OF 2015 JUDGMENT DATED 25 TH JUNE, 2018 HAS ANSWERED THE QUESTION POSED BEFORE IT IN AFFIRMATIVE THAT WHERE A RETURN WAS FI LED IN RESPONSE TO NOTICE UNDER S.153A(1)(A) OF THE ACT IS REQUIRED TO BE TRE ATED AS A RETURN UNDER S.139 OF THE ACT AND THAT ANY OTHER RETURN IS OF NO CONSEQUENCE AND NON EST . THE CO-ORDINATE BENCH IN ACIT VS. V. N. DEVADOSS (2013) 32 TAXMANN.COM 133 (CHENNAI) HAS ALSO EXPRESSED A SIMILAR VIEW AND HELD THAT TH E ASSESSEE WAS ENTITLED TO AVAIL THE BENEFIT OF DEDUCTION UNDE R S.80IB(10) OF THE ACT IN RETURN FILED UNDER S.153A OF THE ACT, DESPITE THE F ACT THAT CLAIM WAS NOT MADE EARLIER IN A RETURN FILED UNDER S.139(1) OF TH E ACT. A CONSPECTUS OF THE AFORESAID DECISION CITED WOULD THUS GIVE A RISE TO A COMPELLING IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 28 - IMPRESSION THAT ASSESSEE IS NOT PREVENTED FROM MAKI NG A CLAIM TO ITS ADVANTAGE IN THE PROCEEDINGS UNDER S.153A OF THE AC T UNLIKE SECTION 147 OF THE ACT. 15. IN THE RESULT, APPEAL OF THE ASSESSEE FOR AY 20 08-09 IS ALLOWED. IT(SS)A NOS. 83, 84 & 889/AHD/2015 - AYS. 2009-10 TO 2011-12 (BHANUBEN K. SAVALIA) 16. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE REVENUE IN TREATING PROFITS ARISING FROM SAL E OF A PART OF LAND AT THALTEJ, AHMEDABAD (KRISH VILLA) AS SHORT TERM CAPI TAL GAINS AS AGAINST THE BUSINESS INCOME SHOWN BY THE ASSESSEE AND CONSEQUEN TLY APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. AS NOTED EAR LIER, THE ASSESSEE WHILE FILING THE ORIGINAL RETURN (PRIOR TO SEARCH) UNDER S.139 OF THE ACT HAD DECLARED THE LAND AT THALTEJ (KRISH VILLA) AS CAPIT AL ASSET IN FY 2007-08 RELEVANT TO AY 2008-09. THE GAINS ARISING FROM SAL E OF THE LAND SPANNING OVER AY 2008-09, 2009-10 & 2010-11 WAS ACCORDINGLY SHOWN AND DECLARED AS CAPITAL GAINS IN ITS RETURN OF INCOME FILED PRIO R TO SEARCH. HOWEVER, CONSEQUENT UPON SEARCH, THE ASSESSEE ALTERED ITS ST AND AND DECLARED THE LAND TO BE HELD AS STOCK-IN-TRADE/CURRENT INVESTMENT AND THE GAINS ARISING ON SALE THEREOF IN SUBSEQUENT YEARS HAVE DECLARED IT TO BE BUSINESS INCOME OF THE ASSESSEE. 17. IN VIEW OF DISCUSSION IN LENGTH ON IDENTICAL FA CT SITUATION, THE CASE OF ASSESSEE MERITS ACCEPTANCE FOR TREATING THE PROFITS ON SALE OF LAND/PLOT TO BE BUSINESS INCOME AS PER RETURN FILED UNDER S.153A OF THE ACT INSTEAD OF CAPITAL GAINS . 18. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE FOR AY 2009-10 TO 2011- 12 ARE ALLOWED. I.T.(SS)A. NOS. 79, 80, 81 & 888/AHD/2015 - A YS. 2 008-09, 2009-10, 2010-11 & 2011-12) IN CASE OF DARSHNABEN HARSHADBHA I SAVALIA & IT(SS)A NO. 82/AHD/15 & 11 APPEALS. [BHANUBEN K. SAVALIA & 2ORS.] - 29 - I.T.(SS)A. NOS. 76, 77, 78 & 887/AHD/2015 AYS. 2008 -09, 2009-10, 2010- 11 & 2011-12) IN CASE OF SMT. KAPILABEN S. SAVALIA 19. THE OTHER ASSESSEE, NAMELY, SMT. DARSHNABEN HAR SHADBHAI SAVALIA AND SMT. KAPILABEN S. SAVALIA ARE ALSO THE CO-OWNER S OF THE SAME LAND PARCELS AS DISCUSSED IN THE CASE OF SMT. BHANUBEN K ANTIBEN SAVALIA (SUPRA). THEREFORE, OBSERVATIONS MADE IN SMT. BHAN UBEN KANTIBEN SAVALIA SHALL APPLY MUTATIS MUTANDIS IN OTHER APPEALS RELATING TO OTHER ASSESSEES AS NOTED ABOVE. 20. IN VIEW OF DISCUSSION IN LENGTH ON IDENTICAL FA CT SITUATION, THE CASE OF ASSESSEE MERITS ACCEPTANCE FOR TREATING THE PROFITS ON SALE OF LAND/PLOT TO BE BUSINESS INCOME AS PER RETURN FILED UNDER S.153A OF THE ACT INSTEAD OF CAPITAL GAINS . 21. IN THE COMBINED RESULT, ALL THE APPEALS OF RESP ECTIVE ASSESSEES ARE ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 17/09/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- ). / REVENUE 2. / ASSESSEE +. ,-.! /! / CONCERNED CIT 4. /!- / CIT (A) 2. 345 6!6-.7 ' -.&7 89, / DR, ITAT, AHMEDABAD :. 5;< = / GUARD FILE. BY ORDER / 7 /8 ' -.&7 89, THIS ORDER PRONOUNCED IN OPEN COURT ON 17/09/2019