HASMUKHBHAI R PRAJAPATI V. ASST. COMMISSIONER OF INCOME TAX

TAXAP/67/2015

AI Insights

The case involves a series of Tax Appeals filed by Mr. Ramesh C. Prajapati against the orders of the Income Tax Appellate Tribunal, which had reversed the decisions of the CIT(A) and restored the assessments made by the Assessing Officer. The primary issues revolved around the classification of income from the sale of land and agricultural income. The Tribunal had treated the income from the sale of land as business income and not capital gains, and had remanded the issue of agricultural income back to the Assessing Officer for re-examination. The High Court upheld the Tribunal's decisions, dismissing the appeals filed by the assessee.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 753681 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 28-04-2015
• Assessment Year: misc
• Other Referred Cases: Ramjibhai Dahyabhai Versus Commissioner of Income-Tax, Commissioner of Income Tax, Bombay Versus H. Holck Larsen, Commissioner of Income-Tax Versus J.M. Mehta and Bros., Commissioner of Income-Tax, Tamil Nadu-I Versus Dadha and Company
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Assessee Lawyers: J P SHAH
• Keywords: Agricultural income; Business income; Capital Gain; Income from land transaction; Long Term Capital Gain; Scrutiny assessment
• Section: 143(2); 80IB; 54EC; 41(1)

Judgement Text

"O/TAXAP/64/2015 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 64 of 2015 With TAX APPEAL NO. 65 of 2015 TO TAX APPEAL NO. 70 of 2015 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH Sd/- and HONOURABLE MR.JUSTICE S.H.VORA Sd/- ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== RAMESH C PRAJAPATI....Appellant(s) Versus DY. COMMISSIONER OF INCOME TAX....Opponent(s) ========================================================== Appearance: MR JP SHAH FOR MR MANISH J SHAH, ADVOCATE for the Appellant ========================================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH Page 1 of 25 O/TAXAP/64/2015 JUDGMENT and HONOURABLE MR.JUSTICE S.H.VORA Date : 28/04/2015 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.00. As common question of law and facts arise in this group of this appeals, and as such they arise out of the impugned judgement and order passed by the learned Income Tax Appellate Tribunal, “C” Bench, Ahmedabad (hereinafter shall be referred to as “the learned tribunal” for short), all these appeals are heard, decided and disposed of by this common judgement and order. 2.00. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by the learned tribunal in ITA No.2657/Ahd/2010 for A.Y. 2007-2008, by which the learned tribunal has allowed the said appeal preferred by the revenue, the appellant – assessee has preferred Tax Appeal No. 64 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in reversing the well reasoned order of C.I.T. (Appeals) and in sending the matter back to the Assessing Officer when in the earlier years, Page 2 of 25 O/TAXAP/64/2015 JUDGMENT agricultural income from the same land was accepted by the Department from the lower figure of Rs.11,47,486/- to the higher figure of Rs.16,01,261/- and this year’s income was Rs.12,12,220/- only? (b). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sale of Plot No.91 yielded business income and not capital gain and thus reversing the well reasoned order of C.I.T. (Appeals)?” 2.01. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by the learned tribunal in ITA No.2702/Ahd/2010 for A.Y. 2007-2008, the appellant – assessee has preferred Tax Appeal No.65 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, the assessee was the owner of the land at Survey Nos.287 and 458? (b). If the reply to the above question is in the affirmative, whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sale of Plot Nos.287 and 485 yielded business profit in the hands of the assessee?” 2.02. Feeling aggrieved and dissatisfied with the Page 3 of 25 O/TAXAP/64/2015 JUDGMENT impugned judgement and order passed by the learned tribunal in ITA No.2658/Ahd/2010 for A.Y. 2007-2008, the appellant – assessee has preferred Tax Appeal No.66 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in reversing the well reasoned order of C.I.T. (Appeals) and in sending the matter back to the Assessing Officer when in the earlier years, agricultural income from the same land was accepted by the Department from the lower figure of Rs.8,11,167/- to the higher figure of Rs.14,21,873/- and this year’s income was Rs.7,24,132/- only? (b). Whether on the facts and in the circumstances of the case, the tribunal was right in holding the sale of Plot No.91 yielded business income and not capital gain and thus reversing the well reasoned order of C.I.T. (Appeals)? (c). Whether on the facts and in the circumstances of the case, the tribunal was right in law in reversing the well reasoned order of C.I.T. (Appeals) on section 41(1) and sending the matter back to the Assessing Officer?. “ 2.03. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by the learned tribunal in ITA No.2704/Ahd/2010 for A.Y. 2007-2008, the Page 4 of 25 O/TAXAP/64/2015 JUDGMENT appellant – assessee has preferred Tax Appeal No.67 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, assessee was the owner of land at Survey No.287? (b). If the reply to the above question is in the affirmative, whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sale of land at Survey No.287 yielded business profit in the hands of the assessee?” 2.04. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by the learned tribunal in ITA No.2659/Ahd/2010 for A.Y. 2007-2008, by which the learned tribunal has allowed the said appeal preferred by the revenue, the appellant – assessee has preferred Tax Appeal No. 68 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in reversing the well reasoned order of C.I.T. (Appeals) and in sending the matter back to the Assessing Officer when in the earlier years, agricultural income from the same land was accepted by the Department from the lower figure of Rs.10,82,809/- to the higher figure of Rs.14,36,108/- and this year’s income was Page 5 of 25 O/TAXAP/64/2015 JUDGMENT Rs.9,16,424/- only? (b). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sale of Plot No.91 yielded business income and not capital gain and thus reversing the well reasoned order of C.I.T. (Appeals)?” 2.05. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by the learned tribunal in ITA No.2703/Ahd/2010 for A.Y. 2007-2008, the appellant – assessee has preferred Tax Appeal No.69 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, assessee was the owner of land at Survey Nos.287 and 1280? (b). If the reply to the above question is in the affirmative, whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sale of land at Survey Nos.287 and 1280 yielded business profit in the hands of the assessee?” 2.06. Feeling aggrieved and dissatisfied with the impugned judgement and order passed by the learned tribunal in ITA No.238/Ahd/2011 for A.Y. 2007-2008, by which the learned tribunal has allowed the said appeal preferred by Page 6 of 25 O/TAXAP/64/2015 JUDGMENT the revenue, the appellant – assessee has preferred Tax Appeal No.70 of 2015 with the following proposed substantial questions of law :- “(a). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in reversing the well reasoned order of C.I.T. (Appeals) and in sending the matter back to the Assessing Officer when in the earlier years, agricultural income from the same land was accepted from the lower figure of Rs.11,81,544/- to the higher figure of Rs.15,06,134/- and this year’s income was Rs.4,50,000/- only? (b). Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sale of Plot yielded business income and not capital gain and thus reversing the well reasoned order of C.I.T. (Appeals)?” 3.00. For the sake of convenience, facts of Tax Appeal No. 64 of 2015, arising out of the impugned judgement and order passed by the learned tribunal in ITA No.2657/Ahd/2010 for A.Y. 2007-2008, are narrated. 3.01. That the assessee - Mr.Ramesh C. Prajapati filed return of income for A.Y. 2007-2008 declaring total income at Rs.19,86,268/-. The case was selected for scrutiny by issuing notice under section 143(2) of the Income Tax Act, 1961 Page 7 of 25 O/TAXAP/64/2015 JUDGMENT (hereinafter referred to as “the Act” for short) dated 25/7/2008, which was duly served upon the assessee. In computation of total income, the assessee stated to have earned income from business, other sources, agricultural, and Capital Gain. The assessee declared Rs.12,12,220/- as net agricultural income. To substantiate the agricultural income, the assessee submitted the copy of the bills of M/s.Parshwa Trading Co. and M/s.Harsh Corporation. The assessee stated to have sold Drum Stick of Rs.97,500/-. 3.02. That the assessee also declared Long Term Capital Gain on sale of Revenue Survey Nos. 91, 484 and 287 and declared Rs.68,50,473/- as Long Term Capital Gain. The assessee declared Long Term Capital Gain at Rs.NIL after claiming deduction under section 54EC of the Act. 3.03. That the A.O. did not accept the claim of the assessee with respect to agricultural income as well as Long Term Capital Gain with respect to income from land transactions. Thus, while finalizing the assessment, the A.O. held income from land transaction as business income and not Capital Gain, as claimed by the assessee and therefore made addition of Rs.1,42,97,628/- to the total income of the assessee, disallowing the Long Term Capital Gain being business income. 3.04. That feeling aggrieved and dissatisfied with the above, addition made by the A.O. while passing order of Page 8 of 25 O/TAXAP/64/2015 JUDGMENT assessment for A.Y. 2007-2008, the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) partly allowed the said appeal and deleted the addition made by the A.O. with respect to the sale of Revenue Survey No.91 treating it as Capital Gain. The learned CIT(A), however, confirmed the addition of Rs.32,55,053/- made by the A.O. on sale of property bearing Revenue Survey No.287 by treating the income derived from the sale of Revenue Survey No.287 as income from business. 3.05. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) both, the revenue as well as the assessee preferred appeals being ITA No.2657/Ahd/2010 and ITA No.2702/Ahd/2010 before the learned tribunal. Similar orders were passed by the A.O. in the case of other assessees – Mr.Hasmukhbhai R. Prajapati and Mr.Rajesh D. Prajapati and similar orders came to be passed by the learned CIT(A) with respect to sale of the land bearing Revenue Survey Nos.91 and 287 and both, the revenue as well as the respective assessee preferred appeals before the learned tribunal being ITA No.2658/Ahd/2010 and ITA No.2770/Ahd/2010 in case of assessee – Mr.Hasmukhbhai R. Prajapati and appeals being ITA No.2659/Ahd/2010 and ITA No.2670/Ahd/2010 in case of Assessees – Rajesh D. Prajati and Mr.Raman C. Prajapati, respectively. 3.06. The assessee preferred appeal before the learned tribunal being ITA Nos.238/Ahd/2011. That by the impugned judgement and order, the learned tribunal has quashed and Page 9 of 25 O/TAXAP/64/2015 JUDGMENT set aside the orders passed by the learned CIT(A) and restored the respective assessment orders and has treated the income from sale of Revenue Survey Nos.91 and 287 as business income and has confirmed the addition made by the A.O. into the income treating the said income as business income in the hands of the respective assessee. 3.07. With respect to agriculture income, the learned tribunal has remanded the matter back to the A.O. to reconsider the said issue / claim afresh. 3.08. Now, in the case of the assessee – Mr.Hasmukh Prajapati, in the Appeal being ITA No.2658/Ahd/2010 with respect to applicability of section 41(1) of the Act with regard to the amount of Rs.1,48,25,333 shown by the assessee as “advance received against land sale” alleged to have been received from one Janpriya Trust against sale of land of Survey no.91, the learned tribunal has remanded the matter to the file of the learned CIT(A) to decide the issue afresh, after considering the submissions of the assessee and after considering the report from the A.O. 3.09. Feeling aggrieved and dissatisfies with the impugned judgement and order passed by the learned tribunal in the respective appeals, more particularly against the decision of the learned tribunal in treating the income on sale of Survey Nos.91 and 287 as business income and in the hands of the respective assessees, the respective assessees have preferred all these Tax Appeals to consider the aforesaid Page 10 of 25 O/TAXAP/64/2015 JUDGMENT proposed substantial questions of law. 4.00. Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants has vehemently submitted that the learned tribunal has materially erred in treating / considering the income from sale of Survey No.91 as business income and not Capital Gain. It is submitted by Mr.Shah, learned advocate appearing on behalf of the respective assessees that Survey No.91 was acquired by the respective assessee by way of Will and therefore, it was “Capital” in nature. It is submitted that therefore, the income from the sale of the aforesaid property which was acquired by sale ought to have been treated as Capital Gain Income and not business income. 4.01. Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants has further submitted that at the time when the respective assessees acquired the land under the sale, it was not acquired as “Stock-in-trade” and it was “Capital” in nature. It is submitted that therefore consequently it is held that the income derived shall be treated as “Capital Gain” and not “Business Income. In support of his above submissions, he has heavily relied upon section 45(2) of the Act as well as decisions of the Division Bench of this Court in the case of Ramjibhai Dahyabhai Versus Commissioner of Income-Tax, reported in (1986) 158 ITR 540 (Gujarat) as well as in the case of Commissioner of Income Tax, Bombay Versus H. Holck Larsen, reported in (1986) 160 ITR 67. Page 11 of 25 O/TAXAP/64/2015 JUDGMENT 4.02. Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants has further submitted that, as such for 20 years, land bearing Survey No.91, which was acquired by the respective assessee under the sale was kept as it is and therefore, the same cannot be held as “Stock-in-trade” in the hands of the respective assessees and is / was required to be treated as Capital Assets in the hands of the respective assessees. Making above submissions and relying upon the above submission, it is vehemently submitted by Mr.Shah, learned advocate appearing on behalf of the respective assessees that the learned tribunal has materially erred in confirming the addition made by the A.O. in the income of the respective assessees treating the income of sale of Revenue Survey No.91 as business income. 4.03. Now, so far as the order passed by the learned CIT(A) as well as the learned tribunal holding that the parcel of land of Revenue Survey No.287 was the property of Partnership Firm named – M/s.Satyanarayan Traders, is concerned, it is vehemently submitted by Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants that as such though the land was purchased in the year 1999 in the accounts of M/s.Satyaranayan Traders, in the Balancesheet of M/s.Satyaranayan Traders it was declared in the hands of individual members. It is submitted that as such the lands in question were shown in the hands of M/s.Satyaranayan Traders by mistake. It is submitted that as Page 12 of 25 O/TAXAP/64/2015 JUDGMENT such the respective assessees were the partners of M/s.Satyaranayan Traders. It is submitted that the land in question was held as “Stock-in-trade” of M/s.Satyaranayan Traders. Relying upon the decision of Bombay High Court in the case of Commissioner of Income-Tax Versus J.M. Mehta and Bros., reported in (1995) 214 ITR 716 (Bombay) as well as decision of Madras High Court in the case of Commissioner of Income-Tax, Tamil Nadu-I Versus Dadha and Company, reported in (1983) 142 ITR 792 (Madras), it is vehemently submitted by Mr.Shah, learned advocate appearing on behalf of the respective assessees that both, the learned CIT(A) as well as the learned tribunal ought not to have included the income from sale of Survey Nos.287 and 484 as business income in the hands of the respective assessees. It is submitted that if the Partnership Firm - M/s.Satyanarayan Traders was the owner of the land in question, the came cannot be passed over to the assessee as a partner without a valid and properly stamped and registered conveyance deed and merely passing the entries in the Books of Partnership Firm. It is submitted that therefore the learned A.O., learned CIT(A) as well as the learned tribunal have materially erred in making addition int eh income received by sale of the aforesaid parcels of land as business income in the hands of the respective assessees. 4.04. Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants has further submitted that the learned tribunal has materially erred in remanding the matter to the A.O. with respect to the agricultural income. It is submitted that as such the Page 13 of 25 O/TAXAP/64/2015 JUDGMENT agricultural income was accepted in the previous years ranging from Rs.11,17,486 to Rs.16,01,261/- and in the year under consideration it was only Rs.12,12,220/-. It is submitted that therefore, the learned tribunal ought not to have remanded the matter back to the A.O. 4.05. Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants has further submitted that even the learned tribunal has materially erred in reversing the order of the learned CIT(A) on Section 41(1) of the Act and sending the matter back to the learned CIT(A). Making above submissions, it is requested to admit/allow these appeals. 5.00. Heard Mr.J.P. Shah, learned advocate appearing on behalf of the respective assessees – original appellants at length. 6.00. Now, so far as the proposed question No.(a) in Tax Appeal Nos.64, 66, 68 and 70 is concerned, it is required to be noted that the learned tribunal has as such remitted the issue to the file of learned A.O. and has directed to decide the issue afresh as per law. That while remanding the issue to the file of the A.O., the learned tribunal has observed in para 8 as under :- “8. We have heard the rival submissions and perused the material on record. In the present case the controversy is that assessee has shown Page 14 of 25 O/TAXAP/64/2015 JUDGMENT income of Rs.12,12,220/- being income from agriculture activities but A.O. has considered income of Rs.7,50,000/- to be as business income. We find that it is the assessee’s contention that he has stated to have earned agriculture income from the crop produced / grown by it but the submission of the assessee of having earned agriculture income was not accepted by A.O. We find that no basis has been spelled out by the A.O. to arrive at the conclusion that out of total income declared by assessee, part of income was business income. We also find that no enquiry was made by the A.O. either by himself or through the Inspector to verify and examine the land holding of the assessee, the nature of crops cultivated on the land, whether the land was irrigated or what were the facilities available for irrigating the land, the yield of the land during the relevant period. We also find that no enquiry with Sarpanch or Patwari or any other revenue authority was made either by A.O. or CIT(A) nor the revenue records were called for to ascertain yield of crops and the factual position. We find that learned CIT(A) has considered the claim of the assessee of having agriculture income in view of the agriculture land shown at Rs.1.25 Crore in the balance sheet. During the course of hearing the ld. A.R. Has asked specific question about the total land holding of the assessee, the type of crops grown and what were the irrigation facilities available to which neither the ld. A.R. or ld. D.R. Could furnish any reply. We are therefore of the view that the details like the land holding under agriculture, nature of irrigation facility on the land, the crops gown on the land in the relevant period, record of crops grown in Page 15 of 25 O/TAXAP/64/2015 JUDGMENT revenue records needs to be verified and therefore, the matter is restored to the file of A.O. for him to examine the aforesaid facts and thereafter decide the issue as per law. Needless to state that A.O. shall grant adequate opportunity of hearing to the assessee. We also direct the assessee to co-operate by promptly furnishing the necessary details called for by the A.O. to decide the issue. Assessee is also free to produce additional evidence, if any, in support of his contention. In result, this round of Revenue is allowed for statistical purposes.” 6.01. In view of the above facts that when now the matter is remitted to the file of learned A.O. to examine the aforesaid issue afresh in accordance with law, we see no reason to interfere with the same. No error has been committed by the learned tribunal in remitting the issue to the file of learned A.O. No substantial question of law arise. Hence Tax Appeal Nos.64, 66, 68 and 70 with respect to the proposed question (a) are hereby dismissed. 7.00. Similarly, so far as proposed question No.(c) in Tax Appeal No.66 of 2015 arising out of ITA No.2658/Ahd/2010 in the case of assessee – Mr.Hasmukhbhai Prajapati is concerned, the learned tribunal has remitted the issue to the file of learned CIT(A) and has directed the learned CIT(A) to decide the said issue afresh after considering the submissions of the assessee and after obtaining the Remand Report from the A.O. While remanding the issue to the file of learned CIT(A), the learned tribunal in para 22 has observed as under :- Page 16 of 25 O/TAXAP/64/2015 JUDGMENT “22. We have heard the rival submissions and perused the material on record. We find that CIT(A) while deciding the issue in favour of the assessee has held that the assessee would have received the balance amount from Janpriya Trust on sale of land and such amount has been offered to tax. Before us, nothing has been placed on record to demonstrate that the said amount was received by the assessee and was offered to tax in earlier years or in the year under consideration and therefore, provision of section 41(1) of the Act was not applicable. Further CIT(A) had decided the issue in a summary manner without passing a speaking order. Further, we also find that while deciding the issue in favour of the assessee, no Remand Report was called from A.O. We therefore feel that in the interest of justice and fair play, the submission made by the assessee before CIT(A) needs to be reexamined. We therefore, remit the issue to the file of CIT(A) to decide the issue afresh after considering the submissions of the assessee and thereafter obtaining Remand Report from A.O. Needless to state that CIT(A) shall grant adequate opportunity of hearing to both the parties. Assessee is also directed to promptly submit all the required details and additional evidence that it may be want to rely. Thus, this ground of Revenue is allowed for statistical purposes.” We are in complete agreement with the view taken by the learned tribunal. As the matter is remanded to the file of Page 17 of 25 O/TAXAP/64/2015 JUDGMENT the learned CIT(A) to decide the issue afresh after considering the submissions of the assessee and after obtaining the Remand Report from the A.O., no substantial questions of law arise. Hence, Tax Appeal No.66 of 2015 with respect to question No.(c) is dismissed. 8.00. Now, so far as impugned judgement and order passed by the learned tribunal inholding the sale of Revenue Survey No.91 yielded business income and not capital gain in respect of Tax Appeal Nos.64, 66, 68 and 70 of 2015 is concerned, the assessee treated the income received on sale of Revenue Survey No.91 as capital gain. It was the case on behalf of the assessee that he along with others acquired the said land by way of Will executed by the original owner – Mr.Maganbhai Ambalal Patel. Therefore, it was the case on behalf of the respective assessee that the land was acquired through Will more than 20 years back and therefore, on its sale, the income derived therefrom is to be treated as capital gain. On appreciation of evidence and the material on record, the learned tribunal has not accepted the case on behalf of the assessee that the said land was acquired by the assessee by way of Will. The learned tribunal also noted that the assessee has claimed deduction under section 80IB of the Act for the development of Housing Project, meaning thereby he was engaged in the business of development of Housing Project in the year under consideration. The learned tribunal while confirming the findings recorded by the A.O. that profit from sale of land bearing Survey No.91 as business income, the learned tribunal in para 13 has observed and held as under :- “13. We have heard the rival submissions and Page 18 of 25 O/TAXAP/64/2015 JUDGMENT perused the material on record. The issue in the present ground is the treatment of treat of tax of the profit earned on sale of land. According to the A.O., the profit to be treated as business income whereas according to the A.O., it is to be treated as capital gains. With respect to the land bearing Survey No.91, it is stated that assessee had acquired the land in the year 1986 under Will made by Shree Maganbhai Ambalal Patel who is stated to have expired on 5/6/1997. It is therefore stated by the assessee that the land was acquired through “Will” more than 20 years back and therefore, on its sale, the profit arising cannot be considered as capital income. From the copy of the “Will” placed at page 132 of the Paper Book, it is seen that the Will is only notarized by Notary and it is not registered nor it was probated. On a query by the Bench as to whether the assessee was related to Shri Manganbhai Patel, it is submitted that Shri Maganbhai Patel was not related to the assessee. It is also a fact that though assessee had submitted that the land was received by him more than 20 years back, but it is also a fact that the aforeasid land was not disclosed I the balancesheet of the assessee after its acquisition. Though learned A.R. has submitted that in the “Hakk Patrak” (placed at page 137 of the Paper Book) which is record of rights, the name of the assessee has been entered in it. From the copy of the assessment order for A.Y. 2005-06 which is placed at page 51 of the Paper Book, it is seen that the assessee in that year had got the accounts audited under section 44AB of the Act and had filed the tax audit report along with the Balancesheet, Profit and Loss Accounts etc. When the assessee is Page 19 of 25 O/TAXAP/64/2015 JUDGMENT maintaining the Books of Accounts and had got the same audited, no valid justification has been offered for not showing the land acquired through inheritance from the financial year 1997-98 onwards in the Balancesheet. A.O. in his order has also noted that assessee has got completed various legal formalities like obtaining NA Order from Collector, Vadodara, Development Permission from Municipal Corporation, Zoning Certificate from Vadodara Urban Development Authority getting the lay out plans approved, developed the land and divided the land into 206 plots. From the assessment orders for A.Y. 2005- 06 and 2006-07, which has been placed in the Paper Book, it is seen that the assessee has claimed deduction under section 80IB of the Act for the development of housing projects, meaning thereby that the assessee was engaged in the business of development of housing projects in those years. In view of the aforesaid facts, we find that A.O. has rightly treated the profit from the sale of land bearing Plot No.91 as “Business Income”.” We are in complete agreement with the view taken by the learned tribunal holding the income from sale of land bearing Survey No.91 as business income and not as capital gain as claimed by the assessee. As observed by the learned tribunal, the assessee was not related to said Mr.Maganbhai Patel. Considering the aforesaid facts and circumstances of the case, the decisions of the Division Bench of this Court in the case of Ramjibhai Dahyabhai (supra) and in the case of H. Holck Larsen (supra), shall not be applicable to the facts Page 20 of 25 O/TAXAP/64/2015 JUDGMENT of the case on hand. Cogent reasons have been assigned by the learned tribunal in holding the income derived from sale of land bearing Survey No.91 as business income. Under the circumstances, present appeal qua proposed question No.(b) in respect of Tax Appeal Nos.64, 66, 68 and 70 arising out of ITA Nos.2657/Ahd/2010, 2658/Ahd/2010, 2659/Ahd/2010 and 238/Ahd/2011, are hereby dismissed. 9.00. Now, so far proposed question No.(a) in remaining Tax Appeals i.e. Tax Appeal Nos.65, 66 and 69 of 2015 with respect to land bearing Revenue Survey Nos.287 and 485 is concerned, at the outset it is required to be noted that the aforesaid parcels of land were held as “Stock-in-trade” by M/s.Satyanarayan Traders and even the same were also shown in the Balancesheet of M/s.Satyanarayan Traders. It is a fact that the said parcels of land were not recorded / mentioned in the individual Balancesheet of the assessee. It was the case on behalf of the assessee that due to mistake in maintaining accounts, the same were not mentioned in the individual Balancesheet of the assessee. However, as rightly observed by the learned CIT(A) as well as the learned tribunal, the assessee did not demonstrate as to how the said mistake continued for so many years, more so when accounts of the firm and the assessee were audited year after year. While confirming the addition made by the A.O. of Rs.32,55,053/-, the learned CIT(A) has observed as under :- “With regard to the land Revenue No.287, the said land was purchased in the year 1999 and the consideration for purchase was made on account of M/s.Satyanarayan Traders where the appellant Page 21 of 25 O/TAXAP/64/2015 JUDGMENT is a partner. This land was purchased along with other and during the year was sold after being held for a period of 8 years. Land at R.S. No.485 was purchased in the year 1999 and was sold to M/s.Rajshri Developers vide a Development Agreement. The appellant was not the sole owner of the land. It is a well established fact that the onus lies on the assessee to establish that holding of the said land was for the purpose of investment. The land was held as “Stock-in- trade” of M/s.Satyanarayan Traders. The appellant had not even declared these lands as an investment in the earlier years in his Balancesheet. Once the decision was taken to dispose certain pieces of land, the authorized representative claims that the Balancesheet was reflected in the accounts of M/s.Satyanarayan Traders was declared in the hands of individual members. The reason forwarded by the learned authorized representative was that all the lands were shown in the hands of M/s.Satyanarayan Traders by mistake. M/s.Satyanarayan Traders are in the business of real estate development. The appellant claimed that the plots were not included in the individual Balancesheet by mistake. Why and how such a mistake consistently occurred has not been explained. It is difficult to accept the appellant’s contention that the mistake of including in the accounts property worth crores would occur year to year. When the property was purchased, it was purchased for business and reflected in the Balancesheet of the Partnership Firm. The claim of the appellant that profit from the sale of property Survey No. 287 is nothing more than capital gain cannot be accepted. The appellant Page 22 of 25 O/TAXAP/64/2015 JUDGMENT has shown this amount as an investment in the Balancesheet of the Firm, wherein he is a partner. Relying on the fact that the department has accepted earlier transaction as capital gains does not help the appellant. In fact it was only after recasting of the Balancesheet of M/s.Satyanarayan Traders and the partners, the appellant started to sell the properties, thereby indicating that business stock has been divided into individual ownership and then sold. Hence the Assessing Officer’s conclusion that the income derived from the sale of this plot of land is income from business is correct and the addition of Rs.32,55,053/- is confirmed.” 9.01. The aforesaid finding has been confirmed by the learned tribunal by observing in para 14 as under :- “With respect to the land at Revenue Survey Nos.287 and 485, it was submitted before CIT(A) that the land was purchased by M/s.Satyanarayan Traders where the assessee was a partner along with others and during the year, it was sold after being held for a period of 8 years. Before CIT(A), it was also submitted that the lands shown in the hands of M/s.Satyanarayan Traders and not included in the individual Balancesheet of the assessee was due to the mistake. These submissions have not been found to be acceptable by CIT(A). Before us, nothing has been brought on record to demonstrate that the consideration for the purchase of the land was paid by the assessee and not by M/s.Satyanarayan Traders, the firm. The Page 23 of 25 O/TAXAP/64/2015 JUDGMENT submission of assessee that the non-recording of the land in the individual Balancesheets was on account of mistake in accounting was also not accepted by CIT(A). Before us the assessee could not demonstrate as to how the mistake continued for so many years more so when accounts of the firm and the assessee were audited year after year. Further, the learned CIT(A) has given a finding that the land was held as “Stock-in-trade” of M/s.Satyanarayan Traders and that the assessee had not declared these lands as investment in the earlier years in his Balancesheet. He has further given a finding that only after recasting of the balancesheet of M/s.Satyanarayan Traders and the partners, the assessee started to sell the properties, thereby indicating that business stock has been divided into individual ownership and then sold. Before us, learned A.R. has not brought any material to controvert the aforesaid findings of CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) with respect to treating the profit on sale of land at Revenue Survey Nos.287 and 485 as business income as held by A.O. and confirmed by CIT(A). Thus, the ground of Revenue is allowed and that of assessee is dismissed.” We are in complete agreement with the view taken by the learned tribunal as well as learned CIT(A). 9.02. In the facts and circumstances of the case, the decision of the Madras High Court as well as Bombay High Court, relied upon by Mr.Shah, learned advocate appearing on Page 24 of 25 O/TAXAP/64/2015 JUDGMENT behalf of the respective assessee, referred to hereinabove shall not be applicable to the facts of the case on hand more particularly when for the reasons stated hereinabove. 9.03. Under the circumstances, no substantial questions of law arise in Tax Appeal No.65, 67 and 69 of 2015 and the said Tax Appeals deserve to be dismissed and are hereby accordingly dismissed. 10.00. In view of the above and for the reasons stated above, all these Tax Appeals deserve to be dismissed and are accordingly dismissed. Sd/- (M.R.SHAH, J.) Sd/- (S.H.VORA, J.) Rafik.. Page 25 of 25 "