TaxTMI 
TaxTMI 
2014 (10) TMI 656
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....rector remuneration, business, capitals gains and other sources. Assessee electronically filed his return of income for A.Y. 2008-09 on 29.9.2008 declaring total income of Rs. 30,63,390/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 22.12.2010 and the total income was assessed at Rs. 30,63,390/- being the returned income. 4. Subsequently on verification of the assessment records, CIT observed that assessee had shown short term gains of Rs. 97,618/- and long term gains of Rs. 27,20,071/- respectively from sale of plots of land. On further verification, he noticed that various pieces of land (15 plots) (claimed to be agricultural land) were purchased by the assessee as co-owner along with his family members in the past, had incurred huge development expenses for developing the land, the source of funding of expenses was cash advance received from co-operative societies and the agricultural income shown from the land purchased in earlier years was minuscule, all the family members and the assessee were engaged in the business of land development and real estate through various companies and partnership firms. He also notic....
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....ty narrated as adventure in the nature of trade and to tax under the head profits and gains from business or profession at normal rate. Ld. CIT failed to appreciate that investment in land purchased from own funds subjected to agricultural activity offering agricultural income for rate purposes amply demonstrated intention of investment. AO passed order after proper inquiry and verification of the claim made by the appellant and hence order of CIT is erroneous that ought to be quashed. 3. Ld. CIT erred in law and on facts in directing AO to examine genuineness of cash advance shown from two co-operative societies as advance against land and to verify their identity, creditworthiness and genuineness of the transaction as per section 68 along with applicability of provisions of section 269SS of the Act without appreciating the submissions made during the assessment as well revisional proceedings. Ld. CIT ought to have accepted that confirmation on the letterhead of the Co operative Society for advances received against Banakhat Agreement discharged the primary onus u/s 68 of the Act. 4. Ld. CIT erred in law and on facts in directing AO to verify genuineness of expenses incurred....
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....allenging the order passed u/s. 263 of the Act, ld. A.R. also submitted that CIT in the order cannot give directions to AO to consider the profit on sale of land as business income and not as capital gains. He therefore urged that since the assessment order was passed by the AO after examining all the facts, the order passed by CIT u/s 263 be quashed. He also placed reliance on the decision in the case of CIT vs Amit Corp 213 Taxman 19 (Guj). The Ld. D.R. on the other hand submitted that ld. CIT has by a very detailed and reasoned order has rightly held that the order passed by the A.O. was without application of mind and was therefore erroneous and prejudicial to the interest of Revenue. He further submitted that the present case was lack of inquiry and therefore CIT has rightly invoked the provisions of Section 263. He thus supported the order of CIT. 8. We have heard the rival submissions and perused the material on record. The issue in the present case is about the invoking of the provisions of Section 263 by the CIT. 9. S. 263(1) of the Act, the powers under which CIT has assumed power for revision reads as under: "The Commissioner may call for and examine the record ....
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....efore us, it is ld. A.R's. submission that AO has made the necessary inquiries during the course of assessment proceedings and thereafter considered the profit on sale of land to be capital gains and therefore the A.O. after considering the submissions of the assessee and after application of mind has decided the issue and therefore the revisionary proceedings u/s. 263 cannot be initiated in the present case. In the context of the aforesaid submission it would be relevant to see the relevant query raised by the AO vide notice dated 30.11.2010 which reads as under: "On verification of details furnished by you it is gathered that you had not furnished the copy of the sale agreement and purchase agreement of land situated at motera survey no 2/2 on which you have claimed long term capital gain of Rs. 3,50,421/-. In the absence of any details you are requested to show cause as to why sates consideration of said land should not be treated as your income. You have also not furnished copy of purchase agreement of land situated at Hadmatia survey no 4 and land situated at Kudsan survey no 189. In absence of said you are requested to show cause as to why amount of sale considerati....
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....372, 377 and 378. The difference as per the purchase document and the purchase price claimed as deduction, is on account exclusion of the plot No. 364 which is there in the purchase document but not m sale document. The cost of purchase claimed as deduction is excluding the cost of plot No. 364 and hence the difference. (b) Similarly, purchase document for plots no. 367, 368, 373, 374 and 385 is for total 8,296 sq. mtrs. of land. As against this, the plot No. 385 (810 sq.mtrs.) is not sold. As such the purchase price claimed as deduction is only for the plots No 367, 368, 373 and 374. The difference as per the purchase document and the purchase price claimed as deduction is on account of exclusion of the plot No. 385 which is there in the purchase document but not in sale document. The cost of purchase claimed as deduction is excluding the cost of plot No. 385 and hence the difference. (c) Similarly, purchase document for plots no. 366, 386 and 388 is for total 10,522 sq, mtrs. of land. As against this, the plot No. 366 (6,879 sq.mtrs.) is not sold. As such the purchase price claimed as deduction is only for the plots No. 366 and 386. The difference as per the purchase docume....
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....iction a fresh notice u/s 143(2) was issued on 11.10.2010. 2. In response to the notices, Shri Bharatbhai Mehta CA attended from time to time and furnished the requisite details. The assessee has shown income mainly from salary, income from house property and share of profit from firm etc. 3. After discussion, and from the data made available, total income of the assessee firm is computed as under: Total income as per return of income Rs. 30,63,390 Assessed u/s 143(3) of the Income tax Act. Issue demand Notice/Challan. Give credit for prepaid taxes after due verification. Charge interest u/s 234A/234B/234C/234D as applicable." A look at the assessment order for the relevant assessment year 2008-09 as reproduced hereinabove would show that it is a brief document and consists of three paragraphs in all and there is no discussion about the profit earned from sale of land etc. In view of the aforesaid facts we are of the view that AO had not made the inquiries about the profit earned by the assessee on the sale of land and other connected issues. In this connection we would like to refer to the decision of Hon'ble Delhi High Court in the case of Gee Vee Enterprise....
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....r in the circumstances of the case. 16. Considering the totality of the facts and the decisions cited herein above we are of the view that CIT has rightly exercised the powers by invoking the provisions of Section 263 and for which we also find support by the decision of Hon'ble High Court of Himachal Pradesh in the case of CIT vs. Alborz Industries reported in (2011) 56 DTR (HP) 334 : (2011) 198 Taxman 419 where the H'ble High Court has held as under: It is true that the AO is not required to pass a very detailed order but his order must show that he has dealt with various aspects of the matter and should not be a general order as in the present case. In the case of CIT vs. South India Shipping Corporation Ltd. (1998) 233 ITR 546 (Mad) the H'ble Madras High Court has held as under: "Even assuming that the ITO had called for the particulars, which were also furnished by the assesses, if the ITO without probing the matter further and allowed the claim of the assesses for weighted deduction and if the CIT on the basis of materials forms an opinion that the grant of allowance made by the officer was erroneous and not warranted by law, the jurisdiction of the CI....