TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 1382
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Demand issued u/s 156 be stayed till the disposal of the appeal. 4. For that the appellant may kindly be permitted to add, alter or modify the grounds of appeal or any of the same at the time of hearing of the appeal." As the grounds of appeal filed by the assessee are identical, therefore, we are adjudicating all the appeals by a single order for the sake of convenience. Effective ground is about treating the profit on sale of land as business income. 2. The assessee-company is in the business of land trading and investment. The details of filing of return, returned income, dates of assessment and assessed income can be summarised as under: AY. Return filed on Returned income Date of assessment Assessed income 2002-03 11-10-2002 15,51,160 29-12-2008 27,86,620 2003-04 13-10-2003 14,22,170 29-12-2008 25,61,940 2004-05 15-10-2004 7,51,290 29-12-2008 29,76,080 2005-06 07-10-2005 1,11,320 29-12-2008 46,89,870 2006-07 14-11-2006 1,63,630 29-12-2008 41,93,310 As per the AO on verification of audit report, filed along with the return, it was noticed that the assessee's business consisted of land trading and investment, that it had treated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r years orders were not binding on the AO to decide the issue for the year under consideration especially when the AO had found that income has escaped assessment. Finally, the AO held that profit on sale of land was a trading receipt of the assessee and had to be assessed under the head "profits or gains of business or profession. Profit on sale of land was calculated at Rs. 12,83,452/- for the assessment year under appeal. For the AY.s. 2003-04, 2004-05, 2005-06 and 2006-07 the sale of land was calculated at Rs. 11,56,569/-, Rs. 22,224,788/-, Rs. 45,82,364/- and Rs. 41,06,798/-respectively. 3. Aggrieved by the order of the AO, the assessee filed appeal before the First Appellate Authority (FAA).Before him, it was contended that it had acquired certain land for investment in the year 1961 and 1970, that the assessee company had held the said plots of land as fixed asset in the balance sheet, that it had never treated plot of land as stock-in-trade, that the business income of the assessee never constituted profit on sale of plots of land, that the assessee company over the years derived a parts of its taxable income from sale of land, that the same had always been treated as capi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....held the reopening of the assessment by the AO by referring to the judgments of CIT v. V.A. Trivedi [1988] 172 ITR 95/38 Taxman 102 (Bom.), CIT v. Jawahar Development Association [1981] 127 ITR 431 (MP) and Premji Bhimji v. CIT [1971] 81 ITR 179 (Cal.). He held that the facts of the case were required to be examined keeping in view the judgments of the various courts cited above, that intentioin of the assessee with regard to sale of land were evident from the various clauses of the Memorandum of Association. He referred to clauses 4 and 5 of the agreement dated 05-09-1954 and held that the intention of the assessee was purchase of land, house or any other movable/immovable properties and sale it by diving the same into blocks/plots, that intention of acquisition of land was for the purpose of sale, that the transaction was an adventure of nature of trade, that out of more than sixty bighas and odd of land, the assessee had sold three bighas of land to number of persons in the assessment year 2001-02, that during the year under consideration it had sold one and odd bighas of land, that it had developed the land purchased/acquired in the same way as a dealer as it would ordinarily d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to be considered under the head income from business. Referring to the principle of res-judicata, he stated that same was not applicable in income tax proceedings and hence he was not following the orders of earlier years. It is true that every assessment year is a separate assessment and the AO is free to decide the issue before him on merits. In our opinion, it is not full truth-rather it is other side of the coin. In the matter of Aroni Commercials Ltd. v. Dy. CIT [2014] 362 ITR 403/224 Taxman 13 (Mag.)/44 taxmann.com 304 (Bom.), Hon'ble Bombay High Court has observed that though the principle of res judicata is not applicable to tax matters as each year is separate and distinct, nevertheless where facts are identical from year to year, there has to be uniformity and in treatment. Similarly, in the case of CIT v. Gopal Purohit [2011] 336 ITR 287/[2010] 188 Taxman 140 (Bom.) same High Court has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. Clearly, rule or principles of consistency are equally applicable to tax assessment proceedings as the rule of res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act, on March 31, 1976. It was found by the AO that the assessee had deposited Rs. 1,58,400 with the Bank of India, Netaji Subhash Road Branch, Calcutta, on 05.04. 1972, through the assessee's son, D, that the assessee stayed in Tinsukia, that on 04.04.1972 the assessee had no sufficient opening cash balance and had to borrow from other firms on that day and in such a circumstance D could not have reached Calcutta on the 5th before noon. Therefore, the amount of Rs. 90,000 was treated as the assessee's income from undisclosed sources. The assessee had explained that D had travelled by air but later stated that D had travelled by car and the AO did not accept this as true. On appeal, the assessee contended that the assessment proceedings had started some years after the event and he did not remember the mode of transport correctly. For the assessment year 1972-73, the Tribunal accepted this explanation but rejected it for the assessment year 1973-74. When the matter travelled to the Hon'ble High Court it was held that the totality of the circumstances and their combined effect were to be taken into consideration while deciding the question as to whether or not a partic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the assessee, acquired the Makhta of the village for Rs. 25,000. He also purchased 217 acres land from the pattadars, paying them in the year of account Rs. 19,186 out of a total consideration of Rs. 25,502. He constructed on portion of the land so acquired a Ganj and shop. The rest of the land he laid out as plots which he sold for Rs. 75,820. In computing his assessable income Rs. 75,820 were added as receipt from business. He appealed to the Appellate Officer and the Tribunal, but without success. He claimed that Rs. 75,820 could not be included in his assessable income and also that the expenses amounting to Rs. 70,686 (Rs. 25,000 plus Rs. 19,186 plus Rs. 26,500) should be deducted as allowable expenses. Matter travelled up to the Hon'ble Apex Court and the court held as under: "Even a single venture may be regarded as in the nature of trade or business. When a person acquires land with a view to selling it later after developing it, he is carrying on an activity resulting in profit, and the activity can only be described as a business venture. Where the person goes further and divides the land into plots, develops the area to make it more attractive and sells the land ....