TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 800
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....CBDT Circular No. 19/2019 dated 14/08/2019 which laid mandate of quoting computer Generated Document Identification Number (DIN) in the body of order (communication). In exceptional circumstances, a DIN can generate afterword with prior written approval of the Chief Commissioner of Income Tax. Any communication without quotation of DIN in the body of order shall be treated as invalid and shall be deemed to have never been issued. Considering mandate of CBDT, order under consideration may kindly be declared as null and void ab initio. 2. That on the facts and in the circumstances of the case, Ld. Pr. CIT erred in holding that gain arising from transfer of capital assets and declared as Capital Gain ought to be taxed as Business Income overriding the binding Judgement of Hon'ble ITAT in assessee's own case for AY 2015-16 [158/Jodh/2019] in which gain from sale of part of assets under consideration were treated as Capital Gain as against assessment of such gain as Business Income by Ld. AO. Considering specific judgement of ITAT in assessee's own case for same property, direction of Ld. Pr. CIT is contrary to principal of Binding Precedence. Necessary direction to set aside the orde....
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....e without due verification/ erroneous application of provisions of the Act and cancel the assessment order with the direction to the A.O. to pass the assessment order afresh. 6. Against the impugned order passed by the ld. Pr.CIT, the assessee has preferred the present appeal before the ITAT on the grounds mentioned above. 7. All the grounds of appeal are interrelated and interconnected but at the outset, the ld AR appearing on behalf of the assesse while pressing ground No. 2 of the appeal has submitted before us that the ld. PCIT erred in holding that the gain arising from transfer of capital asset and declared as capital gain ought to be taxed as business income overriding the binding decision of the Hon'ble ITAT in assessee's own case for the A.Y. 2015-16 in ITA No. 157/Jodh/2019 in which gain from sale of part of assets under consideration were treated as capital gain as against the assessment of such gain as business income by the A.O. As per the ld. AR, considering specific judgment of Hon'ble ITAT in assessee's own case for the same property, directions issued by the ld. PCIT is contrary to the principle of binding precedence. The ld. AR also relied upon the written submi....
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....old Semi constructed buildings on various dates during the previous year the cost of acquisition of lands were born by you and your brother, Sh. Pushp Raj Bohra jointly. Sh. Pushp Raj Bohra is also engaged in the activity of sale of land conversion into Flats acquisition of land in FRR apartment scheme." That it can be clearly discern from the above that wrong facts has been construed by your good self as assessee had purchased the lands long back and not engaged into regular purchasing of lands. Secondly, assessee has not constructed any flats/apartments on the said land. This fact is also misconstrued. It is also worthwhile to mention here that since the purchased lands were big in size and as assessee wants to purchase a new residential property in Bangalore which was costing higher than the land value at Jalore. Thus, in order to fetch higher prices, assessee with his brother plans to sell the land by splitting into smaller plots and by constructing building on few plots. The said purchased lands were shown as capital asset and not as inventory. It is also worthwhile to mention here that mere conversion of land into plots does not itself by virtue to be construed as busines....
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....missioner (Appeals) and carried before the Hon'ble ITAT. It is pleased to inform your Honour that the Hon'ble ITAT has had finally decided and concluded that the activity of assessee is to be taxed under the head Capital gains by treating the assets/income as capital asset/income instead of business assets and all expenses borne by assessee to be construed as part of cost of improvement. A copy of the order of Hon'ble Tribunal, Jodhpur {ITA NO. 157/Jodh/2019} with identical facts and for same assessee is enclosed herewith and marked as "Annexure-5", which is having jurisdictional binding effect on assessee's case. 8. Thus, by any sight of imagination the order passed Ld. \O for the AX 2016-17; treating the assets as capital asset and allowing the claim of exemption u/s 54F/etc. cannot be termed as improper or made without verification or prejudicial to the interest of revenue. Moreover, it is emphatically submitted that Ld. AO has duly made all inquiries and was of same view as of Hon'ble tribunal that such asset is capital asset and thereby allowed the exemption under the head "Capital Gains". 9. It is pertinent to mention here that Hon'ble Rajasthan Hi....
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....ussed above in detail are not found to coexist. Therefore, we set aside the impugned order dt . 07.03.2013 passed by the Id. CIT and allows the appeal of the assessee." (Emphasis supplied) 11. Accordingly, It is well settled legal position as held in the case of THE COMMISSIONER OF INCOME TAX, CHENNAI V/s M/S. A.R. BUILDERS & DEVELOPERS P LTD 1 2020 (3) TMI 53 - MADRAS HIGH COURT} that "it is very clear that time and again the Honourable Supreme Court as well as this court, when two views are possible, if the Assessing Officer had taken one of the plausible views, the CIT has no authority to set aside the order of the Assessing Officer and adopt its one of the other views. Therefore Principal Commissioner of Income Tax could not substitute a lawful view taken by the Assessing Officer." (Emphasis supplied) Considering the facts and circumstances your good self is humbly requested to drop the proceedings for revision so initiated and oblige." Submissions before this Bench: 1. CBDT Circular No 19/2019 dated 14/08/2019 [PB Pg 35-36] laid that no communication shall be issued by any income-tax authority to the assessee or any other person, on or after the 1st day of October, ....
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....ven in para 3(i)/3 (ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No ...dated ..... (strike off those which are not applicable) and with the approval of the Chief Commissioner / Director General of Income Tax vide number .... dated .... 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued." 2. In the case under consideration order u/s 263 made on 26/03/2021. Since the order framed after 01/10/2019, as per CBDT Circular No 19/2019 dated 14/08/2019, a computer-generated Document Identification Number (DIN) must be allotted to it and same must be duly quoted in the body of order itself. From the bare perusal of order u/s 263 it can be observed that neither a computer generated DIN quoted in the body of order nor it has been stated that Order has been issued manually without a DIN in exceptional situation after obtaining written approval of the Chief Commissioner of Income-Tax. Considering the factual position absence of quotation of Computer Generated DIN in the body of assessment order shall be treated as invalid and shall be deemed to have never been issued, as per binding CBDT Circul....
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....en issued. Summary of order u/s 263 * Pg 1-2 Para 2 Show cause notice reproduced. Pg 2 "Further, it was observed that you have frequently purchased land and convert into the flats by construction of RCC on basement, ground floor and first floor in a apartment scheme Fateh Rooral Residency (FRR) Aawasiya Youjana, Jalore (Raj) and other apartments scheme and then sold to various persons. You have sold semi Constructed building on various dates during the previous year the cost of acquisition of lands were born by you and your brother, Sh. Ramesh Raj Bohra jointly. Sh. Ramesh Raj Bohra is also engaged in the activity of sale of land conversion into flats acquisition of land in FRR Apartment Scheme. The activity of purchase land and then convert into flats and sold after construction with other co-owner which shows clearly that you have engaged in the activity of real estate business/ building developer and the income was chargeable to tax under the head of income from business and profession instead under the head income from capital gains. Thus the income was chargeable to tax under the head of income from business and the benefit of cost of indexing, exemption u/s 54, 54F ....
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....estment in the property was long back and without any motive of business of real estate and therefore gain has to be assessed as capital gain. * Pg 15 Judgement of Delhi High Court in the case of Vardan Buildcon vs ACIT in ITA No. 429/2011 referred to overrule ITAT judgement in assessee's own case for AY 2015-16. * Pg 16 "It is observed that assessee purchase land frequently ..." This observation has been specifically objected during the 263 proceeding as factually incorrect, but without bringing any factual material on record which shows that assessee frequently purchased land and sale same after development same as real estate. * Pg 17-18 Para 6-8 Reference made to Explanation 2 to 263(1) * Pg 18-20 Para 9-10 Judicial pronouncements referred - Gee Vee Enterprises 99 ITR 375 (Delhi) - Jagdish Kumar Gulati vs CIT 269 ITR 71 - Duggal & Co 220 ITR 456 (Delhi - K.A. Rama Swami Chettiar vs CIT 220 ITR 657 - Malabar Industrial Co Ltd. 243 ITR 83 (SC) - CIT vs Jawahar Bhattacharjce 342 ITR 74 - CIT vs Amitabh Bachchan Civil Appeal 5009 of 2016 - Rameshwar Prasad Sharma ITA No 449/JP/2019 * Pg 20 Para 11From the above discussion, the order u/s 143(3) dated 13/1....
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....are as under: 8.1. The Fateh Royal Residency Township has been planned on the Khasra No 2010, 1962, 2011, 2012, 2013, 2014, 2015 & 2016 at Railway station by pass road, Jalore. These properties owned by Pushp Raj Bohra, Ramesh Raj Bohra (assessee) and Lata Bohra w/o Dinesh Bohra detail of which are as under: Khasra No Owner Area in Hectare Date of Purchase 2011, 2012, 2013 & 2014 Pushp Raj Bohra (assessee) 1.55 02/11/1995 1962 Pushp Raj Bohra (assessee) 0.33 28/01/2011 2015 & 2016 Ramesh Raj Bohra 2.27 27/10/1995 2010 Lata Bohra w/o Dinesh Bohra 1.57 15/09/1994 Total Area 5.72 8.2. Property (2.27 Hectare) under the scheme has been purchased by the assessee in the year 1995. The investment so made in property is shown as capital investment in balance sheet. Intention of assessee at the time of purchase can be clearly discern from this, moreover, a general inference can be drawn from this that why assessee purchase land with the motive of business around 20 years back, when the main stream line of family business of assessee is granites manufacturing and trading since 1986. Further in case property purchased with business inte....
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.... was specifically submitted that observation recorded in the show cause notice that assessee frequently purchase land and convert into flats by construction of RCC is factually incorrect and request was made to consider correct factual position, Ld. Pr. CIT framed order u/s 263 in autocratic manner and again repeat the observation that assessee frequently purchase land and convert into flats by construction of RCC without any supporting factual evidence and without any recording that claim of the assessee that he did not frequently purchase land and convert into flats by construction of RCC is incorrect jump to conclusion that AO framed assessment without proper inquiry. This demonstrate that the statutory requirement of hearing opportunity to assessee has been fulfilled for the name sack and in reality, submission made by the assessee not at all considered while invoking power u/s 263 except to reproducing same in the order u/s 263. Merely reproduction of the submission of assessee and recording a finding that submission of the assessee has been considered cannot be treated as compliance of statutory provision of providing hearing opportunity. 16. It may pertinent to mention tha....
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....of business of Builders - Property Development. Property sold by assessee i.e. Fateh Royal Residency and Fateh Hills were initial projects of the company in the business line of Builders - Property Development. Considering complete factual finding, it cannot be said that since assessee is one of the director of the company Fateh Agro Builders Pvt Ltd which is also buyer of the property under consideration, transaction is of the nature of business transaction. Fact that company after acquiring such property treating same as business transaction support the submission of assessee that when the assessee along with other family members who were co-owner of property under consideration decided that it is better to execute such transaction as business transaction they transfer remaining land of project to the company. Therefore transfer of property under consideration by assessee is realization of investment and cannot be held as business transaction. 19. Had the Ld. Pr. CIT consider the correct factual finding in judicious manner, there is no reason to held the assessment order framed by the Ld. AO as erroneous so as to prejudicial to the interest of revenue. It may pertinent to menti....
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.... AO u/s 143(3) on 13/11/2018 with the direction to the Assessing Officer to pass the assessment order afresh after considering the above mentioned issues, apart from other issues discussed in the assessment order dated 13/11/2018 and also the issues which may subsequently come into the notice of Assessing Officer, during the assessment proceedings u/s 143(3) r.w.s. 263 of the Income Tax Act, 1961. [Pg 20 para 12] 25. The case was selected for limited scrutiny by CASS but the Ld. Pr. CIT while exercising power u/s 263 convert this limited scrutiny assessment case into complete scrutiny case. As per the procedure laid by CBDT through instruction No 20/2015 dated 29/12/2015 and Instruction No 5/2016 dated 14/07/2016 the scope of enquiry in the cases selected for limited scrutiny should be restricted to the issue for which case has been selected for limited scrutiny. By the order u/s 263 Ld. Pr. CIT enhanced the scope the assessment proceeding from Limited to Complete. This is not permissible as held by ITAT Chandigarh Bench in the case of Taj Paul Bhardwaj vs Pr. CIT [ITA No. 463/CHD/2019] [PB Pg 93-109]. In light of above submission and judgement relied upon direction of Ld. Pr. ....
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.....Y. 2015-16 as well wherein also the then A.O. had treated the activity of the assessee as business activity and the income of the assesse was considered as business income instead of capital gains. The said order passed by the A.O. was challenged before the ld. CIT(A) and thereafter before the ITAT. The Coordinate Bench of the ITAT after considering the entire facts and circumstances of the case of the assessee had finally decided and concluded that the activities of the assessee is to be taxed under the head capital gains by treating the assets/income as capital asset/income instead of business asset/income and all the expenses borne by the assessee were also construed as part of cost of improvement. The copy of order of the Coordinate Bench of ITAT dated 20/03/2020 in assessee's own for the A.Y. 2015-16 in ITA No. 157/Jodh/2019 have been perused by us which at based on identical facts and moreover the said copy was also placed on record by the assessee before the ld. PCIT with submissions that the order of the ITAT is having jurisdictional binding effect in assessee's case for the A.Y. 2016-17. Even otherwise, nothing has been placed on record by the revenue to demonstrate as to....