TaxTMI 
TaxTMI 
2021 (9) TMI 800
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.... as such other (communication) framed contrary to the 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 ....
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....n assumption of the facts of the case by way of accepting the statement of the assessee 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 cont....
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....oor in a apartments scheme Fateh Rooyal residency (FRR) aawasiya youjana, Jalore (Raj.( and other apartments scheme and then sold to various persons. You have sold 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 s....
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.... assessee in the previous year i.e. A.Y 2015-16 (P.Y 2014-15), wherein the Ld AO has treated the activity as business income instead of capital gains. The matter was challenged in appeal before Hon'ble Commissioner (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 inquiri....
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....specific instruction or prescription: of a particular section of the Act has not been carried by the AO or else the AO as not conducted enquiry as demanded by law. In our considered opinion, this is not such a case. The twin conditions of Section 263 as discussed 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 pr....
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....resaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income-Tax for issue of manual communication in the following format- .. This communication issues manually without a DIN on account of reason/reasons given 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 be....
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....r the Order, if any DIN generated in the circumstances under consideration (non mentioning in the order about manual order and information about obtaining permission of CCIT) does not change the void Order into a sustainable one. Considering above facts and circumstances and binding CBDT circular the assessment order may kindly be declared as null and void and shall be treated as never been 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....
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....Shri Ramesh Raj Bohra in purchase of land, ... The AO is also directed to examine and verify the nature of sales transactions of the house properties..." • Pg 14-15 After clear direction to the AO for examination of the nature of the transaction, Ld. Pr. CIT consider it appropriate to discuss about the order Hon'ble ITAT in assessee's own case for AY 2015-16 in which sale of part of property took place and Ld. AO while framing assessment u/s 143(3) assessed gain as business income and on appeal Hon'ble ITAT held that investment 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 r....
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.... PLOT B-08 5. FATEH ROYAL RESIDENCY PLOT A-13 6. FATEH ROYAL RESIDENCY PLOT A-11 7. FATEH ROYAL RESIDENCY PLOT A-08 8. FATEH ROYAL RESIDENCY PLOT B-01 9. FATEH ROYAL RESIDENCY PLOT G-08 10. FATEH ROYAL RESIDENCY PLOT A-12 11. FATEH ROYAL RESIDENCY PLOT B-03 12. FATEH ROYAL RESIDENCY PLOT A-07 13. FATEH ROYAL RESIDENCY PLOT B-07 14. FATEH ROYAL RESIDENCY PLOT B-09 15. FATEH ROYAL RESIDENCY PLOT A-06 16. FATEH ROYAL RESIDENCY PLOT A-03 17. FATEH ROYAL RESIDENCY PLOT G-09 18. FATEH ROYAL RESIDENCY PLOT A-02 19. FATEH ROYAL RESIDENCY PLOT A1 20. FATEH ROYAL RESIDENCY PLOT A-04 8. That brief background of transactions with reference to Fateh Royal Residency 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 (assesse....
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....uced. 11. Ld. AO having examined all documents and after consideration of submission of assessee frame assessment on returned income. 12. Irrespective of the fact that Ld. AO had made required inquiry before framing assessment, Ld. Pr. CIT invoking power u/s 263 issued show cause notice stating that he is of the view that while passing the assessment order proper inquiries and verification was not done by the AO. 13. In the show cause notice so issued it has been stated that assessee frequently purchase land and convert into flats by construction of RCC. 14. In the reply it was submitted before Ld. Pr. CIT that factual finding recorded that assessee is frequently purchase land and convert into flats by construction of RCC is incorrect. It was requested to consider correct factual position of the case under consideration. 15. Even though it 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 ....
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.... Court Judgement no adverse action can be taken in case of assessee within Jurisdiction of Rajasthan High Court. 18. Ld. Pr. CIT at Page 11 of the order recorded that: "(iv) It is all the more pertinent to mention here that the assessee and his two brothers are directors in Fateh Agro Builders Private Limited. The company was engaged in business of Builders- Property Developers. And that the company has projected in Jalore namely Fateh Royal Residency and Fateh Hills and at Banglore in the names of Perfect Charm, Perfect Charisma and Perfect Bansankari." 18.1. Above finding is partial finding. The company Fateh Agro Builders Pvt Ltd was incorporated in year 1986 (earlier it's name was Fateh Granite and Marble Pvt Ltd) and it was engaged in the business of Mining Work, Production of Granite Slabs, Tiles and Blocks. During the financial year 2014-15 for the first time company started new line 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 th....
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.... In light of above submission and judicial pronouncements relied upon the order u/s 263 may kindly be declared as without authority as the assessment order under consideration neither erroneous nor prejudicious to the interest of revenue. 23. Return of income filed by assessee selected for limited scrutiny and as per notice u/s 143(2) dated 04/07/2017 following issues were identified for examination [PB Pg 1-2]: "i. Whether investment and income relating to properties are duly disclosed. ii. Whether deduction from capital gains has been claimed correctly." 24. Various direction of Ld. Pr. CIT through order u/s 263 are as under: 24.1. The AO is directed to examine and verify the source of investment made by the assessee and his brother Shri Pushp Raj Bohra in purchase of land, ... [Pg 14] 24.2. The AO is also directed to examine and verify the nature of sales transactions of the house properties... [Pg 14] 24.3. I, therefore, cancel the assessment order passed by the 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, ap....
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.... placed on record. From perusal of the record, we noticed that accordingly to the ld. PCIT, the activity of purchasing land by the assesse and then converting it into flats and selling after construction to other co-owners comes under the ambit of business activity, therefore, the income of the assesse is to be charged to tax under the head business and profession instead of income from capital gain. Thus, according to the ld. PCIT, the income are chargeable to tax under the head of income from business and the benefits of cost of indexing, exemption U/s 54, 54F and 54EC of the Act was not allowable. It is pertinent to mention here that the ld. PCIT while deciding this issue has completely ignored and overlooked the specific assertions made by the assessee by filing its written submissions dated 11/02/2021 wherein it was specifically pleaded as to why the ld. PCIT has misconstrued the facts of the present case. Apart from this, the ld. PCIT has ignored the very important fact that the same activity on the same land was carried out by the assesse in the previous year i.e. A.Y. 2015-16 as well wherein also the then A.O. had treated the activity of the assessee as business activity an....