AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1139
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....ting and proceeded to conclude the assessment based on the presumption that the mercantile system of accounting was adopted, which is erroneous and unjustified. 3. The Learned Assessing Officer, had, failed to understand and appreciate the true nature, spirit, and scope of Section 145, and its importance over the issue of determination of income under Chapter VI- D 4. The Learned Assessing Officer has grossly erred in considering an land, forming part of. the business stock of the appellant, as a capital asset in the .hands of the appellant on irrelevant and arbitrary grounds; and had invoked the provisions of Section 50 C of the Act. 5. The Learned .Assessing Officer, has miserably failed to appreciate the content, spirit, and scope of Section 50C'of the Act read with Section 2(14) of the Act. 6. The Honourable Commissioner - Appeals 4 had, without considering the statements and submissions furnished vide the paper book, had disposed off the appeal ex-parte, which is unjustified. 7. The Learned Assessing Officer has miserably failed to comprehend and appreciate the binding nature of the decisions of the various Hon'ble High Courts on the same issue on hand and va....
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....ned property for business purpose and shown as stock in trade in the books of account is unsubstantiated. Therefore, rejected arguments of the assessee and computed short term capital gains from transfer of property by adopting full value of consideration in terms of provisions of section 50C of the Act and determined short term capital gains of Rs. 2,40,29,848/-. The relevant findings of the AO are as under: "ADOPTION OF MARKET VALUE U/s 50 C 5. The market value adopted for the. land sold as per the S.R.O. is Rs.3,00,00,000/-.When questioned about the *applicability of Sec.50C, the AR. in his reply filed on 28/02/2014 has contented that the sale consideration reflected in the sale deed at Rs. 95,00,000/- is just reasonable and the estimation of the market value by the Sub-registrar as Rs. 3,00,00,000/- is unreasonable. The AR. had further contented that the adoption of the value of Rs. 3 Crores will be grossly erroneous and that no such proposal may be contemplated without a reference of the property to a Valuation Officer, 6. The contention has been examined. The sale had* taken place on 23/01/2007. The Sub-registrar has adopted the market value of Rs. 3 Crores as against R....
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.... amount(Rs.48,00,000) is realized. The A.R. has not adduced any evidence why the assessee has chosen to adopt the change in the system. The contention is acceptable when the assessee filed the return of income with in due date as contemplated under Section 139(1) of the Act and the accounts are subjected to audit as provided in Section 44AB of the Act. The assessee has not mentioned the method of accounting during any of the Previous Years scrutiny proceedings. Just because he could not realize the sale amount for the land sold he cannot change the method of. accounting. In this background the plea of the assessee is only' an after thought, as the sme has been claimed without any basis. 10. In this background the assessment is finalized by adopting the market value determined by the Sub-registrar as the correct consideration amount received and the period of holding by the assessee is less than 36 months, and the profit is taken into account as a short term capital gain." 5. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the ld. CIT(A), the assessee reiterated his arguments taken before the AO and submitted that the AO is ....
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.... argument that department has accepted his method accounting as cash in earlier years, by referring to a reference in the assessment order, cannot be valid, since there was* no specific finding on this. there was no audit report submitted by the appellant, though he claimed that the receipts were stock-in-trade, which attracted the provisions of section 44AB. Appellant's argument that he followed cash system of accounting and therefore part of the amount was not accrued is not valid. 7.3. Vide Ground 4, the appellant argued that the AO has grossly erred in coming to the inference that the transferred asset was a capital asset. The appellant argued that he was engaged in purchase and sale of land. This is clearly an afterthought. Appellant was showing income from manpower agency this year and earlier years and there was no business income from land in any of these years. The appellant has not done any development on the land Which was purchased on 12/10/2004 and sold a part of the land on 23/1/2007 after 27 months without any developmental work. When the transaction came to light .through a search under section 132 by the IT Act, the assessee filed revised return disclosing th....
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....ty by applying the provisions of section 50C of the Act, without appreciating the fact that the assessee has declared the impugned property as stock in trade in the books of accounts and further, the assessee has explained reasons for not developing the property, even though said property has been purchased for the purpose of commercial exploitation. The Ld. Counsel for the assessee, submitted that the assessee has purchased property in the year 2004, but could not develop the property because M/s. Alfa Home makers (P) Ltd has filed a civil suit before the Jurisdictional Civil Court challenging transfer of property in favour of the assessee by one Shri. T. Balan, who was the managing director of M/s. Alfa Home Maker (P) Ltd. Therefore, the assessee could not invest in development of the property, though the property was purchased for commercial exploitation. He further submitted that, but fact remains that the assessee has declared said property as stock in trade in the books of accounts and also filed return of income for assessment year 2007-08, where it has been shown as stock in trade. The AO disregarded all evidences filed by the assessee and made addition under the head capit....
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....aid property has been purchased for commercial exploitation, but could not develop the property because of civil dispute pending in Civil Court. 10. We have given our thoughtful consideration to the reasons given by the AO to assess profit derived from transfer of property under the head capital gains and we ourselves do not subscribe to the reasons given by the AO for the simple reason that non-development of property during the period of holding the asset does not decide the nature and head of income under which profit derived from transfer of said property is assessable. But, what is relevant to decide the nature and head of income on a particular receipt is intent of the assessee and the treatment given in the books of accounts for the relevant assessment year. In this case, the assessee claims to have purchased the property for the purpose of commercial exploitation, keeping in view the location of land, which is adjacent or near to Bangalore International Airport, where lot of scope for commercial exploitation of property. The assessee further explained that he could not develop the property because of pending OS No. 615/2005 before Devanahalli Civil Court filed by M/s. Alfa....