TaxTMI 
TaxTMI 
2023 (4) TMI 1435
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....er had made inquiry and taken position. 3. The appellant further submits that the Principal Commissioner of Income Tax did not appreciate the settled position of law where proceedings u/s 263 do not stand to sustain if Principal Commissioner of Income Tax opts to take different view in the same matter. 4. The learned Pr.CIT was driven by extraneous consideration in not dropping the proceedings u/s 263. 5. The revision fails because under the same jurisdiction, the appellant's shave (2/3) in the land is taken for revision, while on the same set of facts, the balance spare (1/3) of relative of the assessee passed u/s 143(3) is allowed to be continued to be classified as "capital gains". (II) Merits: 1. With the assessee indisputably being an agriculturist, selling its agricultural land as agricultural land after holding it for a period of 10 years, would not characterize such transaction one-off in a year into adventure in the nature of trade. 2. If every transaction of capital gains if considered as though the Assessing Officer did not put inquiry on the point of view of adventure in the nature of trade, each of the case would be....
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.... so far as it is prejudicial to the interest of revenue and directed the Assessing Officer to make proper enquiry and pass the assessment order in time and in accordance with law in the order and as per the provisions of law. 4. Facts leading to invocation of jurisdiction under section 263 by ld. PCIT was that on perusal of assessment order, the ld. Pr.CIT noted that the assessee and his co-owner sold piece of land at Revenue Survey No. 371, Vesu, Taluka-Majura, Surat for a sale consideration of Rs. 33.82 crores and claimed deduction under Section 54B of Rs. 17.75 crores on purchase of other agricultural land. The purchaser of land used it for commercial development. The ld. Pr.CIT also recorded that in three preceding year, the assessee frequently transacted in the land as a commodity in a large quantity which signifies that the assessee was doing a business of land dealing and not holding it as a capital asset. The land held by assessee was in stock in trade and the income arising of such sale is to be treated as business income. The assessee before transfer of sale obtained permission from Deputy Collector, Surat under Section 63 of Tenancy Act for selling agri....
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...., the ld. Pr.CIT given fresh show cause notice to the assessee to file his reply on or before 30/11/2021. In response to such fresh show cause notice, the assessee filed his reply through e-filing portal on 01/12/2021. In the reply, the assessee objected for exercising jurisdiction under Section 263 of the Act by raising objection that the order under Section 263 is being exercised with 2/3rd parcel of land while on 1/3rd parcel of land, capital gain is allowed. The earlier revision order was set aside as the ld. Pr.CIT in the first round of litigation has not considered the reply of assessee. The assessee further objected that Explanation-2 of Section 263 laid down certain condition for treating the order as erroneous in so far as prejudicial to the interest of revenue where the ld. Pr.CIT can exercise his jurisdiction. The Assessing Officer raised specific enquiry on the transaction of land which were duly responded in a specific manner demonstrating that the Assessing Officer had made due application of mind and formed a conscious opinion that sale of land was a transaction of capital gain and assessee was eligible for claiming of deduction under Section 54B of the Act. The Asse....
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.... identified in the notice under Section 263, that there was a non-application of mind by the Assessing Officer, in not treating the sale of land as a business income and proposal of revision, when solitary transaction of land took place, then it is too much to presume as a business transaction as an adventure in nature of trade. The assessee retreated that transaction is a solitary transaction of sale during the year, other transactions of sales of land were of compulsorily acquisition by Government, where the assessee had no choice. The assessee is unquestionably is an agriculturist. The assessee undertook agriculture operation since the land was acquired. The land was sold after a gap of 10 years after obtaining permission under Section 63 of Gujarat Tenancy and Agricultural Land Act. The assessee always shown the land as investment in its books of account. During the year, the assessee sold impugned agricultural land to Rising Reality for a total consideration of Rs. 33.82 crores, wherein the assessee has share of 66.67% (2/3) and balance (1/3) belongs to Ramesh Chandra Purshottamdas Patel. On the transaction of assessee, the jurisdiction under Section 263 was invoked while....
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.... objection is not acceptable as the fact of said case with regard to involvement of said person in the real estate business, frequency of land transaction, intention of that person to purchase the land for resale or for personal use etc. have not been stated. The different cases have different aspects and could not be related to each other just on the basis of fact that the other person was also partly involved in the transaction of same land. There is no basis to raise such objection that consciously no revision was proposed in that case. The ld. Pr.CIT further noted that no enquiry was made by the Assessing Officer with respect to sale of land transaction being in the nature of business or adventure in the nature of trade which should have been made. Whether any agriculture operation have been carried out by the assessee over last preceding years or not. The assessee has not disclosed the agricultural income in preceding assessment year. Though, the Assessing Officer raised question for seeking evidence of agriculture income, the assessee failed to prove that land was being used for agricultural purpose by furnishing valid documentary evidence. Although, the assessee claimed that....
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....pose. The assessee sold the said land after obtaining permission under section 63 of The Gujarat Tenancy Act, in absence of such permission the assessee could not sale such land to non-agriculturist i.e. Raising Reality. The copy of order under section 63 of Gujarat Tenancy Act is filed on record. The ld. AR for the assessee submits that whether someone holding agriculture land for 10 years is said to have made and adventure in the nature of trade by acquiring the property with a motive of sale, the answer will be, No. The parcel of land hold by the assessee was exclusively used for agriculture purpose. The finding in the order of ld. Pr CIT that the land sold by the assessee was non-agriculture land are factually incorrect. 8. On non-verification of issue on the details of property and nonapplication of mind of assessing officer during the assessment, the ld. AR for the assessee submits that assessing officer issued notice dated 23.07.2018, 01.10.2018, 16.10.2018 and 06.11.2018, copies of such notices are placed on record. The assessee filed its reply by replies dated 13.09.2018, 11.12.2018, 24.10.2018 and 14.11.2018, copies of such replies are also placed on record. The a....
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....58 (Bang.), ❖ S K. Kantilal (231 CTR 531- P&H), ❖ Delhi Apartment (P) Limited (135 ITD-441) (Delhi), ❖ Harjit Singh Sanga (37 taxmann.com 63 P& H), ❖ P. K. N. & Co Limited (60 ITR 65-SC), ❖ Kaur Singh (144 ITR 756 P & H), ❖ Michael Kallivayalil (102 ITR 202 Ker), ❖ Kasturi Estate (P) Limited (62 ITR 578 Madras), ❖ Omkarmal Rambilas Ginning and Processing Factory (44 SOT 544 Hyd Trib.), ❖ Rewashanker A Kothari (283 ITR 338- Gujarat), ❖ Marudhar Hotels (P) Limited (92 DTR-1 Jodhpur Trib.) and ❖ D.N. Krishanappa (21 DTR -11 Bangalore -Trib.) 9. At the time of making submissions by ld. AR for the assessee, we raised quarry, if the order of Tribunal in first round of appeal was appealed in the High Court or not. The ld. AR for the assessee fairly accepted that they filed appeal against the order of Tribunal in ITA No. 38/SRT/2021, however, the appeal of the assessee was dismissed vide order dated 29.11.2021 in Tax Appeal No. 275 of 2021. However, the Hon'ble High Court while dismissing the appeal held....
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....no impediment in adjudication the present appeal on merit. We find that while passing the assessment order, the assessing officer accepted the returned income in his order dated 13.12.2018. The ld. PCIT revised assessment order by taking view that the assessee is involved in the business of builder as a partner in a firm Kabir Corporation. The assessee has a practice to purchase land, hold it for few years, get necessary approval and permission to convert the land into non-agriculture by paying necessary charges and sale it for non-agriculture/commercial used when it fetches goods price. The land in question was also sold after converting into non-agriculture land for commercial use. It was held that the assessee never seems to have held the property for personal use, possession or enjoyment. The ld. PCIT ultimately held that no enquiry was made by the Assessing Officer with respect to sale of land transaction being in the nature of business or adventure in the nature of trade which should have been made. No inquiry was made if any agriculture operations have been carried out by the assessee over last preceding years or not. The assessee has not disclosed the agricultural income in....
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....ails about the deduction under Section 54B to 54G of the Act and sale consideration of property in Income tax return is less than the consideration reported in Form 26QB, details of long term capital gain. The assessee further vide its reply dated 24/10/2018 furnished complete details. We find that the assessee again in response to show cause notice dated 06/11/2018, furnished the details of immovable property purchased vide its reply dated 14/11/2018. From the various reply furnished by the assessee, it can be concluded that the assessing officer thoroughly examined the issue of the deduction under section 54B. No doubt that there is no such observation about conducting such detailed inquiry, in the assessment order. 15. The Punjab & Haryana High Court in S.K. Kantilal (supra) held that when the assessee having sold the land after holding it for two decades and using it for agriculture purpose without effecting any improvement on the land, the earning from such sale of is to be treated as capital gain and not income from business and profession. Further, Punjab & Haryana High Court in Harjeet Sing Sangha (supra) also took the view that when the assessee purchased agriculture la....
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.... to purchase the land for resale or for personal use etc. have not been stated. And that there is no basis to raise such objection that consciously no revision was proposed in that case. In our view the observation of ld. PCIT is not correct. Once, the department has accepted the capital gain in the hand of co-owner in respect of the common transaction, the assessee cannot be treated indifferently. Thus, on such principle the assessment order cannot be branded as erroneous. 18. The Supreme Court in a celebrated case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 832 (SC), held that the prerequisite for the exercise of jurisdiction by the Commissioner suo-motu is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had t....