Income Tax Appellate Tribunal - Chandigarh
Anu Singhi, Sirhind vs I.T.O.. Ward, Sirhind on 6 June, 2023
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ,च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, "A", CHANDIGARH
BEFORE SHR I SUDHANSH U SRIVASTAVA, JUDICIAL MEMBER
& SHRI VIK RAM SINGH YADAV, ACCOUNTANT MEMBER
आयकरअपीलसं./ITA No.420/C H D / 2 0 2 2
नधारणवष / Assessment Year :2 0 1 7 - 1 8
Anu Singhi, बनाम The ITO, Ward,
H.No.4370A, Khalsa Colony, Sirhind
Vill. Barra, Sirhind-140406
Distt. Fatehgarh Sahib
(Pb)
थायीलेखासं./PAN NO: AQJPS 8656H
अपीलाथ /Appellant यथ /Respondent
नधा रतीक ओरसे/Assessee by :Sh. Tej Mohan Singh, Advocate
राज वक ओरसे/ Revenue by : Sh. Vivek Nangia, CIT DR
सुनवाईक तार ख/Date of Hearing :14.03.2023
उदघोषणाक तार ख/Date of Pronouncement :06.06.2023
आदे श/Order
Per Sudhanshu Srivastava, Judicial Member:
This appeal is preferred by the assessee against order dated 29.03.2022 passed by the Pr. Commissioner of Income Tax, (PCIT), Pati ala, for A.Y. 201 7-18.
2.0 In the present appeal, the assessee has challenged the impugned order passed u/s. 263 of the Income Tax Act, 1961 (hereinafter called 'the Act').
ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 2 3.0 The brief facts of the case are that the r eturn of income for the captioned year had been filed declaring taxable income at Rs. 23,49, 550/-. T he return was initial ly processed u/s.143(1) of the Act and subseque ntly, the case was sel ected for scrutiny through CASS. The assessment was completed after accepting the returned income. 3.1 Subsequently, the ld. PCIT issued notice u/s. 263 of the Act, on the ground that the assessee had sold certain properties during the ca ptioned assessment year and had computed Long Term Capital Gain and had al so paid Long Term Capital Gain Tax, but, the impugned property had been sold in piecemeal, in 14 transactions. The ld. PCI T was of the view that this indicated that the assessee was in the business of buying and selling land/properti es. The ld. PCIT also noted that even in the Assessment Years 2015-16 and 2016-17, the assessee had declared Capital Gain and in vi ew of repetitive transactions of the same nature, the properties held by the asses see were stock-in-trade and not capital asset and, therefore, benefit of indexation was not to be made a vailable to the assessee. The assessee was required to show cause as to why the assessment framed was not erroneous inasmuch as being prejudicial to the interest of the Revenue.
ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 3 3.2 In response to the show cause noti ce, it was the assessee 's submission before the ld. PCI T that the assessee was not conducting any regular business in buying and selli ng of immovable property and fur ther the Assessing Officer had duly verifi ed the issue during the course of assessment proceedings and, therefore, revisionary proceedings were not required.
3.3 This contention of the assessee did not find favour with the Ld. PCIT and he observed that the Assessing Officer had not obtained any explanation from the assessee regarding the nature of business i.e. buying and selli ng of land/property by the assess ee and further, the Assessing Officer had not considered attributes of the land like location, nature of the land etc. and that the Assessing Officer had also not examined the pa st profile of the assessee. The ld. PCIT invoked Explanation-2 of Section 263 of the Act and held that the assessment in this case was erroneous as well as pr ejudi cial to the interest of the Revenue. The ld. PCIT set aside the order of the assessment and directed the Assessing Officer to pass a fresh order in respect of the issue raised in the show cause notice.
ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 4 4.0 Aggrieved, the assessee has now approached this Tribunal, (ITAT), chall enging the order of the ld. PCIT by raising the following grounds of appeal:
1. That the order of the Ld. P.C.l.T . is against the f acts of the case and is bad in law as he is not jus tif ied to arbitr arily hold that the assessment order dt. 11.10.2019 passed by the Income T ax Off icer, Sirhind is erroneous and prejudicial to the in teres t of the revenue.
2. That on the f ac ts & circumstances of the case, the Ld. P.C.l.T. has erred, in holding that the appellant is engaged in the business of real-
estate and has f urther erred in treating the long ter m c apital gain on sal e of land as business income of the appellan t.
3. That the appellant craves leave to add, amend or delete any of the grounds of appeal bef ore the same is f inal ly heard & disposed off." 5.0 The ld. Authorized Representative submitted that the Assessing Officer had completed the assessment proceedings after due a nd proper v erification of the documents. He drew our attention to the paper book filed by the assessee and specifically poi nted out to the copy of notice dated 09.01.2019 issued u/s. 142(1) of the Act by the Assessi ng Officer along with the questionnair e and the replies of the assessee da ted 04.03.2019 and 26.07.2019 filed by the assessee befor e the Assessing Officer in response to the ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 5 queries raised by the Assessing Officer. I t was submitted that the allegation of the ld. PCIT that the Assessing Officer had not raised any query or made any enquiry on the issue was factually incorrect. It was submitted that the Assessing Officer had duly raised the query and the assessee had duly replied to the same and, therefore, invocation of revisionary jurisdiction by the l d. PCIT w as l egally incorrect and the impugned order was liable to be quashed. The l d. AR further submitted that it was only after the examination of the various documents, sale deeds etc. filed by the assessee the Assessing Officer had a form ed an opinion that the income declared by the assessee was taxable under the head Long Term Capital Gain.
5.1 It was submitted that it was one of the plausible views taken by the Assessing Officer and that the ld. PCIT had no power to overturn the view taken by the ld. Assessing Officer. It was submitted by the ld. Authorized Representative that whether an income was taxable as business income or as Capital Gain was a matter of subjective opini on havi ng regard to the facts of the given case and provi sions of Section 263 of the Act did not empower the ld. PCIT to invoke hi s revisional powers to substitute his opinion on a debatable issue without showi ng ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 6 as to how the Assessi ng Officer had committed an error in adopting one of the plausible views.
5.2 Relia nce was placed on the order of the Raipur Bench of ITAT in the cases of Shri Dilip Sangoi vs. DCIT in ITA No. 34/RPR/2021 and Shri Arvind Sangoi v s. DCIT in ITA No. 33/RPR/2021. Reliance was also placed on order of ITAT, Chandigarh Bench in the case of Shri Rupinder Singh Gill vs. ACIT in ITA No. 298/Chd/2013 and it was argued that plausible view taken in exercise of a quasi judicial function cannot be dislodged in a light hearted m anner in the name of inadequacy in enquiries as perceived by the revisional authority and that further the revisional powers cannot be exercised for directing a fuller enquiry to m erely find out whether the earlier view taken w as erroneous. 6.0 Per contra, the ld. CIT(DR) vehemently supported the impugned order and submitted that the act of the assessee in s elling a plot through twenty or so odd transactions indicated the intention of the assessee to conduct the business of sell ing of property/land and it i s this aspect, which the ld. PCIT has pointed out in the impugned order, which the Assessing Officer has failed to enquire into. I t was argued that the Assessi ng Officer had made no enquiry into the nature of transactions being entered into by the assessee ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 7 and that he ha d simply accepted the version of the assessee and completed the assessm ent at the returned income without actually enquiring into the nature of transactions and/or the head of income under which the transactions should ha ve been taxed.
7.0 We have heard the rival submissions and have also perused the material pla ced on record. W e have also gone through the questionnaire issued by the Assessi ng Officer and the replies filed by the assessee in response to the various queries raised by the Assessing Officer. We have also gone through the copies of the sale deeds through which the assessee had sold the land in numerous transactions and we note that in all the sale deed the impugned land has show n as agricultural land. We note that the impugned pi ece of land was purchased in 2010 (which even the ld. PCIT has noted in the i mpugned order) and it was only duri ng Assessment Year 2017-18, that the assessee had sold some portion of the land in 14 transactions of small holdings. Thus, admittedly, and undi sputedly, the assessee had been holding this pi ece of land for over six years and nothing has been brought on record to demonstrate that the assessee had purchased this land with the intention to enter into the business of buying/selling of property of the land i.e. when ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 8 it was purchased a nd when it was sold. In both the years, it continued to be in the nature o f agricultural land. O n such facts, we are not in a position to concur with the observations of the ld. PCIT that the assessee was in the business of b uying and selling of property. It appears that the ld. PCIT has been influenced by the fact that one piece of land was sold through 14 tra nsactions. How ever, in our considered view, on the facts and circumstances of the case, the ld. PCIT was not justified in invo king his revisionary power to hold that the Assessing Officer should have treated the incom e as income from business of buying and selling of property.
7.1 At this juncture, ref erence may be drawn to the judgment of the Hon'ble Punja b and Haryana High Cour t i n the case of Kaur Si ngh vs. CIT reported i n 144 ITR 756 (1983) (P&H) wherei n the Hon'ble Jurisdictional High Court, on a similar set of facts, had held as under:
"11. Keeping in vie w the pr incipl es enunciated by the Supreme Cour t, we sh all no w independently examine whether on the facts found by the Tribunal, the sale was an adventure in the nature of tr ade. A bare analysis of the f acts f ound by the Tribunal would sho w that f or arriv ing at th is conclus ion that it was an adven ture in the nature of tr ade, the Tribunal was mainly inf luenced by the f act that out of the land attached to the Krishan Bagh Ko thi, 42 plots of 2000 sq. yar ds e ach have been e armarked f or sale; that in the year in question 7 plots were sold f or Rs. 18,500 and th at advances were received in respect of other ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 9 plots. In our view, on the bas is of these f acts alone, no such inf erence could legally be dra wn that the tr ansactio n in dispute has the char acter of a trade in nature. The assessee admitte dly had purchased the property in the year 1967. The Revenue has not at all brought any circums tance or evidence on the, record to sho w that at the time of the purc hase of the property in the year 1967, th e assessee had an intention to sell the property. Merely carving out plots in a por tion of the land, without proof of anything more, canno t give rise to the conclusion that the tr ansactio n is an adventure in the nature of trade. Our attention was pointedly drawn by the Ld. counsel f or the Revenue to a Divisio n Bench judgment of this Cour t in Har ballns Singh vs. CIT (1981)23 CTR (P&H) 335 (1981)132 IT R 77 (P & H). But the decision is of no assis tance to the Revenue as the f acts of that case are entirely diff erent and on the f ac ts f ound in th at c ase, the vie w was r ightly taken that it was an adventure in the nature of tr ade. There can be no gainsaying that even a singl e venture may be regarded as a trade or business, but there have to be circumstances which may giv e rise to suc h a conclusion. As earl ier observed, in this c ase the Tribunal has f allen in error in holding the venture as a trade or business merely on the ground that 42 plots were carved out, of which 7 were disposed of in the year in ques tion. In this vie w of the matter, in the circumstances of the c ase and on the f ac ts f ound. the Tribunal was not right in law in holding that the income derived by the assessee from the sale of plots were f rom an adven ture in the n ature of trade. Consequently, the ans wer to this ques tion is returned in f avour of the assessee and agains t the Revenue."
7.2. It is also worthwhile to refer to another judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Harjit Sing h Sangha in I TA No. 16 of 2012 ( P&H), wherei n the Hon'ble High Court had held as under:
"6. The Tribunal also on appreciation of material on record came to the conclusion that it was not ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 10 business income bu t it resul ted in Long T erm Capital gains. The relevant f indings no ticed read thus:-
"21. In the to tality of the above said f ac ts and circums tances and the evidence perused by us, the n ature of land being agr icultur al l and stands established: a) as the said l and was par t of notif ied f orest area where admittedly no other ac tivities IT A No. 16 of 2012 4 except agr icultur al, if allo wed. could be carried out; b) Gir dawar i of the lan dholdings of the assessee proves the stan d of the assessee that it was agr icultur al land and also the notif ic ation issued f or the urban usage/non-agricultur al activities certif ies that pr ior to its notif ication the said l and was used f or agricultur al purposes. The land being regis tered in Land Revenue Records as Agricultur al land, then there is no basis for holding the said land and as no t agricul tural l and. We f ind suppor t f rom the ratio laid do wn by the Chandigarh Bench of the Tribun al in DCIT v. A.P. Paper M ills Limite d (supra). Accordingly, we hold that the nature of the land sold by the assessee as on the d ate of its sale was agricultural land, which was acquired by the assessee in the year 1995 and was sold during the year under consider ation.
22. The said asse t be ing held by the assessee canno t be said to be a business asset and its sale in s mall plots of land to diff erent purch asers is not adventure in the nature of tr ade, in the absence of the as sessee having floated the s ame or h aving developed its l and for the purposes other th an agr icul tural land. Fur ther f or converting the usage. prior permission is required f rom the authorities and in the absence of any permission being obtaine d by the assessee f rom PUDA authorities in respect of the l and sold, merely because the land is sold in small plots to persons who intende d its residential use, does not change the nature of land sold in the hands of the as sessee and its taxability. We f ind suppor t from the ratio laid do wn by the Hon'ble Patna High Cour t in the case of Addl.CIT v. Tar achand Jain, 123 IT R 567 (Pat), ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 11 which has been referred to by the Chandigar h Bench of the T ribunal in DC IT v M/s A.P. Paper Mills Limited (supra). The relevant ex trac t of the said judgment is as under:-
'........ the land may lie near an urb an area and the l and may have fe tched a good price, may hold good in c ases of agricultur al l and also. Since the land has been recorded in the off icial records as agricul tur al l and, if the depar tment wanted to sho w that the entry was wrong. it should have given ITA No.16 of 2012 5 concre te f acts in that direction. For example, it could have sho wn th at the land l ay within the munic ipal limits of the to wn of Ranchi or that the assessee had made his entire plot of land into parcels and was selling eac h one of them f or the purpose of construc ting a house thereof . The f act that the purchaser has purchased it for the purpose of cons tructing his house has no relev ance because to f ar at the seller is concerne d, he will be deemed to have par ted wi th the agricul tural land in the f orm of agr icultur al land, unless it is prayed other wise. The depar tment has no t brought up any such mater ial on the record by which it coul d be said that the criteria adopted by the Tribunal for determining the char acter of the agricul tur al land was wrong. [Emphasis supplie d)
23. In vie w thereof we hold that the gain arising on the sale of the af oresaid agricul tur al land cannot be taxed as income f rom business,"
7. Learned counsel f or the revenue was unable to sho w th at the activ ity under taken by the assessee was an adven ture in the nature of trade. No error could be pointed out in the f indings recor ded by the CIT(A) and uphel d by the Tribunal warr antin g interf erence by this Cour t."
7.3 In the instant case also, the impugned land has been recorded in the Revenue records as agricultural land. This fact is not i n dispute. Just because the assessee had sol d the land in piecemeal after entering into numerous ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 12 transactions, it cannot be concl uded that such transactions were in the nature of business and selling of immovable property. It is not in di spute that the assessee had duly filed the copies of the sale deed before the Assessing Officer and, therefore, it is a logical assumption that the Assessi ng Officer had duly examined these sale deeds before accepting the returned income of the assessee. Whether to accept the transactions as being taxabl e under the Long Term Capi tal Gain or to reject them and tax them under the head income from business would have b een duly considered by the Assessing Officer at the tim e of assessment proceedings and the conclusion arrived at by the Assessi ng Officer was definitely o ne of the plausible views and, therefore, it cannot be said that the order passed by the Assessing Officer was erroneous inasmuch as bei ng prejudicial to the interest of the Revenue.
7.4. Under similar circumstances, the Rai pur Bench of thi s Tribunal in the cases of Shri Dilip Sangoi and Shri Arvind Sangoi (Supra), vide order dated 29.09.2021 had held as under:
"8. We have caref ully heard the rival submissions and perused the revisional order as well as the Assessment Or der sought to be revised. T he material/documents ref erred to and rel ied upon in the course of appe al has bee n perused in accordance wi th Rule 18(6) of the ITAT Rules, 1963. On perusal of the ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 13 f acts, it emerges th at the assessee herein along with other co-o wner sold a par t of land parcel. It is the case of the assessee that, in pas t, he has never indulge d into any business of real estate or sale or purch ase of plots which f ac t has been duly placed bef ore the A.O. in the course of assessment proceedings. No in teres t bear ing f unds have been utilized and no developme nt expenses have been incurred. It is the cl aim of the assessee that the gain has ar ise n to the assessee due to eff lux of time without any spe cif ic efforts and because of meteoric rise in value of land parcels arising to every l and o wners on account of unprecedented development of Raipur City.
8.1 When, we see the f ac ts in its natur al perspective, the char ac teris ation of the income as 'capital gain' in the given f acts, looks quite plaus ible. It c anno t cer tainly be branded as an issue f ree of any debate. The law is well settled that whe re the A.O has taken a vie w wh ich is plausible in l aw, cannot be displaced and substitu ted by the sub jec tive vie w of a superior authority. In the ins tant case, the PCIT has not sho wn as to ho w the A.O. has gone wrong while admitting the nature of income decl are d by the assessee. There is no thing on record to sho w that the AO. acted arb itr arily in exercise of quasi judicial po wers. T he AO had merely adopted one of the courses permissible in law and backed by a long line of judicial precedents holding such income to be capital gains. In contr ast, the PCIT h as adopted erroneous measurement of l and giving the impression of large parcel of land which is no t true. The basic f eatures of a capital asse t were also overlooked. Secondly, it was open f or the PCIT to ex amine the f acts himself and come to a conclusion of un-debatable nature. We f ail to unders tand wh at kind of enquir ies is needed in such cases when the relev an t fac ts are avail able on record both bef ore the A.Q, as well as the PCIT and only war rants a relook at the same.
8.2 Expl anation- 2 to sec tion 263 of the Ac t does not give a unco n trolled & unbridled power to the revisional Commiss ioner to reopen a completed assessment to conduc t f urther enquiries to verify and f ind out whe ther order passed is in f act erroneous or not. The f ac ts explained on behalf of the assessee gives an inf allible impression that the course adopted ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind 14 by the assessee in treating the gains as capital gains chargeable under section 145 of the Act and endorsed by the A.O. to be plausible.
8.3 The revisional po wer exercised in the f acts of the case is plainly wi thout author ity of law. Consequently, the revisio nal order passed under section 263 is liable to be quashed and set aside." 7.5. Therefore, on an overall view of the facts and circumstances of the case and in vi ew of the j udicial precedents referred to by us in the precedi ng paragraphs, we are unable to concur with the vi ew taken by the ld. PCIT and we quash the impugned order which has been passed u/s. 263 of the Act.
8.0 In the final result, appeal of the assessee stands allowed.
(Order pronounced in the open Cour t on 06/06/2023) Sd/- Sd/-
(VIKRAM SINGH YADAV) (SUDHANSHU SRIVASTAVA)
Accountant Member Judicial Member
Dated : 06.06.2023
Aks
ITA No. 420-Chd-2022 (A.Y. 2017-18) -
Anu Singhi, Sirhind
15
आदे शक त ल पअ े षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु त/ CIT
4. आयकरआयु त (अपील)/ The CIT(A)
5. वभागीय त न ध, आयकरअपील यआ धकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
6. गाडफाईल/ Guard File सहायकपंजीकार/ Assistant Registrar