TMI Blog2012 (4) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the ld. CIT(A)-II be set aside and that of the AO be restored. 4. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 3. Ground No. 4 is general in nature and needs no separate adjudication. Hence the same is dismissed. 4. The revenue in ground No. 1 contended that the ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 25,09,080/- made by the AO by treating the income under the head capital gains as business income. 5. In the course of appellate proceedings, the ld. 'DR', for the revenue extensively referred to relevant part of the assessment order and supported the findings of the AO contained therein. The ld 'AR', for the assessee, on the other hand, placed reliance on the order of CIT(A). The ld 'AR', for the assessee, further, placed reliance on the decision(s) in the case of Indian Hume Pipe Co. Ltd V. CIT, 195 ITR 386; CIT v. Smt. Bilkishbai, 225 ITR 570; CIT v. Sushila Devi Jain, 259 ITR 671 and Jindal Strips Ltd. V. ITO, 116 ITR 825 (P H)(Full Bench). Both the ld. 'DR', for the revenue and the ld 'AR', for the assessee stated that the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove the expenses having been actually incurred on the above two plots of land to which he replied in negative. In the copy of his personal account filed during investigation, the assessee has shown a lump sum withdrawal of Rs. 10.00 lakhs for the marriage of his sister which was solemnized sometimes in Feb., 2005, but he has not been able to furnish any details of the marriage expenses or the manner in which the amount of Rs. 10.00 lakhs was spent or otherwise utilized. In para 3 of his letter dated 22.12.2008 he has stated that he had only contributed a total sum of Rs. 10.00 lakhs for the marriage of his sister. As regards the details of marriage expenses, the assessee has stated that his parents only know about it. As regards the documentary evidence in relation to the expenses incurred on the two plots purchased during the financial years 1995-96 and 1996-97 and disposed of during the year under consideration, in para 8 of his letter dated 2/8.12.2008 the assessee has stated as under: Regarding the expenditure on development of two properties claimed by the assessee, it is respectfully submitted that the same was incurred in the financial year 1996-97 relevant to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2008 the assessee has state that he is not regularly engaged in the purchase and sale of immovable properties. It is further stated that since most of the lands which he had purchased long back were not yielding suitable returns it was decided to be sold in piece meals after making improvements by earmarking plots but nonetheless it would remain a capital asset and not a transaction of any stock in trade. In this connection, it may be pointed out that immovable properties comprising of commercial or residential plots never yield annual returns and the profit from these properties arises only as and when the same are disposed of. The assessee has not admittedly maintained any books of account in respect of his business activities and in the absence of any books of account it can not be ascertained as to at what point of time he had converted his capital assets into stock in trade. In the given facts and circumstances of the case, I have to go by the facts on record relating to the frequency of the transactions of purchase and sale of immovable properties to determine the nature of business transactions, whether capital asset or stock in trade. In the course of assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons. It is explained by the ld. counsel that it was not a case where the appellant had purchased 16 pieces of land by executing separate deeds and sold the same again to 16 persons. The land purchased by the appellant in one transaction in the year 1995 is claimed to have been sold in small parts to different persons. In view of the above I agree with the ld. counsel that just because there happened to be 16 transactions of sale of land the appellant could not be considered to be engaged in the business of sale and purchase of properties. 8.1 As rightly pointed out by the ld. counsel in the written submissions also, as per settled position of law by now that for deciding as to whether such sale transaction is on account of business of an assessee or simply sale of a capital asset attracting capital gains, the intention of the assessee at the time of purchasing the land in question is paramount. The AO has not discussed as to whether the intention of the appellant at the time of purchasing this property could be said to be for dealing in this property as business or not. Rather the AO has mentioned in the assessment order that as the appellant had not maintained any books it cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble jurisdictional High Court of Punjab Haryana in the case of Sushila Devi Jain (supra), which has been relied upon by the ld. counsel also land sold by the appellant in parcels because the entire area could not be sold in one go, cannot be said to constitute an adventure in the nature of trade. The decisions of the Hon'ble Jurisdictional Bench of ITAT in the case of Rajesh Kumar Aggarwal in ITA No. 538/Chd/2006 which has further been relied upon by the ld. counsel also advanced the case of the appellant only. 8.3 Keeping in view the above position and particularly the fact that intention of the appellant at the time of purchase of the land in question in the year 1995 is shown tobe that of holding it as an asset being agricultural land, the action of the AO in considering the profits from the sale of the land as business profits just because the appellant sold this land in parts to different persons cannot be upheld. The AO is, therefore, directed to consider the income of the appellant from the purchase and sale of the properties under the head capital gains as shown in the return of income. This ground of appeal of the appellant is, therefore, allowed. 8. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not amount to trade or business within the meaning of the Act. No substantial question of law arose. (iv) In Jindal Strips Ltd. V. ITO and another, 116 ITR 825, the Hon'ble Punjab Haryana High Court has held in the Head note as under: Valuation of property Jurisdiction of ITO to reopen valuation of property of which assessments already completed Right to get valuation done by Valuation Officer Sec 55A applies only to capital gains ITO can resort to Sec 133(6) for revaluation Mention of wrong sec in requisition sent to Valuation Officer does not vitiate valuation Valuation officer s valuation is not binding on ITO Assessee has its say in the matter Income-Tax Act, 1961, ss. 55A, 133(6). 9. We have carefully perused the general propositions laid down in these case laws. Having regard to the fact-situation of the case, relevant case laws relied upon by the assessee and the findings of the ld. CIT(A), we are of the considered opinion that the issue in question is covered by the general proposition laid down in these case law. Therefore, the findings of the ld. CIT(A), in the matter are upheld. Thus, this ground of appeal of the revenue is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs mutatis mutandis shall be applicable, in respect of these two grounds of appeal raised by the Revenue, in ITA No. 1355/Chd/2010 for the Assessment Year 2004-05, which are identical on facts. Consequently, following the findings given by us, above in para no. 9, these two ground of appeal of the revenue are dismissed, 11 In ground No. 2 (ITA No. 155/Chd/2010, for the Assessment Year 2005-06) the revenue contended that the ld. CIT(A) erred on facts and in law in deleting the addition of Rs. 30 lakhs,made on account of investment made by the assessee in acquisition of land at Gill Road, Ludhiana which was held to be made out of assessee s income from undisclosed sources. 12 We have carefully perused the rival submissions, facts of the case and relevant records. The relevant portion of the observations and findings of the AO,in respect of this ground are reproduced hereunder: 8 Vide sale deed registered on 8.2.2005, the assessee alongwith others purchased 4250 sq. yds of land at Gill Road, Ludhiana , having 1/5th share i.e. 850 sq. yds. for a total sum of Rs. 30,00,000/-. The assessee has not maintained any books of account in respect of his business activities of purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn from his capital account. On being asked to give the details of marriage expenses, the assessee stated that these are know to his father Shri Madan Lal. Later on, summons u/s 131(1) were issued in the name of Shri Madan Lal and served upon him, but he did not make any compliance to the summons on the ground of ill health. I have considered the facts of the case. In my opinion, the assessee cannot be allowed to take undue benefit for his non cooperation during the entire assessment proceedings and also for non-maintenance of books of account in respect of his business activities at the relevant time. Summons u/s 131(1) of the Act, 1961 were issued in the name of assessee s father primarily to investigate into the huge investments in the name of his minor son, the assessee under reference, particularly in the years 1995-96 and 1996-97 as well as the marriage expenses of his daughter. He did not make compliance of the summons for obvious reasons. Shri Madan Lal Bhardwaj and his two sons, real estate dealers, are financially very well off as is apparent from the huge investments made by them in landed properties. In view of their financial status the marriage expenditure of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of cash available with the appellant was consumed in the marriage of his sister. First of all there is nothing on record to show that how much expenses were incurred on the marriage. Secondly if there was such evidence that expenditure in excess of Rs. 10.00 lakhs has been incurred on this marriage, it was for appellant s father to explain the remaining amount. In case he failed to explain the sources, adverse view could have been taken in the hands of appellant s father. However, no addition on the above basis could be held to be justified in the hands of the appellant. Even otherwise, it has been stated by the appellant that another Rs. 10.00 was contributed for this marriage by his brother Shri Sanjiv Bhardwaj. Even the name of the Banquet Hall was given to the AO where marriage ceremony was performed. In the face of the above factual position and in the absence of necessary inquiries the inference drawn by the AO can be taken to be just on the basis of surmises and presumptions which are not maintainable in the eyes of law. Keeping in view the totality of the facts and circumstances discussed above, the addition of Rs. 30.00 Lakhs made by the AO to the income of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cash Flow Statement is not supported by any evidence. It is, further, observed by the AO that in the Cash Flow Statement 16 instances of sale of land has been incorporated, without furnishing complete particulars of such lands sold by the assessee. The assessee furnished copies of sale deeds, on 10.12.2008, 20.2.2008 and 24.12.2008, which render the Assessing Officer, incapable to make proper and reasonable inquiries, in the matter, in view of time constraints prescribed for completion of assessment. It is mentioned that the assessee has not maintained books of account, in respect of purchase of immovable properties. It is, further, recorded by the AO that no balance sheet or statement of affairs evidencing complete picture of the transactions of the assessee were annexed to the relevant Returns of Income filed by the assessee, for Assessment Year 2004-05 and 2005-06. The assessee filed Cash Flow Statement and statement of affairs, in the course of investigation proceeding before the Investigation Wing of the Department. Such documents must be corroborated by cogent and credible evidences, to render credibility to the veracity of such documents, as the assessee had not filed such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deemed fit in accordance with the relevant provisions of the Act after providing reasonable opportunity to the assessee. Accordingly, the issue is restored to the file of AO. 17. Ground Nos. 3 and 4 raised by the Revenue are general in nature and hence, need no separate adjudication. Hence, the same are dismissed. 18. In the result, appeal of the Revenue in ITA No. 155/Chd/2010 is adjudicated in the above terms. In ITA No. 1355/Chd/2010 The Revenue has raised the following grounds of appeal 1 That the ld. CIT(A)-II has erred in law and on facts in directing the Assessing Officer to assess the income of Rs. 13,97,872/- under the head Capital Gains instead of under the head income from business and profession as assessed by the Assessing Officer. 2. That the ld. CIT(A)-II has erred in law and on facts in directing the AO to assess the income of Rs. 8,00,000/- under the head Capital gains instead of under the head Income from business and profession as assessed by the Assessing Officer. 3. That the ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,00,000/- made by the Assessing Officer being income of the assessee from real estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in deleting the addition of Rs. 763254/- made by the Assessing Officer, as the assessee has failed to explain the cash in hand shown, in the statement of fund flow statement. 24. We have heard the rival submissions, facts of the case and the relevant records. It would be pertinent to refer to the comments of the Assessing Officer, in the matter, hence, the same is reproduced hereunder: As regards the concealed amount of Rs. 782754/- shown in his statement of affairs, as on 31.3.2004, on account of investments and cash in hand the assessee has furnished details thereof as under: Shri Hemraj Sharma, Malerkotla Rs. 19,500/- Cash in hand Rs. 763254/- No doubt the assessee has furnished the details as required he has not produced any documentary evidence what so ever to explain the source of cash in hand of Rs. 763254/- and circumstances under which it was kept at home and not deposited in any of his Bank accounts which he has been maintaining regularly. Since the assessee has been found non-cooperative and filed this information on 24.12.2009 only in the absence of any evidence regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated cash, indicating huge opening cash balance, which cannot be accepted as such, having regard to the surrounding facts and circumstances of the case. The assessee had not adduced or annexed any evidence indicating true state of affairs of his business, along with the return of income. The assessee is showing cash in hand, in the vicinity of 6-7 lakhs, as carry forward from Assessment Year 2002-03 to 2004-05, which was neither used by the assessee nor it was deposited, in the saving bank account. In view of this, explanation filed by the assessee, in respect of such cash in hand, cannot be accepted. Therefore, the findings of the ld. CIT(A) which are founded merely on the acceptance of the assessee s self-created version of availability of cash, is not factually and legally tenable. Therefore, the findings given by the Assessing Officer, in the matter are upheld. 28. Ground Nos. 5 6 raised by the Revenue are general, in nature, and, hence, need no separate adjudication. Hence, the same are dismissed. 29. In the result, appeal of the Revenue in ITA No. 1355/Chd/2010 is adjudicated, in the terms indicated above. Order Pronounced on 17 .04.2012. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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