TMI Blog2016 (10) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... dwellers. The Assessing Officer has observed that the receipts produced by the assessee are cyclostyled bearing only name and amount. We are of the considered view that when payments are made to encroachers/illegal occupants for vacating the land no formal agreement is required to be executed. The prime object of the owner of land is to seek the possession of land and ensure that land is free from encumbrances and encroachments. The assessee has produced receipts signed by some of the persons to whom payments have been made. The objection of the Department that receipts are on cyclostyled paper and lacks information is unwarranted. When the possession of land is retrieved from unauthorized occupants especially when they are hutment dwellers against some payment the details such as area occupied by each one of them is not relevant. Thus, the objections raised by the Department in disallowing the entire payment made to encroachers for vacating the land are not justified. The assessee had jointly purchased the land with Shri Narayan S. Khadake, though the assessee had major share in the land. As per assessee own admission, the assessee has paid ₹ 7.80 lakhs out of ₹ 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness income assessed by the Assessing Officer. The grounds raised by Revenue in appeal are as under : 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in treating the under the head Long Term Capital Gains as against the adventure in the nature of trade assessed by A.O. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in treating the addition made on account of adventure in nature of trade as presumption. In para 10 of the AO's order it is very clear that assessee before entering into this transaction and after that also was having series of transactions which proves that assessee was indulging in such adventure in nature of trade since long. 3. On the facts and in the circumstances of the case, the decision of the ITAT, Bombay G Bench in the case of ITO Vs. Sitaram Chamaria (6 SOT 594) may not be made applicable in this case. 4. Shri Sunil Ganoo appearing on behalf of the assessee submitted that the reassessment proceedings initiated against the assessee are bad in law as the notice u/s. 148 was issued in the name of a dead person. The ld. AR submitted that Mr. Sitaram Anandram Baheti filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is obligation of the appellate court to set aside the order under appeal. The ld. AR in support of his submissions placed reliance on the following decisions : i. Harshad Chiman Lal Modi Vs. DLF Universal Ltd. Another, AIR 2005 SC 4449; ii. State of Gujarat Vs. Rajesh Kumar Chimanlal Barot Another, AIR 1996 SC 2264; iii. Vipin Walia Vs. Income Tax Officer, 67 taxmann.com 56 (Delhi); iv. Braham Parkash Vs. Income Tax Officer, 275 ITR 242 (Del); v. Spice Infotainment Ltd. Vs. Commissioner of Income Tax, 247 CTR 500 (Del); vi. Mrs. Veena Vij Vs. Income Tax Officer in ITA No. 1299/Del/2012 for assessment year 2002-03 decided on 09-02-2015; vii. Shri Avinash V. Vyas Vs. Income Tax Officer in ITA Nos. 3538 3539/Mum/10 for assessment years 2004-05 and 2005-06 decided on 20-07-2011. 4.1 The ld. AR further submitted that a perusal of reasons for reopening which are available at page 85 of the paper book would show that reassessment proceedings have been initiated without their being any fresh material available for reopening. The Assessing Officer has invoked the provisions of section 147 merely to verify the transactions. There is no allegation against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commissioner of Income Tax (Appeals) in rejecting the claim of assessee. 5. Per contra Shri S.K. Rastogi representing the Department vehemently supported the order of Assessing Officer in disallowing the expenditure claimed by the assessee towards payment of compensation to the alleged encroachers of land and further disallowed by the Commissioner of Income Tax (Appeals). The ld. DR submitted that the assessee in his return of income had declared total income of ₹ 22,30,284/- including agriculture income of ₹ 42,000/-. The original assessment was made in the case of the assessee on 29-12-2003 u/s. 143(1) of the Act. Thereafter, notice u/s. 148 was issued on 08-11-2004. The notice was duly served on the assessee i.e. LR of Mr. Sitaram Anandram Baheti. At the time of issuance of notice u/s. 148, it was not in the knowledge of Assessing Officer that Mr. Sitaram Anandram Baheti had died. In response to the notice issued u/s. 148 of the Act, the wife of the assessee informed about the death of Mr. Sitaram Anandram Baheti. The LR of the deceased not only accepted the notice but requested the Assessing Officer to treat the return already file as return in response to no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of his submissions placed reliance on the following decisions : i. Commissioner of Income Tax Vs. Sumantbhai C. Munshaw, 128 ITR 142 (Guj); ii. Hemedra Ranchhoddas Merchant Vs. DIT, 351 ITR 206 (Bom); 5.2 The ld. DR submitted that the Department in appeal has assailed the findings of first appellate authority in holding the income from sale of land as Long Term Capital Gain. The facts of the case show that the assessee had purchased plot of land for the purpose of earning profit and not as investment. The plot was purchased with encroachments in 1995. Majority of the encroachments were removed in 1999. Thereafter, the plot was sold in 2002 after it was free from unauthorized occupants. This clearly shows that the plot was purchased with the intention of earning huge profit after removing encroachers. The land transaction is clearly adventure in the nature of trade. Apart from the land in question, the assessee had made investment in other immovable assets as well. 6. Controverting the submissions of the ld. DR, the ld. AR submitted that in the case of Kaushlya Bai Vs. ACIT (supra), the Hon'ble High Court has not considered the earlier judgment of Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and Vipin Walia Vs. Income Tax Officer (supra) to say that assessment made on the dead person is null and void. There is absolutely no doubt about this proposition. However, we find that facts in the cases on which the ld. AR of the assessee has placed reliance are at variance from the facts of the case in hand. In the case of Avinash V. Vyas (supra) notice u/s. 148 was issued on a dead person, the LR of the deceased informed the Assessing Officer regarding the demise of assessee, despite that the Assessing Officer issued notice u/s. 143(2) in the name of dead person and proceeded on to make assessment in the name of dead person. 8.1 In the case of Veena Vij Vs. ITO (supra), the assessee Ashok Kumar Vij filed return of income for assessment year 2002-03 on 09- 09-2002. Shri Ashok Kumar Vij died on 11-02-2006. The LR of Shri Ashok Kumar Vij filed return of income for assessment year 2006-07 on 31-10-2006. The Assessing Officer issued notice u/s. 148 for assessment year 2002-03 on 24-03-2009 in the name of Ashok Kumar Vij. In reply to notice Shri S.C. Jain, CA again informed Assessing Officer on 14-05-2009 regarding death of Ashok Kumar Vij. The Assessing Officer was aware of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we reject the objection of the assessee qua validity of reassessment proceedings. 9.1 Another objection raised by assessee against reassessment proceeding is that no fresh material was available with Assessing Officer for invoking the provisions of section 148/147 of the Act. The ld. DR has contended that initially assessment was framed u/s. 143(1) of the Act, therefore, the Assessing Officer had no occasion to make any enquiries in respect of information furnished by the assessee in the return of income. We find merit in the submissions of the ld. DR. The Assessing Officer can apply his mind and form an opinion in respect of return of income in proceedings u/s. 143(3) of the Act. In the facts of the case we find no merit in the objection raised by the assessee against reassessment proceedings. Accordingly, ground No. 1 raised in the appeal by the assessee is dismissed. 10. In ground No. 2 of the appeal, the assessee has assailed the findings of Commissioner of Income Tax (Appeals) in confirming the disallowance of ₹ 10,00,000/- i.e. the payment made to hutment dwellers for vacating the land. The document on record reveal that the land purchased by the assessee in 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to produce the illegal occupants of land to whom payments were made. In so far as second objection is concerned the assessee has furnished a copy of title of civil suit filed in the Civil Court, Jalgaon. A perusal of same shows that the suit was filed against 19 defendants, if the assessee has included the name of some more persons in the list of unauthorized occupants to whom the payments have allegedly been made and the same are not verifiable, the Assessing Officer could have made reasonable disallowance rather than rejecting the claim of assessee in toto. The third objection is that there is no formal agreement with the slum dwellers. The Assessing Officer has observed that the receipts produced by the assessee are cyclostyled bearing only name and amount. We are of the considered view that when payments are made to encroachers/illegal occupants for vacating the land no formal agreement is required to be executed. The prime object of the owner of land is to seek the possession of land and ensure that land is free from encumbrances and encroachments. The assessee has produced receipts signed by some of the persons to whom payments have been made. The objection of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the conclusion based on wrong presumption without assessment year basis. The assessee purchased various properties for investment and sold this particular plot after a period of 6 years and does not have features of trade. It is also very difficult to establish that the assessee purchased property with an intention of making profit. Thus the conduct of the assessee also does not show that the transaction is in the nature of adventure in trade. The assessee is able to argue that the property was sold for repaying the bank loan and the co-owner was wanting to build a house. Hence, the sale is making profit. As already discussed above, the assessee was an Advocate and sale and purchase of lands is not incidental to his profession. Even the character of the transaction does not prove that it is in the nature of adventure of trade and the transaction does not have any similarity of a transaction of business, because there was no sale of land transactions since 1985 to 2002 by the assessee. Therefore, it is difficult to believe that there were series of transactions to hold this particular transaction as adventure in the nature of trade. In a recent decision the I TAT , Bombay G Ben ..... 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