TMI Blog2021 (9) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the entire facts and circumstances of the case of the assessee had finally decided and concluded that the activities of the assessee is to be taxed under the head capital gains by treating the assets/income as capital asset/income instead of business asset/income and all the expenses borne by the assessee were also construed as part of cost of improvement. Thus the order of the A.O. for the year under consideration treating the asset as capital asset and allowing the claim of exemption U/s 54F of the Act etc. cannot be termed as improper or made without verification or prejudicial to the interest of Revenue. Moreover, after perusal of the record, we found that the A.O. had carried out all the required verifications and had taken the same view as has been taken by the Coordinate bench of the ITAT in assessee s own case[ 2020 (5) TMI 236 - ITAT JODHPUR] . We draw strength from the decision of Union of India Vs Kamalakshmi Finance Corpn. Ltd[ 1991 (9) TMI 72 - SUPREME COURT] wherein it was held that the order passed by the Income Tax Appellate Tribunal are having binding effect upon all the subordinate authorities under the jurisdiction of the said Tribunal, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Business Income overriding the binding Judgement of Hon ble ITAT in assessee s own case for AY 2015-16 [158/Jodh/2019] in which gain from sale of part of assets under consideration were treated as Capital Gain as against assessment of such gain as Business Income by Ld. AO. Considering specific judgement of ITAT in assessee s own case for same property, direction of Ld. Pr. CIT is contrary to principal of Binding Precedence. Necessary direction to set aside the order of Pr. CIT may kindly be issued. 3. That on the facts and in the circumstances of the case, various direction of Ld. Pr. CIT invoking power u/s 263 resulted in enhancement of Limited Scrutiny scope of proceeding u/s 143(3) which is not permissible under law. Assessment Order framed by assessing officer in Limited Scrutiny scope is neither erroneous nor it is prejudicial to the interests of the revenue so that lead to invocation of power u/s 263 by the Ld. Necessary order may kindly be issued to set aside such autocratic directions being beyond the scope of power assigned to Pr. CIT u/s 263. 4. That on the facts and in the circumstances of the case, Ld. Pr. CIT erred in directing the AO to examine and ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding decision of the Hon ble ITAT in assessee s own case for the A.Y. 2015-16 in ITA No. 157/Jodh/2019 in which gain from sale of part of assets under consideration were treated as capital gain as against the assessment of such gain as business income by the A.O. As per the ld. AR, considering specific judgment of Hon ble ITAT in assessee s own case for the same property, directions issued by the ld. PCIT is contrary to the principle of binding precedence. The ld. AR also relied upon the written submissions submitted before the ld. PCIT as well as before us which are reproduced below: Submissions before the ld. PCIT: 1. At the very outset, it is pertinent to mention here that case of assessee was selected for limited scrutiny and the issues for examination as identified by CASS are as under:- a. Whether investment and income relating to properties are duly disclosed. b. Whether deduction from capital gains has been claimed correctly. A copy of Notice u/s 143(2) is enclosed herewith and marked as Annexure- 1 . 2. After the issuance of Notice u/s 143(2), detailed questionnaire vide Notices u/s 142(1) and letters was issued with respect to the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also worthwhile to mention here that since the purchased lands were big in size and as assessee wants to purchase a new residential property in Bangalore which was costing higher than the land value at Jalore. Thus, in order to fetch higher prices, assessee with his brother plans to sell the land by splitting into smaller plots and by constructing building on few plots. The said purchased lands were shown as capital asset and not as inventory. It is also worthwhile to mention here that mere conversion of land into plots does not itself by virtue to be construed as business asset. For construing this as business asset there are lot other parameters which needs to be considered, which are lacking in the case of assessee. 6. It is worthwhile to mention here that it is well settled legal position that revisionary powers under section 263 cannot override the scope as envisaged under Notice u/s 143(2). In other words when the present case in hand has been selected for Limited scrutiny then the revisionary powers so initiated; for the reasons that nature of transaction is business income, is illegal and beyond the scope of revision under section 263 of the Act. The ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional binding effect on assessee's case. 8. Thus, by any sight of imagination the order passed Ld. \O for the AX 2016-17; treating the assets as capital asset and allowing the claim of exemption u/s 54F/etc. cannot be termed as improper or made without verification or prejudicial to the interest of revenue. Moreover, it is emphatically submitted that Ld. AO has duly made all inquiries and was of same view as of Hon'ble tribunal that such asset is capital asset and thereby allowed the exemption under the head Capital Gains . 9. It is pertinent to mention here that Hon'ble Rajasthan High court in the case of COMMISSIONER OF INCOME-TAX. VERSUS. TAN CONSTRUCTION CO. (IT Appeal No. 60 of 20121 has held :- It is clear that the learned CIT had merely on a change of opinion and to substitute his own opinion about the deficiencies in the maintenance of the record by the assessee invoked the revisional jurisdiction and set aside the assessment order. This is not permissible under section 263 of the Act . Once the order of the assessing authority stood merged with higher appellate authority, the parallel authority on the administrative side, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken one of the plausible views, the CIT has no authority to set aside the order of the Assessing Officer and adopt its one of the other views. Therefore Principal Commissioner of Income Tax could not substitute a lawful view taken by the Assessing Officer. (Emphasis supplied) Considering the facts and circumstances your good self is humbly requested to drop the proceedings for revision so initiated and oblige. Submissions before this Bench: 1. CBDT Circular No 19/2019 dated 14/08/2019 [PB Pg 35-36] laid that no communication shall be issued by any income-tax authority to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. Relevant portion of circular reproduced as under: 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as the Act ), has decided that no communication shall be issued by any income-tax authority relating to assessment, appeals, order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed after 01/10/2019, as per CBDT Circular No 19/2019 dated 14/08/2019, a computer-generated Document Identification Number (DIN) must be allotted to it and same must be duly quoted in the body of order itself. From the bare perusal of order u/s 263 it can be observed that neither a computer generated DIN quoted in the body of order nor it has been stated that Order has been issued manually without a DIN in exceptional situation after obtaining written approval of the Chief Commissioner of Income-Tax. Considering the factual position absence of quotation of Computer Generated DIN in the body of assessment order shall be treated as invalid and shall be deemed to have never been issued, as per binding CBDT Circular. Considering the position, it is requested to declare the assessment order as null and void ab initio. 3. It may pertinent to mention that the circular specify five exceptional circumstances wherein order can be issued manually. But for same there is binding condition that order issued manually only after recording reasons in writing in the tile and with prior written approval of the Chief Commissioner /Director General of income-tax. The communication issued under e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various dates during the previous year the cost of acquisition of lands were born by you and your brother, Sh. Ramesh Raj Bohra jointly. Sh. Ramesh Raj Bohra is also engaged in the activity of sale of land conversion into flats acquisition of land in FRR Apartment Scheme. The activity of purchase land and then convert into flats and sold after construction with other co-owner which shows clearly that you have engaged in the activity of real estate business/ building developer and the income was chargeable to tax under the head of income from business and profession instead under the head income from capital gains. Thus the income was chargeable to tax under the head of income from business and the benefit of cost of indexing, exemption u/s 54, 54F and 54EC amounting was not allowable to you. Pg 3-10 Para 4 Submission of assessee reproduced Pg 4-5 5. That it is imperative to bring to your kind consideration that facts of case has been wrongly construed as it can be discern from your show cause notice dated 13.03.2020, wherein it has been stated as under; That it can be clearly discern from the above that wrong facts has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly This observation has been specifically objected during the 263 proceeding as factually incorrect, but without bringing any factual material on record which shows that assessee frequently purchased land and sale same after development same as real estate. Pg 17-18 Para 6-8 Reference made to Explanation 2 to 263(1) Pg 18-20 Para 9-10 Judicial pronouncements referred - Gee Vee Enterprises 99 ITR 375 (Delhi) - Jagdish Kumar Gulati vs CIT 269 ITR 71 - Duggal Co 220 ITR 456 (Delhi - K.A. Rama Swami Chettiar vs CIT 220 ITR 657 - Malabar Industrial Co Ltd. 243 ITR 83 (SC) - CIT vs Jawahar Bhattacharjce 342 ITR 74 - CIT vs Amitabh Bachchan Civil Appeal 5009 of 2016 - Rameshwar Prasad Sharma ITA No 449/JP/2019 Pg 20 Para 11From the above discussion, the order u/s 143(3) dated 13/11/2018 for the AY 2016-17 passed by the Assessing Officer is found to be erroneous in so far as it is prejudicial to the interest of revenue, as I am of the opinion that the assessment order was passed by the Assessing Officer without making proper inquiries and verifications which should have been made. Pg 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. FATEH ROYAL RESIDENCY PLOT A-06 16. FATEH ROYAL RESIDENCY PLOT A-03 17. FATEH ROYAL RESIDENCY PLOT G-09 18. FATEH ROYAL RESIDENCY PLOT A-02 19. FATEH ROYAL RESIDENCY PLOT A1 20. FATEH ROYAL RESIDENCY PLOT A-04 8. That brief background of transactions with reference to Fateh Royal Residency are as under: 8.1. The Fateh Royal Residency Township has been planned on the Khasra No 2010, 1962, 2011, 2012, 2013, 2014, 2015 2016 at Railway station by pass road, Jalore. These properties owned by Pushp Raj Bohra, Ramesh Raj Bohra (assessee) and Lata Bohra w/o Dinesh Bohra detail of which are as under: Khasra No Owner Area in Hectare Date of Purchase 2011, 2012, 2013 2014 Pushp Raj Bohra (assessee) 1.55 02/11/1995 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty, period of holding, circumstances under which property sold after converting into plots, utilization of sale realization for purchase of residential house property along with all supporting documents have been produced. 11. Ld. AO having examined all documents and after consideration of submission of assessee frame assessment on returned income. 12. Irrespective of the fact that Ld. AO had made required inquiry before framing assessment, Ld. Pr. CIT invoking power u/s 263 issued show cause notice stating that he is of the view that while passing the assessment order proper inquiries and verification was not done by the AO. 13. In the show cause notice so issued it has been stated that assessee frequently purchase land and convert into flats by construction of RCC. 14. In the reply it was submitted before Ld. Pr. CIT that factual finding recorded that assessee is frequently purchase land and convert into flats by construction of RCC is incorrect. It was requested to consider correct factual position of the case under consideration. 15. Even though it was specifically submitted that observation recorded in the show cause notice that assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal High Court of Rajasthan in the case of CIT vs Sohan Khan [2008] 304 ITR 194 (Raj) and therefore even if there is applicable Delhi High Court judgement in case same is in contradiction of Rajasthan High Court Judgement no adverse action can be taken in case of assessee within Jurisdiction of Rajasthan High Court. 18. Ld. Pr. CIT at Page 11 of the order recorded that: (iv) It is all the more pertinent to mention here that the assessee and his two brothers are directors in Fateh Agro Builders Private Limited. The company was engaged in business of Builders- Property Developers. And that the company has projected in Jalore namely Fateh Royal Residency and Fateh Hills and at Banglore in the names of Perfect Charm, Perfect Charisma and Perfect Bansankari. 18.1. Above finding is partial finding. The company Fateh Agro Builders Pvt Ltd was incorporated in year 1986 (earlier it s name was Fateh Granite and Marble Pvt Ltd) and it was engaged in the business of Mining Work, Production of Granite Slabs, Tiles and Blocks. During the financial year 2014-15 for the first time company started new line of business of Builders Property Development. Property sold by asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.3. CIT vs Jain Construction Co [2012 (11) TMI 1071 Rajasthan High Court] [PB Pg 75-86] 22.4. Pr. CIT v. N. K. PROTEINS LTD. [2020] 429 ITR 493 (Guj) [PB Pg 87- 92] In light of above submission and judicial pronouncements relied upon the order u/s 263 may kindly be declared as without authority as the assessment order under consideration neither erroneous nor prejudicious to the interest of revenue. 23. Return of income filed by assessee selected for limited scrutiny and as per notice u/s 143(2) dated 04/07/2017 following issues were identified for examination [PB Pg 1-2]: i. Whether investment and income relating to properties are duly disclosed. ii. Whether deduction from capital gains has been claimed correctly. 24. Various direction of Ld. Pr. CIT through order u/s 263 are as under: 24.1. The AO is directed to examine and verify the source of investment made by the assessee and his brother Shri Pushp Raj Bohra in purchase of land, [Pg 14] 24.2. The AO is also directed to examine and verify the nature of sales transactions of the house properties [Pg 14] 24.3. I, therefore, cancel the assessment order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mind. Therefore, she prayed for upholding the order of the ld. Pr.CIT. 9. We have considered the rival contentions and carefully perused the material placed on record. From perusal of the record, we noticed that accordingly to the ld. PCIT, the activity of purchasing land by the assesse and then converting it into flats and selling after construction to other co-owners comes under the ambit of business activity, therefore, the income of the assesse is to be charged to tax under the head business and profession instead of income from capital gain. Thus, according to the ld. PCIT, the income are chargeable to tax under the head of income from business and the benefits of cost of indexing, exemption U/s 54, 54F and 54EC of the Act was not allowable. It is pertinent to mention here that the ld. PCIT while deciding this issue has completely ignored and overlooked the specific assertions made by the assessee by filing its written submissions dated 11/02/2021 wherein it was specifically pleaded as to why the ld. PCIT has misconstrued the facts of the present case. Apart from this, the ld. PCIT has ignored the very important fact that the same activity on the same land was carried ..... X X X X Extracts X X X X X X X X Extracts X X X X
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