TMI Blog2002 (10) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... That the authorities below did not appreciate that no addition can be made on protective basis without making any substantive addition. As such, the addition made on protective basis may be deleted. 4. That the CIT(A) has grossly erred in confirming the addition of Rs. 23,06,112 on account of sale of jewellery by treating the same as business profits instead of returned capital loss at Rs. 9,72,472. The CIT(A) should have accepted the returned capital loss at Rs. 9,72,472. 5. Any other ground of appeal that may be urged at the time of hearing of the appeal." 3. Ground Nos. 1 and 2 are general in nature, so do not require any comments on our part. 4. Vide ground No. 3, the grievance of the assessee relates to the confirmation of addition of Rs. 1,92,250 on account of profit on the sale of land by treating the same as 'adventure in the nature of trade' against the returned capital gains of Rs. 1,54,949 on account of sale of land. 4.1 The relevant facts appearing from the orders of the authorities below in brief are that the assessee declared an income of Rs. 21,22,150 and filed his return on 30th Dec., 1998, vide receipt No. 276; the same was processed under s. 143(1)(a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the submissions of the assessee, the learned CIT(A) observed that the assessee was involved in the sale of land from the financial years 1991-92 to 1999-2000 and there were about 36 to 45 transactions of sale of land made by the assessee out of the land acquired in the year 1990. The year-wise sale of land was shown as under: "Financial year Gross area of plots sold 1991-92 92 Marlas 43 feet. 1992-93 88.68 Marlas 1993-94 76.93 Marlas 1994-95 89.15 Marlas 1995-96 148.49 Marlas 1996-97 150.77 Marlas 1997-98 82 Marlas 84 sq. feet. 1998-99 50.100 Marlas 1999-2000 25.174 Marlas." On the basis of the above, the learned CIT(A) opined that it was not isolated instance of sale dealt in by the assessee, but it was a regular consistent dealing of the assessee in the sale of land from the financial years 1991-92 to 1999-2000. According to him it was not the isolated case of disposal of capital asset that was being done by the assessee but a systematic business of dealing in sale of land which could not be said anything except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dt. 29th Feb., 1996, as such there was no question as regards to considering the land as stock-in-trade because the learned CIT after proper verification dropped the proceedings. It was pointed out that in that year also, the assessee sold Malba on the same land for Rs. 2 lakhs and the transaction was not considered as business transaction. The learned counsel for the assessee vehemently argued that the purchase of the land by the assessee was only one transaction and not the regular business and, as such, the AO as well as the learned CIT(A) were not justified in treating the transaction as related to the business because it was not the regular business of the assessee to make the purchase and sale of the land. It was stated that the assessee was forced to dispose of the land in pieces because due to disturbed situation in Punjab at that time, no buyer was available for whole of the land which was purchased with the intention to raise a farm house. He also relied on the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT vs. Saraswati Bai Ors. (1982) 137 ITR 656 (P H). It was pointed out that for the asst. yr. 1992-93, an addition of Rs. 53,701 was made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction undertaken by the assessee in purchasing the land was an isolated/single transaction, as such the onus to prove that the transaction was an adventure in the nature of trade was on the Department because the transaction was not in the ordinary course or like business of the assessee. The reliance was placed on the following case laws, viz.: (i) Janki Ram Bahadur Ram vs. CIT (ii) Saroj Kumar Mazumdar vs. CIT (iii) CIT vs. Hiralal Manilal Mody (1981) 25 CTR (Guj) 275 : (1981) 131 ITR 421 (Guj) (iv) Ashok Kumar Jalan vs. CIT (1991) 187 ITR 316 (Bom) 4.5 In his rival submissions, the learned Departmental Representative strongly supported the orders of the authorities below and submitted that the assessee sold the land in piecemeal in many years, as such, the transaction was in the shape of business transaction, therefore, the AO was justified in making the addition treating the transaction as business transaction and consequently the learned CIT(A) was justified in confirming the action of the AO. 4.6 We have heard both the parties at length and gone through the relevant material available on the record. We have also carefully gone through the various case l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispose of the land in piecemeal, but the disposing of the asset in pieces when the buyer is not available for whole of the asset cannot be considered as transaction related to the business. In a similar type of case recently, the Hon'ble Andhra Pradesh High Court in the case of M. Ramanamma vs. CIT (2000) 176 CTR (AP) 264 : (2002) 255 ITR 467 (AP) has observed as under: "The question referred to this Court at the instance of the Revenue is a mixed question of fact and law. The only thing to be seen is whether the finding recorded by the Tribunal is based on some acceptable evidence or perverse. The learned Tribunal has opined that the assessee after purchase of the land did not resort to any action or acts from which it could be concluded that the assessee acquired the land as a venture in trade or business. This conclusion is reached by the Tribunal on the ground that after purchase, the assessee had not developed the land into house sites, the assessee did not prepare and submit any layout to the municipality for approval, she did not advertise sale of any plots. It is also pointed out by the Tribunal that the assessee is a widow and dependant upon others to look after her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Department. We, therefore, considering the entire facts as discussed above, are of the view that the AO as well as the learned CIT(A) were not justified in treating the transaction as an 'adventure in the nature of trade'. We, therefore, set aside the order of the authorities below on this issue and direct the AO to treat the transaction/income in question under the head "Capital gains" and not as business income from an "adventure in the nature of trade". In the above premises, this issue is disposed of. It is made clear that no other argument was placed before us by either of the parties on this issue. 5. Now, we will take up the remaining ground taken by the assessee in this appeal, i.e., ground No. 4, which relates to the confirmation of addition of Rs. 23,06,112 on account of sale of jewellery by treating the same as business profits instead of returned capital loss at Rs. 9,72,472. 5.1 The facts relating to this issue in brief are that the assessee declared jewellery under VDIS (Voluntary Disclosure Income Scheme) 1997, on 5th Dec., 1998, worth Rs. 20,56,964. The said jewellery was claimed to have been sold to M/s Thuru Ram Sons, Sujanpur, and accordingly the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions of the assessee observed that the jewellery declared under VDIS 1997 had been promptly sold to a sister concern, M/s Thuru Ram Sons, Sujanpur, where mother and brother of the assessee were the partners. He further observed that in the books of account of the assessee, the accounts of M/s Thuru Ram Sons were debited with the amount of sale of jewellery which had shown that the jewellery was held as business assets. The learned CIT(A) further observed that the assessee was carrying on the business of jewellery over a large number of years and his main earnings were out of that business, as such, the income declared in VDIS 1997 had been earned out of jewellery business and, therefore, the declaration had also been made in the capacity of proprietor of that business. He further stated that the jewellery declared by the assessee could not be said to be his personal effects or personal jewellery. On the basis of above, the learned CIT(A) observed that it was reasonable to presume that the jewellery which had been shown as sold represented stock-in-trade of business of the assessee. Accordingly, the learned CIT(A) upheld the action of the AO in treating the business income at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as part of net wealth statement as on 31st March, 1997, and furthermore as the jewellery itself was sold on 27th Nov., 1997, so it could also not be possible to disclose the net wealth as on 31st March, 1998, because on that date, no jewellery was in the possession of the assessee. As regards the pride possession of jewellery, the learned counsel for the assessee submitted that the prices of jewellery were falling day by day, as such, being a prudent businessman assessee sold the jewellery and invested in FDRs to earn the income. The learned counsel for the assessee further referred to the CBDT Circular No. 754, dt. 10th June, 1997, wherein reply has been given with regard to the cost of acquisition of jewellery, etc., wherein it has been clarified that in case of jewellery the cost of acquisition will be actual cost and not deemed cost as on 1st April, 1987. The learned counsel for the assessee vehemently argued that it was not known how and when the AO had converted the 'self' asset as stock-in-trade because nothing was available on record to establish his belief. Accordingly, it was submitted that the learned CIT(A) was not justified in confirming the addition made by the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts, it is crystal clear that the declaration was made by Shri Vinod Kumar (assessee) in his individual capacity and the jewellery disclosed was stated to be held by "self". On perusing the certificate dt. 8th Dec., 1997, issued by the CIT, Amritsar, it would be clear that in that certificate, the first column relates to the name and address of the declarant wherein it has been mentioned: Sh. Vinod Kumar, Prop. M/s Vinod Jewellers, Androon Bazar, Pathankot. The next column pertains to son/daughter/wife of in that column 'son' has been ticked and the name has been mentioned s/o Sh. Thuru Ram. Further col. No. 5 deals with the details of declaration. In that column there is sub-col. 5 which states name in which held. In that sub-column, the gold jewellery had been shown in the name of "self". From the above narrated facts, it is also clear that the declaration was accepted in the individual capacity because there can be no father of a firm and moreover col. 5 is self-explanatory which tells about the status in which the assets were held. In that column, it is clearly mentioned that the gold jewellery amounting to Rs. 20,56,964 was held in the capacity of "self". Considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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