2018 (3) TMI 1823 - AT - Income Tax

Short term capital gains - Transaction belong to the appellant individually OR transactions were required to be considered in the hands of AOP in which the appellant was a member with 1/7thshare - HELD THAT - As seen that in para 6.1 of the assessment order for Assessment Year 2010-11 as per the ANNEXURE-1, it is noted by the AO that enquiries were conducted at the office of the sub-registrar, Kengeri and also at Banashankari to find out about the activities of the assessee in connection with investments made in immovable properties along with six others and the details of those properties are also mentioned in the same Para in which assessee s share is worked out at 1/7th of the total value of such land. Hence this is apparent that the assessee is co-owner of these lands. As in the case of Smt. M. Lakshmi Vs. ITO 2017 (5) TMI 1706 - ITAT BANGALORE held by the Tribunal in these two cases that the AO has not taken into account the expenditure incurred in respect of carving out 90 plots out of the total land purchased. It is also held by the Tribunal that some expenditure is bound to be incurred for this purpose. But the AO has not taken into consideration those expenses. Therefore, the matter is restored back to the file of AO for fresh decision with the direction that the claim of the expenditure incurred in levelling of the plot or otherwise relevant should be re-examined and the matter may be decided afresh. In the present case which is of a co-owner, respectfully follow this Tribunal order in the case of co-owners and set aside the order of CIT(A) in the present case also in all the three years and restore the matter back to the file of AO for fresh decision with the same directions as were given by the Tribunal in para 7 of the Tribunal order which is reproduced above.The AO should pass necessary order as per law as per above discussion after providing adequate opportunity of being heard to the assessee.

Summary

Issues:
Reopening of assessment under section 147 of the Income Tax Act, validity of additions made, consideration of expenditure incurred, and confirmation of interest under sections 234A, 234B, and 234C.

Assessment Year 2007-08:
The assessee challenged the reopening of assessment under section 147, arguing it was opposed to law due to absence of conditions precedent. Additionally, the appellant contested the addition made under short term capital gains and asserted that the transaction should be considered in the hands of an Association of Persons (AOP) rather than individually. The CIT(A) was criticized for not considering the appellant's share in the AOP's income correctly. The Tribunal found in favor of the assessee, emphasizing the need for a fresh decision by the Assessing Officer (AO) considering the expenditure incurred for land development.

Assessment Year 2008-09:
Similar to the previous year, the appellant disputed the reopening of assessment under section 147 and the subsequent addition under short term capital gains. The argument was made for considering the transaction in the hands of the AOP. The Tribunal, following a similar precedent, directed a reexamination by the AO to evaluate the expenditure incurred for land development.

Assessment Year 2010-11:
Once again, the assessee contested the reopening of assessment under section 147 and the addition under short term capital gains. The claim was made for considering the transaction in the AOP's hands. Citing a previous Tribunal order, the Tribunal set aside the CIT(A)'s decision and directed the AO to reexamine the expenditure incurred for land development, emphasizing the need for a fresh decision.

In all three assessment years, the Tribunal ruled in favor of the assessee, highlighting the necessity for the AO to reconsider the expenditure incurred for land development and make a fresh decision after providing adequate opportunity for the assessee to be heard. The appeals were allowed for statistical purposes, and the orders were pronounced in open court.