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2022 (5) TMI 43 - AT - Income TaxSale of agricultural land to be income which arose from An Adventure In The Nature of Trade - HELD THAT - We find that the assessee herein was a co owner of an agricultural land situated at approx. eight kilometers on Wardha Road, Nagpur and as per the revenue records the said land is still agricultural land. The said land was sold by the assessee - The return of income was filed by the assessee, however, no enquiry was made by the authorities below. The other co owner was assessee s father Shri Ratanshi Malji Patel who was residing at Ghatkopar, Mumbai. We observe that if the Revenue have doubt over the sale of the said piece of land by the assessee, the Assessing Officer was at Nagpur and the property of the assessee was situated at Nagpur and the Assessing Officer ought to have visited the site and found the fact. In this regard, both the authorities below have failed to make any enquiry on the sale of land. Since the said plot is still vacant, it is obvious that the assessee had not derived any benefit out of the said plot. We have no other choice except to follow the aforesaid decision of the Tribunal rendered in assessee s Father s case 2012 (10) TMI 710 - ITAT MUMBAI wherein the Tribunal has set aside set aside the order passed by the learned CIT(A) and restored the order of the Assessing Officer. Consequently, in view of the decision of the Tribunal rendered in assessee s Father s case, we uphold the impugned order passed by the learned CIT(A) by dismissing the grounds raised by the assessee.
Issues Involved:
1. Whether the sale of agricultural land at ?57,88,240 constituted income arising from "An Adventure In The Nature of Trade". 2. Whether the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] erred in their assessment by not considering the factual circumstances and principles of natural justice. 3. Whether the CIT(A) erred in confirming the AO's order without independent analysis and by copying the order from a related case. 4. Whether the CIT(A) failed to distinguish the appellate order passed by ITAT Mumbai due to misrepresentation by the department regarding the actual condition of MIHAN. Issue-Wise Detailed Analysis: 1. Nature of Income from Sale of Agricultural Land: The primary issue was whether the sale of agricultural land by the assessee was to be considered as income from "An Adventure In The Nature of Trade." The Assessing Officer (AO) observed that the assessee sold the land within eleven months of purchase and received around 40% of the sale consideration within this period. Additionally, the AO noted the absence of any agricultural operations on the land, which was situated in a commercially developing area. Based on these observations, the AO concluded that the land was not agricultural but a commercial asset, and thus, the income from its sale was treated as business income. The CIT(A) upheld this view, referencing a similar case involving the assessee's father, where the ITAT Mumbai had sustained the addition made by the AO. 2. Consideration of Facts and Principles of Natural Justice: The assessee argued that the CIT(A) confirmed the AO's order without considering the facts properly and in derogation of the Principles of Natural Justice. The assessee contended that the land was still recorded as agricultural in revenue records and that no enquiry was made by the authorities to verify the actual condition and use of the land. The Tribunal noted that the AO and CIT(A) failed to conduct any site visit or detailed enquiry, which could have clarified the nature of the land and its use. 3. Independent Analysis by CIT(A): The assessee claimed that the CIT(A) did not apply independent judgment and merely copied the order from a related case involving the assessee's co-owner. The Tribunal observed that the CIT(A) relied heavily on the decision of the ITAT Mumbai in the case of the assessee's father, where similar facts were considered. The Tribunal found that the CIT(A) did not conduct an independent analysis of the specific circumstances of the assessee's case. 4. Misrepresentation of Facts Regarding MIHAN: The assessee argued that the CIT(A) failed to distinguish the appellate order passed by ITAT Mumbai due to misrepresentation by the department regarding the condition of MIHAN, a developing area. The Tribunal noted that the assessee's father had challenged the ITAT Mumbai's decision before the Hon'ble Jurisdictional High Court, and the matter was pending. The Tribunal decided to follow the ITAT Mumbai's decision in the father's case, given the similarity in facts and pending final disposal by the High Court. Conclusion: The Tribunal upheld the CIT(A)'s order, dismissing the grounds raised by the assessee. It concluded that the nature of the transaction was rightly held by the AO as trading income, based on the observations and facts presented. The Tribunal emphasized the importance of considering the totality of circumstances, including the intention at the time of purchase, the use of the land, and the surrounding developments, which indicated a commercial intent rather than agricultural use. Final Order: The assessee's appeal was dismissed, and the order was pronounced in the open court on 28.04.2022.
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