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TMI Blog2018 (10) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... the t ime of hearing, it was submi tted on behalf of the assessee that al l the cases are inter-connected and give rise the simi lar grievance permeating over different assessment years and therefore, it wil l be convenient to hear al l the appeals together. We accordingly have heard all the appeals together and dispose of the same by this common order. 3. We shall first take appeal in IT(SS)A No. 188/Ahd/2016 for adjudicat ion purposes. IT(SS)A No. 188/Ahd/2016 (Shri Dhiren B. Patel) (A.Y. 2009-10) 4. As per the grounds of appeal, the assessee has sought to challenge the action of CIT(A) in confirming the assessment framed under s.153A of the Act whereby the head of income for the purposes of assessment of gain arising on sale of plot of lands has been changed from 'capi tal gains' offered by the assessee to 'business income' assessed by the AO. 5. Apart from the challenge to the act ion of the Revenue Authorities on merits, the assessee has also raised additional grounds of appeal in terms of the Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 which reads as under: "1. Both the lower authorities erred in law and on facts in framing assessment under section 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that the assessee purchased agricultural land and converted the same into nonagricultural land, done plotting and sold the same to various customers. The AO show caused the assessee to treat the aforesaid act ivity to be a 'business activity' spanning over various assessment years in appeal . After considering the detailed reply of the assessee to counter the show cause notice, the AO continued to believe that the activity of the assessee of dividing and sub-dividing the land after conversion into non-agricultural land and sale thereof to various customers is akin to business act ivity. The AO accordingly held that the income arising on sale of plotted land is required to be assessed under the head 'business income' instead of 'capital gains'. In this backdrop, the learned AR submit ted that by virtue of the aforesaid action, the AO has changed the taxable head of income in the course of search assessment. The learned AR, at this juncture, vociferously submit ted that while doing so and while assessing the income already offered under the different head of income, the AO has not made any reference to any incriminating material as evident from the show cause notice as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have careful ly considered rival submissions and perused the material avai lable on record and case law cited. The scope of applicabi l ity of Sect ion 153A concerning search assessment is in question. It is the case on behalf of the assessee that re-alignment of taxabil ity of income offered from one head to another are subject matter of regular assessment and do not resonate wi th the scheme of search assessment under s. 153A of the Act de hors reference to any incriminating material in this regard. Further emphasis is lead on behalf of the assessee that in the absence of any incriminating material , no adjustment of regular income offered in the returned income is permissible under s.153A of the Act . As noted above, i t is pointed out on behalf of the assessee that impugned return for AY 2009-10 of the assessee-Dhiren B. Patel were not pending for assessment at the time of search and consequently, the regular assessment /deemed assessment stand concluded at the t ime of search relating to the assessment year in question and thus survives and did not get abated. It is thus the case on behalf of the assessee that in these facts, it is not permissible for the AO to invoke authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of head of income towards gain on sale of land for the purposes of taxabil i ty requires to be quashed. Thus, we find meri t in the legal ground raised by the assessee. In this view of the mat ter, we do not intend to adjudicate the merits of the adjustments / re-al ignment . 13. In the result, the captioned appeal of the assessee in IT(SS)A No.188/Ahd/2016 [in case of Shri Dhiren Bholidas Patel] for AY 2009-10 is allowed. 14. In IT(SS)A Nos. 191 & 192/Ahd/2016 [in case of Shri Kiritkumar D. Patel] for AYs 2007-08 & 2008-09 also, the respect ive assessees have fi led addit ional ground challenging the jurisdiction of the AO to al ter the head of income in respect of already included in the regular return and in the absent of any reference to any incriminat ing material . We find that the facts and issues involved in these appeals are identical in material respect to appeal in IT(SS)A No.188/Ahd/2016 (supra). Accordingly, in parity, the captioned appeals are also required to be al lowed in favour of the assessee for simi lar reasonings. 15. In the result, IT(SS)A Nos. 191 & 192/Ahd/2016 [in case of Shri Kiri tkumar D. Patel] for AYs 2007-08 & 2008-09 are al lowed. 16. We shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept paying required charges to the Government Agencies for approval. The sel l ing of land by sub-dividing in plots does not consti tute business act ivity. The learned AR further submi tted that gain on sale of such plots has been offered as short term capital gains in the income tax return fi led where the tax rate is no different. Thus, there is advantage to assessee per se. The learned AR accordingly submit ted that income offered under the head 'capital gains' has a rational basis and the act ion of AO is devoid of any satisfact ion to assess i t under head 'business income'. 16.6 The learned AR thereafter relied upon the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Premji Gopalbhai 113 ITR 785 (Guj) and of the co-ordinate bench in Hiteshkumar Ashokkumar Vaswani vs. Jt.CIT (2017) 165 ITD 505 (Ahmedabad) to support it's the claim of taxabi li ty of gains under the head 'capital gains'. 16.7 The learned DR, on the other hand, relied upon the order of the AO and CIT(A). 17. We have careful ly considered rival submissions and perused the case law ci ted. The substantive issue in the present appeal is whether gains arising on sale of plots by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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