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TMI Blog2020 (1) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... committed by them on account of which they filed their applications under Section 264 of the I.T. Act. The aforesaid means that the impugned order is based upon certain circumstances, which can be styled as irrelevant. The petitioners, though had not placed any contemporaneous material before respondent no.1 at the time of hearing of their applications under Section 264 of the I.T. Act, have, in the course of present hearing, placed some material. The effect of such material cannot be decided by this Court and it is only appropriate that the same is decided by the respondent no.1 afresh. The impugned order also does not reflect that the same was based on the alleged failure on the part of the petitioners to make any fair valuation of the Seraulim property at the stage of their alleged conversion into stock in trade. No doubt, all these matters might be relevant for determining whether this is a case where the petitioners had made a genuine error, as contended by them, or whether, this is a case where the petitioners, merely, by way of an afterthought, seek to invoke provisions of Section 264 of the I.T. Act and thereby avoid paying capital gains tax. Interest of justice would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to the Seraulim property were indicated. However, in the balance sheet for the year ending 31.03.2014, an amount of ₹ 4,03,87,633/- was disclosed, which includes the Seraulim property valued at ₹ 50 lakhs. Even this return of income was accepted Section 143(1) of the I.T. Act. 6. It is the case of the petitioners that on 02.04.2014 they converted the Seraulim property which were earlier shown under the head of Investment into stock in trade for purposes of development. This was done by making a book entry in the books of account/ledgers. However, the petitioners, instead of themselves developing the property, vide registered sale deed dated 05.05.2014, sold the Seraulim property, which was already converted as stock in trade for a consideration of ₹ 90 lakhs and necessary entries were made in the books of account. 7. The petitioners, on 07.06.2016 filed their return of income for A.Y. 2015-16. However, it is the case of the petitioners that they erroneously and inadvertently computed the profits from sale of Seraulim property under the head of income from capital gains and arrived at short term capital gain of ₹ 20 lakhs after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and since the impugned order proceeds on the basis of irrelevant observations, the same warrants interference. 11. Ms. Razaq, the learned Standing Counsel for the respondents defends the impugned order on the basis of the reasoning reflected therein. She submits that the issue is not about non-disclosure of the Seraulim property but the issue is whether there is any material at all produced on record by the petitioners to suggest that there was any genuine mistake in filing of returns for A.Y. 2015-16. She submits that there was absolutely no evidence or contemporaneous material produced on record by the petitioners in support of alleged conversion of investment into stock in trade. She submits that there are no entries even in the books of account/ledgers unilaterally maintained by the petitioners to indicate any determination of fair value or any entries to support the conversion. She submits that this is clearly a case of afterthought and the impugned order was quite correctly made. 12. Ms. Razaq pointed out that this is not at all case of failure of natural justice because the petitioners were offered hearing, which offer, the petitioners have av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,03,87,633/- which, included the value of the Seraulim property. However, in the balance sheet for the year ending 31.03.2015, this figure has again come down to ₹ 3,53,87,633/-. It was pointed out that this, at least, prima facie, indicates that the petitioners did convert this capital asset into a stock in trade and this position was reflected not only in the books of account/ledgers but also in the balance sheet. 18. According to us, although, it is true that neither the books of account/ledgers nor the balance sheets were produced by the petitioners along with their applications under Section 264 of the I.T. Act or during the course of personal hearing thereon, the interests of justice would require that the petitioners are given an opportunity to produce this material before respondent no.1. The impugned order, makes reference to certain reasons or circumstances, which, may not be entirely relevant. In any case, the impact of such irrelevant circumstances on the ultimate decision is also not quite clear from perusal of the impugned order. The fact that for A.Y. 2015-16, the respondents themselves treated the Seraulim property as capital asset is really begging ..... X X X X Extracts X X X X X X X X Extracts X X X X
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