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TMI Blog2021 (9) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. was challenged before the ld. CIT(A) and thereafter before the ITAT. The Coordinate Bench of the ITAT after considering the entire facts and circumstances of the case of the assessee had finally decided and concluded that the activities of the assessee is to be taxed under the head capital gains by treating the assets/income as capital asset/income instead of business asset/income and all the expenses borne by the assessee were also construed as part of cost of improvement. Thus the order of the A.O. for the year under consideration treating the asset as capital asset and allowing the claim of exemption U/s 54F of the Act etc. cannot be termed as improper or made without verification or prejudicial to the interest of Revenue. Moreover, after perusal of the record, we found that the A.O. had carried out all the required verifications and had taken the same view as has been taken by the Coordinate bench of the ITAT in assessee s own case[ 2020 (5) TMI 236 - ITAT JODHPUR] . We draw strength from the decision of Union of India Vs Kamalakshmi Finance Corpn. Ltd[ 1991 (9) TMI 72 - SUPREME COURT] wherein it was held that the order passed by the Income Tax Appellate Tribunal are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income overriding the binding Judgement of Hon'ble ITAT in assessee's own case for AY 2015-16 [158/Jodh/2019] in which gain from sale of part of assets under consideration were treated as Capital Gain as against assessment of such gain as Business Income by Ld. AO. Considering specific judgement of ITAT in assessee's own case for same property, direction of Ld. Pr. CIT is contrary to principal of Binding Precedence. Necessary direction to set aside the order of Pr. CIT may kindly be issued. 3. That on the facts and in the circumstances of the case, various direction of Ld. Pr. CIT invoking power u/s 263 resulted in enhancement of Limited Scrutiny scope of proceeding u/s 143(3) which is not permissible under law. Assessment Order framed by assessing officer in Limited Scrutiny scope is neither erroneous nor it is prejudicial to the interests of the revenue so that lead to invocation of power u/s 263 by the Ld. Necessary order may kindly be issued to set aside such autocratic directions being beyond the scope of power assigned to Pr. CIT u/s 263. 4. That on the facts and in the circumstances of the case, Ld. Pr. CIT erred in directing the AO to examine and verify source of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's own case for the A.Y. 2015-16 in ITA No. 157/Jodh/2019 in which gain from sale of part of assets under consideration were treated as capital gain as against the assessment of such gain as business income by the A.O. As per the ld. AR, considering specific judgment of Hon'ble ITAT in assessee's own case for the same property, directions issued by the ld. PCIT is contrary to the principle of binding precedence. The ld. AR also relied upon the written submissions submitted before the ld. PCIT as well as before us which are reproduced below: Submissions before the ld. PCIT: "1. At the very outset, it is pertinent to mention here that case of assessee was selected for limited scrutiny and the issues for examination as identified by CASS are as under:- a. Whether investment and income relating to properties are duly disclosed. b. Whether deduction from capital gains has been claimed correctly. A copy of Notice u/s 143(2) is enclosed herewith and marked as "Annexure- 1". 2. After the issuance of Notice u/s 143(2), detailed questionnaire vide Notices u/s 142(1) and letters was issued with respect to the issues involved as stated herein supra Para 1. A Copy of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lands were big in size and as assessee wants to purchase a new residential property in Bangalore which was costing higher than the land value at Jalore. Thus, in order to fetch higher prices, assessee with his brother plans to sell the land by splitting into smaller plots and by constructing building on few plots. The said purchased lands were shown as capital asset and not as inventory. It is also worthwhile to mention here that mere conversion of land into plots does not itself by virtue to be construed as business asset. For construing this as business asset there are lot other parameters which needs to be considered, which are lacking in the case of assessee. 6. It is worthwhile to mention here that it is well settled legal position that revisionary powers under section 263 cannot override the scope as envisaged under Notice u/s 143(2). In other words when the present case in hand has been selected for "Limited scrutiny" then the revisionary powers so initiated; for the reasons that nature of transaction is business income, is illegal and beyond the scope of revision under section 263 of the Act. The above preposition is held by Hon'ble Tribunal in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny sight of imagination the order passed Ld. \O for the AX 2016-17; treating the assets as capital asset and allowing the claim of exemption u/s 54F/etc. cannot be termed as improper or made without verification or prejudicial to the interest of revenue. Moreover, it is emphatically submitted that Ld. AO has duly made all inquiries and was of same view as of Hon'ble tribunal that such asset is capital asset and thereby allowed the exemption under the head "Capital Gains". 9. It is pertinent to mention here that Hon'ble Rajasthan High court in the case of COMMISSIONER OF INCOME-TAX. VERSUS. TAN CONSTRUCTION CO. (IT Appeal No. 60 of 20121 has held :- "It is clear that the learned CIT had merely on a change of opinion and to substitute his own opinion about the deficiencies in the maintenance of the record by the assessee invoked the revisional jurisdiction and set aside the assessment order. This is not permissible under section 263 of the Act . Once the order of the assessing authority stood merged with higher appellate authority, the parallel authority on the administrative side, namely, CIT, even cannot revise later on the order passed by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Assessing Officer and adopt its one of the other views. Therefore Principal Commissioner of Income Tax could not substitute a lawful view taken by the Assessing Officer." (Emphasis supplied) Considering the facts and circumstances your good self is humbly requested to drop the proceedings for revision so initiated and oblige." Submissions before this Bench: 1. CBDT Circular No 19/2019 dated 14/08/2019 [PB Pg 35-36] laid that no communication shall be issued by any income-tax authority to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. Relevant portion of circular reproduced as under: "2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), has decided that no communication shall be issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Number (DIN) must be allotted to it and same must be duly quoted in the body of order itself. From the bare perusal of order u/s 263 it can be observed that neither a computer generated DIN quoted in the body of order nor it has been stated that Order has been issued manually without a DIN in exceptional situation after obtaining written approval of the Chief Commissioner of Income-Tax. Considering the factual position absence of quotation of Computer Generated DIN in the body of assessment order shall be treated as invalid and shall be deemed to have never been issued, as per binding CBDT Circular. Considering the position, it is requested to declare the assessment order as null and void ab initio. 3. It may pertinent to mention that the circular specify five exceptional circumstances wherein order can be issued manually. But for same there is binding condition that order issued manually only after recording reasons in writing in the tile and with prior written approval of the Chief Commissioner /Director General of income-tax. The communication issued under exceptional circumstances shall state the fact that the communication is issued manually without a DIN and the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohra is also engaged in the activity of sale of land conversion into flats acquisition of land in FRR Apartment Scheme. The activity of purchase land and then convert into flats and sold after construction with other co-owner which shows clearly that you have engaged in the activity of real estate business/ building developer and the income was chargeable to tax under the head of income from business and profession instead under the head income from capital gains. Thus the income was chargeable to tax under the head of income from business and the benefit of cost of indexing, exemption u/s 54, 54F and 54EC amounting was not allowable to you." * Pg 3-10 Para 4 Submission of assessee reproduced Pg 4-5 "5. That it is imperative to bring to your kind consideration that facts of case has been wrongly construed as it can be discern from your show cause notice dated 13.03.2020, wherein it has been stated as under; … … That it can be clearly discern from the above that wrong facts has been construed by your good self as assessee had purchased the lands long back and not engaged into regular purchasing of lands. Secondly, assessee has not constructed any flats/ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently purchased land and sale same after development same as real estate. * Pg 17-18 Para 6-8 Reference made to Explanation 2 to 263(1) * Pg 18-20 Para 9-10 Judicial pronouncements referred - Gee Vee Enterprises 99 ITR 375 (Delhi) - Jagdish Kumar Gulati vs CIT 269 ITR 71 - Duggal & Co 220 ITR 456 (Delhi - K.A. Rama Swami Chettiar vs CIT 220 ITR 657 - Malabar Industrial Co Ltd. 243 ITR 83 (SC) - CIT vs Jawahar Bhattacharjce 342 ITR 74 - CIT vs Amitabh Bachchan Civil Appeal 5009 of 2016 - Rameshwar Prasad Sharma ITA No 449/JP/2019 * Pg 20 Para 11From the above discussion, the order u/s 143(3) dated 13/11/2018 for the AY 2016-17 passed by the Assessing Officer is found to be erroneous in so far as it is prejudicial to the interest of revenue, as I am of the opinion that the assessment order was passed by the Assessing Officer without making proper inquiries and verifications which should have been made. * Pg 20 Para 12… In this regard, I am of the opinion that the order passed is based on incorrect/ mistaken assumption of the facts of the case by way of accepting the statement of the assessee without due verification/ erroneous application of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohra w/o Dinesh Bohra 1.57 15/09/1994 Total Area 5.72 8.2. Property (2.27 Hectare) under the scheme has been purchased by the assessee in the year 1995. The investment so made in property is shown as capital investment in balance sheet. Intention of assessee at the time of purchase can be clearly discern from this, moreover, a general inference can be drawn from this that why assessee purchase land with the motive of business around 20 years back, when the main stream line of family business of assessee is granites manufacturing and trading since 1986. Further in case property purchased with business intention as to why no action for realisation of money invested, not taken for such a long period. 8.3. That from the time of Purchase of land in the year 1995 till the conversion of the land for township, such land has been cultivated by the assessee and agricultural income from the same has been duly shown in the return of income filed by the assessee. 8.4. Three persons whose lands were involved are family member and no outside person is involved. 8.5. Main force behind sale of property is requirement of fund for purchase of house property at Bengaluru. 8.6. No expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction of RCC is incorrect jump to conclusion that AO framed assessment without proper inquiry. This demonstrate that the statutory requirement of hearing opportunity to assessee has been fulfilled for the name sack and in reality, submission made by the assessee not at all considered while invoking power u/s 263 except to reproducing same in the order u/s 263. Merely reproduction of the submission of assessee and recording a finding that submission of the assessee has been considered cannot be treated as compliance of statutory provision of providing hearing opportunity. 16. It may pertinent to mention that neither factual incorrect finding recorded in show cause notice, referred by assessee has been considered nor various binding judicial pronouncements quoted by the assessee has been dealt with by Ld. Pr. CIT while framing order u/s 263. 17. Further to this the judgement of the ITAT in the assessee's own case [PB Pg. 37 - 52] has been denied to follow in an autocratic manner. It may pertinent to mention here that before discussion about the judgement of ITAT in the assessee's own case Ld. AO has been directed to reframe assessment by examination of nature of sale transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee that when the assessee along with other family members who were co-owner of property under consideration decided that it is better to execute such transaction as business transaction they transfer remaining land of project to the company. Therefore transfer of property under consideration by assessee is realization of investment and cannot be held as business transaction. 19. Had the Ld. Pr. CIT consider the correct factual finding in judicious manner, there is no reason to held the assessment order framed by the Ld. AO as erroneous so as to prejudicial to the interest of revenue. It may pertinent to mention though Ld. Pr. CIT repeatedly recorded that necessary inquiry were not carried by the Ld. AO, but in entire order running over 20 pages it has been stated that what further inquiry required from the end of Ld. AO. He sought entire detail about the property under consideration (regarding purchase of property as well as sell of property). After consideration of details required for adjudication of the case under consideration, Ld. AO framed assessment. 20. Intention of assessee at the time of purchase of property and Time period of holding of property not at all conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into complete scrutiny case. As per the procedure laid by CBDT through instruction No 20/2015 dated 29/12/2015 and Instruction No 5/2016 dated 14/07/2016 the scope of enquiry in the cases selected for limited scrutiny should be restricted to the issue for which case has been selected for limited scrutiny. By the order u/s 263 Ld. Pr. CIT enhanced the scope the assessment proceeding from Limited to Complete. This is not permissible as held by ITAT Chandigarh Bench in the case of Taj Paul Bhardwaj vs Pr. CIT [ITA No. 463/CHD/2019] [PB Pg 93-109]. In light of above submission and judgement relied upon direction of Ld. Pr. CIT u/s 263 to the extend it enhance the scope the Limited Assessment proceeding may kindly be struck down. 26. Ld. Pr. CIT while exercising the power u/s 263 issued direction that "The AO is directed to examine and verify the source of investment made by the assessee and his brother Shri Ramesh Raj Bohra in purchase of land". 27. Direction of examination of the source of investment has no relevance with the assessment of income for the AY 2016-17 and therefore issuance of such direction is beyond the scope of power u/s 263. Similarly, there is no authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l asset/income instead of business asset/income and all the expenses borne by the assessee were also construed as part of cost of improvement. The copy of order of the Coordinate Bench of ITAT dated 20/03/2020 in assessee's own for the A.Y. 2015-16 in ITA No. 157/Jodh/2019 have been perused by us which at based on identical facts and moreover the said copy was also placed on record by the assessee before the ld. PCIT with submissions that the order of the ITAT is having jurisdictional binding effect in assessee's case for the A.Y. 2016-17. Even otherwise, nothing has been placed on record by the revenue to demonstrate as to whether the order of the Coordinate Bench of the ITAT dated 20/03/2020 in ITA No. 157/Jodh/2019 has ever been challenged before any competent court of jurisdiction, thus, we can very well presume that the said order passed by the Coordinate Bench has attained finality and is having binding effect in assessee's own case for subsequent year under identical circumstances. Thus, the order of the A.O. for the year under consideration treating the asset as capital asset and allowing the claim of exemption U/s 54F of the Act etc. cannot be termed as improper or made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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