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TMI Blog2023 (6) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the AO was erroneous inasmuch as being prejudicial to the interest of the Revenue. We are unable to concur with the view taken by the ld. PCIT and we quash the impugned order which has been passed u/s. 263 - Decided in favour of assessee. - ITA No. 420/CHD/2022 - - - Dated:- 6-6-2023 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER And SHRI VIK RAM SINGH YADAV, ACCOUNTANT MEMBER For the Assessee : Sh. Tej Mohan Singh, Advocate For the Revenue : Sh. Vivek Nangia, CIT DR ORDER Per Sudhanshu Srivastava , Judicial Member This appeal is preferred by the assessee against order dated 29.03.2022 passed by the Pr. Commissioner of Income Tax, (PCIT), Patiala, for A.Y. 2017-18. 2. In the present appeal, the assessee has challenged the impugned order passed u/s. 263 of the Income Tax Act, 1961 (hereinafter called 'the Act'). 3. The brief facts of the case are that the return of income for the captioned year had been filed declaring taxable income at Rs. 23,49,550/-. The return was initially processed u/s.143(1) of the Act and subsequently, the case was selected for scrutiny through CASS. The assessment was completed after accepting the returned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrarily hold that the assessment order dt. 11.10.2019 passed by the Income Tax Officer, Sirhind is erroneous and prejudicial to the interest of the revenue. 2. That on the facts circumstances of the case, the Ld. P.C.l.T. has erred, in holding that the appellant is engaged in the business of real-estate and has further erred in treating the long term capital gain on sale of land as business income of the appellant. 3. That the appellant craves leave to add, amend or delete any of the grounds of appeal before the same is finally heard disposed off. 5. The ld. Authorized Representative submitted that the Assessing Officer had completed the assessment proceedings after due and proper verification of the documents. He drew our attention to the paper book filed by the assessee and specifically pointed out to the copy of notice dated 09.01.2019 issued u/s. 142(1) of the Act by the Assessing Officer along with the questionnaire and the replies of the assessee dated 04.03.2019 and 26.07.2019 filed by the assessee before the Assessing Officer in response to the queries raised by the Assessing Officer. It was submitted that the allegation of the ld. PCIT that the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer had made no enquiry into the nature of transactions being entered into by the assessee and that he had simply accepted the version of the assessee and completed the assessment at the returned income without actually enquiring into the nature of transactions and/or the head of income under which the transactions should have been taxed. 7. We have heard the rival submissions and have also perused the material placed on record. We have also gone through the questionnaire issued by the Assessing Officer and the replies filed by the assessee in response to the various queries raised by the Assessing Officer. We have also gone through the copies of the sale deeds through which the assessee had sold the land in numerous transactions and we note that in all the sale deed the impugned land has shown as agricultural land. We note that the impugned piece of land was purchased in 2010 (which even the ld. PCIT has noted in the impugned order) and it was only during Assessment Year 2017-18, that the assessee had sold some portion of the land in 14 transactions of small holdings. Thus, admittedly, and undisputedly, the assessee had been holding this piece of land for over six years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pointedly drawn by the Ld. counsel for the Revenue to a Division Bench judgment of this Court in Harbans Singh vs. CIT (1981)23 CTR (P H) 335 (1981)132 ITR 77 (P H). But the decision is of no assistance to the Revenue as the facts of that case are entirely different and on the facts found in that case, the view was rightly taken that it was an adventure in the nature of trade. There can be no gainsaying that even a single venture may be regarded as a trade or business, but there have to be circumstances which may give rise to such a conclusion. As earlier observed, in this case the Tribunal has fallen in error in holding the venture as a trade or business merely on the ground that 42 plots were carved out, of which 7 were disposed of in the year in question. In this view of the matter, in the circumstances of the case and on the facts found. the Tribunal was not right in law in holding that the income derived by the assessee from the sale of plots were from an adventure in the nature of trade. Consequently, the answer to this question is returned in favour of the assessee and against the Revenue. 7.2. It is also worthwhile to refer to another judgment of the Hon'ble ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra). The relevant extract of the said judgment is as under:- '........the land may lie near an urban area and the land may have fetched a good price, may hold good in cases of agricultural land also. Since the land has been recorded in the official records as agricultural land, if the department wanted to show that the entry was wrong. it should have given concrete facts in that direction. For example, it could have shown that the land lay within the municipal limits of the town of Ranchi or that the assessee had made his entire plot of land into parcels and was selling each one of them for the purpose of constructing a house thereof. The fact that the purchaser has purchased it for the purpose of constructing his house has no relevance because to far at the seller is concerned, he will be deemed to have parted with the agricultural land in the form of agricultural land, unless it is prayed otherwise. The department has not brought up any such material on the record by which it could be said that the criteria adopted by the Tribunal for determining the character of the agricultural land was wrong. [Emphasis supplied) 23. In view thereof we hold that the gain ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It is the claim of the assessee that the gain has arisen to the assessee due to efflux of time without any specific efforts and because of meteoric rise in value of land parcels arising to every land owners on account of unprecedented development of Raipur City. 8.1 When, we see the facts in its natural perspective, the characterisation of the income as 'capital gain' in the given facts, looks quite plausible. It cannot certainly be branded as an issue free of any debate. The law is well settled that where the A.O has taken a view which is plausible in law, cannot be displaced and substituted by the subjective view of a superior authority. In the instant case, the PCIT has not shown as to how the A.O. has gone wrong while admitting the nature of income declared by the assessee. There is nothing on record to show that the AO. acted arbitrarily in exercise of quasi judicial powers. The AO had merely adopted one of the courses permissible in law and backed by a long line of judicial precedents holding such income to be capital gains. In contrast, the PCIT has adopted erroneous measurement of land giving the impression of large parcel of land which is not true. The basi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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