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TMI Blog2023 (10) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is an individual deriving income from other sources and agricultural income filed his return of income for the AY 2016-17 on 27/03/2017 declaring a total income of Rs. 75,14,450/- including the agricultural income of Rs. 6,00,000/-. Subsequently, the case was selected for limited scrutiny under CASS for the reason 'whether capital gains / loss on sale of property has been correctly shown in the return of income'. Accordingly, notices U/s. 143(2) and 142(1) of the Act were issued through ITBA. In response to the notices, the assessee submitted information electronically as called for by the Ld. AO. On verification of the assessee's ITR for the AY 2016-17 it was observed by the Ld. AO that the assessee had not shown any income und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. AO, the Ld. AO came to a conclusion that the assessee had violated the provisions of section 269SS of the Act and therefore the assessee is liable for penalty U/s. 271D of the Act. Accordingly, the Ld. AO completed the assessment U/s. 143(3) of the Act vide order dated 23/12/2018. 3. Thereafter, on examination of the assessment record, the Ld. Pr. CIT, Vijayawada observed that the assessment order was passed without making enquiries or verification which should have been made by the Ld. AO and thereby considered the assessment order in so far it is prejudicial to the interest of the revenue within the meaning and scope of section 263 of the Act. Accordingly, the Ld. Pr. CIT issued a show cause notice U/s. 263 of the Act dated 24/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case was selected for scrutiny and therefore the Ld. Pr. CIT came to the conclusion that the assessment order passed U/s. 143(3) by the Ld. AO is erroneous in so far it is prejudicial to the interest of the revenue. Accordingly, the Ld. Pr. CIT set-aside the assessment order passed on 23/12/2018 and directed the Ld. AO to re-do the assessment in accordance with law after making all necessary enquiries and verification in respect of the issues mentioned in the order passed U/s. 263 of the Act. Aggrieved by the order of the Ld. Pr. CIT, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: "1. The order of the Ld. Pr. CIT is contrary to the facts and also the law applicable to the facts of the case. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and assessed the capital gains. The Ld. AR therefore submitted that the Ld. AO has passed the assessment order in accordance with law and also complied with the CBDT Instruction No.20/2015, dated 29/12/2015. The Ld. AR further submitted that under these circumstances, the Ld. Pr. CIT has wrongly invoked the provisions of U/s. 263 of the Act. The Ld. AR also relied on the judgment of the Hon'ble Madras High Court in the case of CIT vs. Kasturi Estates (P) Ltd reported in [1966] 62 ITR 0578 to state that the assessee's sale and purchase transactions cannot be treated as 'adventure in the nature of trade' but merely realization of capital investment. The Ld. AR also relied on the decision of this Bench in the case of Sri Venu Gopala Primary Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee has not converted the land into stock-in-trade, but has only sub-divided the land into parts to fetch a higher market price on the sale of the same. Therefore, it can be safely concluded that the assessee has not converted the land into stock-in-trade as the assessee has resorted to sell it to difference buyers by sub-dividing it into various parts to fetch higher price. Merely by selling the entire land after dividing it into various parts, without altering the character of land, cannot be considered as an adventure in the nature of trade as contemplated by the Ld. Pr. CIT. On the identical issue the Hon'ble High Court of Madras in the case of CIT vs. Kasturi Estates (P) Ltd (supra) held that: "Where one concerned with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto parts to fetch a higher market price on the sale of the same and at the same time the Revenue also could not bring on record any evidence to prove that the assessee held the capital asset as stock in trade and the purchase and sale of property was with a view to earn profits through trading transactions. Further, the Ld. AO after making necessary enquiries and thorough examination / verification of the documents and the computation statement submitted by the assessee accepted the net long term capital gains offered by the assessee in his revised return of income. Further, it is noted that the Ld. Pr. CIT ought to change the character of the income ie., from capital gains to business income. However, the Hon'ble Madras High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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