B.K. RAGHAVENDRA,BENGALURU vs. THE ACIT, CENTRAL CIRCLE - 1(2), BENGALURU

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

2. Statement of facts of each appeal are as follows: for AY 2010-11 – Statement of facts in the case of B.K. Dhananjaya, Bangalore:

The appellant is an individual engaged in the business of execution of 1.1. small civil contracts. The Hindu Undivided Family (HUF), in which the assessee was a Co-parcener before its Partition, owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into NA land, developed into plots and sold during the period from FY 2011-12 to FY 2014-15.

1.2. Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation issued in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 143(3) dated, 29-02-2016, came to be passed by determining the total income assessed at Rs.27,71,760/-, as against the returned income of Rs.5,85,460/-. declared in the return filed on 27-01-2016 in response to the Notice u/s 153A of the Act. The return of income for the subject assessment year u/s 139(4) of the Act declaring total income of Rs.1,72,296/- on 24-02-2011.

1.3. The assessee also declared Short-Term Capital Gain (STCG) of Rs.5,13,167/- and the learned AO recomputed the same in the impugned assessment order by disallowing the cost of improvement of Rs.21,86,300/- and consequently enhancing the total income to Rs.27,71,760/-. The only issue

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore disputed in this appeal is the said disallowance of cost of improvement of Rs.21,86,300/-.

Findings of the CIT(A). 1.4.On appeal, the learned CIT(A) has sustained the disallowance referring to the decision of the Hon'ble Jurisdictional High Court in the case of M/s. Canara Housing Development Company [2014] 49 taxmann.com 98 (Karnataka), which has held that initiation of proceedings u/s 153A is not dependent on any undisclosed income being unearthed during the search. It is submitted that the ratio of this decision is completely misread by the learned CIT(A). It is undisputed that all the six assessment years mentioned in clause (a) of section 153A(1) would automatically reopened once search is initiated u/s 132/132A.

1.5.But the scope of addition in respect of the said six assessment years, once reopened as a consequence of the search initiated u/s 132 or 132A comprising of pending assessment abating as on the date of search as well as the completed/unabated assessment, is different and the Hon'ble Jurisdictional High Court in M/s. Canara Housing Development Company (Supra) had no occasion to consider the same.

1.6.Aggrieved by the same, the assessee is in appeal before the Hon'ble Tribunal.

Case in brief before the Hon'ble Tribunal. 2.1.It is submitted that all the six assessment years mentioned in clause (a) of sub- section (1) of section 153A would automatically be reopened for scrutiny as soon as search u/s 132 is initiated or requisition u/s 132A is made in a case. But on the date of search, there are 2 category of assessments - (i) assessments within the period of 6 assessment years pending and abating as on the date of search, and; (ii) the assessments that do not abate i.e., the completed assessments. It is judicially settled that the scope of addition in respect of completed assessments is limited to undisclosed income unearthed during the search on the basis of the seized material. But in respect of the pending assessments abating on the date of search, the jurisdiction of the assessing officer is two-fold - he retains his original jurisdiction to make additions/disallowances on the basis of the accounts and also the jurisdiction conferred on him by the search.

2.2. Kind reference is invited to the decision of the Hon'ble Special

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore Bench of the Mumbai Tribunal in the case of All Cargo Global Logistics Ltd. (2012) 18 ITR(T) 106 (Mumbai) (SB) / (2012) 23 taxmann.com 103 (Mum.) (SB). It is submitted that the Hon'ble Tribunal has also laid down the guidelines as to how to ascertain the assessments that are pending on the date of search and consequently abating under the said Second Proviso to section 153A(1), vis-à-vis the completed assessment/ unabated assessments for the purpose of making additions.

2.3.It is submitted that the said decision of the Hon'ble Tribunal came to be affirmed by the Hon'ble High Court of Bombay in (2015) 374 ITR 645 (Bombay).

2.4.Recently in the case of Caprihans India Ltd. (2020) 114 taxmann.com 103 (Bombay), the Hon'ble High Court referred to its own earlier decision in All Cargo Global Logistics Ltd. (Supra; and reiterated that the settled law that addition could not be made unless some incriminating material or evidence was found during the search if the assessment had not abated as on the date of search. On appeal by the Department, the Hon'ble Supreme Court dismissed the appeal vide its order reported in (2020) 114 taxmann.com 104 (SC). 2.5. Reference may also be made to the decision of the Hon'ble Supreme Court in the case of Meeta Gutgutia [2018] 96 taxmann.com 468 (SC), which has dismissed the Department's appeal confirming the order of the Hon'ble High Court holding that the addition in respect of a completed assessment year could not be made unless there was incriminating material found during the search indicating undisclosed income.

2.6. The Hon'ble Jurisdictional Tribunal in the case of Sree Lakshmi Venkateshwara Minerals (2021) 123 taxmann.com 255 (Bangalore-Trib.) vide para 23 of its order, has applied the settled principles/guidelines in order to know whether an assessment was pending or not. 2.7. Hence it is submitted that applying the aforesaid principles/guidelines, the assessment in the case of the appellant for the subject assessment year, 2010-11, was not pending & not abated —considering the fact that the return of income for the subject assessment year was filed u/s 139(4) on 24/02/2011 declaring a total income of Rs.1,72,296/-.

2.8. In the light of the above, it is submitted that the disallowance of cost of improvement could not have been made as there was no material found or seized during the search indicating any undisclosed STCG.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

3. In view of the above and the Grounds of appeal taken, it is respectfully prayed that the Hon'ble Tribunal may be pleased to allow the appeal of the assessee in the interest of equity & justice.” for AY 2011-12 – Statement of facts in the case of B.K. Dhananjaya, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The Hindu Undivided Family (HUF) family, in which the assessee was a Co-parcener before its Partition, owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into Non-Agricultural (NA) land, developed into plots and sold during the period from FY 2011-12 to FY 2014-15. The return of income for the subject assessment year, 2011-12, was filed u/s 139 of the Act on 09-09-2011 declaring total income of Rs.7,24,680/-.

1.2.Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation issued in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 144 dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.2,59,59,198/-, as againIt the returned income of Rs.12,09,290/- declared in the return filed on 27-01-2016 in response to the Notice u/s 153A of the Act.

1.3.Since the return of income u/s 139 was filed on 09-09-2011, the time to issue the Notice u/s 143(2) had expired on 30-09-2012 and therefore, the assessment for the subject assessment year had not abated as per the Second Proviso to section 153A(1) of the Act.

1.4.The details of the incomes disclosed in the said return u/s 153A and the additions made in the impugned assessment order are tabulated below for the sake of reference:

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Order u/s 153A - additions made. Head of Income Additions Remarks Sl. Income No. I made in the declared order u/s in the 153A r.w.s Return 144 (In Rs.) (In Rs.) (i). Presumptive 2,76,900 NIL -- income from business Business Income 6,985 1,58,16,242 Please see (ii). Note. - on sale of lands 9,51,577 27,98,577 (iii). Please see LTCG - share in the Note. land in Survey No.110, Bileshivale village. (50.89% share) (iv) Income from NIL 61,35,085 Rs.53,25,085/ - and . other sources Rs.8,10,000/- as unexplained credits u/s 68.

Note: The LTCG arose by virtue of sale of plots in the said land of 8 acres & (i). 11 guntas in Survey No.110, which was ancestral land and 11 family members inherited their respective shares.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(ii). FMV as on 01-04-1981 The assessee has adopted the cost of land being FMV of the entire land of 8.11 acres as on 01-04-1981 at Rs.1,17,692/-. As against this, the learned AO has adopted the FMV of the said land at Rs.10,810/- per acre stated to be on the basis of sale instance of adjoining land in October, 1986 received from the Sub-Registrar of Bommanahalli and Hosakote. For this sale value, the learned AO has applied reverse indexation and arrived at FMV of Rs.63,891/- for the entire land of 8.11 acres as on 01-04-1981, which is disputed in this appeal.

The learned AO has not allowed the cost of improvement of (iii). Rs.1,47,582/- in FY 1986-87 (incorrectly mentioned as Rs.47,862/- in para 4.6 of page 6 of the assessment order) on stating that there was no proof for the same, which is also disputed in this appeal.

Brief history of inheritance. 2.1.Shri. B.C. Kempaiah died intestate leaving behind his estate including the agricultural land of 8.11 acres, which came to devolve among the legal heirs. Subsequent to the demise of tle said Shri. B.C. Kempaiah, the HUF consisted of 11 family members comprising of mother and her 5 daughters and 5 sons, and all the 11 persons inherited the agricultural land measuring 8 acres & 11 guntas at Survey No.110, Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru. The 5 male members of the family are - (i) BK

Raghavendra, (ii) BK Dhananjaya, (iii) BK Shivappa, (iv) BK Kanakaraju and (v) BK Manjunath. The LTCG accruing to the late B.K. Manjunath is assessed in the hands of his 'wife & legal heir, BK Shashikala.

2.2. The learned AO has apportioned the LTCG arising out of the transfer of the said land of 8.11 acres based on the respective shares as per the family arrangement/MOU dated, 08-03-2016 in the hands of the legal heirs.

2.3. Based on the aforesaid MOU, the Learned AO has reworked the respective shares of the Co-parceners in the said land of 8.11 acres (3,60,459 S.ft.,) in SI. No. (iii) of para 4.5 of pages 5 & 6 of the impugned assessment order.

Income on sale of Plots. 3.1. The subject land was converted into SIT in the FY 2010-11 and therefore income arising on its conversion and sale is to be taxed separately as -

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore (i). LTCG on conversion of the subject land into SIT as per section 45(2), and; . (ii). Business income on sale of plots comprised in SIT. LTCG on conversion of Land u/s 45(2).

3.2. As per section 45(2) of the Act, the LTCG arising on conversion of land into SIT is chargeable to tax as income of the previous year in which such SIT is sold otherwise transferred. The computation of LTCG has two steps –

The determination of cost as on 01-04-1981/or FMV where cost is not available. Such cost/FMV is further increased, to arrive at the indexed cost/FMV, and; (ii).The determination of FMV as on the date of conversion as on 01-04-2010.

Cost/FMV as on 01-04-1981. 3.3. The assessee has taken the cost as on 01-04-1981 at Rs.1,17,692/- as the cost of acquisition in FY 1981-82 and also taken cost of improvement at Rs.1,47,862/- in FY 1986-87. The indexed cost of acquisition was accordingly computed by applying the notified inflation index to the aforesaid cost of acquisition in FY 1981-82 and cost of improvement in 1986-87.

3.4. The Learned AO has disagreed with the said computation and re-computed the FMV as on 01-04-1981 on the basis of the purported sale instances in FY 1986-87 received from the Sub Registrar Offices of Bommanahalli and Hosakote. As per the said information from the Sub Registrar, the adjoining land of 18 1/2 guntas was sold for Rs.5000/-. On this basis, the sale value of 1 acre worked out to Rs.10,810/- per acre in FY 1986-87. As per serial No.(ii) of para 4.6 of pages 6 & 7 of the impugned assessment order, the cost as on 0104-1981 of the entire land of 8 acres and 11 guntas and the indexed value in the year of conversion in FY 2010- 11 is worked out as per the following: SI. Particulars Amount No. (in Rs.) 5000/- 1 The purported sale value of adjoining land of 18 1/2 Guntas in FY 1986-87.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

2 The sale value of 1 acre(5000x40/18.5) as in FY 1986- 10810/- 87; worked out on the basis of the above value in SI. No.1

3 Cost of 1 acre of land on the basis of the 7721/-per acre above said values applying the reverse indexation (10810x100/140)

4 Cost of land of 8.11 acres @ Rs.7721/- per acre 63891/-

5 Indexed cost of the land in FY 2010-11 being the 4,54,265/- year of conversion of the land into SIT u/s 45(2)

Note: The purported information/sale instances received from the Sub- Registrar of Bommanahalli & Hoskote was not made available during the assessment proceedings and also during the appellate proceedings before the Learned CIT(A), as more clearly submitted under the appropriate context hereinunder.

FMV as on 01-04-2010. 3.5. As submitted earlier, the second step in computation of LTCG u/s 45(2) is to determine the FMV of the land as on the relevant date i.e., 01-04-2010, being the date on which the land was converted into the SIT. For the purpose of working of the FMV of the entire land as on 01-04-2010, the assessee has relied on the Notification No.CVC-24/2013-14 dated, 07-08-2013, issued by the Government of Karnataka. In the said Notification, the land is listed jn SI. No.151 & 152 and the guidance value is notified at Rs.1,20,00,000/- in the FY 2013-14. The guidance value as per the said Notification is taken and the same is reduced by applying the reverse cost inflation index (CII) notified for the respective financial years. The computation of the FMV as on 01-04-2010 by the assessee is referred to in SI. No.(iii) of para 4.6 of page 7 of the impugned assessment order.

3.6. As per the learned AO, the assessee has shown higher LTCG taxable at 20% to correspondingly reduce the business income which is taxable at a higher rate at 30% (serial No.(iii) of para 4.7 of pages 9 & 10 of the impugned

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore assessment order). On this assumption, the Learned AO has recomputed the FMV as on 01-042010 by taking Rs.30,00,000/- per acre purportedly on the basis of the Notification dated 17-04-2007 issued by the Government of Karnataka (Serial No.(iii) of para 4.6 of page 8 of the impugned assessment order). This information regarding the Notification dated 17-04-2007 is allegedly received from the Sub-Registrar in respect of the land at Bileshivale village. This purported information was not made available either during the assessment proceedings or during the appellate proceedings before the Learned CIT(A), even though, a specific ground for supply of the information was taken during the appellate proceedings.

3.7. The dispute in this appeal mainly is relates to: the working of the Cost of acquisition as on 01-041981, and; (i). the FMV on the date of conversion of land into SIT in FY 2010- (ii). 11. The Learned AO has determined the FMV as on 01-04-2010 at Rs.2,48,25,000/-, as against Rs.8,43,47,406/- determined by the assessee.

Business Income. 4.1. The learned AO has worked out the business income by taking the cost of land as per the reworked FMV as on the date of conversion in FY 2010-11. Since the said recomputed FMV is adopted as cost in computing the business income, the business income is proportionately increased. The learned AO has further added Rs.32,49,600/- stating it to be the difference in sale consideration received as per the seized document from one Mr. S. Anil Reddy and this addition is not disputed in this appeal. 4.2. The learned AO has also reworked the share of the assessee on the basis of the said MOU dated, 08-03-2016 at 50.89%, whereas the assessee had taken the share at 20% in the return of income. The share of 20% in the return of income was taken since the land was inherited by 5 brothers, sons of Late Shri. B.C. Kempaiah. Proceedings before the CIT(A). 5.1. On appeal by the assessee, the learned CIT(A) has dismissed the appeal vide order in dated, 27-01- 2021. The learned CIT(A) has reproduced the Grounds of the assessee, the statement of facts, additional Grounds of appeal taken and the counter submissions made by the learned AO in the remand report. The ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore findings of the learned CIT(A) are recorded in THREE sentences in para 17 of page 15 of the appellate order, which is as under:

"The appellant has not brought anything on record to find fault with the findings of the AO as well as the method adopted by him to determine the business income for each of the assessment years. The addition made on this count for the impugned assessment years stands confirmed. The grounds fail."

5.2. The written-submissions vide paper-book dated, 14-03-2019, filed during the hearing and the counter comments dated, 27-11-2019 on the remand report of the AO, have not been considered at all, because if they were to be considered, there was no option for the learned CIT(A), but to allow the appeals as there was no material to controvert the grounds taken. The submissions made in para 1.1 to 3 of the said counter comments of the assessee dated, 27-11-2019 briefly capture the issues in a nutshell and the same are reproduced below:

"1.1.The dispute is regarding the cost of acquisition of the land measuring 8 acres 11 guntas situated at Survey No. 110, Bilishivale Village, Bidarahalli Hobli, Bangalore East Taluk, in computing the LTCG. The Learned AO adopted the FMV as on 01-04-1981 before indexation on the basis of the purported instance of sale obtained from the Sub-Registrar Offices of Bommanahalli and Hoskote, as per the discussion in SI. No. (ii) of para 4.6 of page 7 of the order. On the basis of this purported information, the learned AO adopted total value of the land of 8 acres 11 guntas at Rs.63,891/-. As submitted earlier, the purported information cannot be used against the assessee for the reason that:

(a). Bommanahalli and Hoskote are situated far away from the land of the assessee, as submitted earlier - kindly refer the google maps enclosed as annexures A & B at pages 13 and 14 of the paper-book (PB).

The purported information was not supplied to the assessee (b). during the assessment proceedings and the learned AO has not supplied a copy even during the remand proceedings. The remand report is conspicuously silent as to whether the said information/document is available on record and why it is not supplied to the assessee or why a certified copy is not made available with the remand report. The said

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore remand report vide SI.No. 1(b) of page 3 merely refers to the para of the said Show-cause Notice dated, 08-03-2016 and does not dispute the fact that the property of the assessee at Bileshivale village is far away from Bommanahalli or Hoskote. Apart from the above, the remand report does not even refer to the letter of enquiry issued by the AO or the letter of the Sub-Registrar received in response.

(c) No doubt, the learned AO had referred to the purported information from the Sub-Registrar Office in para 15.1 of the show-cause Notice dated, 0803-2016. Again the said Notice mentions the same in the last para. Since the information regarding the relied upon instances of sale itself was not made available to the assessee, the assessee could not comment on the same, especially in the absence of precise information as to its location, Survey Nos. etc. 1.2. In view of the above, it is prayed that the working of the AO of the cost of acquisition is unsupportable and therefore, the cost of acquisition as adopted in the return of income may be restored.

FMV as on Date of Conversion i.e., as on 01-04-2010.

2. As submitted earlier, the FMV of the property - 8 acres 11 guntas as on 01-04-2010 was taken at Rs.2,48,25,000/- as against FMV of Rs.8,43,47,406/-taken by the assessee. The computation of the FMV by the AO is stated to be based on the information received from the Sub-Registrar - Notification dated, 17-04-2007 of the Government of Karnataka. It is submitted that - (a). The purported Notification was not made available to the assessee and accordingly, the assessee had no occasion to counter the same.

To the best of our knowledge and belief, there is no such (b). Notification referred to and relied by the learned AO available in the website of Government of Karnataka.

The remand report does not dispute the fact that (c). the purported Notification was not made available at the time of assessment proceedings. Further, the purported Notification is not supplied even at this stage and also not commented upon. The observation of the learned AO is available in para (c) of the last page and it is seen that it merely mentions that the Sub-Registrar has given the values of sale instances of adjoining lands. It is not known -

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore i. What is the Survey No. of the adjoining land. What is the nature of the land and extent of ii. land. Who is the owner. iii. iv. What is the date of sale. v. Who is the purchaser. vi. What is the sale consideration

(d). In contrast, the FMV of the land is worked out by the assessee based on the Notification No. CVC-24/2013-14, dated, 07-08-2013 by reverse indexation. In fact, the land of the assessee in Survey No.110 is mentioned in SI.No.152 of the Notification under the Blleshivale village (Refer page 19 of the PB dated, 14-03-2019). The learned AO has also taken FMV of the non-existent Notification stated to be dated, 17-04- 2007 and determined by the FMV by reverse indexation. Hence there is no dispute regarding the method by reverse indexation based on the Guidance Values notified by the Government. Hence the FMV adopted by the assessee on the existing Notification should prevail over the FMV determined by the AO on non-existent Notification. It may be further clarified that the learned AO vide para 4.6. (iv) of page 8 of the assessment order has observed that the Gazette Notification is in respect of Byrathi village, whereas the land in question is in Bileshvale village. It is clear that the learned AO misread the material facts on record as is evident from a mere glance at the SI. Nos. 151 and 152 of the Notification, especially when the survey No. (110) is mentioned.

COST OF IMPROVEMENT.

3. The learned AO has commented that there was no documentary proof regarding the claim that-the assessee was not required to maintain books of account under any law as the only income at the relevant time was from agriculture, that too for the HUF. As there was no liability to income tax at the relevant time and no returns were filed, it is submitted that the burden was on the learned AO to show how the assessee was liable to maintain the books of account under the law. In this view it is submitted that the cost of improvement made to agricultural lands on fencing, sinking of bore wells etc., is an allowable deduction, because there ought to be some expenditure on maintenance of the lands."

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 5.3. As may be seen from the impugned order of the learned CIT(A), the Grounds of appeal and the submissions of the assessee have not been considered and adjudicated in proper & right perspective at all.

Addition u/s 68. 6. The learned AO has added an amount of Rs.8,10,000/- shown as unsecured loan received from Shri. Padmaprasad and other loans amounting to Rs.53,25,085/- as unexplained credits u/s 68 of the Act. The learned CIT(A) has not considered the Grounds of appeal and the explanations of the assessee at all.

7. Aggrieved by the same, the assessee is in appeal before the Hon'ble tribunal.” for AY 2012-13 – Statement of facts in the case of B.K. Dhananjaya, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The Hindu Undivided Family (HUF) family, in which the assessee was a Co-parcener before its Partition, owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into Non-Agricultural (NA) land, developed into plots and sold during the period from FY 2011-12 to FY 2014-15.

1.2.Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation issued in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 144 dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.2,20,24,131/-, as against the returned income of Rs.12,32,820/-declared in the return filed on 05-03-2016 in response to the Notice u/s 153A of the Act.

1.3.The details of the incomes disclosed in the said return u/s 153A and the additions made in the impugned assessment order are tabulated below for the sake of reference: Order u/s 153A — additions made.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Head of Income SI. Income Remarks Additions No. declared made in the in the order u/s Return 153A r.w.s (In Rs.) 144 (In Rs.) Business Income — on 1,23,960 1,84,30,671 Please see (i). Note. sale of lands (ii). LTCG — share in 8,48,563 23,12,637 Please see the land in Survey Note. No.110, ... Bileshivale village. (50.89% share) ( ). Short-term capital gain 2,60,000 48,000 Disallowance of cost of improvement. Note: The LTCG arose by virtue of sale of plots in the said land of 8 acres & 11 (i). guntas in Survey No.110, which was ancestral land and 11 family members inherited their respective shares.

FMV as on 01-04-1981 (ii). The assessee has adopted the cost of land being FMV of the entire land of 8.11 acres as on 01-04-1981 at Rs.1,17,692/-. As against this, the learned AO has adopted the FMV of the said land at Rs.10,810/- per acre stated to be on the basis of sale instance of adjoining land in October, 1986 received from the Sub-Registrar of Bommanahalli and Hosakote. For this sale value, the learned AO has applied reverse indexation and arrived at FMV of Rs.63,891/- for the entire land of 8.11 acres as on 01-04-1981, which is disputed in this appeal. (iii). The learned AO has not allowed the cost of improvement of Rs.1,47,582/- in FY 1986-87 (incorrectly mentioned as Rs.47,862/- in para 4.6 of page 6 of the assessment order) on stating that there was no proof for the same, which is also disputed in this appeal.

Brief history of inheritance.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

2.1. Shri. B.C. Kempaiah died intestate leaving behind his estate including the agricultural land of 8.11 acres, which came- to devolve among the legal heirs. Subsequent to the demise of the said Shri. B.C. Kempaiah, the HUF consisted of 11 family members comprising of mother and her 5 daughters and 5 sons, and all the 11 persons inherited the agricultural land measuring 8 acres & 11 guntas at Survey No.110, Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru. The 5 male members of the family are - (i) BK Raghavendra, (ii) BK Dhananjaya, (iii) BK Shivappa, (iv) BK Kanakaraju and (v) BK Manjunath. The LTCG accruing to the late B.K. Manjunath is assessed in the hands of his wife & legal heir, BK Shashikala.

2.2.The learned AO has apportioned the LTCG arising out of the transfer of the said land of 8.11 acres based on the respective shares as per the family arrangement/MOU dated, 08-03-2016 in the hands of the legal heirs.

2.3.Based on the aforesaid MOU, the Learned AO has reworked the respective shares of the Co-parceners in the said land of 8.11 acres (3,60,459 S.ft.,) in SI. No. (iii) of para 4.5 of pages 5 & 6 of the impugned assessment order.

Income on sale of Plots. 3.1.The subject land was converted into SIT in the FY 2010-11 and therefore income arising on its conversion and sale is to be taxed separately as -

LTCG on conversion of the subject land into SIT (i). as per section 45(2), and;

(ii). Business income on sale of plots comprised in SIT.

LTCG on conversion of Land u/s 45(2). 3.2.As per section 45(2) of the Act, the LTCG arising on conversion of land into SIT is chargeable to tax as income of the previous year in which such SIT is sold otherwise transferred. The computation of LTCG has two steps -

(i) The determination of cost as on 01-04-1981/or FMV where cost is not available. Such cost/FMV is further increased to arrive at the indexed cost/FMV, and;

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(ii). The determination of FMV as on the date of conversion as on 01-04- 2010.

Cost/FMV as on 01-04-1981. 3.3. Th e ass es s ee has t ak en the cost a s on 0 1-04-1981 at Rs.1,17,692/- as the cost of acquisition in FY 1981-82 and also taken cost of improvement at Rs.1,47,862/- in FY 1986-87. The indexed cost of acquisition was accordingly computed by applying the notified inflation index to the aforesaid cost of acquisition in FY 1981-82 and cost of improvement in 1986- 87.

3.4. The Learned AO has disagreed with the said computation and re- computed the FMV as on 01-04-1981 on the basis of the purported sale instances in FY 1986-87 received from the Sub Registrar Offices of Bommanahalli and Hosakote. As per the said information from the Sub Registrar, the adjoining land of 18 1/2 guntas was sold for Rs.5000/-. On this basis, the sale value of 1 acre worked out to Rs.10,810/- per acre in FY 1986- 87. As per serial No.(ii) of para 4.6 of pages 6 & 7 of the impugned assessment order, the cost as on 01-04-1981 of the entire land of 8 acres and 11 guntas and the indexed value in the year of-conversion in FY 2010-11 is worked out as per the following:

SL Particulars [ Amount No. (in Rs.) The purported sale value of adjoining land of 18 1/2 1 5000/- Guntas in FY 1986-87.

2 The sale value of 1 acre(5000x40/18.5) as in FY 10810/- 1986-87; worked out on the basis of the above value in SI. No.1

3 Cost of 1 acre of land on the basis of the 7721/-per acre above said values applying the reverse indexation (10810x100/140)

4 Cost of land of 8.11 acres @ Rs.7721/- per acre 63891/-

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

5 Indexed cost of the land in FY 2010-11 being the 4,54,265/- year of conversion of the land into SIT u/s 45(2)

Note: The purported information/sale instances received from the Sub- Registrar of Bommanahalli & Hoskote was not made available during the assessment proceedings and also during the appellate proceedings before the Learned CIT(A), as more clearly submitted under the appropriate context hereinunder.

FMV as on 01-04-2010. 3.5. As submitted earlier, the second step in computation of LTCG u/s 45(2) is to determine the FMV of the land as on the relevant date ie.,01-04- 2010, being the date on which the land was converted into the SIT. For the purpose of working of the FMV of the entire land as on 01-042010, the assessee has relied on the Notification No.CVC-24/2013-14 dated, 07-08- 2013, issued by the Government of Karnataka. In the said Notification, the land is listed in SI. No.151 & 152 and the guidance value is notified at Rs.1,20,00,000/- in the FY 2013-14. The guidance value as per the said Notification is taken and the same is reduced by applying the reverse cost inflation index (CII) notified for the respective financial years. The computation of the FMV as on 01-04-2010 by the assessee is referred to in SI.No.(iii) of para 4.6 of page 7 of the impugned assessment order. 3.6. As per the learned AO, the assessee has shown higher LTCG taxable at 20% to correspondingly reduce the business income which is taxable at a higher rate at 30% (serial No.(iii) of para 4.7 of page 10 of the assessment order). On this assumption, the Learned AO has recomputed the FMV as on 01-04-2010 by taking Rs.30,00,000/- per acre purportedly on the basis of the Notification dated 17-04-2007 issued by the Government of Karnataka (Serial No.(iii) of para 4.6 of page 8 of the assessment order). This information regarding the Notification dated 17-04-2007 is allegedly received from the Sub-Registrar in respect of the land at Bileshivale village. This purported information was not made available either during the assessment proceedings or during the appellate proceedings before the Learned CIT(A), even though, a specific ground for supply of the information was taken during the appellate proceedings.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 3.7. The dispute in this appeal mainly is relates to (i) the working of the Cost of acquisition as on 01-04-1981, and; (ii) the FMV on the date of conversion of land into SIT in FY 2010-11. The Learned AO has determined the FMV as on 01-04-2010 at Rs.2,48,25,000/-, as against Rs.8,43,47,406/- determined by the assessee. Business Income. 4.1.The learned AO has worked out the business income by taking the cost of land as per the reworked FMV as on the date of conversion in FY 2010-11. Since the said recomputed FMV is adopted as cost in computing the business income, the business income is proportionately increased. The learned AO has further added Rs.32,49,600/- stating it to be the difference in sale consideration received as per the seized document from one Mr. S. Anil Reddy and this addition is not disputed in this appeal.

4.2.The learned AO has also reworked the share of the assessee on the basis of the said MOU dated, 08-03-2016 at 50.89%, whereas the assessee had taken the share at 20% in the return of income. The share of 20% in the return of income was taken since the land wes inherited by 5 brothers, sons of Late Shri. B.C. Kempaiah.

Proceedings before the CIT(A). 5.1.On appeal by the assessee, the learned CIT(A) has dismissed the appeal vide the common order in & 124/CIT(A)-11/BNG/2016-17 dated, 27-01-2021. The learned CIT(A) has reproduced the Grounds of the assessee, the statement of facts, additional Grounds of appeal taken and the counter submissions made by the learned AO in the remand report. The findings of the learned CIT(A) are recorded in THREE sentences in para 19 of page 17 of the appellate order, which is as under:

"The appellant has not brought anything on record to find fault with the findings of the AO as well as the method adopted by him to determine the business income for each of the assessment years. The addition made on this count for the impugned assessment years stands confirmed. The grounds fail."

5.2. The written-submissions vide paper-book dated, 14-03-2019, filed during the hearing and the counter comments dated, 27-11-2019 on the remand

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore report of the AO, have not been considered at all, because if they were to be considered, there was no option for the learned CIT(A), but to allow the appeals as there was no material to controvert the grounds taken. The submissions made in para 1.1 to 3 of the said counter comments of the assessee dated, 27-11-2019 briefly capture the issues in a nutshell and the same are reproduced below:

"1.1. The dispute is regarding the cost of acquisition of the land measuring 8 acres 11 guntas situated at Survey No. 110, Bilishivale Village, Bidarahalli Hobli, Bangalore East Taluk, in computing the LTCG. The Learned AO adopted the FMV as on 01-04-1981 before indexation on the basis of the purported instance of sale obtained from the Sub-Registrar Offices of Bornmanahalli and Hoskote, as per the discussion in SI. No. (ii) of para 4.6 of page 7 of the order. On the basis of this purported information, the learned AO adopted total value of the land of 8 acres 11 guntas at Rs.63,891/-. As submitted earlier, the purported information cannot be used against the assessee for the reason that:

(a). Bommanahalli and Hoskote are situated far away from the land of the assessee, as submitted earlier - kindly refer the google maps enclosed as annexures A & B at pages 13 and 14 of the paper-book (PB).

(b). The purported information was not supplied to the assessee during the assessment proceedings and the learned AO has not supplied a copy even during the remand proceedings. The remand report is conspicuously silent as to whether the said information/document is available on record and why it is not supplied to the assessee or why a certified copy is not made available with the remand report. The said remand report vide SI.No. 1(b) of page 3 merely refers to the para of the said Show-cause Notice dated, 08-03- 2016 and does not dispute the fact that the property of the assessee at Bileshivale village is far away from Bommanahalli or Hoskote. Apart from the above, the remand report does not even refer to the letter of enquiry issued by the AO or the letter of the Sub-Registrar received in response.

No doubt, the learned AO had referred to the purported information (c). from the Sub-Registrar Office in para 15.1 of the show-cause Notice dated, 08-03-2016. Again the said Notice mentions the same in the last para. Since the information regarding the relied upon instances of sale itself was not made available to the assessee, the assessee could not comment on the ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore same, especially in the absence of precise information as to its location, Survey Nos. etc.

1.2. In view of the above, it is prayed that the working of the AO of the cost of acquisition is unsupportable and therefore, the cost of acquisition as adopted in the return of income may be restored.

FMV as on Date of Conversion i.e., as on 01-04-2010.

2. As submitted earlier, the FMV of the property - 8 acres 11 guntas as on 01-04-2010 was taken at Rs.2,48,25,000/-as against FMV of Rs.8,43,47,406/- taken by the assessee. The computation of the FMV by the AO is stated to be based on the information received from the Sub-Registrar Notification dated, 17-04-2007 of the Government of Karnataka. It is submitted that - (a). The purported Notification was not made available to the assessee and accordingly, the assessee had no occasion to counter the same.

To the best of our knowledge and belief, there is (b). no such Notification referred to and relied by the learned AO available in the website of Government of Karnataka.

(c). The remand report does not dispute the fact that the purported Notification was not made available at the time of assessment proceedings. Further, the purported Notification is not supplied even at this stage and also not commented upon. The observation of the learned AO is available in para (c) of the last page and it is seen that it merely mentions that the Sub-Registrar has given the values of sale instances of adjoining lands. It is not known - i. What is the Survey No. of the adjoining land. ii. What is the nature of the land and extent of land. iii. Who is the owner. iv. What is the date of sale. Who is the purchaser. v. vi. What is the sale consideration

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(d). In contrast, the FMV of the land is worked out by the assessee based on the Notification No. CVC-24/2013-14, dated, 07- 08-2013 by reverse indexation. In fact, the land of the assessee in Survey No.110 is mentioned in SI.No.152 of the Notification under the Bileshivale village (Refer page 19 of the PB dated, 14-03-2019). The learned AO has also taken FMV of the non-existent Notification stated to be dated, 17-04-2007 and determined b7 the FMV by reverse indexation. Hence there is no dispute regarding the method - by reverse indexation based on the Guidance Values notified by the Government. Hence the FMV adopted by the assessee on the existing Notification should prevail over the FMV determined by the AO on non-existent Notification. It may be further clarified that the learned AO vide para 4.6.(iv) of page 8 of the assessment order has observed that the Gazette Notification is in respect of Byrathi village, whereas the land in question is in Bileshvale village. It is clear that the learned AO misread the material facts on record as is evident from a mere glance at the SI. Nos. 151 and 152 of the Notification, especially when the survey No. (110) is mentioned.

COST OF IMPROVEMENT.

3. The learned AO has commented that there was no documentary proof regarding the claim that the assessee was not required to maintain books of account under any law as the only income at the relevant time was from agriculture, that too for the HUF. As there was no liability to income tax at the relevant time and no returns were filed, it is submitted that the burden was on the teamed AO to show how the assessee was liable to maintain the books of account under the law. In this view it is submitted that the cost of improvement made to agricultural lands on fencing, sinking of bore wells etc., is an allowable deduction, because there ought to be some expenditure on maintenance of the lands."

5.3. As may be seen from the impugned order of the learned CIT(A), the Grounds of appeal and the submissions of the assessee-have not been considered and adjudicated in proper & right perspective at all.

Short-term Capital Gain. The learned AO recomputed the short-term capital gain, by 6. disallowing the cost of improvement amounting to Rs.48,000/- on the ground that there was no evidence furnished. The learned CIT(A) has not considered the Grounds of appeal and the Explanations of the assessee at all.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Aggrieved by the same, the assessee is in appeal before the Hon'ble Tribunal. 7. for AY 2013-14 – Statement of facts in the case of B.K. Dhananjaya, Bangalore:

1.1. The appellant is an individual mainly engaged in agriculture. The Hindu Undivided Family (HUF) family, in which the assessee was a Co-parcener before its Partition, owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into Non-Agricultural (NA) land, developed into plots and sold during the period from FY 2011-12 to FY 2014-15.

1.2. Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation issued in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 144 dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.77,72,052/-, as against the returned income of Rs.12,31,100/-declared in the return filed on 05-03-2016 in response to the Notice u/s 153A of the Act.

1.3. The details of the incomes disclosed in the said return u/s 153A and the additions made in the impugned assessment order are tabulated below for the sake of reference:

Order u/s 153A - additions made. Head of Income Remarks SI. Income Additions No. declared made in the in the order u/s Return 153A r.w.s (In Rs.) 144 (In Rs.) (i). Business Income - on 85,942 24,11,234 Please see Note. sale of lands (ii). LTCG - share in the 1,44,141 4,24,220 Plepse see land in Survey Note. - No.110, BileShivale village. (50.89% share)

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(iii). Short-term capital 10,01,015 4,75,500 Disallowance of cost of gain improvement. (iv). Investment in land -- 32,30,000 -- Note: The LTCG arose.by virtue of sale of plots in the said land of 8 acres & (i). 11 guntas in Survey.No.110, which was ancestral land and 11 family members inherited their respective shares.

(ii). FMV as on 01-04-1981 The assessee has adopted the cost of land being FMV of the entire land of 8.11 acres as on 01-04-1981 at Rs.1,17,692/-. As against this, the learned AO has adopted the FMV of the said land at Rs.10,810/- per acre stated to be on the basis of sale instance of adjoining land in October, 1986 received from the Sub-Registrar of Bommanahalli and Hosakote. For this sale value, the learned AO has applied reverse indexation and arrived at FMV of Rs.63,891/- for the entire land of 8.11 acres as on 01-04-1981, which is disputed in this appeal.

(iii). The learned AO has not allowed the cost of improvement of Rs.1,47,582/- in FY 1986-87 (incorrectly mentioned as Rs.47,862/- in para 4.6 of page 6 of the assessment order) on stating that there was no proof for the same, which is also disputed in this appeal.

Brief history of inheritance. 2.1.Shri. B.C. Kempaiah died intestate leaving behind, his estate including the agricultural land of 8.11 acres, which came to devolve among the legal heirs. Subsequent to the demise of the said Shri. B.C. Kempaiah, the HUF consisted of 11 family members comprising of mother and her 5 daughters and 5 sons, and all the 11 persons inherited the agricultural land measuring 8 acres & 11 guntas at Survey No.110, Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru. The 5 male members of the family are - (i) BK Raghavendra, (ii) BK Dhananjaya, (iii) BK Shivappa, (iv) BK Kanakaraju and (v) BK Manjunath. The LTCG accruing to the late B.K. Manjunath is assessed in the hands of his wife & legal heir, BK Shashikala.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 2.2.The learned AO has apportioned the LTCG arising out of the transfer of the said land of 8.11 acres based on the respective shares as per the family arrangement/MOU dated, 08-03-2016 in the hands of the legal heirs.

2.3.Based on the aforesaid MOU, the Learned AO has reworked the respective shares of the Co-parceners in the said land of 8.11 acres (3,60,459 S.ft.,) in SI. No. (iii) of para 4.5 of pages 5 & 6 of the impugned assessment order.

Income on sale of Plots. 3.1.The subject land was converted into SIT in the FY 2010-11 and therefore income arising on its conversion and sale is to be taxed separately as -

(i). LTCG on conversion of the subject land into SIT as per section 45(2), and;

(ii). Business income on sale of plots comprised in- SIT.

LTCG on conversion of Land u/s 45(2). 3.2.As per section 45(2) of the Act, the LTCG arising on conversion of land into SIT is chargeable to tax as income of the previous year in which such SIT is sold otherwise transferred. The computation of LTCG has two steps -

(i) The determination of cost as on 01-04-1981/or FMV where cost is not available. Such cost/FMV is further increased to arrive at the indexed cost/FMV, and;

(ii).The determination of FMV as on the date of conversion as on 01-04- 2010.

Cost/FMV as on 01-04-1981. 3. 3. The as ses s ee h as t ak en th e cost a s on 01- 04-1981 at Rs.1,17,692/- as the cost of acquisition in FY 1981-82 and also taken cost of improvement at Rs.1,47,862/- in FY 1986-87. The indexed cost of acquisition was accordingly computed by applying the notified inflation index to the aforesaid cost of acquisition in FY 1981-82 and cost of improvement in 1986- 87.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 3.4. The Learned AO has disagreed with the said computation and re- computed the FMV as on 01-04-1981 on the basis of the purported sale instances in FY 1986-87 received from the Sub Registrar Offices of Bommanahalli and Hosakote. As per the said information from the Sub Registrar, the adjoining land of 18 1/2 guntas was sold for Rs.5000/-. On this basis, the sale value of 1 acre worked out to Rs.10,810/- per acre in FY 1986- 87. As per serial No.(ii) of para 4.6 of pages 6 & 7 of the impugned assessment order, the cost as on 01-04-1981 of the entire land of 8 acres & 11 guntas and the indexed value in the year Qf conversion in FY 2010-11 is worked out as per the following:

Si. Particulars Amount No. (in Rs.) 1 The purported sale value of adjoining land of 18 1/2 5000/- Guntas in FY 1986-87.

2 The sale value of 1 acre(5000x40/18.5) as in FY 1986- 10810/- 87; worked out on the basis of the above value in SL No.1

3 Cost of 1 acre of land on the basis of the 7721/-per acre above said values applying the reverse indexation (10810x100/140)

4 Cost of land of 8.11 acres @ Rs.7721/- per acre 63891/-

5 Indexed cost of the land in FY 2010-11 4,54,265/- being the year of conversion of the land into SIT u/s 45(2) .

Note: The purported information/sale instances received from the Sub- Registrar of Bommanahalli & Hoskote was not made available during assessment proceedings and also during the appellate proceedings before the Learned CIT(A), as more clearly submitted under the appropriate context hereinunder.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore FMV as on 01-04-2010. 3.5. As submitted earlier, the second step in computation of LTCG u/s 45(2) is to determine the FMV of the land as on the relevant date ie.,01-04- 2010, being the date on which the land was converted into the SIT. For the purpose of working of the FMV of the entire land as on 01-042010, the assessee has relied on the Notification No.CVC-24/2013-14 dated, 07-08- 2013, issued by the Government of Karnataka. In the said Notification, the land is listed in SI. No.151 & 152 and the guidance value is notified at Rs.1,20,00,000/- in the FY 2013-14. The guidance value as per the said Notification is taken and the same is reduced by applying the reverse cost inflation index (CII) notified for the respective financial years. The computation of the FMV as on 01-04-2010 by the assessee is referred to in SI.No.(iii) of para 4.6 of page 7 of the impugned assessment order. 3.6. As per the learned AO, the assessee has shown higher LTCG taxable at 20% to correspondingly reduce the business income which is taxable at a higher rate at 30% (serial No.(iii) of para 4.7 of page 10 of the assessment order). On this assumption, the Learned AO has recomputed the FMV as on 01-04-2010 by taking Rs.30,00,000/- per acre purportedly on the basis of the Notification dated 17-04-2007 issued by the Government of Karnataka (Serial No.(iii) of para 4.6 of pages 7 & 8 of the assessment order). This information regarding the Notification dated 17-04-2007 is allegedly received from the Sub-Registrar in respect of the land at Bileshivale village. This purported information was not made available either during the assessment proceedings or during the appellate proceedings before the Learned CIT(A), even though, a specific ground for supply of the information was taken during the appellate proceedings.

3.7. The dispute in this appeal mainly is relates to:

(0. the working of the Cost of acquisition as on 01-04-1981, and;

(ii). the FMV on the date of conversion of land into SIT in FY 2010-11. The Learned AO has determined the FMV as on 01-04-2010 at Rs.2,48,25,000/-, as against Rs.8,43,47,406/- determined by the assessee.

Business Income. 4.1. The learned AO has worked out the business income by taking the cost of land as per the reworked FMV as on the date of conversion in FY 2010-11. Since the said recomputed FMV is adopted as cost in computing the business income, the business income is proportionately increased. The learned AO has further added Rs.32,49,600/- stating it to be the difference

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore in sale consideration received as per the seized document from one Mr. S. Anil Reddy and this addition is not disputed in this appeal.

4.2. The learned AO has also reworked the share of the assessee on the basis of the said MOU dated, 08-03-2016 at 50.89%, whereas the assessee had taken the share at 20% in the return of income. The share of 20% in the return of income was taken since the land wad inherited by 5 brothers, sons of Late Shri. B.C. Kempaiah.

Proceedings before the CIT(A). 5.1. On appeal by the assessee, the learned CIT(A) has dismissed the appeal vide the common order in & 124/CIT(A)- 11/BNG/2016-17 dated, 27-01-2021. The learned CIT(A) has reproduced the Grounds of the assessee, the statement of facts, additional Grounds of appeal taken and the counter submissions made by the learned AO in the remand report. The findings of the learned CIT(A) are recorded in THREE sentences in para 19 of page 17 of the appellate order, which is as under:

"The appellant has not brought anything on record to find fault. with the findings of the AO as well as the method adopted by him to determine the business income for each of the assessment years. The addition made on this count for the impugned assessment years stands confirmed. The grounds fail."

5.2. The written-submissions vide paper-book dated, 14-03-2019, filed during the hearing and the counter comments dated, 27-11-2019 on the remand report of the AO, have not been considered at all, because if they were to be considered, there was no option for the learned CIT(A), but to allow the appeals as there was no material to controvert the grounds taken. The submissions made in para 1.1 to 3 of the said counter comments of the assessee dated, 27-11-2019 briefly capture the issues in a nutshell and the same are reproduced below:

"1.1. The dispute is regarding the cost of acquisition of the land measuring 8 acres 11 guntas situated at Survey No. 110, Bilishivale Village, Bidarahalli Hobli, Bangalore East Taluk, in computing the LTCG. The Learned AO adopted the FMV as on 01-04-1981 before indexation on the basis of the purported instance of sale obtained from ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore the Sub-Registrar Offices of Bommanahalli and Hoskote, as per the discussion in SI. No.

(ii) of para 4.6 of page 7 of the order. On the basis of this purported information, the learned AO adopted total value of the land of 8 acres 11 guntas at Rs.63,891/-. As submitted earlier, the purported information cannot be used against the assessee for the reason that:

Bommanahalli and Hoskote are situated far away from the land (a). of the assessee, as submitted earlier - kindly refer the google maps enclosed as annexures A & B at pages 13 and 14 of the paper-book (PB).

The purported information was not supplied to the assessee (b). during the assessment proceedings and the learned AO has not supplied a copy even during the remand proceedings. The remand report is conspicuously silent as to whether the said information/document is available on record and why it is not supplied to the assessee or why a certified copy is not made available with the remand report. The said remand report vide SI.No. 1(b) of page 3 merely refers to the para of the said Show-cause Notice dated, 08-03- 2016 and does not dispute the fact that the property of the assessee at Bileshivale village is far away from Bommanahalli or Hoskote. Apart from the above, the remand report does not even refer to the letter of enquiry issued by the AO or the letter of the Sub-Registrar received in response.

No doubt, the learned AO had referred to the purported information (c). from the Sub-Registrar Office in para 15.1 of the show-cause Notice dated, 08-032016. Again the said Notice mentions the same in the last para. Since the information regarding the relied upon instances of sale itself was not made available to the assessee, the assessee could not comment on the same, especially in the absence of precise information as to its location, Survey Nos. etc.

1.2. In view of the above, it is prayed that the working of the AO of the cost of acquisition is unsupportable and therefore, the cost of acquisition as adopted in the return of income may be restored.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore FMV as on Date of Conversion i.e., as on 01-04-2010.

2. As submitted earlier, the FMV of the property - 8 acres 11 guntas as on 01-04-2010 was taken at Rs.2,48,25,000/-as against FMV of Rs.8,43,47,406/- taken by the assessee. The computation of the FMV by the AO is stated to be based on the information received from the Sub-Registrar Notification dated, 17-04-2007 of the Government of Karnataka. It is submitted that - (a). The purported Notification was not made available to the assessee and accordingly, the assessee had no occasion to counter the same.

(b). To the best of our knowledge and belief, there is no such Notification referred to and relied by the learned AO available in the website of Government of Karnataka.

(c). The remand report does not dispute the fact that the purported Notification was not made available at the time of assessment proceedings. Further, the purported Notification is not supplied even at this stage and also not commented upon. The observation of the learned AO is available in para (c) of the last page and it is seen that it merely mentions that the Sub- Registrar has given the values of sale instances of adjoining lands. It is not known - i. What is the Survey No. of the adjoining land. ii. What is the nature of the land and extent of land. iii. Who is the owner. What is the date of sale. iii. Who is the purchaser. iv. What is the sale consideration v.

(d). In contrast, the FMV of the land is worked out by the assessee based on the Notification No. CVC-24/2013-14, dated, 07-08-2013 by reverse indexation. In fact, the land of the assessee in Survey No.110 is mentioned in SI.No.152 of the ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Notification under the Bileshivale village (Refer page 19 of the PB dated, 14-03-2019). The learned AO has also taken FMV of the non-existent Notification stated to be dated, 17-04-2007 and determined by the FMV by reverse indexation. Hence there is no dispute regarding the method - by reverse indexation based on the Guidance Values notified by the Government.

Hence the FMV adopted by the assessee on the existing Notification should prevail over the FMV determined by the AO on non-existent Notification. It may be. further clarified that the learned AO vide para 4.6.(iv) of page 8 of the assessment order has observed that the Gazette Notification is in respect of Byrathi village, whereas the land in question is in Bileshvale village. It is clear that the learned AO misread the material facts on record as is evident from a mere glance at the SI. Nos. 151 and 152 of the Notification, especially when the survey No. (110) is mentioned.

COST OF IMPROVEMENT. 3.The learned AO has commented that there was no documentary proof regarding the claim that the assessee was not required to maintain books of account under any law as the only income at the relevant time was from agriculture, that too for the HUF. As there was no liability to income tax at the relevant time and no returns were filed, it is submitted that the burden was on the learned AO to show how the assessee was liable to maintain the books of account under the law. In this view it is submitted that the cost of improvement made to agricultural lands on fencing, sinking of bore wells etc., is an allowable deduction, because there ought to be some expenditure on maintenance bf the lands."

5.3. As may be seen from the impugned order of the learned CIT(A), the Grounds of appeal and the submissions of the assessee have not been considered and adjudicated in proper & right perspective at all.

Short-term Capital Gain. The learned AO recomputed the short-term capital gain by 6. disallowing the cost of improvement amounting to Rs.4,75,500/- on the ground that there was no evidence furnished. The learned CIT(A) has not considered the Grounds of appeal and the Explanations of the assessee at all.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Aggrieved by the same, the assessee is in appeal before the Hon'ble 7. Tribunal.” for AY 2014-15 – Statement of facts in the case of B.K. Dhananjaya, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The family-owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into NA land, developed into plots and sold during the period from FY 2011-12 to FY 2014- 15.

1.2.Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 144 r.w.s 153D of the Act dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.43,20,000/-.

1.3.The only issue disputed in ths appeal is investment of Rs.43,20,000/- made by the assessee during the subject assessment year. It was explained that in view of the LTCG declared in the earlier , ears and the sale proceeds available to the assessee, the investment to the above said extent should be treated as explained.

Case before the Hon'ble Tribunal. 1.4. As per the learned AO himself, the following sale proceeds are available for the assessee for investment during the subject assessment year:

SI. Details of Income Amount No. (In Rs.) (i). 50.89% share of sale proceeds of land of 8.11 5,70,58,227 acres in Survey No.110 amounting to Rs. 11,21,20,705/-. Please refer SI.No.(vi) of para 4.7 of page 12 of the assessment order for the AY 2011-12.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

1.5. In view of the above and taking into account the settled principle that income as well as asset made out of the income cannot be taxed as it would amount to double taxation of the same amount, it is prayed that the addition is unsustainable.

The learned AO has also initiated the penalty proceedings u/s 271(1)(c) 8. r.w.s 274 of the Act.

Aggrieved by the same, the assessee is in appeal before the Hon'ble Tribunal for AY 2011-12 – Statement of facts in the case of B.K. Raghavendra, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The family owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into NA land, developed into plots and sold during the period from FY 2011-12 to FY 2014- 15.

1.2.Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 144 dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.1,49,82,081/-, as against the returned income of Rs.12,50,390/- declared in the return filed on 27-01- 2016 in response to the Notice u/s 153A of the Act.

1.3.The details of the incomes disclosed in the said return u/s 153A and the additions made in the impugned assessment order are tabulated below for the sake of reference:

SI. Income Additions Remarks Head of No. declared made in the Income in the order u/s Return 153A r.w.s (In Rs.) 144 (In Rs.)

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Business Income 3,82,408 NIL -- (i). - presumptive . basis.

Business Income - 6,985 49,21,255 Please see (ii). on sale of lands Note

(iii). LTCG - share in 9,51,577 2,16,431 Please see Note the land in Survey No.110, Bileshivale ' . village. (15.85% share) (iv). Income from 85,03,425 Rs.52,44,425/-and .NIL Rs.32,59,000/-as other sources unexplained credits u/s 68.

Note:- The LTCG arose by virtue of sale of plots in the said land of 8 acres & 11 guntas in Survey No.110, which was ancestral land and 11 family members inherited their respective shares.

(ii). FMV as on 01-04-1981 The assessee has adopted the cost of land being FMV of the entire land of 8.11 acres as on 01-04-1981 at Rs.1,17,692/-. As against this, the learned AO has adopted the FMV of the said land at Rs.10,810/- per acre stated to be on the basis of sale instance of adjoining land in October, 1986 received from the Sub.-Registrar of Bommanahalli and Hosakote. For this sale value, the learned AO has applied reverse indexation and arrived at FMV of Rs.63,891/- for the entire land of 8.11 acres as on 01-04-1981, which is disputed in this appeal.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(iii). The learned AO has not allowed the cost of improvement of Rs.1,47,582/- in FY 1986-87 (incorrectly mentioned as Rs.47,862/- in para 4.6 of page 6 of the assessment order) on stating that there was no proof for the same, which is also disputed in this.appeal.

Brief history of inheritance. 2.1.Shri. B.C. Kempaiah died intestate leaving behind his estate including the agricultural land of 8.11 acres, which came to devolve among the legal heirs. Subsequent to the demise of the said Shri. B.C. Kempaiah, the HUF consisted of 11 family members comprising of mother and her 5 daughters and 5 sons, and all the 11 persons inherited the agricultural land measuring 8 acres & 11 guntas at Survey No.110, Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru. The .5 male members of the family are — (i) BK Raghavendra, (ii) BK Dhananjaya, (iii) BK Shivappa, (iv) BK Kanakaraju and (v) BK Manjunath. The LTCG accruing to the late B.K. Manjunath is assessed in the hands of his wife &.legal heir, BK Shashikala.

2.2.The learned AO has apportioned the LTCG arising out of the transfer of the said land of 8.11 acres based on the respective shares as per the family arrangernent/MOU dated, 08-03-2016 in the hands of the legal heirs.

2.3.Based on the aforesaid MOU, the Learned AO has reworked the respective shares of the Co-parceners in the said land of 8.11 acres (3,60,459 S.ft.,) in SI. No. (iii) of para 4.5 of page 6 of the impugned assessment order.

Income on sale of Plots. 3.1.The subject land was converted into SIT in the FY 2010-11 and therefore income arising on its conversion and sale is to be taxed separately as -

LTCG on conversion of the subject (i). land into SIT as per section 45(2), and; (ii). Business income on sale of plots comprised in SIT.

LTCG on conversion of Land u/s 45(2). 3.2.As per section 45(2) of the Act, the LTCG arising on conversion of land into SIT is chargeable to tax as income of the previous year in which such SIT is sold otherwise transferred. The computation of LTCG has two steps -

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(i) The determination of cost as on 01-04-1981/or FMV where cost is not available. Such cost/FMV is further increased to arrive at the indexed cost/f`MV, and;

(ii).The determination of FMV as on the date of conversion as on 01-04-2010.

Cost/FMV as on 01-Q4-1981. 3.3.The assessee has taken the cost as on 01-04-1981 at Rs.1,17,692/- as the cost of acquisition in FY 1981-82 and also taken cost of improvement at Rs.1,47,862/- in FY 1986-87. The indexed cost of acquisition was accordingly computed by applying the notified inflation index to the aforesaid cost of acquisition in FY 1981-82 and cost of improvement in 1986-87.

3.4.The Learned AO has disagreed with the said computation and re-computed the FMV as on .01-04-1981 on the basis of the purported sale instances in FY 1986-87 received from the Sub Registrar Offices of Bommanahalli and Hosakote. As per the said information from the Sub Registrar, the adjoining land of 18 1/2 guntas was sold for Rs.5000/-. On this basis, the sale value of 1 acre worked out to Rs.10,810/- per acre in FY 1986-87. As per serial No.(ii) of para 4.6 of pages 6 & 7 of the impugned assessment order, the cost as on 0104-1981 of the entire land of 8 acres and 11 guntas and the indexed value in the year of conversion in FY 2010-11 is worked out as per the following: Si. Particulars Amount No. (in Rs.) 1 The purported sale value of adjoining land of 18 1/2 5000/- Guntas in FY 1986-87.

2 The sale value of 1 acre(5000x40/18.5) as in 10810/- FY 1986-87; worked out on the basis of the above value in SI. No.1

3 Cost of 1 acre of land on the basis of the 7721/-per acre above said values applying the reverse indexation (10810x100/140)

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

4 Cost of land of 8.11 acres @ Rs.7721/- per 63891/- acre

5 Indexed cost of the land in FY 2010-11 being the year 4,54,265/- of conversion of the land into SIT u/s 45(2)

Note: The purported information/sale instances received from the Sub-Registrar of Bommanahalli & Hoskote was not made available during the assessment proceedings and also during the appellate proceedings before the Learned CIT(A), as more clearly submitted under the appropriate context hereinunder.

FMV as on 01-04-2010. 3.5. As submitted earlier, the second step in computation of LTCG u/s 45(2) is to determine the FMV of the land as on the relevant date i.e., 01- 04-2010, being the date on which the land was converted into the SIT. For the purpose of working of the FMV of the entire land as on 01-04-2010, the assessee has relied on the Notification No.CVC-24/2013-14 dated, 07-08- 2013, issued by the Government of Karnataka. In the said Notification, the land is listed in SI. No.151 & 152 and the guidance value is notified at Rs.1,20,00,000/- in the FY 2013-14. The guidance value as per the said Notification is taken and the same is reduced by applying the reverse cost inflation index (CII) notified for the respective financial years. The computation of the FMV as on 01-04-2010 by the assessee is referred to in SI. No.(iii) of para 4.6 of page 7 of the impugned assessment order.

3.6. As per the learned AO, the assessee has shown higher LTCG taxable at 20% to correspondingly reduce the business income which is taxable at a higher rate at 30% (serial No.(iii) of para 4.7 of page 10 of the impugned assessment order). On this assumption, the Learned AO has recomputed the FMV as on 01-042010 by taking Rs.30,00,000/- per acre purportedly on the basis of the Notification dated 17-04-2007 issued by the Government of Karnataka (Serial No.(iii) of para 4.6 of page 8 of the impugned assessment order). This information• regarding the Notification dated 17-04-2007 is allegedly received from the Sub-Registrar in respect of the land at Bileshivale village. This purported information was not made available either during the assessment proceedings or during the appellate proceedings before the Learned CIT(A), even though, a specific ground for supply of the information was taken during the appellate proceedings.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 3.7. The dispute in this appeal mainly is relates to: the working of the Cost of acquisition as on 01-041981, and; (i). the FMV on the date of conversion of land into SIT in FY 2010-11. The (ii). Learned AO has determined the FMV as on 01-04-2010 at Rs.2,48,25,000/-, as against Rs.8,43,47,406/- determined by the assessee.

Business Income. The learned AO has worked out the business income by taking the cost of land as per the reworked FMV as on the date of conversion in FY 2010- 11. Since the said recomputed FMV is adopted as cost in computing the business income, the business income is proportionately increased. The learned AO has further added Rs.32,49,600/- stating it to be the difference in sale consideration received as per the seized document from one Mr. S. Anil Reddy and this addition is not disputed in this appeal.

4.2. The learned AO has also reworked the share of the assessee on the basis of the said MOU dated, 08-03-2016 at 15.85%, whereas the assessee had taken the share at 20%. in the return of income. The share of 20% in the return of income was taken since the land was inherited by 5 brothers, sons of Late Shri. B.C. Kempaiah.

Proceedings before the CIT(A). 5.1. On appeal by the assessee, the learned CIT(A) has dismissed the appeal vide order in dated, 29- 01-2021. The learned CIT(A) has reproduced the Grounds of the assessee, the statement of facts, additional Grounds of appeal taken and the counter submisions made by the learned AO in the remand report. The findings of the learned CIT(A) are recorded in THREE sentences in para 15 of page 17 of the appellate order, which is as under:

"The appellant has not brought anything on record to find fault with the findings of the AO as well as the method adopted by him to determine the income from Long Term Capital Gains for impugned assessment year. The addition made on this count therefore stands confirmed."

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 5.2. The written-submissions vide paper-book dated, 14-032019, filed during the hearing and the counter comments dated, 27-11-2019 on the remand report of the AO, have not been considered at all, because if they were to be considered, there was no option for the learned CIT(A), but to allow the appeals as there was no material to controvert the grounds taken. The submissions made in para 1.1 to 3 of the said counter comments of the assessee dated, 27-11-2019 briefly capture the issues in a nutshell and the same are reproduced below: "1.1. The dispute is regarding the cost of acquisition of the land measuring 8 acres 11 guntas situated at Survey No. 110, Bilishivale Village, Bidarahalli Hobli, Bangalore East Taluk, in computing the LTCG. The Learned AO adopted the FMV as on 01-04-1981 before indexation on the basis of. the purported instance of sale obtained from the Sub-Registrar Offices of Bommanahalli and Hoskote, as per the discussion in SI. No. (ii) of para 4.6 of page 7 of the order. On the basis of this purported information, the learned AO adopted total value of the land of 8 acres 11 guntas at Rs.63,891/-. As submitted earlier, the purported information cannot be used against the assessee for the reason that:

(a). Bommanahalli and Hoskote are situated far away from the land of the assessee, as submitted earlier - kindly refer the google maps enclosed as annexures A & B at pages 13 and 14 of the paper-book (PB).

(b). The purported information was not supplied to the assessee during the assessment proceedings and the learned AO has not supplied a copy even during the remand proceedings. The remand report is conspicuously silent as to whether the said information/document is available om record and why it is not supplied to the assessee or why a certified copy is not made available with the remand report. The said remand report vide SI.No. 1(b) of page 3 merely refers to the para of the said Show-cause Notice dated, 08- 03-2016 and does not dispute-the fact that the property of the assessee at Bileshivale village is far away from Bommanahalli or Hoskote: Apart from the above, the remand.report does not even refer to the letter of enquiry issued by the AO or the letter of the Sub-Registrar received in response.

(c): No doubt, the learned AO had referred to the purported information from the Sub-Registrar Office in para 15.1 of the show-cause Notice dated, 0803-2016. Again the said Notice mentions the same in the last para. Since the information regarding the relied upon instances of sale itself was not made available to the assessee, the assessee could not comment on the same, especially in the absence of precise information as to its location, Survey Nos. etc.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 1.2. In view of the above, it is prayed that the working of the AO of the cost of acquisition is unsupportable and therefore, the cost of acquisition as adopted in the return of income may be restored.

FMV as on Date of Conversion i.e., as on 01-04-2010. 2. As submitted earlier, the FMV of the property - 8 acres 11 guntas as on 01-04-2010 .was taken at Rs.2,48,25,000/- as against FMV of Rs.8,43,47,406/-taken by the assessee. The computation of the FMV by the AO is stated to be based on the information received from the Sub-Registrar - Notification dated, 17-04-2007 of the Government of Karnataka. It is submitted that –

(a). The purported Notification was not made available to the assessee and accordingly, the assessee had no occasion to counter the same,

(b) To the best of our knowledge and belief, there is no such Notification referred to and relied by the learned AO available in the website of Government of Karnataka.

(c). The remand report does not dispute the fact that the. purported Notification was not made available at the time of assessment proceedings. Further, the purported Notification is not supplied even at this stage and also not commented upon. the observation of the learned AO is available in pa.ra (c) of the last page and it is seen that it merely mentions that the Sub-Registrar has given the values of sale instances of adjoining lands. It is not.known - i. What is the Survey No. of the adjoining land. ii. What is the nature of the land and extent of land. iii. Who is the owner. iv. What is the date of sale.* v. Who is the purchaser. vi. What is the sale consideration (d). In contrast, the FMV of the land is worked out by the assessee based on the Notification No. CVC-24/2013-14, dated, 07-08-2013 by reverse indexation. In fact, the land of the assessee in Survey No.110 is mentioned in SI.No.152 of the Notification under the Bileshivale village (Refer page 19 of the PB dated, 14-03-2019). The learned AO has also taken FMV of the non- existent Notification stated to be dated, 17-04-2007 and determined by the FMV by reverse indexation. Hence there is no dispute regarding the method

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore by reverse indexation based on the Guidance Values notified by the Government. Hence the FMV adopted by the assessee on the existing Notification should prevail over the FMV determined by the AO on non- existent Notification. It may be further clarified that the learned AO vide para 4.6. (iv) of page 8 of the assessment order has observed that the Gazette Notification is in respect of Byrathi village, whereas the land in question is in Bileshvale village. It is clear that the learned AO misread the material facts on record as is evident from a mere glance at the SI. Nos. 151 and 152 of the Notification, especially when the survey No. (110) is mentioned.

COST OF. IMPROVEMENT. 3.The learned AO has commented that there was no documentary proof regarding the claim that the assessee was not: required to maintain books of account under any law as the only income at the relevant time was from agriculture, that too for the HUF. As there was no liability to income tax at the relevant time and no returns were filed, it is submitted that the burden was on the learned AO to show how the assessee was liable to maintain the books of account under the law. In this view it is submitted that the cost of improvement made to agricultural lands on fencing, sinking of bore wells etc., is an allowable deduction, because there ought to be some expenditure on maintenance of the lands."

5.3. As may be seen from the impugned order of the learned CIT(A), the Grounds of appeal and the submissions of the assessee have, not been considered and adjudicated in proper & right perspective at all.

Unsecured Loans — Rs.52,44,425/- The learned AO has added an amount of Rs.52,44,425/- shown as 6. unsecured loans as unexplained credits u/s 68 of the Act. The learned CIT(A) has not considered the Grounds of appeal and the explanations of the assessee at all. Unexplained Investment — Rs.32,59,000/- The learned AO has added an amount of R.32,59,000/- shown in the balance 7. sheet, as undisclosed income. The learned CIT(A) has not considered the Grounds of appeal and the explanations of the assessee at all.

The learned AO has also initiated the penalty proceedings u/s 271(1)(c) r.w.s 8. 274 of the Act.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Aggrieved by the same, the assessee is in appeal before the Hon’ble 9. Tribunal.” for AY 2012-13 – Statement of facts in the case of B.K. Raghavendra, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The family owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into NA land, developed into plots and sold during the period from FY 2011-12 to FY 2014- 15., 1.2.Search u/s 132 of the•Act came to be conducted by virtue of the warrant of authorisation in the joint names of B.K. Raghavendra, B.K. Dhananjaya anCI'Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 144 dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.90,03,724/-, as against the returned income of Rs.13,49,310/- declared in the return filed on 05-03-2016 in response to the Notice u/s 153A of the Act.

1.3.The details of the incomes disclosed in the said return u/s 153A and the additions made in the impugned assessment order are tabulated below for the sake of reference:

SI. Head of Income Income Additions Remarks No. declared made in in the the order Return u/s 153A r. (In• Rs.) w.s 144 (In Rs.) (i). Business Income - 1,23,958 56,55,242 Please see on sale of lands Note

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

LTCG - share in 8,48,563 1,68,096 Please see (ii). 'Note the land in Survey No.110, Bileshivale village. (15.85% share)

( ). STCG 4,67,365 17,40,500 Disallowance of cost of improvement and selling ' expenses.

Note: The LTCG arose by virtue of sale of plots in the said land of 8 acres (i). & 11 guntas in Survey No.110, which was ancestral land and 11 'family members inherited their respective shares.

FMV as on 01-04-1981 (ii). The assessee has adopted the cost of land beirlg FMV of the entire land of 8.11 acres as on 01-04-1981 at Rs.1,17,692/-. As against this, the learned AO has adopted the FMV of the said land at Rs.10,810/- per acre stated to be on the basis of sale instance of adjoining land in October, 1986 received from the Sub-Registrar of Bommanahalli and Hosakote. For this sale value, the learned AO has applied reverse indexation and arrived at FMV of Rs.63,891/- for the entire land of 8.11 acres as on 01-04-1981, which is disputed in this appeal.

(iii).The learned AO has not allowed the cost of improvement of Rs.1,47,582/- in FY 1986-87 (incorrectly mentioned as Rs.47,862/-, in para 4.6 of page 6 of the assessment order) on stating that there was no proof for the same, which is also disputed in this appeal.

Brief history of inheritance. 2.1.Shri. B.C. Kempaiah died intestate leaving behind his estate including the agricultural land of 8.11 acres, which came to devolve among the legal heirs. Subsequent to the demise of the said Shri. B.C. Kempaiah, the HUF consisted of 11 family members comprising of mother and her 5

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore daughters and 5 sons, and all the 11 persons inherited the agricultural land measuring 8 acres & 11 guntas at Survey No.110, Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru. The 5 male members of the family are - (i) BK Raghavendra, (ii) BK Dhananjaya, (iii) BK Shivappa, (iv) BK Kanakaraju and (v) BK Manjunath. The LTCG accruing to the late B.K. Manjunath is assessed in the hands of his wife & legal heir, BK Shashikala.

2.2.The learned AO has apportioned the LTCG arising out of the transfer of the said land of 8.11 acres based on the respective shares as per the family arrangement/MOU dated, 08-03-2016 in the hands of the legal heirs'.

2.3. Based on the aforesaid MOU, the Learned AO has reworked the respective scares of the .Co-parceners in the said land of 8.11 acres (3,60,459 SA.,) in SI. No. (iii) of para 4.5 of page 7 of the impugned assessment order.

Income on sale of Plots. 3.1. The subject lartd was converted into SIT in the FY 2010-11 and therefore income arising on its conversion and sale is to be taxed separately as -

LTCG on conversion of the subject land into SIT as per section (i). 45(2), and;

(ii). Business income on sale of plots comprised in SIT.

LTCG on conversion of Land u/s•45(2). 3.2. As per section 45(2) of the Act, the LTCG arising on conversion of land into SIT is chargeable to tax as income of the previous year in which such SIT is sold otherwise transferred. The computation of LTCG has two steps - (i) The determination of cost as on 01-04-1981/or FMV where cost is not available. Such cost/FMV is further increased to arrive at the indexed cost/FMV, and; (ii) The determination of FMV as on the date of conversion as on 01-04-2010.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore Cost/FMV as on 01-04-1981. 3.3.The assessee has taken the cost as on 01-04-1981 at Rs.1,17,692/- as the cost of acquisition in FY 1981-82 and also taken cost of improvement at Rs.1,47,862/- in FY 1986-87. The indexed cost of acquisition was accordingly computed by applying the notified inflation index to the aforesaid cost of acquisition in FY 1981-82 and cost of improvement in 1986-87.

3.4. The Learned AO has disagreed with the said computation and re-computed the FMV as on 01-04-1981 on the basis of the purported sale instances in FY 1986-87 received from the Sub Registrar Offices of Bommanahalli and Hosakote. As per the said information from the Sub Registrar, the adjoining land of 18 1/2 guntas was sold for Rs.5000/-. On this basis, the sale value of 1 acre worked out to Rs.10,810/- per acre in FY 1986- 87. As per serial No.(ii) of para 4.6 of page 8 of the impugned assessment order, the cost as on 01-041981 of the entire land of 8 acres and 11 guntas and the indexed value in the year of conversion in FY 2010-11 is worked out as per the following:

Sl. Amount Particulars No. (in Rs.) 1 The purported sale value of adjoining land of 18 1/2 5000/- Guntas in FY 1986-87.

2 The sale value of 1 acre(5000x40/18.5) as in FY 1986- 10810/- 87; worked out on the basis of the above value in SI. No.1

3 Cost of 1 acre of land on the basis of the 7721/-per acre above said values applying the reverse indexation (10810x100/140) . 4 Cost of land of 8.11 acres @ Rs.7721/- per acre 63891/-

5 Indexed cost of the land in FY 2010-11 being the 4,54,265/- year of conversion of the land into SIT u/s 45(2)

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Note: The purported information/sale instances received from the Sub-Registrar of Bommanahalli & Hoskote was not made available during the assessment proceedings and also during the appellate proceedings before the Learned CIT(A), as more clearly submitted under the appropriate context hereinunder.

FMV as on 01-04-2010. 3.5. As submitted earlier, the second step in computation of LTCG u/s 45(2) is to determine the FMV of the land as on the relevant date i.e., 01-04- 2010, being the date on which the land was converted into the SIT. For the purpose of working of the FMV of the entire land as on 01-04-2010, the assessee has relied on the Notification No.CVC-24/2013-14 dated, 07-08- 2013,, issued by the Government of Karnataka. In the said Notification, the land is listed in SI. No.151 & 152 and the guidance value is notified at Rs.1,20,00,000/- in the FY 2013-14. The guidance value as per the said Notification is taken and the same is reduced by applying the reverse cost inflation index (CII) notified for the respective financial years. The computation of the FMV as on 01-04-2010 by the assessee is referred to in Si. No.(iii) of para 4.6 of pages 8 & 9,of the impugned assessment order.

3.6. As per the !earned AO, the assessee has shown higher LTCG taxable at 200/0 to correspondingly reduce the business income which is taxable at a higher rate at 30% serial No.(iii) of para 4.7 of pages 11 & 12 of the impugned assessment order). On this assumption, the Learned AO has recomputed the FMV as on 01-042010 by taking Rs.30,00,000/- per acre purportedly on the basis of the Notification dated 17-04-2007 issued by the Government of Karnataka (Serial No.(iii) of para 4.6 of page 9 of the impugned assessment order). This information regarding the Notification dated 17.4.2007 is allegedly received from the Sub-Registrar in respect of the land at Bileshivale village. This purported information was not made available either during the assessment proceedings or during the appellate proceedings before the Learned CIT(A), even though, a specific ground for supply of the information was taken during the appellate proceedings.

3.7. The dispute in this appeal mainly is relates to: the working of the Cost of acquisition as on 01-041981, and; (i). the FMV on the date of conversion of land into SIT in FY 2010- (ii). 11. The Learned AO has determined the FMV as on 01-04-2010

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore at Rs.2,48,25,000/-, as against Rs.8,43,47,406/- determined by the assessee.

Business Income. 4.1.The learned AO has worked out the business income by taking the cost of land as per the reworked FMV as on the date of conversion in FY 2010-11. Since the said recomputed FMV is adopted as cost in computing th0 business income, the business income is proportionately increased. The learned AO h.as further added Rs.32,49,600/- stating it to be the difference in sale consideration received as per the seized document from One Mr. S. Anil Reddy and this addition is not disputed in this appeal.

4.2.The learned AO has also reworked the share of the assessee on the basis of the said MOU dated, 08-03-2016 at 15.85%, whereas the assessee had taken the share at 20% in the return of income. The share of 20% in the return of income was taken since the land was inherited by 5 brothers, sons of Late Shri. B.C. Kempaiah.

Proceedings before the CIT(A). 5.1. On appeal by the assessee, the learned CIT(A) has dismissed the appeal vide common order in & 129/CIT(A)-11/BNG/2016-17 dated, 29-01-2021. The learned CIT(A) has reproduced the Grounds of the assessee, the statement of facts, additional Grounds of appeal taken and the counter submissions made by the learned AO in the remand report. The findings of the learned CIT(A) are recorded in THREE sentences in para 18 of page 17 of the appellate order, which is as under:

"The appellant has not brought anything on record to find fault with the findings of the AO as well as the method adopted by him to determine the business income for each of the assessment years. The addition made on this count for the impugned assessment years stands confirmed. The ground fails." 5.2. The written-submissions vide paper-book dated, 14-032019, filed during the hearing and the counter comments dated, 27-11-2019 on the remand report of the AO, have not been considered at all, because if they were to be considered, there was no option for the learned CIT(A), but to allow the appeals as there was no material to controvert the grounds taken. The submissions made in para 1.1 to 3 of the said counter comments of the assessee dated, 27-11-2019 briefly capture the issues in a nutshell and the same are reproduced below:

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore "1.1. The dispute is regarding the cost of acquisition of the land measuring 8 acres 11 guntas situated at Survey No. 110,. Bilishivale Village, Bidarahalli Hobli, Bangalore East Taluk, in: computing the LTCG. The Learned AO adopted the FMV as on 01-04-1981 before indexation on the basis of the purported instance of sale obtained from the Sub-Registrar Offices of Bommanahalli and Hoskote, as per the discussion in SI. No. (ii) of para 4.6 of page 7 of the order. On the basis of this purported information, the learned AO adopted total value of the land of 8 acres 11 guntas at Rs.63,$91/-. As submitted earlier, the purported information cannot be used against the assessee for the reason that:

Bommanahalli and Hoskote are situated far away (a). from the land of the assessee, as submitted earlier - kindly refer the google maps enclosed as annexures A & B at pages 13 and 14 of the paper-book (PB). The purported information was not supplied to the assessee during the (b). assessment proceedings and the learned AO has not supplied a copy even during the remand proceedings. The remand report is conspicuously silent as to whether the said information/document is available on record and why it is not supplied to the assessee or why a certified copy is not made available with the remand report. The said remand report vide SI. No. 1(b) of page 3 merely refers to the para of the said Show-cause Notice dated, 08-03-2016 and does not dispute the fact that the property of the assessee at Bileshivale village is far away from Bommanahalli or Hoskote. Apart from the above, the remand report does not even refer to the letter of enquiry issued by the AO or the letter of the Sub-Registrar received in response.

No doubt, the learned AO had referred to the purported (c). information from the Sub-Registrar Office in para 15.1 of the show- cause Notice dated, 0803-2016. Again, the said Notice mentions the same in the last para. Since the information regarding the relied upon instances of sale itself was not made available to the assessee, the assessee could not comment on the same, especially in the absence of precise. information as to its location, Survey Nos. etc.

1.2. In. view of the above, it is prayed that the working of the AO of the cost of acquisition is unsupportable and therefore, the cost of acquisition as adopted in the return of income may be restored.

FMV as on Date of Conversion i.e., as on 01-04-2010.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

2. As submitted earlier, the FMV of the property – 8 acres 11 guntas as on 01- 04-2010 was taken at Rs.2,48,25,000/- as against FMV of Rs.8,43,47,406/-taken by the assessee. The computation of the FMV by the AO is stated to be based on the information received from the Sub- Registrar - Notification dated, 17-04-2007 of the Government of Karnataka. It is submitted that - (a). The purported Notification was not made available to the assessee and accordingly, the assessee had no occasion to counter the same.

(b). To the best of our knowledge and belief, there is no such Notification referred to and relied by the learned AO available in the website of Government of Karnataka.

(c). The remand report does not dispute the fact that the purported Notification was not made available at the time of assessment proceedings. Further, the purported Notification is not supplied even at this stage and also not commented upon. The observation of the learned AO is available in para (c) of the last page and it is seen that it merely mentions that the Sub-Registrar has given the values of sale instances of adjoining lands. It is not known -

What is the Survey No. of the adjoining land. i. What is the nature of the land and extent of land. ii. iii. Who is the owner. iv. What is the date of sale. Who is the purchaser. v. vi. What is the sale consideration

(d). In contrast, the FMV of the land is worked out by the assessee based on the Notification No. CVC-24/2013-14, dated, 07-08-2013 by reverse indexation. In fact, the land of the assessee in Survey No.110 is mentioned in SI.No.152 of the Notification under the Bileshivale village,(Refer page 19 of the PB dated, 14-03-2019). The learned AO has also taken FMV of the non-existent Notification stated to be dated, 17-04-2007 and determined by the FMV by reverse indexation. Hence there is no dispute regarding the method by reverse indexation based on the Guidance Values notified by the Government. Hence the FMV adopted by the assessee on the existing Notification should prevail over the FMV determined by the AO on non- existent Notification. It may be further clarified that the learned AO vide para

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

4.6. (iv) of page 8 of the assessment order has observed that the Gazette Notification is in respect of Byrathi village, whereas the land in question is in Bileshvale village. It is clear that the learned AO misread the material facts on record as is evident from a mere glance at the Si. Nos. 151 and 152 of the Notification, especially when the survey No. (110) is mentioned.

COST OF IMPROVEMENT.

3. The learned AO has commented that' there was no documentary proof regarding the claim that the assessee was not required to maintain books of account under any law 'as the only income at the relevant time was from agriculture, that too for the HUF. As there was no liability to income tax at the relevant time and no returns were filed, it is submitted that the burden was on the learned AO to show how the assessee was liable to maintain the books of account under the law. In this view it is submitted that the cost of improvement made to agricultural lands on fencing, sinking of bore wells etc., is an allowable deduction, because there ought to be some expenditure on maintenance of the lands."

5.3.As may be seen from the impugned order of the learned CIT(A), the Grounds of appeal and the submissions of the assessee have not been considered and adjudicated in proper & right perspective at all.

Short-term Capital Gain. The learned AO recomputed the short-term capital gain by disallowing 6. the cost of improvement amounting to Rs.17,40,500/- on the ground that there was no evidence furnished. The learned CIT(A) has not considered the Grounds of appeal and the Explanations of the assessee at all.

The learned AO has also initiated the penalty proceedings u/s 271(1)(c) r.w.s 7. 274 of the Act. Aggrieved by the same, the assessee is in appeal before the Hon'ble 8. Tribunal.” for AY 2013-14 – Statement of facts in the case of B.K. Raghavendra, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The family owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore converted into NA land, developed into plots and sold during the period from FY 2011-12 to FY 2014-15.

1.2.Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugned assessment order u/s 153A r.w.s. 144 dated, 28-03-2016 came .to be passed by determining the total income assessed at Rs.59;54,781/- , as against the returned income of Rs.2,30,080/- declared. in the return filed on 05-03-2016 in response to the Notice u/s 153A of the Act.

1.3.The details of the incomes disclosed in the said return u/s 153A and the additions made in the impugned assessment order are tabulated below' for the sake of reference:

Remarks SL Head of Income Income Additions No. declared in made in the order u/s the Return (In Rs.) 153A r.w.s 144 (In Rs.)

(i). Byiness Income — 85,942 6,91,819 Please see Note an sale of lands (ii). LTCG — share in 1,44,141 32,879 Please see the land . in Note . Survey No.110, . Bileshivale village. (15.85% share) (iii) Investment in NIL 50,00,000 -- land Note: The LTCG arose by virtue of sale of plots in the said land of 8 acres & (i). 11 guntas in Survey No.110, which was ancestral land and 11 family members inherited their respective shares.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(ii). FMV as on 01-04-1981 The assessee has adopted the cost of land being FMV of the entire land of 8.11 acres as on 01-04-1981 at Rs.1,17,692/-. As against this, the learned AO has adopted the FMV of the said land at Rs.10,810/- per acre stated to be on the basis of sale instance of adjoining land in October, 1986 received from the. Sub-Registrar of Bommanahalli and Hosakote. For this sale .vijue, the learned AO has applied reverse indexation and arrived at FMV of Rs.63,891/- for the entire land of 8.11 acres as on 01-04-1981, which is disputed in this appeal.

(iii). The learned AO has not allowed the cost of improvement of Rs.1,47,582/- in FY 1986-87 (incorrectly mentioned as Rs.47,862/- in para 4.6 of page 6 of the assessment order) on stating that there was no proof for the same, which is also disputed in this appeal.

Brief history of inheritance. 2.1. Shri. B.C. Kempaiah died intestate leaving behind his estate including the agricultural land of 8.11 acres, which came to devolve among the legal heirs. Sulpsequent to the demise of the said Shri. B.C. Kempaiah, the HUF:tconsisted of 11 family members comprising of mother and her 5 'daughters and 5 sons, and all the 11 persons inherited the agricultural land measuring 8 acres & 11 guntas at Survey No.110, Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru. The 5 male . members of the family are - (i) BK Raghavendra, (ii) BK bhananjaya, (iii) BK Shivappa, (iv) BK Kanakaraju and (v) BK Manjunath. The LTCG accruing to the late B.K. Manjunath is assessed in the hands of his wife & legal heir, BK Shashikala.

2.2. The learned AO has apportioned the LTCG arising out of the transfer of the said land of 8.11 acres based on the respective shares as per the family arrangement/MOU dated, 08-03-2016 in the hands of the legal heirs.

2.3. Based on the aforesaid MOU, the Learned AO has reworked the respective shares of the Co-parceners in the said land of 8.11 acres (3,60,459 S.ft.,) in SI. No. (iii) of para 4.5 of page 6 of the impugned assessment order.

Income on sale of Plots. 3.1. The subject land was converted into SIT in the FY 2010-11 and therefore income arising on its conversion and sale is to be taxed separately as -

LTCG on conversion of the subject land into SIT as per section (i). 45(2), and;

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

(ii). Business income on sale of plots comprised in SIT.

LTCG on conversion of Land u/s 45(2). 3.2. As per section 45(2) of the Act, the LTCG arising on conversion of land into SIT is chargeable to tax as income of the previous year in which such SIT is sold otherwise transferred. The computation of LTCG has two steps -

(i) The determination of cost as on 01-04-1981/or FMV where cost is not available. Such cost/FMV is further increased to arrive at the indexed cost/FMV, and;

(ii). The determination of FMV as on the date of conversion as on 01-04-2010.

Cost/FMV as on 01-04-1981.

3.3.The assessee has taken the cost as on 01-04-1981 at Rs.1,17,692/- as the cost of acquisition in FY 1981-82 and also taken cost of improvement at Rs.1,47,862/- in FY 1986-87. The indexed cost of acquisition was accordingly computed by applying the notified inflation index to the aforesaid cost of acquisition in FY 1981-82 and cost of improvement in 1986-87.

3.4. The Learned AO has disagreed with the said computation and re-computed the FMV as on 01-04-1981 on the basis of the purported sale instances in FY 1986-87 received from the Sub Registrar Offices of Bommanahalli and Hosakote. As per the said information from the Sub Registrar, the adjoining land of 18 1/2 guntas -was sold for Rs.5000/-. On this basis, the sale value of 1 acre worked out to Rs.1O,810/- per acre in FY 1986-87. As per serial No.(ii) of para 4.6 of page 7 of the impugned assessment order, the cost as on 01-041981 of the entire land of 8 acres and 11 guntas and the indexed value in the year of conversion in FY 2010-11 is worked out as per the following:

SI. Particulars Amount No. (in Rs.) The purported sale value of adjoining land of 18 1/2 1 5000/- Guntas in FY 1986-87.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

2 The sale value of 1 acre(5000x40/18.5) as in FY 1986- 10810/- 87; worked out on the basis of the above value in SI. No.1 3 Cost of 1 acre of land on the basis of the 7721/-per acre above said values applying the reverse indexation (10810x100/140) 4 Cost of land of 8.11 acres @ Rs.7721/- per acre 63891/- 5 Indexed cost of the land in FY 2010-11 being the 4,54,265/- year of conversion of the land into SIT u/s 45(2) Note:

The purported information/sale instances received from the Sub- Registrar of Bomm8nahalli & Hoskote was not made available during the assessment proceedings and also during the appellate proceedings before the Learned CIT(A), as more clearly submitted under the appropriate context hereinunder.

FMV as on 01-04-2010. 3.5. As submitted earlier, the second step in computation of LTCG u/s 45(2) is to determine the FMV of the land as on the relevant date i.e., 01- 04-2010, being the date on which the land was converted into the SIT. For the purpose of working of the FMV of the entire land as on 01-04-2010, the assessee has relied on the Notification No.CVC-24/2013-14 dated, 07-08- 2013, issued by the Government of Karnataka. In the said Notification, the land is listed in SI. No.151 & 152 and the guidance value is notified at Rs.1,20,00,000/- in the FY 2013-14. The guidance value as per the said Notification is taken and the same is reduced by applying the reverse cost inflation index (CII) notified for the respective financial years. The computation of the FMV as on 01-04-2010 by the assessee is referred to in SI. No.(iii) of para 4.6 of pages 7 & 8 of the impugned assessment order.

3.6. As per the learned AO, the assessee has shown higher LTCG taxable at 20% to correspondingly reduce the business income which is taxable at a higher rate at 30% (serial No.(iii) of para 4.7 of page 10 of the impugned assessment order). On this assumption, the Learned AO has recomputed the FMV as on 01-042010 by taking Rs.30,00;000/- per acre purportedly on the basis of the Notification dated 17-04-2007 issued by the Government of Karnataka (Serial No.(iii) of para 4.6 of page 8 of the impugned assessment order). This information regarding the Notification dated 17-04-2007

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore is allegedly received from the Sub-Registrar in respect of the land at Bileshivale village. This purported information was not made available either during the assessment proceedings or during the appellate proceedings before the Learned CIT(A), even though, a specific ground for supply of the. information was taken during the appellate proceedings.

3.7. The dispute in this appeal mainly is relates to:

(i). the working of the Cost of acquisition as on 01-041981, and; the FMV on the date of conversion of land into SIT in FY 2010- (ii). 11. The Learned AO has determined the FMV as on 01-04-2010 at Rs.2,48,25,000/-, as against Rs.8,43,47,406/- determined by the assessee.

Business Income. 4.1.The learned AO has worked out the business income by taking the cost of land as per the reworked FMV as on the date of conversion in FY 2010-11. Since the said recomputed FMV is adopted as cost in computing the business income, the business income is proportionately increased. The learned AO has further added Rs.32,49,600/- stating it to be the difference in sale consideration received as per the seized document from one Mr. S. Anil Reddy and this addition is not disputed in this appeal.

4.2.The learned AO has also reworked the share of the assessee on the basis of the said MOU dated, 08-03-2016 at 15.85%, whereas the assessee had taken the share at 20% in the return of income. The share of 20% in the return of income was taken since the land was inherited by 5 brothers, sons of Late Shri. B.C. Kempaiah. Proceedings before the CIT(A). 5.1.On appeal by the assessee, the learned CIT(A) has dismissed the appeal vide common order in & 129/CIT(A)-11/BNG/2016-17 dated, 29-01- 2021. The learned CIT(A) has reproduced the. Grounds of the assessee, the statement of facts, additional Grounds of appeal taken and the counter submissions made by the learned AO in the remand report. The findings of the learned CIT(A) are recorded in THREE sentences in para 18 of page 17 of the appellate order, which :is as under: "The appellant has not brought anything on record to find fault with the findings of the AO as well as the method adopted by him to determine the business income for each of the assessment years. The addition made on ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore this count for the impugned assessment years stands confirmed. The ground fails:"

5.2. The written-submissions vide paper-book dated, 14-032019, filed during the hearing and the counter comments dated, 27-11-2019 on the remand report of the AO, have not been considered at all, because if they were to be considered, there was no option for the learned CIT(A), but to allow the appeals as there was no material to controvert Ihe grounds taken. The submissions made in para 1.1 to 3 of the said counter comments of the assessee dated, 27-11-2019 briefly capture the issues in a nutshell and the same are reproduced below:

"1.1.The dispute is regarding the cost of acquisition of the land measuring 8 acres 11 guntas situated at Survey No. 110, Bilishivale Village, Bidarahalli Hobli, Bangalore East Taluk, in computing the LTCG. The Learned AO adopted the FMV as on 01-04-1981 before indexation on the basis of the purported instance of sale obtained from the Sub-Registrar Offices of Bommanahalli and Hoskote, as per the discussion in SI. No. (ii) of para 4.6 of page 7 of the order. On the' basis of this purported information, the learned AO adopted total value of the land of 8 acres 11 guntas at Rs.63,891/-. As submitted earlier, the purported information cannot be used against the assessee for the reason that:

(a) Bommanahalli and Hoskote are situated far away from the land of the assessee, as submitted earlier - kindly refer the google maps enclosed as annexures A & B at pages 13 and 14 of the paper-book (PB'). (b) The purported information was not supplied to the assessee during the assessment proceedings and the learned AO has not supplied a copy even during the remand proceedings. The remand report is conspicuously silent as to whether the said information/document is available on record and why it is not supplied to the assessee or why a certified copy is not made available with the remand report. The said remand report vide SI. No. 1(b) of page 3 merely refers to the para of the said Show-cause Notice dated, 08-03-2016 and does not dispute the fact that the property of the assessee at Bileshivale village is far away from Bommanahalli or Hoskote. Apart from the above, the remand re port does not even refer to the letter of enquiry issued by the AO or the letter of the Sub-Registrar received in response. (c) No doubt, the learned AO had referred to the purported information from the Sub-Registrar Office in para .15.1 of the show-cause Notice

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore dated, 0803-2016. Again the said Notice mentions the same in the last para. Since the information regarding the relied upon instances of sale itself was not made available to the assessee, the assessee could not comment on the same, especially in the absence of precise information as to its location, Survey Nos. etc.

1.2. In view of the above, it is prayed that the working of the AO of the cost of acquisition is unsupportable and therefore, the cost of acquisition as adopted in the return of income may be restored.

FMV as on Date of Conversion i.e., as on 01-04-2010. 2.As submitted earlier, the FMV of the property – 8 acres 11 guntas as on . 01-04- 2010 was taken at Rs.2,48,25,000/- as against FMV of Rs.8,43,47,406/-taken by the assessee. The computation of the FMV by the AO is stated to be based on the information received from the Sub-Registrar - Notification dated, 17-04-2007 of the Government of Karnataka. It is submitted that - (a). The purported Notification was not made available to the assessee and accordingly, the assessee had no occasion to counter the same.

(b) To the best of our knowledge and belief, there is no such Notification referred to and relied by the learned AO available in the website of Government of Karnataka.

(c). The remand report does not dispute the fact that the purported Notification was not made available at the time of assessment proceedings. Further, the purported Notification is not supplied even at this stage and also not commented upon. The observation of the learned AO is available in para (c) of the last page and it is seen that it merely mentions that the Sub-Registrar has given the values of sale instances of adjoining lands. It is not known -

What is the Survey No. of the adjoining land. i. ii. What is the nature of the land and extent of land. iii. Who is the owner. iv. What is the date of sale. Who is the purchaser. v. vi. What is the sale consideration

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore (d).In contrast, the FMV of the land is worked out by the assessee based on the Notification No. CVC-24/2Q13-14, dated, 07-08-2013 by reverse indexation'. In fact, the land of the assessee in Survey No.110 is mentioned in SI.No.152 of the Notification under the Bileshivale village (Refer page 19 of the PB dated, 14-03-2019). The learned AO has. also taken FMV of the non-existent Notification stated to be dated, 17-04-2007 and determined by the FMV by reverse indexation. Hence there is no dispute regarding the method by reverse indexation based on the Guidance Values notified by . the Government. Hence the FMV adopted by the assessee on the existing Notification should prevail over the FMV determined by the AO on non-existent Notification. It may be further clarified that the learned AO vide para 4.6. (iv) of page 8 of the assessment order has observed that the Gazette Notification is in respect of Byrathi village, whereas the land in question is in Bileshvale village. It is clear that the learned AO misread the material facts on record as is evident from a mere glance at the SI. Nos. 151 and 152 of the Notification, especially when the survey No. (110) is mentioned.

COST OF IMPROVEMENT. 3.The learned AO has commented that there was no documentary proof regarding the claim that the assessee was not required to maintain books of account under any law as the only income at the relevant time was from agriculture, that too for the HUF. As there was no liability to income tax at the relevant time and no returns were filed, it is submitted that the burden was on the learned AO to show how the assessee was liable to maintain the books of account under the law. In this view it is submitted that the cost of improvement made to agricultural lands on fencing, sinking of bore wells etc., is an allowable deduction, because there ought to be some expenditure on maintenance of the lands."

5.3. As may be seen from the impugned order of the learned CIT(A), the Grounds of appeal and the submissions of the assessee have not been considered and adjudicated in proper & right perspective at all. Investment of Rs.50,00,000/-.

The learned AO has taxed the amount of investment of Rs.50,00,000/- 6. in the property on the ground that the same is made out of undisclosed sources. The learned CIT(A) has not considered the Grounds of appeal and the Explanations of the assessee at all.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

The learned AO has also initiated the penalty proceedings u/s 271(1)(c) r.w.s 7. 274 of the Act. Aggrieved by the same, the assessee is in appeal before the Hon'ble 8. Tribunal.” for AY 2014-15 – Statement of facts in the case of B.K. Raghavendra, Bangalore:

1.1.The appellant is an individual mainly engaged in agriculture. The family-owned agricultural land in Survey No.110 at Bileshivale village, Doddagubbi Post, Bengaluru East Taluk, Bengaluru, which was converted into NA land, developed into plots and sold during the period from FY 2011-12 to FY 2014-15.

1.2. Search u/s 132 of the Act came to be conducted by virtue of the warrant of authorisation in the joint names of B.K. Raghavendra, B.K. Dhananjaya and Smt. Shashikala on 01-10-2013. In consequence thereof, the impugne4 assessment order u/s 144 r.w.s 153D dated, 28-03-2016 came to be passed by determining the total income assessed at Rs.69,13,000/-. The details of additions are as under: SI. Amount Particulars No. (in Rs.) LTCG 22,40,000 (i). . (ii). Sale consideration of property 27,23,000 (iii). Investment in immovable property 19,50,000

6. The learned AO has also initiated the penalty proceedings u/s 271AAB r.w.s 274 of the Act.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

In view of the above facts no interference is called for since no infirmity 10. arosed." It is submitted that the learned CIT(A) has not even considered the written 8. submissions dated, 14/03/2019 at all.

Aggrieved by the same, the assessee is in appeal before the Hon'ble Tribunal.” 9.

2.1 The assessees are in appeal before us contesting the various additions made by the AO and also framing assessments u/s 153A of the Act and also raised various other grounds.

“The order of the learned CIT(A) dated, 27/01/2021 was not received/served 1. on the assessee-appellant. The assessee filed a letter before the learned CIT(A) on 24/06/2021 stating that the appellate order was not served/received on the assessee and therefore, a certified copy may be issued to him. A certified copy of the order

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore accordingly was issued to the assessee on 24/06/2021. Accordingly, the time to file the appeal expired on 23/08/2021.

The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi- judicial proceedings.

II Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.

III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, -all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."

(Emphasis added) 3. Hence it is submitted that the delay should be reckoned after the expiry of 90 days from 01-03-2022 which is 29-05-2022. Hence there is delay of 185 days calculated upto the date of 14-12-2022, the date of filing this appeal, which is explained hereinunder:

It is submitted that identical assessments were made in the hands of BK Shashikala, BK Dhananjaya and BK Raghavendra (assessee) and long-term capital gain was taxed proportionate to their shares in the assessee as may be seen from the impugned assessment orders. The case records along with the order of the CIT(A) were handed over to the advocate, Shri. Aravind Chavan on the advise of the tax consultant, who had opined that writ petition may be filed before the Hon'ble High Court.

(ii). The said advocate filed the writ petition in the case of Smt. BK Shashikala which came to be disposed of vide orders of the Hon'ble High Court in WP Nos.22748/2021(T-IT) & 22819/2021(T-IT) dated, 20-10-2022. The Hon'ble High Court was pleased to set aside the impugned assessment order and remand the matter back to the file of the assessing officer directing to decide the disputed issues applying the guidelines mentioned.

(iii). It was later ascertained that writ petitions in the case of the assessee were not filed and the tax consultant was instructed to over the phone to consider filing regular appeal before the Hon'ble Tribunal. However, the tax consultant was of the opinion that writ petitions should be filed in these cases also and was under the impression that writ petitions would be filed in the case of the assessee also.

(iv) When the order of the Hon'ble High Court in the case of Smt. BK Shashikala was received, the assessee came to know that the writ petitions were not filed in his case. As soon as the actual position is ascertained, the assessee took steps and the appeal is filed as expeditiously as possible. Hence it is submitted that the delay in filing the appeal is on account of ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore difference of opinion and lack of proper communication between the said advocate and the tax consultant and totally unintentional. Hence it is submitted that the delay requires to be condoned.

4. Without prejudice to the above, the Appellant most respectfully prays that the Hon'ble Tribunal may be pleased to consider the following submissions: (i). In Collector, Land Acquisition vs. Mst. Katiji & Ors. 167ITR 0471, the Hon'ble Supreme Court laid down the principle that the expression "reasonable cause" should be liberally construed so as to advance the cause of substantial justice.

(ii). Non-condonation of delay has the undesirable effect of throwing out a meritorious case at the threshold, which should be avoided. It is for this reason that the Hon'ble Court has laid down the proposition that when a prayer is made for condonation of delay, the concerned authority has to first examine whether, prima- facie, there is a case. If there is a prima-facie arguable case, condonation should not be refused. It is for this reason, the Hon'ble Court has held that ultimately the question is whether the assessee is liable according to provisions of the law or not, and a liability can't be fastened by refusing condonation of delay.

(III) The Hon'ble Court further held: "There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk."

It is submitted that if the delay is condoned, there would not be any 5. prejudice to the Revenue since the appeal would be decided on merits. If the delay is not condoned, the same would result in prejudice and irreparable damage to the assessee.

Hence, it is respectfully prayed that the Appeals may be admitted and 6. adjudicated on merits.”

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 5.1 In this case, the total delay in filing these appeals is at 478 days. The assessees said to be received the certified copies of CIT(A)’s orders on 23.3.2021 though the orders were passed on 27.01.2021. The time limit to file the appeals is 60 days from the date of receipt of orders. The assessees filed appeals in these cases on 14.12.2022. The period of delay from 15.3.2020 to 28.2.2022 is condoned by Hon’ble Supreme Court, which was due to Covid period and extended further period of 90 days from 1.3.2022 upto 29.5.2022 by the judgement of Hon’ble Supreme Court in MA No.29 of 2023 in MA 665 of 2021 in suo moto WP(C) No.3 of 2020 dated 10.1.2022. Hence, the delay has to be computed from 30.5.2022 to 14.12.2022. In other words, the delay from 23.3.2021 to 29.5.2022 which at 280 days has already been condoned by the judgement of Hon’ble Supreme Court cited (supra). This delay of 280 days need not be explained. The assessee has to explain the delay from 30.5.2022 to 14.12.2022 which is at 198 days out of which 60 days are excluded being the limitation period. The net delay in filing the appeals is 138 days.

5.2 In this regard, the assessee has filed an affidavit along with petition for condonation of delay stating that the assessee has engaged an advocate viz. Shri Aravind Chavan for filing the writ petition before the Hon’ble High Court in the case of Smt. BK Shashikala which came to be disposed of vide orders of the Hon'ble High Court in WP Nos.22748/2021(T-IT) & 22819/2021(T-IT) dated, 20-10-2022 and the assessee requested the advocate to file writ petition in these cases also. However, he failed to take appropriate steps to file appropriate writ petition.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore Hence, in our opinion, there is no mistake on the part of the assessees to file appeals belatedly the assessee has been waiting their advocate to file writ petition before Hon’ble High Court and the failure of advocate to file writ petition in the case of assessee cannot be attributable to the assessee. Accordingly, in our opinion, there is a reasonable cause for not filing the appeals in time before this Tribunal. In view of this, we condone the delay of 138 days in filing these appeals before this Tribunal.

5.3 The other delay of 280 days already condoned by Hon’ble Supreme Court cited (supra), which was due to Covid period as explained above i.e. from 15.3.2020 to 28.02.2022 and extended further period of 90 days from 1.3.2022 by the judgement of Hon’ble Supreme Court cited (supra), which need not be explained by the assessee and hence, the entire delay is condoned.

5.4 At the time of hearing, the ld. A.R. submitted that fair opportunity of hearing has not been given to the assessee while passing assessment orders in the case of B.K. Dhananjaya for the assessment years 2011-12, 2012-13, 2013-14 & 2014-15 which were ex-parte and the orders of the ld. CIT(A) in these cases are very cryptic and not discussed all the issues in dispute in proper perspective and he submitted that the issues may be remitted to the AO for fresh consideration in all these years including assessment year 2010-11 as the issues in all these appeals are inter-related.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore 5.5 Similarly, in the case of B.K. Raghavendra, it was submitted that assessments for the assessment years 2011-12, 2012-13, 2013-14 & 2014-15 were ex-parte and the ld. CIT(A) also has passed orders in wholesome manner without considering all the issues in proper perspective and the ld. A.R. also prayed that these cases also may be remitted to the AO for fresh consideration.

5.6 The ld. D.R. submitted that the appeals of the assessee may be remitted back to the file of ld. CIT(A) instead of remitting to the AO for de-novo consideration.

5.7 We accede to the request of the assessee’s counsel as the assessment orders in the case of B.K. Dhananjaya for the assessment years 2011-12 to 2014-15 and similarly in the case of B.K. Raghavendra for the assessment years 2011-12 to 2014- 15 have been passed ex-parte u/s 144 of the Act without the participation of the assessees and the orders of the ld. CIT(A) are very cryptic. Hence, we remit entire issues in dispute to the file of AO for reconsideration. The assessee shall cooperate with the AO and place necessary evidences in support of the claim of the assessee. Ordered accordingly.

ITA Nos.1127 to 1131/Bang/2022 B.K. Dhananjaya, Bangalore & to 1135/Bang/2022 B.K. Raghavendra, Bangalore

Order pronounced in the open court on 12th Jan, 2023