SUDHIR ANGRE,RAIGAD vs. INCOME-TAX OFFICER, WARD - 4, PANVEL

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ITA 496/PUN/2018Status: DisposedITAT Pune20 July 2023AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) did not provide the assessees with an adequate opportunity of hearing before directing the profit to be assessed as business income. Therefore, the matter was restored to the CIT(A) for fresh adjudication.

What were the facts?

The assessees treated profits from land sale as capital gains, while the Revenue, supported by the CIT(A), sought to classify it as business income. The CIT(A) directed the AO to assess the profit as business income without granting adequate opportunity of hearing.

What were the issues?

Whether the profits from the sale of land should be treated as capital gains or business income, and whether the CIT(A) provided adequate opportunity of hearing to the assessees.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 271(1)(c),Section 251(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE

Before: SHRI SATBEER SINGH GODARA & SHRI G.D. PADMAHSHALI

Hearing: 13.07.2023Pronounced: 20.07.2023

ORDER PER BENCH : The instant batch of four appeals pertains to two assessees viz., S/Shri Sudhir Angre and Sunil Angre. Both these assessees have filed their respective twin appeals i.e., ITA.Nos.495

1.

2 ITA.Nos.495 to 498/PUN./2018 & 496/PUN./2018 and ITA.Nos.497 & 498/PUN./ 2018, for assessment year 2012-2013, against the CIT(A)-2, Thane’s as many common orders in case nos.ITA No.10199 & 10203/2017- 18, both dated 22.12.2017, in proceedings u/sec.143(3) and 143(3) r.w.s. 147 [quantum] and sec.271(1)(c) [penalty] of the Income Tax Act, 1961 (in short "the Act"), respectively.

Heard both the parties at length. Case files perused.

2.

It is noted during the course of hearing that we hardly need to delve deeper in the relevant factual matrix since the first and foremost identical issue that arises for our apt adjudication is that of head of income itself. Suffice to say, both these assessee’s identical stand is that if at all they deserve to be assessed qua sale of the land in issue [as co sharers], they ought to be taxed under the head “capital gains” only as admittedly done by the Assessing Officer in his corresponding twin assessments.

3.

The Revenue’s case on the other hand strongly supports the CIT(A)'s identical detailed discussion directing the Assessing Officer to treat the assessees’ profits derived from sale of the land in issue as business income as under :

“6. I have carefully considered facts of the case, findings of the AO in the assessment orders, submission of the Ld. AR

3 ITA.Nos.495 to 498/PUN./2018 and material placed on record. From the facts of the case it is noticed that these two brothers/appellants claimed to had purchased one piece of land, vide purchase agreement No 4088/2011 dated 03.05.2011, executed on stamp paper of Rs.100/-, for total consideration of Rs.7,50,000/-, paid through three cheques of Rs 2,50,000/ of Pen Cooperative Urban Bank Ltd. On perusal of the sale deed it is noticed that the said land was sold within short span of 4 months, i.e. on 20.09.2011, vide sale agreement No.7403/2011 to M/s Rahul Land Pvt. Ltd, for total consideration of Rs 50 lakhs, that is at profit of Rs.42,50,000/-, which is quite abnormal profit in the trade. In the absence of purchase deed, the AO resorted to add their 50% share of entire sale consideration of Rs 50 lakhs, i.e. Rs.25 lakhs each in their respective hands as STCG. The transactions under dispute are adventure in nature and liable to be assessed as business income, as the appellants have harvested huge profit of Rs.42,50,000/-, which establishes the motto of the appellant to harvest maximum profit there from. In view of these facts the AO is hereby directed to assess the 50% share differential amount of Rs.42,50,000/-, i.e. Rs 21,25,000/- each, in the hands of these appellants, after verifying the source of investment of Rs.7,50,000/- made in the purchase of the land. The AO is therefore, directed

4 ITA.Nos.495 to 498/PUN./2018 accordingly. The appellant is also directed to produce the required details, along with credible documents, in support of above claims, along with source thereof.”

4.

We note in this clinching factual backdrop that the CIT(A)'s foregoing directions to the Assessing Officer for assessing the assessees’ profits from sale of land as business income, have nowhere granted them adequate opportunity of hearing as provided u/sec.251(2) of the Act. No material to this effect has been placed during the course of hearing before us. Faced with the situation, we deem it appropriate to restore these twin assessees’ quantum and consequential penalty appeals back to the CIT(A) for his afresh appropriate adjudication as per law, preferably within three effective opportunities of hearing. Ordered accordingly.

5.

All other pleadings on merits stand rendered premature at this stage.

6.

Both these assessee’s instant twin appeals each ITA.Nos.495 & 496/PUN./2018 and ITA.Nos.497 & 498/PUN./ 2018 are allowed for statistical purposes. A copy of this common order be placed in the respective case files.

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