Loading judgment…
Facts
The assessee's appeal was filed with a delay of 72 days, which was condoned. The Assessing Officer initially reclassified gains from sale of land as business income. Subsequent proceedings under Section 153A did not lead to additions but maintained the business income classification.
Held
The Tribunal held that the CIT(A)'s decision to treat the appeal against the Section 153A order as infructuous was justified because the issue of classifying gains from sale of land as capital gains had already attained finality in previous proceedings before the ITAT.
Key Issues
Whether the appeal against the reclassification of sale of land gains as business income under Section 153A is infructuous when the same issue was decided as capital gains in prior proceedings.
Sections Cited
153A, 143(3), 147, 132
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri Ratnesh Nandan Sahay
Year: 2013-14 Tiruchangodu Sengodagounder Vs. The Deputy Commissioner of Ramasamy Khannaiyann, Income Tax, 67, Avarampalayam Road, K.R. Puram, Central Circle 1, Coimbatore 641 006. Coimbatore. [PAN:AFZPK7832C] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri S. Dharshan Bothra, Advocate ��थ� की ओर से/Respondent by : Ms. E. Pavuna Sundari, Addl. CIT सुनवाई की तारीख/ Date of hearing : 17.09.2025 घोषणा की तारीख /Date of Pronouncement : 22.10.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 26.02.2025 passed by the ld. Commissioner of Income Tax (Appeals) 20, Chennai, for the assessment year 2013-14.
We find that this appeal is filed with a delay of 72 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The assessee raised 2 grounds challenging the action of the ld. CIT(A) having concluded that the gains from sale of land is to be taxed under the head capital gains, ought to have held the same income, which was subsequently reclassified as business income under section 153A of the Income Tax Act, 1961 [“Act” in short] is also arising out of capital gains in the facts and circumstances of the case.
At the outset, we note that there was a search operation under section 132 of the Act on 06.03.2019 in the group case of M/s. Hindusthan Educational and Charitable Trust, wherein, the assessee is Chairman/Managing Trustee. We note that the assessee had offered long term capital gains in the original return of income, which was reclassified as business income by the Assessing Officer in the order passed under section 143(3) r.w.s. 147 of the Act dated 31.12.2018. We further note that upon initiating proceedings under section 153A of the Act, consequent upon search, the Assessing Officer completed the assessment under section 153A of the Act dated 10.08.2021 without making addition, but, however, the income under capital gains, which was reclassified as business income vide his order dated 31.12.2018 effectively stands, against which, the assessee preferred an appeal before the ld. CIT(A). Since, the appeal filed against the order under section 143(3) r.w.s. 147 of the Act has been adjudicated vide his order dated 26.02.2025, the ld. CIT(A) treated the appeal filed against the order passed under section 153A of the Act as infructuous and dismissed.
The ld. AR Shri S. Dharshan Bothra, Advocate submits that the ld. CIT(A), vide his order dated 26.02.2025 for AY 2013-14, having concluded that the gains from sale of land is to be taxed under the head capital gains and not under the head profits and gains from business or profession against the assessment order passed under section 143(3) r.w.s. 147 of the Act dated 31.12.2018, erred in dismissing the appeal of the assessee as infructuous against the reclassification of income of the assessee as business income, though no addition was made in the assessment order passed under section 153A of the Act and prayed that the ld. CIT(A) should have retained same stand as taken against scrutiny assessment.
The ld. DR Ms. E. Pavuna Sundari, Addl. CIT supported the order passed by the ld. CIT(A).
We have heard both the parties and perused the material available on record. We note that the Assessing Officer completed the assessment for the year under consideration under section 143 r.w.s.147 dated 31.12.2018 and concluded that the gains from sale of land is to be taxed under the head “profits and gains from business or profession”. Further, consequent upon the search, the Assessing Officer concluded the assessment order under section 153A of the Act dated 10.08.2021, wherein, even though no addition was made, the Assessing Officer retained the classification of assessee’s income as income from business.
On perusal of the 1st appellate order dated 26.02.2025 passed 8. against assessment order under section 143(3) r.w.s. 147 of the Act, brought on record in the form of paper book, we note that the ld. CIT(A), vide para 6.1.3, by placing reliance on the order of ITAT in assessee’s own case for AYs 2011-12 & 2009-10, held the income of the assessee arising out of sale transaction under the head “capital gain” and not business income.
On perusal of the impugned order passed against the order under section 153A of the Act, we note that the ld. CIT(A) observed the issue appealed has been adjudicated on merits in the order under section 143(3) r.w.s. 147 of the Act and the issues in the appeal filed against the order under section 153A of the Act becomes infructuous and dismissed, in our opinion, is justified, as we find, against the reclassification of income of the assessee as business income in the assessment order passed under section 153A of the Act, is no more res integra, as the ld. CIT(A) already held that the income of the assessee should be taxed under the head capital gains, but, not under the head profits and gains from business or profession against the assessment order passed under section 143(3) r.w.s. 147 of the Act. Therefore, we find no force in the submissions of the ld. AR that the ld. CIT(A) should have retained his stand towards reclassification of income as income should be taxed under the head “capital gain” only, instead of treating the appeal filed by the assessee as infructuous in the impugned order passed against the assessment order under section 153A of the Act. We find the definition of “infructuous” means that there is no necessity in adjudicating the issue again since the same issue has been adjudicated in another proceedings, thereby, the ld. CIT(A) opined that no purpose would serve in adjudicating the same in the impugned proceedings under section 153A of the Act since the same identical issue attained its finality before the ITAT, accordingly, held the issue in the present proceedings become infructuous and dismissed the appeal of the assessee. Therefore, we find no infirmity in the order of the ld. CIT(A) in holding the issue in the present appeal become infructuous and it is justified. However, we make it clear that the gains from sale of land is to be taxed under the head capital gains only, since the issue attained finality before the ITAT. Thus, the grounds raised by the assessee are dismissed.
In the result, the appeal filed by the assessee is dismissed. Order pronounced on 22nd October, 2025 at Chennai.