KADIR USMAN SHAIKH,LONAVALA vs. ITO CEN.II, PUNE, PUNE

आदेश / ORDER

PER D. KARUNAKARA RAO, AM :

These are the two appeals filed by the same assessee against the separate orders of CIT(Appeals), Central, Pune commonly dated 24.11.2011 for the assessment years 2006-07 & 2007-08.

2 ITA Nos.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08

ITA No.476/PUN/2012 A.Y.2006-07

07 reads as under:

“1) The learned CIT(A) erred in holding that the asst. made by the learned A.O. u/s.153A r.w.s. 143(3) was valid without appreciating that no notice u/s.143(2) was issued by the learned A.O. within the time limit prescribed and hence, the said asst. order passed by the learned A.D. was null and void. 1.1) The learned CIT(A) erred in holding that no notice u/s.143(2) was required to be served on the appellant for the purpose of completing the asst. u/s 153A and hence, just because the notice u/s.143(2) was not issued within the time limit prescribed did not mean that the asst. order passed by the A.O. was null and void. 1.2) The learned CIT(A) failed to appreciate that issue of notice u/s. 143(2) was the basic requirement for starting the asst. proceedings u/s.153A and once, the notice u/s.143(2) was not issued within the prescribed time limit, the asst. ought to have been held as null and void. 2) The learned CIT(A) erred in not appreciating that the asst. was barred by limitation and without jurisdiction since the asst. order was served on the appellant on 11.01.2010 which was beyond the limitation period prescribed u/s.153B and therefore, the asst. order ought to have been declared null and void. 3) The learned CIT(A) erred in not admitting the additional ground of appeal relating to the issue of warrant of authorization without appreciating that the 'issue raised was purely legal issue and since all the facts were on record, the same ought to have been admitted. 3.1) The learned CIT(A) further failed to appreciate that since the warrant of authorization was issued in the name of more than one person, the same was not valid and accordingly, the asst. completed u/s.153A was illegal and without jurisdiction and hence, the same should have been held null and void.

4) The learned CIT(A) erred in confirming the disallowance made u/s 40A(3) of Rs.3,33,866/- without appreciating that in the course of search, no incriminating evidence was found pertaining to this issue and hence, no addition could be made in the asst. order passed u/s 153A.

4.1) The learned CIT(A) failed to appreciate that the land purchased by the appellant was his capital asset and not a trading asset and therefore, the provisions of section 40A(3) were not applicable and hence, the disallowance made u/s 40A(3) ought to have been deleted.

5) The learned CIT(A) erred in confirming the addition of Rs.5,23,176/- by treating the gain on sale of agricultural land as business income as against the claim of the assessee that the said gain was exempt from tax and without appreciating that no such addition could be made in the asst. u/s 153A particularly because no incriminating evidence was found in the course of search pertaining to this issue.

3 ITA Nos.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08

5.1) The learned CIT(A) erred in holding that the gain arising on sale of land of Rs.5,23,176/- was taxable as business income on the ground that the assessee was engaged in the business of trading in lands and hence, the gain was taxable as business income.

5.2) The learned CIT(A) failed to appreciate that the assessee had held the lands as an investment and the assessee was not engaging in the business of trading in lands and therefore, the gain arising on sale of the lands was not taxable as business income of the assessee.

5.3) The learned CIT(A) erred in not appreciating that the lands sold by the assessee were agricultural lands and since those lands were held as an investment, the gain arising on sale of such lands was exempt from tax.

6) The learned CIT(A) erred in not deciding the ground relating to the addition of negative cash balance of Rs.1,63,474/-. 6.1) The learned CIT(A) failed to appreciate that the addition made on account of negative cash balance of Rs.1,63,474/- was not warranted and the same ought to have been deleted. 7) The learned CIT(A) erred in not appreciating that the learned A.O. had earned in charging interest u/s 234A, 234B & 234C and the same ought to be deleted. 8) The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”

Identical grounds have been raised by assessee in assessment year

2007-08. Considering identical grounds, both the appeals are heard

together and being adjudicated vide this common order. However, reference

is being made to the facts of ITA No.476/PUN/2012 for the purpose of

standard one.

income on 24.03.2008 declaring total income of Rs.3,33,090/- in response

to the notice u/s.153A of the Income Tax Act, 1961 (hereinafter referred to

as ‘the Act’). During assessment proceedings, Assessing Officer assessed

total income of assessee at Rs.13,03,600/- (rounded off) and made

following additions

i) Addition of Rs.3,33,866/- made u/s. 40A(3) of the Act.

4 ITA Nos.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08

ii) Addition of Rs.5,23,176/- on account of gain on sale of agricultural land.

CIT(A). During First Appellate proceedings, the CIT(A) confirmed the

addition made by Assessing Officer by holding as under :

“3.1 The appellant has taken grounds of appeal which are identical in substance in his appeal for other assessment years including A.Y.2003-04. Factual and legal position of the appellant in the period relevant for current assessment year (2006-07) are substantively similar to the period relevant for A.Y.2003-04. Therefore, decision in the appeal order for A.Y.2003-04 in respect of these grounds of appeal is equally applicable for the present appeal. In view of the decision given in the appeal order for A.Y.2003-04, all grounds of appeal for the present appeal ( of A.Y.2006-07) are dismissed.”

Tribunal by raising grounds as extracted above.

BEFORE THE TRIBUNAL

elaborate argumentative grounds and sub-grounds raised in appeal and

submitted that ground Nos.1, 1.1 and 1.2 relates to the requirement of

issuing notice u/s.143(2) of the Act in the matter of assessment made u/s.

153A of the Act. He further mentioned that the issue stands covered by

virtue of order of the Tribunal in assessee’s own case for the Assessment

Years 2002-03 to 2005-06 in ITA Nos.472 to 475/PUN/2012 dated

03.08.2018. Bringing our attention to the contents of Para 3 of the said

order, Ld. Counsel fairly submitted that the issue was decided against

assessee by relying on the Judgment of Hon'ble Delhi High Court in the

case of Ashok Chaddha Vs. ITO reported in 337 ITR 399 (Del.). The said

judgment is relevant for the proposition that the issue of notice u/s. 143(2)

of the Act is not mandatory in a case of the assessment made u/s.153A of

5 ITA Nos.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08

the Act. For the sake of completeness, the relevant para is extracted as

under:

“3. Referring to the above said grounds, Ld. AR for the assessee brought our attention to ground Nos.1, 1.1 and 1.2 and submitted that the said grounds have to be decided against the assessee in view of the binding High Court judgment in the case of Ashok Chaddha Vs. ITO reported in 337 ITR 399 (Del.) which is relevant for the proposition that the issue of notice u/s. 143(2) of the Act is not mandatory in a case of the assessment made u/s.153A of the Act. Ld. AR filed the written note relying on the said proposition.”

ground No.1, 1.1 and 1.2. Accordingly, ground Nos. 1, 1.1 and 1.2 raised

in appeal by Assessee are dismissed.

ground Nos. 2, 3, 3.1, 6 and 6.1 and submitted the said grounds are not

being pressed. On hearing the parties, the ground No.2, 3, 3.1, 6 and 6.1

are dismissed as ‘not pressed’.

Nos. 7 and 8 are consequential and general in nature and hence, requires

no adjudication. Accordingly, ground No. 7 and 8 are dismissed as such.

Accordingly, we order. That leaves ground Nos. 4 and 5 and its sub

grounds for adjudication.

for the assessee submitted that these grounds relate to the nature of

business of the assessee in the matter of land transaction. Ld. Counsel

brought our attention to the page 15 of the Paper Book and submitted that

assessee has land at Pimpri Land, Deoghar Jambhulane, Aundhe Land and

6 ITA Nos.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08

Bhushi Plot and they were sold by assessee at different period and earned

profits. Land at Bhushi Plot was sold by assessee after holding the plot for

long years and other three lands were sold in a period lesser than three

years. Land at Aundhe was sold in the same month. It is a limited prayer of

Ld. Counsel for the assessee that transactions in the Bhushi land may be

considered as ‘Capital Asset’ having regard to period of holding. With

respect to other transactions, Ld. Counsel submitted that it is offered as

concession and they cannot be business transactions.

Officer and CIT(A). Ld. DR further submitted that the assessee is engaged

in the business of purchase and sale of land and the same is undisputed

by the assessee. In such circumstances, profits earned on sale of land

must be considered as “Business Profit” taxable u/s. 52(8) of the Act.

general and contents of Para 3.1 in particular. The CIT(A) examined the

issue and status of the assessee as well as applicability of provisions to

section 40A(3) of the Act. The CIT(A) dismissed the appeal of assessee

relying on his earlier order relating to A.Y. 2003-04. Contents of Para 3.1 is

relevant and same is extracted above. Considering the factual matrix of the

case on one side and legal position on the other, we are of the opinion that

order of the CIT(A) is fair and reasonable and the same does not call for any

interference. Accordingly, ground Nos.4, 4.1, 5, 5.1, 5.2 and 5.3 are

dismissed.

assessment year 2006-07 is dismissed.

7 ITA Nos.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08

ITA No. 477/PUN/2012 A.Y.2007-08

Order pronounced on 05th day of October, 2018.

Sd/- Sd/- (�वकास अव�थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

पुणे / Pune; �दनांक / Dated : 05th October, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals), Central Pune. 4. The CIT, Central, Pune. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.