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The Tribunal held that the assessee had purchased and held the agricultural lands as an investment, not as stock-in-trade, as no development activities were carried out. Therefore, the gains from the sale were not to be treated as business income.
The Tribunal found that the Pr. CIT's conclusion that the AO failed to verify purchases from M/s. Anjaneya Life Care Ltd. was based on incorrect facts, as the assessee had not made any such purchases. The AO had, however, disallowed other bogus purchases.
The Tribunal partly upheld the Pr. CIT's order, finding that the Assessing Officer's failure to consider certain documents and the Fair Market Value of land rendered the assessment order erroneous. However, it directed a re-examination of the Section 54G deduction claim.
The Tribunal held that the Joint Commissioner's approval for reopening was granted mechanically, without proper application of mind, as evidenced by the discrepancy in the loss figures. Therefore, the reopening of the assessment was invalid.