Reopening under Section 263 alleging buying and selling agricultural land within same financial year whether a ploy to thwart capital gains

Facts :

Post facto a scrutiny assessment, the PCIT reopened the case under Section 263 alleging that the assessee had purchased large tracts of agricultural land and had sold the same within the same financial year. Alleging that the AO did not make full inquiry on the same, the order was erroneous and prejudicial to the interests of the revenue. On appeal to ITAT, assessee explained that he had sold the agricultural land in yards instead of in acres without deplotting or converting into non-agricultural land and because as per VAO records the land remained agricultural land as it was there was no capital gains.

Held in favour of the assessee that there was no capital gains which was chargeable and the reopening stood quashed as AO had inquired about the same in the scrutiny assessment.

Ed. Note : What is an adventure in the nature of business or commerce, this needs to be mulled over once more. A One off transaction can also be a business. The intent is more important more than the form of the transaction.

Case: Vanga Jain Babu v. ITO 2023 TaxPub(DT) 2173 (Vis-Trib)