Vanga Jain Babu v. ITO - Taxpublishers.in

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The Tax Publishers2023 TaxPub(DT) 2173 (Visak-Trib) IN THE ITAT, VISAKHAPATNAM BENCH DUVVURU RL REDDY, J.M. & S BALAKRISHNAN, A.M. Vanga Jain Babu v. ITO ITA No. 126/VIZ/2021 31 March, 2023 Appellant by: GVN Hari, Advocate Respondent by: M.N. Murthy Naik, Commissioner- Departmental Representative ORDER *S. Balakrishnan, A.M.* This appeal filed by the assessee is against the order passed under section 263 of the Income Tax Act, 1961 (the Act) by the learned Principal Commissioner, Visakhapatnam-1 (Pr. CIT) in DIN & Letter No. ITBA/COM/F/17/2020-21/1031835728(1), dated 27-3-2021 for the assessment year 2015-16. 2. Brief facts of the case are that the assessee is an individual, filed his return of income for the assessment year 2015-16 admitting a total income of Rs. 3,69,300 and agricultural income of Rs. 1,25,000, on 1-3-2016. The assessee is running a business/trade in Cashew Nuts in the name and style of Maranatha Cashew and Generals. The case was selected for limited scrutiny under CASS with a reason to examine Low Capital Gain with respect to sale consideration (higher of AIR and ITR). The learned assessing officer issued notice under section 143(2) of the Act on 29-7-2016 and the same was served on 7-8-2016. Due to change of incumbent, another notice under section 143(2) read with section 129 was issued and served on the assessee. Further, notice under section 142(1) of the Act along with a questionnaire was issued and the same was served on the assessee. The learned assessing officer in his order observed that despite several opportunities given to the assessee, the assessee did not respond to the same and therefore issued notice under section 274 read with section 271(1)(b) of the Act asking the assessee to show-cause why penalty should not be levied under section 271 of the Act and was provided an opportunity of being heard on 17-7-2017. Since the assessee did not appear nor filed any written explanation, a penalty under section 271(1)(b) was imposed on the assessee vide Order dated 16-8-2017. Further, notice under section 142(1) of the Act was issued and served on the assessee. In response to the notice the assessees Representative appeared and produced the required information called for by the learned assessing officer. The learned assessing officer during the scrutiny assessment proceedings observed that the assessee has entered into various transactions and noticed that the assessee was in receipt of Rs. 1,82,600 during the impugned assessment year which was not disclosed in the return of income. Therefore, the learned assessing officer considered the amount of Rs. 1,82,600 as income from other sources, while framing the assessment, for which the assessee did not object. Subsequently, the learned Principal Commissioner in exercise of powers vested under section 263 of the Act found that the order of the learned assessing officer as erroneous and prejudicial to the interests of the Revenue, in so far as the assessee has purchased and sold agricultural lands within a span of one month and considered that the learned assessing officer has not rejected the claim of the assessee in the absence of documentary evidence. The learned Principal Commissioner issued a show-cause notice dated 12-2-2020 for which the assessee submitted its reply on 23-2-2020. Considering the submissions made by the assessee, the learned Principal Commissioner found that the assessee purchased agricultural land admeasuring 6.69 Acrs on 14-7-2014 for Rs. 33,45,00 and sold the same for a consideration of Rs. 2,25,59,000 on 5-8-2014. Further, the learned Principal Commissioner also observed that the assessee has purchased another piece of agricultural land admeasuring 4.47 Acres for Rs. 61,00,000 on 14-8-2014 and sold the same for a consideration of Rs. 1,10,53,000 on 19-8-2014. From the submissions made by the assessee, the learned Principal Commissioner found that the assessee has purchased these lands with the ultimate motto of selling the lands and hence it cannot be considered as a simple transaction of sale of agricultural lands thereby attracting the capital gains on the sale of such lands. The learned Principal Commissioner therefore directed the learned assessing officer to pass necessary order giving effect to the revision order under section 263 of the Act considering the capital gains on the sale of land as short-term capital gains. The learned Principal Commissioner also directed the learned assessing officer to afford one more opportunity to the assessee before passing the consequential order. Aggrieved by the order of the learned Principal Commissioner, the assessee is in appeal before the Tribunal. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2023 TaxPub(DT) 2173 (Visak-Trib)

IN THE ITAT, VISAKHAPATNAM BENCH

DUVVURU RL REDDY, J.M. & S BALAKRISHNAN, A.M.

Vanga Jain Babu v. ITO

ITA No. 126/VIZ/2021

31 March, 2023

Appellant by: GVN Hari, Advocate

Respondent by: M.N. Murthy Naik, Commissioner- Departmental Representative

ORDER

S. Balakrishnan, A.M.

This appeal filed by the assessee is against the order passed under section 263 of the Income Tax Act, 1961 (the Act) by the learned Principal Commissioner, Visakhapatnam-1 (Pr. CIT) in DIN & Letter No. ITBA/COM/F/17/2020-21/1031835728(1), dated 27-3-2021 for the assessment year 2015-16.

2. Brief facts of the case are that the assessee is an individual, filed his return of income for the assessment year 2015-16 admitting a total income of Rs. 3,69,300 and agricultural income of Rs. 1,25,000, on 1-3-2016. The assessee is running a business/trade in Cashew Nuts in the name and style of Maranatha Cashew and Generals. The case was selected for limited scrutiny under CASS with a reason to examine Low Capital Gain with respect to sale consideration (higher of AIR and ITR). The learned assessing officer issued notice under section 143(2) of the Act on 29-7-2016 and the same was served on 7-8-2016. Due to change of incumbent, another notice under section 143(2) read with section 129 was issued and served on the assessee. Further, notice under section 142(1) of the Act along with a questionnaire was issued and the same was served on the assessee. The learned assessing officer in his order observed that despite several opportunities given to the assessee, the assessee did not respond to the same and therefore issued notice under section 274 read with section 271(1)(b) of the Act asking the assessee to show-cause why penalty should not be levied under section 271 of the Act and was provided an opportunity of being heard on 17-7-2017. Since the assessee did not appear nor filed any written explanation, a penalty under section 271(1)(b) was imposed on the assessee vide Order dated 16-8-2017. Further, notice under section 142(1) of the Act was issued and served on the assessee. In response to the notice the assessees Representative appeared and produced the required information called for by the learned assessing officer. The learned assessing officer during the scrutiny assessment proceedings observed that the assessee has entered into various transactions and noticed that the assessee was in receipt of Rs. 1,82,600 during the impugned assessment year which was not disclosed in the return of income. Therefore, the learned assessing officer considered the amount of Rs. 1,82,600 as income from other sources, while framing the assessment, for which the assessee did not object. Subsequently, the learned Principal Commissioner in exercise of powers vested under section 263 of the Act found that the order of the learned assessing officer as erroneous and prejudicial to the interests of the Revenue, in so far as the assessee has purchased and sold agricultural lands within a span of one month and considered that the learned assessing officer has not rejected the claim of the assessee in the absence of documentary evidence. The learned Principal Commissioner issued a show-cause notice dated 12-2-2020 for which the assessee submitted its reply on 23-2-2020. Considering the submissions made by the assessee, the learned Principal Commissioner found that the assessee purchased agricultural land admeasuring 6.69 Acrs on 14-7-2014 for Rs. 33,45,00 and sold the same for a consideration of Rs. 2,25,59,000 on 5-8-2014. Further, the learned Principal Commissioner also observed that the assessee has purchased another piece of agricultural land admeasuring 4.47 Acres for Rs. 61,00,000 on 14-8-2014 and sold the same for a consideration of Rs. 1,10,53,000 on 19-8-2014. From the submissions made by the assessee, the learned Principal Commissioner found that the assessee has purchased these lands with the ultimate motto of selling the lands and hence it cannot be considered as a simple transaction of sale of agricultural lands thereby attracting the capital gains on the sale of such lands. The learned Principal Commissioner therefore directed the learned assessing officer to pass necessary order giving effect to the revision order under section 263 of the Act considering the capital gains on the sale of land as short-term capital gains. The learned Principal Commissioner also directed the learned assessing officer to afford one more opportunity to the assessee before passing the consequential order. Aggrieved by the order of the learned Principal Commissioner, the assessee is in appeal before the Tribunal.