High Court Of Madhya Pradesh : Indore Bench
CIT vs. Jagdish Kalani
Section 263
Asst. Year 1992-93
A.M. Sapre & Ashok Kumar Tiwari, JJ.
IT Appeal No. 130 of 1999
10th February, 2006
Counsel Appeared
R.L. Jain with Ku. V. Mandlik, for the Appellant : S.C. Bagadia with D.K. Chhabra, for the Respondent
ORDER
A.M. SAPRE, J. :
This is an appeal filed by Revenue (CIT) under s. 260A of the IT Act against an order dt. 6th May, 1999, passed by Income-tax Appellate Tribunal (for brevity hereinafter referred to as Tribunal) in ITA No. 406/Ind/1995. This appeal was admitted for final hearing on following substantial question of law :
“1. Whether, on the facts and in the circumstances of the case, the Honâble Tribunal was justified in ignoring the detailed and specific instances mentioned by the CIT in the order under s. 263 regarding the transaction of purchase and sale of plots entered into by the assessee over the years with a motive to earn profit and to which the AO failed to apply his mind which made the assessment order erroneous and prejudicial to the interest of Revenue ?”
Heard Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant and Shri S.C. Bagadia, learned senior counsel with Shri D.K. Chhabra, learned counsel for the respondent.
The dispute relates to asst. yr. 1992-93. The respondent (assessee) was assessed as an individual for the year in question by passing an order under s. 143(3) on 17th March, 1993. While making an assessment, the AO treated one sale of plot bearing No. C-1, Bungalow No. 45, Neemuch, exigible to payment of capital gains tax by accepting the stand of assessee who offered to pay capital gains tax on its sale amounting to Rs. 60,005. However, CIT invoked his suo motu revisionary powers under s. 263 of the Act against the assessee. In the opinion of CIT, the transaction in question, i.e., sale of plot did not amount to sale so as to attract the liability to pay capital gains but according to him, it was in the nature of “adventure-in-trade” and hence, the entire sale transaction amounted to business profit. The CIT, therefore, forming such prima facie opinion, issued notices to assessee and after giving him an opportunity confirmed his opinion by his order, dt. 27th March, 1995. In this view of the matter, the AO was asked to make consequential assessment. It is this order of CIT which was challenged by the assessee in appeal to Tribunal. By impugned order under appeal, the Tribunal allowed the appeal and set aside the order of CIT holding inter alia, that firstly the order of AO was neither erroneous nor prejudicial to the interest of Revenue and secondly, mere change of opinion on the same facts already considered by AO does not empower the CIT to invoke s. 263 ibid for setting aside of the order passed by AO insofar as it relates to the issue regarding sale of plot in question. It is against this order of Tribunal, the Revenue has come up in appeal which as stated supra was admitted for final hearing on aforementioned substantial question of law. At the outset, learned counsel for assessee (respondent herein) contended that the basis on which the CIT had invoked the suo motu revisionary powers under s. 263 ibid against the assessee for setting aside of the assessment order passed by AO has disappeared during pendency of this appeal. It was contended by pointing out from the order of CIT, dt. 27th March, 1995 (at p. 40 of record) that what had persuaded the CIT to invoke s. 263 powers against the assessee was a case of co-owner of assessee, i.e., Smt. Prakash Rani Agrawal in whose case a finding was recorded of identical transaction to be that of adventure-in-trade and not that of attracting the liability of capital gains. It was contende that pending this appeal, the finding even in the case of co-owner, i.e., Prakash Rani Agrawal was set aside by the Tribunal in her favour and the same was also accepted by the Department because her matter was not pursued further in any appeal to this Court. It is on the basis of these undisputed facts, learned counsel for assessee contended that when in identical case of co-owner which was made basis for invoking s. 263 of the Act the finding in relation to same transaction is set aside and the same was accepted by the Department then in such event, the very basis for pursuing the case against this assessee in seeking restoration of order of CIT passed under s. 263 ibid has gone. In other words, the submission was that when formation of so-called opinion by the CIT for invoking s. 263 having disappeared by order of the authorities, in favour of assessee there is no point in pursuing this appeal by the Revenue which is otherwise liable to be dismissed on merits on the grounds decided by the Tribunal. Learned counsel for the Revenue did not dispute this position insofar as it related to the case of co- owner when asked by the Bench.
5. It is clear from perusal of CITâs order (which has been set aside by the Tribunal by impugned order) that it was based on the case of co-owner. Following mention in the order proves this fact : “It is further relevant to note that in the case of the property C-1/45, Neemuch, the other co-owner was Smt. Prakash Rani Agrawal, Neemuch, and in her case on identical facts sale of part of land has been treated as adventure in the nature of trade by the AO vide order dt. 2nd Feb., 1995 for asst. yr. 1993-94.”
6. We are thus inclined to accept the submission of learned counsel for the assessee as in our considered opinion, when the very basis for invoking the powers conferred under s. 263 has disappeared as mentioned supra then the order of CIT treating the sale in question to be adventure-in-trade cannot sustain. Indeed, there cannot be two inconsistent orders in the case of same sale made by two co-owners. In any event, in the facts of this case, the AO having applied his mind to all facts and circumstances of case and having come to a conclusion that it was a case of sale attracting capital gains, the CIT could not have invoked his revisionary powers by forming different opinion on the same facts.
7. We, therefore, find no merit in this appeal which fails and is hereby dismissed. No costs.
[Citation : 295 ITR 539]