KUBERDAS HARGOVANDAS MODI Vs. K N LALCHANDANI ITO

JUDGEMENT

(1.) THIS petition is directed against a notice dated 28th March, 1969, issued by the Income -tax Officer, Circle II, ward C. Ahmedabad, against the petitioner under section 148 of the Income -tax Act, 1961, seeking to reopen the assessment of the petitioner for the assessment year 1960 -61. In or about 1930, the petitioner purchased the entire areas forming the village of Sahijpur -Bogha in the District of Ahmedabad. The total area purchased by the petitioner comprised 1,332 acres. Out of this petitioner set apart 266 acres for building sites and divided it into 1,000 plots after laying to roads and providing other amenities. The petitioner thereafter started selling these plots from time to time and the sales effected by the petitioner went on for a number of years. In Samvat year 1991, being year of account corresponding to the assessment year 1936 -37, the petitioner sold 208 plots and, as a result of the sales, he realised an agreegate sum of Rs. 65,870. The Income -tax Officer assessing th petitioner for the assessment year 1936 -37 included in the total income of the petitioner a sum of Rs. 56,980 on account of profit earned by him from the sale of 208 plots after giving him credit for the expenditure incurred by him and taxed him on the basis of such profit. The petitioner carried the matter in appeal to the Appellate Assistant Commissioner but the view taken by the Income -tax Officer as regards the taxability of the amount of profit was confirmed by the Appellate Assistant Commissioner and the only relief granted to the petitioner was that the amount of profit was reduced from Rs. 56,980 to Rs. 47,533. The petitioner thereupon asked for a reference and the following question of law, namely :

(2.) THE learned judges, however, found themselves unable on the material before them to state whether there way any profits and, if so, whether the amount of Rs. 47,533 stated in the question referred represented profit. This decision given by the learned judges is In re K. H. Mody.

(3.) THE Income -tax Officer, accepting this contention of the petitioner, passed an assessment order dated 18th August, 1961, excluding the profit embodied in the sale proceeds of the plots from computation of the total income of the petitioner, for the following reasons :