HEMACHAND HIRACHAND SHAH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE present reference arises from a decision of the Tribunal in two appeals involving common points. The relevant assessment years are 1969 70 and 1970 71. The short and pertinent facts are as under :

(2.) THE question raised for consideration in the present reference before us is as under :

(3.) ON the facts of the case and from the material on record we find that the explanations offered by the assessee for disposing of the lands soon after his purchase are just not acceptable. The explanation of the assessee in most of the cases is that the lands were 'dabhada' lands, on which considerable expenditure would have to be incurred in order to develop them and make them fit for agricultural operations. It should be noted that the assessee who professes to be an agriculturist would be aware of the nature and character of the land he is purchasing particularly when he professes to purchase the said lands for the purpose of agriculture. We cannot accept a situation where such agriculturist would purchase a land for the purpose of agriculture, on an assumption or an observation that it would be fit for agriculture, and immediately after the purchase, arrive at a conclusion that it would be uneconomical to develop the same for agriculture and would, therefore, be required to dispose of the same. We find the assessee to have entered into a series of transactions of purchase and sale, and in each case the sale was within a reasonably short time of the purchase. Thus, the very fact that large number of such transactions was entered into within a reasonably short period of time enables us to reach a conclusion that it was an organised business activity on the part of the assessee.