Law:

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ORDER J.K. Ranka, J. - This appeal under Section 260A of the Income Tax Act (for short, 'IT Act') is directed against the order of the Income Tax Appellate Tribunal (for short, 'ITAT') and is relevant for the assessment year 2008-09. 2. Brief facts, which can be noticed on perusal of the impugned order and the order annexed, are that the assessee though was indulged in the activity of trading of precious stones, was simultaneously also Director of M/s Grass Field Farms and Resorts Pvt. Ltd. and M/s Grass Field Fire Capital Developers Pvt. Ltd. and during the year under appeal had sold certain lands to the aforesaid companies. The bone of contention in the present appeal relates to two activities of the assessee wherein the Assessing Officer (for short, 'AO'), with reference to the sale of lands, came to the conclusion that it is business income while the claim of the assessee was that it being sale/transfer of agricultural land, is not a capital asset within the meaning of section 2(14) (iii) of the Act and thus is not liable to tax under the Income Tax Act (for short, 'IT Act'). The second issue, which has been raised in the appeal, relates to rejection of the books of accounts by invoking provisions of Sec. 145 (3) of the IT Act and in applying a higher gross profit rate after rejecting the trading accounts. 3. During the course of hearing in assessment proceedings before the AO, information was gathered by the AO on the basis of information conveyed by the assessee that he had sold certain lands from 1st April, 2007 to 31st March, 2008 falling within the previous year relating to the assessment year 2008-09 for a sale consideration of Rs.8,36,93,154/-. 4. Simultaneously, the assessee also gave purchase value including registration cost at Rs.3,21,29,158/- and resulting into a difference/gain/surplus of Rs.5,15,43,996/-. It was noticed by the AO that in some of the cases, the lands were sold/transferred in near vicinity of the land purchased to the private limited companies where the assessee was a Director resulting in huge difference/gain to the assessee, but the claim of the assessee was that although there was surplus of Rs.5,15,43,996/- during the…

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