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2015 (11) TMI 1775 - AT - Income TaxCapital gain u/s 45 r.w.s. sec. 48 - assessee has transferred the land and received security deposit and that security deposit was again reinvested in making the construction of the malls - colourable device to avoid the tax - HELD THAT:- From the question of law admitted in LAKE PALACE HOTELS AND MOTELS LTD. [2008 (4) TMI 449 - RAJASTHAN HIGH COURT], nowhere it is stated that if the assessee has received any security deposit against the lease rent of security deposit, it is not chargeable to capital gain u/s 45 r.w.s. sec. 48. Therefore, CIT(A) is not justified in relying upon the decision of Hon’ble Rajasthan High Court. We therefore are of the view that the issue in controversy is covered by the Jodhpur ITAT Bench in LAKE PALACE HOTELS & MOTELS LTD. [2004 (3) TMI 771 - ITAT JODHPUR] but it is not decided by Hon’ble Rajasthan High Court. We find that in the instant case, assessee has transferred the land and received security deposit and that security deposit was again reinvested in making the construction of the malls. We find that the said transaction is not a sale transaction. The Assessing Officer has held that the transaction entered into by the assessee with Kalani Bros and Padma Homes are colourable device on the ground that the lease agreement is stage managed affairs of the assessee. No interest was charged on the security deposit. AO has also referred this matter to District Registrar and he was of the view that it is a colourable device. As we have already held that transaction is not avoiding the tax and assessee has made registered agreement, therefore, unless and until, Assessing Officer proves that assessee has made this colourable device to avoid the tax. We find that in the instant case, during the course of hearing, AR has specifically submitted before us that the same transaction is already over and assessee has already transferred its land to some other person, therefore, this transaction is already over and when this transaction is already over, as per the decision of Jodhpur Bench (supra), the assessee is not liable for capital gain and CIT(A) is justified in his action. During the course of hearing, the ld. DR could not bring any contrary decision against the Jodhpur Bench. We do not find any contrary decision, therefore, we endorse the action of the CIT(A). We state that the CIT(A) has without looking to the facts of the Rajasthan High Court judgment relied the judgment. We find that this judgment of Hon’ble Rajasthan High Court is not applicable to the facts of the assessee’s case. We, therefore, reverse the finding of the ld. CIT(A) but we agree on the decision of CIT(A) on the basis of Jodhpur ITAT decision. Assessment u/s 153A - proof of incrementing material found in search - HELD THAT:- It is a settled legal position that once a search and seizure action has taken place u/s 132 of the Act or a requisition has been made u/s 132A, the provisions of section 153A trigged and Assessing Officer is bound to issue notice u/s 153A of the Act. Once notices are issued u/s 153A then assessee is legally obliged to file return of income for six years. The assessment and reassessment for six years shall be finalised by the AO. It is also held by various Courts that once notice u/s 153A issued, then assessment for six years shall be at large both for AO and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then Assessing Officer acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material. But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized. No assessment proceedings were abated in these assessee. Thus assessments for these assessment years were completed on the date of search. The assessments were completed u/s 143(3) read with section 153A/153C of the Act after the search. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. There is no seized material belonging to the assessee which was found and seized in relation to additions made. In a recent decision, Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] has held that completed assessments can be interfered with by the Assessing Officer while making assessment u/s 153A of the Act, only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which was not produced or not already disclosed or made known in the course of original assessment. In all these cases no assessments were pending on the date of search for these assessment years. No assessments were abated in terms of second proviso to section 153A of the Act.
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