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2017 (10) TMI 1544 - ITAT BENGALURUValidity of assumption of jurisdiction u/s 148 - Assessment u/s 147 consequent to assessment u/s 153C - assessment framed u/s 153A in relation to undisclosed income - HELD THAT:- In the present case, original assessments were made u/s 143(3) r.w.s. 153A of the Act vide order dated 28/12/2010. Subsequently, consequent to search operations in the case of Smt. Adlene Kagoo, material disclosing alleged payment to appellant was found. The AO had proceeded to make assessment by issuing notice u/s 148. Whether the AO was correct in law in assuming jurisdiction u/s 148 when the provisions of section 153C of the Act prescribe a separate scheme of assessment in the case of material found as a result of search in the case of third parties? - A similar issue had arisen in the context of block assessment prescribed under Chapter XIV-B of the Act and these provisions were subsequently substituted by inserting sections 153A, 153B, 153C and 153B in Chapter XIV. But the spirit of both old provisions and new provisions remained same. As relying on Cargo Clearing Agency (Gujarat) [2008 (8) TMI 86 - GUJARAT HIGH COURT] wherein held Once assessment has been framed u/s 158BA in relation to undisclosed income for the block period as a result of search there is no question of the Assessing Officer issuing notice u/s 148 for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for block period - no notice u/s 148 is required to be issued for the purpose of proceeding under Chapter XIV-B. Consideration received on cancellation of any agreement to sell or JDA - Also from perusal of reasons recorded, it cannot be inferred that there is income in the hands of the appellant, even if there is payment to appellant, but there is nothing on record suggesting that it constitutes income in the hands of the appellant. Even assuming for a moment that the contention of the AO that payments were made towards consideration for cancellation of Joint Development Agreement (JDA) which the assessee had entered with in respect of property at survey Nos.3/3, 7, 8, 9/2A, 9/213, Mallasandra. In the absence of evidence that the appellant is the owner, had interest of any nature in the said property, it cannot be said that the payments constituted taxable income in the hands of the appellant. One cannot come to conclusion that the payments constituted taxable income in the hands of the assessee - even assuming that these payments were made towards consideration of cancellation of JDA, same does not represent taxable income for period under consideration. It is only after insertion of clause (ix) to section 56(2) by Finance (No.2) Act 2014 w.e.f. 01/04/2015 that provisions of the Act have been amended to tax any consideration received on cancellation of any agreement to sell or JDA. Therefore, viewed from any angle, we cannot uphold the validity of assumption of jurisdiction u/s 147 - Decided in favour of assessee.
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