TMI Blog2014 (6) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... ction in pursuance to the order passed by the concerned authority transferring the case u/s 127 of the Act. Original assessment made u/s 153C r.w. section 153A of the Act – Order not passed u/s 153A of the Act – Held that:- The present assessees are persons other than searched person - the proceedings had to be initiated u/s 153C of the Act - after initiating proceedings u/s 153C of the Act, the assessment proceedings have to be completed only as per the procedure laid down in section 153A of the Act - merely because there was an omission to mention the relevant provision of law or wrong mentioning of the provisions of law that cannot be a reason to invalidate the assessment order passed by the AO. Satisfaction not recorded before transferring the file – Proceedings initiated u/s 153C of the Act – Held that:- Following Manish Maheshwari vs Assist.Commissioner of Income-tax & Anr [2007 (2) TMI 148 - SUPREME COURT OF INDIA] - when the AO is same for the person searched and person other than searched recording of satisfaction may not be necessary since there is no necessity for handing over the assessment records to the other officer - the same AO has completed the assessment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri K K John, Sr.DR ORDER:- PER : N R S Ganesan All the appeals relate to two independent assesseess for the assessment years 2007-08 and 2008-09. Since common issues arise for consideration in all the four appeals, for the sake of convenience, they were heard together and are disposed of by this common order. 2. Let us first take appeal in ITA No.230/Coch/2012 in the case of Right Hand Developers India (P) Ltd. 3. Shri CBM Warrier, the ld.representative for the assessees submitted that there was a search in the premises of the assessees u/s 132 of the Act on 26-03-2008 and incriminating documents marked as MKG A(39) to A(45) was seized. According to the ld.rperesentative, the search was conducted in the case of the assessees, therefore, the assessment has to be framed u/s 153A. In this case, according to the ld.representative, the assessment was framed u/s 153C of the Act. Therefore, the assessment order is null and void. According to the ld.representative, during the year under consideration, the assessees company purchased land and incurred expenditure for filling up the land with soil. The expenses for filling up the land was claimed as deduction. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that during the course of search operation, vouchers for the expenditure upto 01-04-2008 was found disclosing the expenditure of Rs.1,23,44,050. Subsequent to 31-03-2008 a sum of Rs.1,25,600 was spent. Referring to Annexure A and the argument note, copy of which is available at page 139, the ld.representative submitted that the assessees has incurred another expenditure of Rs. 78,13,400. Referring to the agreement dated 25-09-2007, the copy of which is available at page 106 of the paper book, the ld.representative submitted that as per clause 3.1, the assessees has to carry out the work of filling up and leveling of the property and the work had to be completed within a period of six months. If the property was already filled up by the vendors before purchase, according to the ld.representative, there is no need for mentioning this clause for filling up the land by the assessees in the agreement to sell. The ld.representative further submitted that during the course of assessment proceedings, the assessees has also filed a detailed report of survey of the property estimating the filling requirements from LAN-DEC ENGINEERS the copy of which is available at page 13 of the pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that the assessees has not incurred any expenditure for land filling expenses. According to the ld.representative, the vouchers seized by the department during the course of search operation were available in the paper book. According to the ld.representative, nothing is unreliable about the payments made by the assessees. Purchase of red soil is evidenced by the seized record. Therefore, the presumption u/s 132(4A) of the Act is available to the assessees. Referring to the provisions of section 132(4A) of the Act, the ld.representative submitted that when the documents are found and seized during the course of search operation, the contents of such documents are presumed to be true unless it is established otherwise by any of the parties. In this case, according to the ld.representative, the expenditure incurred by the assessees for purchase of the red soil and the payments made to the contractor is available on the search material, therefore, there is a presumption that the assessees has incurred the expenditure. It is for the revenue to rebut the presumption if at all they have any material to suggest that the assessees has not incurred such expenditure. According to the ld.r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent found during the course of search operation. Referring to section 153C of the Act, the ld.representative submitted that when the search took place on 26-03- 2008, the jurisdiction to assess the assessees company was with the Income-tax Officer, Bangalore. Therefore, according to the ld.representative, all the documents found during the course of search operation relates to the present assessees has to be handed over to the assessing officer at Bangalore to initiate proceedings u/s 153C of the Act. According to the ld.representative, the assessing officer at Bangalore has to record his satisfaction with regard to material found during the course of search operation. In this case, according to the ld.representative, no satisfaction was recorded by the assessing officer. 9. Shri CBM Warrier, the ld.representative for the assessees submitted that as per the copy of the order served on the assessees, the assessment order was said to be made u/s 153C r.w.s. 153A of the Act. However, when the assessees contended that no order could be passed u/s 153A, the department has produced another copy of the order said to be passed u/s 153C of the Act. According to the ld.representative, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure only in respect of Rajagiri property. In respect of other property, no such claim was made. Therefore, the finding of the assessing officer to disallow the total expenditure of Rs.6,34,79,700 is without any basis. Even with regard to Rajagiri Property, the material found during the course of search operation clearly shows that the expenditure was incurred by the assessees. 13. Referring to the agreement for purchase of property at Rajagiri, the ld.representative submitted that the agreement was entered into between Shri Mohiyuddin, Shri Mathew Joseph and others from the respective vendors on 10-09-2005 onwards. Therefore, the individual directors entered into agreement to purchase the property before incorporation of the company. The company in fact was incorporated on 18-12-2006. However, the respective directors have taken a decision to acquire the land before formation of the company. According to the ld.representative, the expenditure incurred by the assessees is only after the agreement entered into for purchase of the property by the respective directors. According to the ld.representative, the assessees company has also entered into agreement on 16-02-2007, 14-03-2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer recognized the genuine payment to the extent of Rs.56 lakhs. In respect of other payment what was found during the course of search operation is only self made vouchers. According to the ld.DR, as per the agreement dated 25- 09-2007 the assessees had to fill up the land in respect of the land sold to Neptue Real Estate. However, the land was sold before the agreement, i.e. 25-08-2007. Therefore, when the land was sold one month before the agreement, no one would undertake the development in respect of the land sold. Referring to MKG-A-39, the seized document, the ld.DR submitted that the land filling charges are paid to various people as referred at paragraph 9 of the remand report. According to the ld.DR, the names appeared in the vouchers differ from the details of payment made to several persons which was found in other documents. 15. Referring to the objection of the assessees on the assessment order in the case of Damac Holdings (P) Ltd, the ld.DR submitted that originally, the assessees company was assessed at Bangalore and subsequently, by an order u/s 127 for consolidated enquiry the jurisdiction was transferred to Ernakulam. According to the ld.DR, the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld.DR, the assessees is not maintaining any book of account, not even a ledger folio for land development expenditure. According to the ld.DR, the only document available is the report of land surveyor. The land surveyor prepared the report on 10-08-2006. As per this report, the expected cost was Rs.8.90 crores. At the time of the report, the assessees has not even purchased the land. Therefore, the survey report has no relevance for deciding the expenditure incurred by the assessees for land development. According to the ld.DR, the assessees company purchased 734.64 cents of land from Nazir Abbas and his family members and friends. In computation of capital gain, the seller of the land claimed land development expenditure at Rs.18,000 per cent. The total expenditure claimed by the original owner is Rs.1,32,24,240. The assessees now claims expenditure of Rs.6,29,39,746. Referring to the agreement said to be entered into between Nazir Abbas and Shri Mathew Jopseph, the ld.DR submitted that the vendor Shri Nazir Abbas agreed to level the property filled in water with red soil and clean the land making it suitable for measuring. In this case, Shri Nazir Abbas, the vendor claimed Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention of the assesseess is that the present assessing officer has no jurisdiction to complete the assessment in the case of Damac Holdings Pvt Ltd. Admittedly, there was a search in the premises of one Shri Mohiyuddin, who is the director in the company. During the course of search operation, material documents relating to the assessees was found and seized. Therefore, for consolidated enquiry / investigation, the assessments of the assesseess were transferred from Bangalore to Ernakulam. The assesseess have not challenged the order passed by the concerned authority transferring the case from Bangalore to Ernakulam. Only before the Tribunal at the second appellate level, the assesseess contend that the transfer is not made in accordance with law. The fact remains is that the transfer was made after giving due notice to the assesseess as required u/s 127 of the Income-tax Act for consolidating enquiry / investigation. Once the authorities followed the due process for transferring the case from one city to another for the purpose of effective investigation and completion of the assessments by one assessing officer, this Tribunal is of the considered opinion that the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the judgment of the Kerala High Court holding that recording of satisfaction may not be necessary in case the assessing officer is one and the same for the person searched and the person other than searched there is no necessity for handing over the assessment records to the other officer.. In this case, the same assessing officer has completed the assessment in the case of Shri Mohiyuddin and also in the case of the present assessees. Therefore, there is no necessity for the assessing officer to handover the document to another assessing officer. In such circumstances, as held by the Kerala High Court, recording of satisfaction may not be necessary. Therefore, this Tribunal do not find any merit in the contention of the ld.representative for the assessees. 22. Now coming to development expenditure incurred by both the assesseess for filling up the land, the assessing officer rejected the claim of the assesseess mainly on the ground that the vendor has already claimed a similar expenditure for filling up the land @18,000 per cent. The contention of the assessees is that seized material found in the course of search operation discloses the expenditure incurred by both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: First Party agreed and assures the Second Party that they will provide right of way to the Second Party for the purpose of filling the land with red earth and for the future entry to the property to the Second Party or their nominees. The Second party has agreed to purchase the necessary land for the approach road and the consideration paid to the first party shall be inclusive for the consideration for the essential land to be transferred for the purpose of road. From this agreement it is obvious that the assessees have to only fill up the land and the vendor has to provide right of way on the basis of the agreement to purchase the land for the purpose of filing up with red earth. A similar agreement has also been entered into which discloses that the assessees have to fill up the land. Therefore, it is obvious from the agreement between the parties, the vendor has to fill up the land so as to make the land suitable for measurement by the surveyor. However, the assessees had to fill up the land and make it suitable for sale. In view of this, this Tribunal is of the considered opinion that merely because the vendors claimed Rs.18,000 per cent for filling up the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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