Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 461 - AT - Income TaxReopening of assessment - capital gain - transfer of property as per section 2(47)(v) - CIT(A) allowed the appeal of the assessee by taking new amendment brought in by the Finance Bill 2017 and directed the AO to tax the capital gains in the year of completion of project - HELD THAT:- CIT(A) has verified the current status of the project and finds that it is still in incomplete stage and has uncertainties prevailing on completion of the project. It clearly shows that there is no reasonable certainty in the project completion. We notice that AO by considering the first JDA, intends to tax on the capital gains in the ratio of 50:50, when the same was renegotiated to 38.5:61.5 ratio. The ratio has changed and new developer has taken over the responsibility of completion of the project. The basic terms have undergone change due to revision of JDA on 06/11/2012. From the above discussion, it is clear that the possession of the land was handed over to the developer with the right of ownership as de-facto and not dejure. The transfer in the ownership has not passed on to the developer until the developer undertakes to complete the project as per the terms or at least 90% of the project has to be complete or to the satisfaction of the parties involved in the agreement. In the given case, there is no possibility of completing the project in certainty. Considering the uncertainties and that no real development activities were carried on by the developer in AY 2009-10, in our considered view, there is no incidence of transfer of property as per section 2(47)(v) in the AY 2009-10. Therefore, AO cannot tax the capital gains in AY 2009-10. Accordingly, ground raised by the revenue in this regard, is dismissed. Proceedings u/s 153C - AO has initiated proceedings u/s 147 after forming an independent opinion with regard to escapement of income on the basis of receipt of information from AO of the searched person communicating after the CIT(A)’s order and not on the basis of receipt of seized document - HELD THAT:- As far as this assessee is concerned, since the incriminating material was found during the search, the provisions of section 153C(2) applies. The revenue has to invoke only section 153C(2) even after receipt of information from the AO of the searched person even after direction of CIT(A)’s order, provided they follow the due procedure as per section 153C. Therefore, resorting to initiation of proceedings u/s 147 is not proper and void ab-initio. Contention of the revenue that section 153C is not attracted because AO who was having jurisdiction over the searched person did not form satisfaction required as per the said provisions to transfer the related material as he was of the opinion that the entire capital gains had arisen in the hands of the assessee on whom he was having jurisdiction and assessed accordingly. Therefore, section 153C not attracted. We are not in a position to accept this proposition as the liability arises on the assessee only because of incriminating material found during search. The procedure laid down for the purpose of search and seizure has to be followed otherwise, the purpose of section 153A, 153B and 153C is defeated. The provision relevant to search requires the AO of the searched person to record satisfaction and he forms the wrong satisfaction, it fails there itself. Further, as per section 153C, not only AO of the searched person but AO of the other person to whom the incriminating material allegedly belongs also has to form satisfaction before initiating proceedings u/s 153C. It cannot be compensated by invoking section 147 as the mandate of section 147 is different. Since, the liability of assessee arises only because of search proceedings, proceedings u/s 153C alone can be initiated. Therefore, we uphold the order of CIT(A) on this issue and dismiss the ground raised by the revenue accordingly.
|