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TMI Blog2017 (5) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... s, trading business in lands and capital gains. A search was carried out in the premises of the assessee on March 4, 2009. Accordingly, notice under section 153A(1)(a) of the Act was issued on January 18, 2010. In response to this notice, the assessee filed his return of income on October 20, 2010 declaring a total income of Rs. 19,30,160. On the basis of seized material and the return originally filed under section 139, a questionnaire and notice under section 142(1) of the Act dated October 6, 2010 was served upon the assessee. A notice under section 143(2) was issued to the assessee on November 23, 2010. The Assessing Officer noticed that the assessee had filed the return of income under section 139 on October 20, 2007 at an income of Rs. 19,30,160. The assessment was completed at a total income of Rs. 1,85,95,310, inter alia, making addition on account of sale of plot No. 91 to M/s. Aggarwal Associates Ltd. as per the memorandum of understanding (MOU) at Rs. 20 lakhs and long-term capital gain on conversion of land at Sailok at Rs. 10,62,472 as under : Income from house property Loss from house property (SOP) (-) 1,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an admissible evidence. 3. That the order of the learned Commissioner of Income-tax (Appeals) being erroneous in law and on facts which needs to be vacated and the order of the Assessing Officer be restored. 4. That the appellant craves leave to add or amend any one or more of the ground of appeal as stated above as and when need for doing so may arise." 6. Brief facts apropos ground No. 1 are that in the course of assessment proceeding, it was found that the assessee had converted the area of the land at Sailok falling in his share measuring 20,400 square metre as stock- in-trade in the assessment year 2005-06. For the purposes of the cost of acquisition, the assessee had adopted the fair market value in that area as on April 1, 1981 at Rs. 58.50 per square metre. Apart from that, the assessee had also claimed the improvement cost in the financial years 1993-94 and 1996-97 at an indexed value of Rs. 16.80 and Rs. 14.58 per square metre respectively. Accordingly, on the basis of these costs, the assessee had calculated the capital gain per square metre chargeable in the year of sale at Rs. 119.72 per square metre. The Assessing Officer noticed that the land had been acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2006-07 and the cost adopted by the assessee had been accepted by the Assessing Officer. (b) The search did not yield any evidence which could substantiate the Assessing Officer's downward revision of the cost of acquisition in the impugned assessment. (c) The property in question is situated at Village Kanwali ; not at Niranjanpur as believed by the Assessing Officer. Thus, the down ward revision was based on the assessee's own figure which pertained to another piece of land. 8. We have considered the submissions of both the parties and perused the record of the case. Admittedly, no incriminating material was found in the course of search which could justify downward revision of the cost of acquisition from Rs. 58.52 to Rs. 40 per square metre. Moreover, the findings recorded by the learned Commissioner of Income-tax (Appeals) have not been controverted by the Department. If the very premise on which the addition was made has no legs to stand then the addition had rightly been deleted by the learned Commissioner of Income-tax (Appeals). In the result, ground No. 1 is dismissed. 9. Brief facts apropos ground No. 2 are that the assessee had disclosed a total sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the plot, direction of the plot with reference to the conditions of sun, wind and vastu. As each plot and each buyer is different the rates are also different keeping in view the personal preferences of the purchasers and the quality of the plot. In view of the above the sale rates of the plots are different. At this stage we would like to point out that all sale deeds are executed as per the actual rates. Coming to the R. B. Enterprises we would like to point out that your assessee has got nothing to do with this firm. Your assessee and M/s. R. B. Enterprises have different plots. Your assessee sells plots whereas R. B. Enterprises is into construction. The conditions effecting sales are different and separate in the case of your assessee and different in the case of M/s. R. B. Enterprises. As there is no common platform between the two entities the results/rates, etc. cannot be compared. As such there is no justification in applying any rate other than the rates as reflected in the sale deeds." 11. After considering the assessee's reply, the Assessing Officer, inter alia, observed that though both are the different entities but the facts that emerge is that the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on 74 pages in which he has primarily annexed orders, notices, etc. relating to M/s. R. B. Enterprises, Dehradun and also the statements of various persons he has also filed written submissions in support of his plea that under section 153A, the Assessing Officer is empowered to assess or reassess the total income of the assessee. His submissions are reproduced hereunder : Before the hon'ble Members Income-tax Appellate Tribunal, F-Bench, New Delhi In the case of Ramesh Batta Appeal No. 3966/Del/2013 and C.O. No. 242/Del/2013 Assessment year 2007-08 Date of hearing 25-01-2017 May it please your honours Sub : Submission of paper book in the above case-reg In the above case, kindly find enclosed two copies of the paper book containing 174 pages each. It is humbly submitted that the following decisions may kindly be considered : 1. CIT v. Anil Kumar Bhatia [2013] 352 ITR 493 (Delhi) ; 24 taxmann.com 98 ; 211 Taxman 453 Where the hon'ble Delhi High Court held that the jurisdiction of the Assessing Officer under section 153A is to assess the total income for the year and not restricted to the seized material. Post-search reassessment in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter considering the cases of CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 374 ITR 645 (Bom) ; 232 Taxman 270 ; 58 taxmann.com 78 (Bom) (paragraph 4), Principal CIT v. Kurele Paper Mills (P.) Ltd. [2016] 380 ITR 571 (Delhi) (paragraph 4), CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) ; [2015] 234 Taxman 300 ; 61 taxmann.com 412 (Delhi) (paragraph 4), CIT v. Lancy Constructions [2016] 383 ITR 168 (Karn) ; 237 Taxman 728 ; 66 taxmann.com 264 (Karn) (paragraph 4), CIT v. St. Francies Clay Decor Tiles [2016] 385 ITR 624 (Ker) ; [2016] 240 Taxman 168 ; 70 taxmann.com 234 (Ker) (paragraph 5) and CIT v. Promy Kuriakose [2016] 386 ITR 597 (Ker) (paragraph 5). 2. CIT v. St. Francis Clay Decor Tiles [2016] 385 ITR 624 (Ker) (copy enclosed) Where the hon'ble Kerala High Court held that notice issued under section 153A-return must be filed even if no incriminating documents discovered during search. 3. Smt. Dayawanti v. CIT [2017] 390 ITR 496 (Delhi) ; [2016] 75 taxmann.com 308 (copy enclosed) Where the hon'ble Delhi High Court held that where inferences drawn in respect of undeclared income of the assessee were premised on materials found as well as sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no opinion as to whether section 153A can be invoked even in such a situation. That question is therefore left open.. . .' In Filatex India Ltd. v. CIT (supra), one of the questions framed was whether the Income-tax Appellate Tribunal erred on facts and in law in not holding that recomputation of book profit, dehors any material found during the course of search, in the order passed under section 153A of the Act was without jurisdiction, being outside the scope of proceedings under that section ? The facts of the case were that there was incriminating material found during the course of search conducted in the premises of the assessee on January 18, 2006 and subsequent dates. This included a statement of the general manager (marketing). On the basis of the said material and statement additions were made to the disclosed income under section 115JB although no material was found specific to such addition. The court held that under section 153A 'the additions need not be restricted or limited to the incriminating material, which was found during the course of search'. Consequently even if no incriminating material was found for the addition under section 115JB of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer has no option but to assess or reassess the total income of each assessment year falling within such six assessment years. The second proviso to section 153A(1) makes it clear that if any assessment or reassessment relating to any assessment year falling within the period of six assessment year considered in this sub- section on the date of initiation of search under section 132 is pending then the same will abate. This implies that the Assessing Officer will have to make the assessment in the case of such assessment year de novo. The object of the second proviso is evident that in the case of those assessments or reassessments, which have not abated, the assessment is not to be made de novo and it is in such cases only that the addition can be made only on the basis of incriminating material though the Assessing Officer is required to make the assessment or reassessment for all the six assessment years considered with reference to the date of search. This is the position of law, we have to first find out that whether the assessment for the assessment year 2007-08 was pending on the date of search or not. Admittedly, the return of income under section 139 was filed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Commissioner of Income-tax (Appeals). 19. In the result, the appeal of the Department is dismissed. 20. Now, we take up the cross-objection of the assessee. The assessee has taken the following grounds of cross-objection : "1. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in reducing the amount of long-term capital gain by Rs. 6,61,831 by redetermining the land price without appreciating the fact that the addition was made by the Assessing Officer on the basis of the material on record. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in deleting the addition of Rs. 1,40,03,327 on account of profit on sale of land at Sailok without appreciating the fact that in terms of the provisions of section 292C, the document collected during the search is an admissible evidence. 3. That the order of the learned Commissioner of Income-tax (Appeals) being erroneous in law and on facts which needs to be vacated and the order of the Assessing Officer be restored. 4. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so may ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plot No. 91 was sold out may be in the shape of passage right for which adequate amount has been received by the assessee and, therefore, assessed the same as business income. The learned Commissioner of Income-tax (Appeals) confirmed the addition after considering the definition of transfer under section 2(47) observing that the memorandum of understanding had the effect of extinguishment of his rights in the plot and also had the effect of enabling the enjoyment of the property by Aggarwal Associates Ltd. and its nominee. The learned counsel reiterated the submissions advanced before the lower Revenue authorities. The learned Departmental representative relied on the order of the lower Revenue authorities. 22. We have considered the submissions of both the parties and have perused the record of the case. The terms of memorandum of understanding with Aggarwal Associates Ltd. are not at all disputed. Admittedly, the assessee had given right of passage and all kinds of privileges and rights to Aggarwal Associates Ltd. and, therefore, there was constructive transfer in favour of Aggarwal Associates Ltd. We, therefore, do not find any reason to interfere with the order of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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