TMI Blog2017 (5) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... ee since no evidence had been found in the case of the assessee suggesting receipt of on-money over and above is stated consideration. Therefore, the addition was rightly deleted by the learned Commissioner of Income-tax (Appeals). Sale of plots - valid transfer u/s 2(47) - Held that:- 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 learned Commissioner of Income-tax (Appeals) on this count. In the result, the cross-objection filed by the assessee is dismissed. - I. T. A. No. 3966/Del/2013 and C. O. No. 242/Del/2013 - - - Dated:- 29-3-2017 - S. V. Mehrotra (Accountant Member) And Suchitra Kamble (Judicial Member) For the Department : S. S. Rana, Commissioner of Income-Tax-Departmental Representative For the Assessee : Salil Kapoor and Sumit Lalchandani, Advocates ORDER S. V. Mehrotra (Accountant Member) 1. The captioned appeal has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rem./Intt. from partnership firm 38,643 Batta Bros 1,08,000 R. B. Coal Co. 1,20,000 R. B. Brick Co. 2,58,000 4,86,000 Addition on account of sale of plot No. 91 to Aggarwal Associates Ltd. as per memorandum of understanding as discussed above. 20,00,000 Total business income 1,77,76,066 Long-term capital gains : Capital loss Manak Mau (-) 3,551 Capital gain on conversion of land at Sailok as discussed in the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 ₹ 16.80 and ₹ 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 ₹ 119.72 per square metre. The Assessing Officer noticed that the land had been acquired by the assessee prior to April 1, 1981. He referred to the assessment years 2003-04 and 2004-05 and pointed out that the land was also situated at Mauja Niranajanpur where the other lands of the assessee were also situated and the fair market value of all such lands at Mauja Niranajanpur had been adopted at ₹ 40 per square metre during the course of those assessments. He pointed out that this value had been adopted by the assessee in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular assessments under section 143(3) had been made for the assessment years 2005- 06 and 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 ₹ 58.52 to ₹ 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by R. B. Enterprises we would like to point out that the plots are sold as per the condition of demand and supply, location 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was seized in the case of M/s. R. B. Enterprises and which was to be evaluated in that case. 14. The learned Departmental representative has filed a paper book containing 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala High Court held that the assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be concluded against the interest of the assessee including making additions even without any incriminating material being available against the assessee in a search under section 132 on the basis of which notice was issued under section 153A(1)(a). The above order has been passed after 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'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears mandatory for the Assessing Officer to issue notices under section 153A calling upon the assessee to file returns for the six assessment years prior to the year in which the search took place'. The court clarified in paragraph 24 as under (page 509) : 'We are not concerned with a case where no incriminating material was found during the search conducted under section 132 of the Act. We, therefore, express 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the search was conducted on March 4, 2009, therefore, the Assessing Officer was required to assess or reassess the total income of six assessment years preceding the assessment year 2009-10. The first proviso to section 153A mandates that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within the six assessment years. Therefore, once the search has taken place the Assessing 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had also shown that there were instances of sale of flats in the same vicinity which were much lower than shown by the assessee. The learned counsel pointed out that the business model of M/s. R. B. Enterprises is entirely different from the assessee since no evidence had been found in the case of the assessee suggesting receipt of on-money over and above is stated consideration. Therefore, the addition was rightly deleted by the learned 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 ₹ 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 ₹ 1,40,03,327 on account of profit on sale of land at Sailok without appreciating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outright sale to M/s. Aggarwal Associates Ltd. at any point subsequently as after passing through these plots the other lands of the assessee were also there apart from the housing project of Aditya Doonshire. He further pointed out that as per the local enquiries and site visit by the Inspector of the office, it had been disclosed that there was no motorable approach to the above discussed land and Aditya Doonshire than these plots. He, therefore, concluded that for all purposes 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 autho ..... 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