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TMI Blog2021 (12) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee's case since there was a search conducted in the residential premises of the assessee and consequently the impugned assessment order invoking the provisions of sec. 153C of the Act is opposed to law, and hence, the same deserves to be cancelled. 2.1 Without prejudice to the above, the learned CIT[A] is not justified in holding that the assessee was not entitled to the copy of the satisfaction note recorded for initiating proceedings u/s. 153C of the Act, since the same was not challenged before the ld.AO, under the facts and in the circumstances of the assessee's case. 3. Without prejudice to the above, the learned CIT[A] is not justified in upholding the short term capital gains of Rs. 8,74,38,017/- assessed by the ld.AO holding that there was a transfer of property on execution of the sale execution of the sale agreement dated 21/02/2012 during the year in terms of sec. 2[47][ii] of the Act, under the facts and in the circumstances of the assessee's case. 4. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the assessee denies himself Liable to be charged to interest u/s. 234-A, 234-B and 234-C of the Act, which under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153C of the Act was issued to the assessee. 8. While filing the return of income in response to the notice issued, the assessee did not challenge the jurisdiction assumed u/s. 153C of the Act before the ld. AO The ld.AR submitted that the question of jurisdiction assumed by the ld.AO in terms of sec. 153C of the Act is purely a legal issue and according to him, which can be raised at any stage. Hence, the assessee is raising the issue relating to the jurisdiction u/s. 153C of the Act. 9. The assessee submits that firstly the issue of jurisdiction is that the provisions of section 153C of the Act has no application to the assessee's case purportedly based on documents found in the residential premises of the assessee. It has also submitted that the ld.AO has not set-out the details of any assets seized and considered as belonging to the assessee or for that matter, details of any books of accounts or other documents seized that pertained to the assessee or any information contained therein relates to the assessee for invoking the provisions of section 153C of the Act. Thus, the mere assumption that there were documents found at the time of search, which pertains to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue that arose for consideration in the course of the assessment proceedings related to the sale of certain lands by the assessee to one M/s. Confident Projects (India) Pvt. Ltd. 13. It is submitted that the assessee had entered into a Memorandum of Understanding with M/s. Rasasri Developers Pvt. Ltd on 20/02/2012 for purchase of land measuring 12 acres 4 guntas in Sy.Nos. 1/2, 5/2, 5/3 and 6/2, Sadaramangala Village, K R Pura Hobli, Bangalore East Taluk, Bangalore District for a total consideration of Rs. 4,50,00,000/-. Thereafter, the assessee had entered into an agreement dated 21/02/2012 with M/s. Confident Projects (India) Pvt.Ltd., for the sale of a portion of the aforesaid land measuring about 10 Acres and 4 guntas for a consideration of Rs. 12,50,00,000/-. It is submitted that the sale agreement entered into by the assessee was an unregistered sale agreement and thereafter, assessee had completed the transaction by executing registered sale deeds in favour of the nominees of M/s. Confident Projects (India) Pvt.Ltd., during the AY 2013-14 & 2014-15. Upon the sale of the aforesaid property during the aforesaid AY 201314 & 2014-15, the assessee had reported short term capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, the ld.AO called upon the assessee vide notice u/s.142[1] and 143[2] of the Act, both dated 14/12/2015 to explain as to why capital gains arising from aforesaid transaction evidenced by the agreement to sell dated 21/02/2012 should not be taxed for the assessment year 2012-13 on account of certain clauses noticed by ld.AO in the said agreement. In response to the notice u/s.142[1] of the Act, the assessee has made submissions before the ld.AO vide letters dated 28/12/2015, 12/01/2016 and 28/01/2016 explaining his stand. 18. It was specifically contended by the assessee before the learned ld.AO that there was no justification to hold that short term capital gains arose on the transfer of the aforesaid property to M/s. Confident Projects India Pvt. Ltd., for the aforesaid assessment year on account of the unregistered agreement to sell. Before the ld.AO, the assessee submitted a copy of a specific power of attorney dated 12/09/2012 executed by the assessee, which was a registered document, under which the assessee permitted M/s. Confident Projects India Pvt. Ltd., to present the sale deeds for purposes of registration. These sale deeds were also required to be executed and sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7] of the Act, relied upon by the learned ld.AO is reproduced hereunder : "Section 2[47] - "Transfer in relation to a capital asset, includes - (i) The sale, exchange or relinquishment of asset; or (ii)The extinguishment of any rights therein; 21. It is submitted that the conclusions of the ld.AO are found recorded in para [7] and [7.1] at pages [6] and [7] of the impugned order. It is clear from the said findings recorded by the ld.A.0. that she has sought to levy short term capital gains for the year under appeal by observing that the assessee has adhered to the terms of the contract for a fixed consideration of Rs. 12,50,00,000/- and therefore, the assessee has relinquished his rights in the property vide agreement for sale dated 21/02/2012. Further, the ld.AO has also held that the assessee's right to transfer further in the property and earn out of it have been extinguished upon entering into of the agreement dated 21/02/2012. 22. It is no doubt true that transfer in relation to a capital asset includes "relinquishment of the asset" or "the extinguishment of any rights therein". However, these expressions employed in section 2[47] of the Act have a definite meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or promised or part-paid and part- promised. In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract of sale - A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property". 25. It is submitted that as can be seen from section 54 of the Transfer of Property Act, a contract for sale of an immovable property is a contract that a sale of such property shall take place on the terms settled between the parties. It does not, of itself, create any interest in or charge on such property. Thus, an agreement to sell which is a contract for the sale of immovable property does not create any interest in the immovable property. When the agreement of sale by itself does not create any interest in the immovable property it is very difficult to consider that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to protect possession against the proposed vendor cannot be pressed in service against a third party." It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred. 27. He submitted that the contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of TP Act enacts that sate of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter". 28. In view of the above, it is submitted that there is absolutely no justification for the ld.AO to bring to tax the short term capital gains on the agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njiv Lal [supra] wherein, the HonbIe Supreme Court has held that there will be a transfer on the execution of the sale agreement itself since the right to sell the property to any other persons stands extinguished. The decision of the Hon'ble Supreme Court in Suraj Lamps and Industries in 340 ITR 1 (SC) relied upon by the assessee is distinguishable since in that case the provisions of sec. 2(47) of the Act was not being considered. Other the other hand, the decision of the Hon'ble Supreme Court in Sanjiv Lal (supra) is directly on the provisions of sec. 2(47) of the Act and has to be applied in this case. Hence, CIT(A) held that there was a transfer of the property on 21.02.2011 and therefore, the ld.AO was correct in computing capital gains tax for the year as per sec. 2(47(u) of the Act. The CIT(A) upheld the action of the ld.AO and dismissed the ground raised by the assessee. 30. We have heard both the parties and perused the materials on record. In this case, the assessee has purchased a property vide MOU dated 20/12/2012 from M/s Confident Projects India Ltd., property measuring about 12 acres 4 guntas for a consideration of Rs. 4.5 crores and paid advance of Rs. 1 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in the assessment year under consideration on this assessment year on merit, we refrain from going into other ground nos.2 and 2.1 on this appeal, which are kept open. The appeal in ITA No.2838/Bang/2017 is partly allowed. ITA No.46 & 47/Bang/2018 31. The grounds raised by the Revenue in both the appeals are common, hence, the grounds raised in ITA No.46/Bang/2028 extracted below :- "1. Whether on facts and in circumstances of the case, the ld.CIT(A) erred in deleting the penalties levied by the AO for the AYs 2013-14 of Rs. 1,37,58,150/- & 2014-15 of Rs. 63,92,330/-, particularly when the Assessing Officer has proven that the Capital Gains arising on the sale of land would not have come to light, but for the search action u/s 132 ? 2. Whether on facts and in circumstances of the case, the Ld.CIT(A) erred in ignoring the eventuality that the assessee may prefer further appeal on the substantive additions for AY 2012-13 confirmed by the CIT(A), and hence in order to protect the interest of revenue and to keep the issue alive till the assessment of substantive addition reaches a finality, the protective assessments made & the penalties levied by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a consideration of Rs. 12,50,00,000/-. In the return of income for the current AY 2012-13, the assessee had not disclosed income from the sale of land. The ld.AO called for an explanation and the assessee explained that the capital gains arising on the sale of land has been declared by him in the returns of income for AY 2013-14 & 2014- 15 since the terms of the Agreement of A Sale dated 21.02.20 12 were given effect to by giving possession of the property and registering the sale deeds only in the previous year relevant to AY 2013-14 & 2014-15. 37. The ld.AO did not accept the contention of the assessee for the assessment year 2012-13 and has held that transfer of the capital asset took place as per the Agreement of Sale dated 21.02.2012 in the FY 2011-12 i.e., AY 2012-13 and short term capital gains therein accrued to the assessee. The ld.AO has worked out the short term capital gains for AY 2012-13 at Rs. 8,74,38,017/- in the order passed u/s. 153C rws 143(3) of the Act, dated 29.01.2016. Along with the assessment order for assessment year 2012-13, the A.O. has also passed the assessment order u/s. 153C rws 143(3) of the Act, dated 29.1.2016 for the assessment year 2013-14 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53C of the Act will not, in our view, entitle the AO to usurp jurisdiction under s.271AAB of the Act for the purposes of imposition of penalty. Hence, we do not see any infirmity in the conclusion drawn by the CIT(A)." 11. The Pune Bench of the Tribunal in the case of Volga Dresses (supra) has also taken a similar view:- "6. We have considered the rival submissions. A perusal of the provisions of section 271AAB shows that the opening words are "penalty where search has been initiated" a perusal of the provisions under Section 271AAB also talks of the assessee declaring any undisclosed income in the course of the search in the statement under section 132(4). Admittedly in the present case, that is in the case of the assessee firm in appeal there has been no search. Search admittedly is on the residence of one of the partner of the assessee firm. Further a perusal of the order of the learned CIT(A) also clearly shows that the learned CIT(A) has cancelled the penalty on the ground that there was no search in the case of the assessee firm. The revenue has not been able to point out as to how this finding of the learned CIT(A) is erroneous. This being so the finding of the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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