TMI Blog2023 (5) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... pted and reflected in the return of income filed by the assessee in the all the past years and even the assessee is doing so consistently. Therefore, the jurisdictional requirement of Section 153A of the Act was not satisfied in this case. Decided against revenue. - ITA. Nos. 264/JP/2022, C.O. Nos. 13/JP/2022 (Arising out of ITA Nos. 264/JP/2022), ITA. Nos. 265/JP/2022, C.O. Nos. 14/JP/2022 (Arising out of ITA Nos. 265/JP/2022) - - - Dated:- 24-5-2023 - ITA. Nos. 266/JP/2022, C.O. Nos. 15/JP/2022 (Arising out of ITA Nos. 266/JP/2022), ITA. Nos. 267/JP/2022, C.O. Nos. 16/JP/2022 (Arising out of ITA Nos. 267/JP/2022) Dr. S. Seethalakshmi, JM And Shri Rathod Kamleh Jayantbhai, AM For the Assessee : Sh S. R. Sharma (CA) And Sh. R. K. Bhatra (CA) For the Revenue : Sh. Ajay Malik (CIT/DR) And Smt. Runi Pal (Addl. CIT) ORDER PER BENCH There are four appeals of the different assessee filed by the revenue and four cross objections filed by the assessee on the appeal of the revenue. These four appeals and four cross objections are arising out of the order of the Commissioner of Income Tax (Appeals)-4, Jaipur [hereinafter referred to as Ld. CIT(A) ] for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court of India has admitted SLP against this proposition in the following matters:- i Principal Commissioner of Income Tax vs. Gahoi Foods (P.) Ltd.117 taxmann.com 118(SC)/272 Taxman 521(SC) dated 24.01.2020 ii Principal Commissioner of Income Tax, Central-4 vs. Dhananjay International Ltd. 114 taxmann.com 351(SC)/270 Taxman 15(SC) dated 16.09.2019. Ground 2. The Ld. CIT(Appeal) has erred in law and on facts in not carrying out her duty of adjudicating the grounds on merit, and dismissing them only on a technical ground. Ground 3. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in deleting the addition of Rs. 27,01,95,945/- by holding that the addition made on account of LTCG is without any reference to any incriminating seized material which could justify the addition. 4. Ground 4. The learned CIT Appeal has erred in granting relief to the assessee (i) on the basis of her finding that the transfer of land within the meaning of provisions of section 2(47) was completed on 19.02.2014 itself, a period falling in assessment year 2014-15 and not in assessment year 2016-17 being the year under consideration. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search action at the corporate office of M/s Chokhi Dhani Resorts Pvt. Ltd., its sister concerns at Chokhi Dhani Tower, S-5, Shyam Nagar, Jaipur on 30.11.2017, certain developed land allotment letters , note sheet pages of JDA regarding acquisition allotment of land miscellaneous correspondence regarding acquisition of land situated at Village- Jhai and Nevta, Tehsil- Sanganer, District-Jaipur (Rajasthan) related to Chokhi Dhani Group of assessee were found and seized. The company owned land in village Nevta as evident from the Balance Sheet. The seized documents were being analyzed during the assessment proceedings and it was observed that land of the company was acquired and another land was allotted in lieu of compulsorily acquired land. From the seized material it was gathered that the lands belonging to the assessee of Choki Dhani Group were compulsorily acquired by the Jaipur Development Authority ( here in after JDA) , Jaipur in accordance with Central Land Acquisition Act, 1894. The details of the land acquired by the JDA of the assessee company is as detailed here in below: Sr. No. Name of land owner Address of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was allotted to it in lieu of land acquired in 2007. From contents of aforementioned letter, it can be safely concluded that the land of the Choki Dhani Group of assessee were acquired under land Acquisition Act, 1894. Against the acquisition proceedings, assessee M/s. Rigid Conductors (Raj) Private Limited along with M/s. Choki Dhani Developers Private Limited, M/s. Gee Vee Developers Private Limited, M/s. Vision Estate Private Limited Devik Vaswani filed write petitions before the Hon ble Rajasthan High Court. In the results the acquisitions proceedings were stayed by the Rajasthan High Court from 01.06.2007. 7.2 Further letter dated 30.08.2013 was issued by UDH, Rajasthan Government regarding acquisition of land related to Choki Dhani Group in which recommendation of empowered committed regarding acquisition of land was mentioned that in lieu of acquired land it was decided to give 25 % developed land ( 20% residential and 5 % commercial to Choki Dhani Group of which the assessee is a part. Hence Choki Dhani Group of Companies were allotted land in lieu of land acquired by JDA. Vide letter dated 19.02.2014 addressed to Deputy Commissioner, Zone 15, Jaipur Development Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as to why the company has not shown income under the head capital gain while the provisions of capital gain are applicable on the assessee in the light of allotment of land in lieu of compulsory acquisition of land. The AR of the assessee company furnished the reply vide letter dated 28.11.2019. 7.3 In the written submission filed, the assessee has raised following major issues and finding of the ld. AO to that is also tabulated for the sake of brevity of the facts: Sr. No. Issued raised by the assessee Finding of the AO 1 As the land was acquired by JDA in the financial year 2005/2006 and as such capital gain (if any) was chargeable in the said year i.e. 2005-2006. It is case of shifting of land from one place to another and the case doesn t fall in the ambit of sale or transfer of the capital asset. As per Section 45(5)(a) of the Act, the consideration received on transfer of a capital assets on transfer by way of compulsory acquisition under any law shall be chargeable as income under the head capital gain of the previous year in which such compensation or part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a plea that the compensation received is exempt in accordance with the RFCTLAAR Act, is also not acceptable. In the case under reference land of the assessee company was acquired as per Central Land Acquisition Act, 1894, therefore, the assessee is not eligible for exemption as enumerated in section 96 of the RFCTLAAR Act. Thus, the provisions of RFCTLAAR Act are not applicable in the case of the assessee under reference as the land was not acquired as per provisions of RFCTLAAR Act. Therefore, the contention of the AR of the assessee regarding non-taxability of compensation received on acquisition of land in accordance with provisions of RFCTLAAR Act CBDT s circular no. 36/2016 dated 25.10.2016 doesn t hold ground. 3 No capital gain will arise till the date of giving physical possession of land and also the year of tax liability will be the year of giving physical possession of the same to the assessee. This issue raised by the assessee company is that no capital gain will arise till the company gets physical possession of the land and also the year of tax liability will be the year of getting the physical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial land. Also the assessee has contended that the reserve prices were being revised by the JDA and has submitted an order with regards to the same. On perusal of the same it was observed that the order was applicable from 14.09.2017 and doesn t apply during the year under consideration. Also, the assessee company has not provided any registered sale deed to claim the cost of acquisition even after repeated queries hence the cost of acquisition is taken as mentioned in the audited balance sheet of the assessee company. 7.5 From the above discussion, the capital of assessee is worked out here under:- Value of land so allotted as per reserve price as on 18.06.2015 Rs. 27,89,92,000/- Less:- Cost of acquisition 903892*1081/223= Rs. 43,81,647/- Rs. 87,96,055/- 430619*1081/244= Rs. 19,07,783/- 221058*1081/259= Rs. 9,22,640/- 570000*1081/389= Rs. 15,83,985/- Long term capital gain Rs. 27,01,95,945/- From the above discussion, it is clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the AY 2016-17 was pending when notice under section 153A of the Act on 25.07.2018 was issued and served upon the appellant. Even the time period for issuing notice under section 143(2) for the aforesaid assessment year had already elapsed. In view of the above, it is evident that the assessment for the impugned assessment year was not pending on the date of search on 30.11.2017 and did not get abated by virtue of search u/s 132 on the date of search and therefore, cannot be considered as merged into the assessment u/s 153A. In case of unabated search assessment, any undisclosed income, which can ultimately be added, is only to the extent of any unrecorded assets or any incriminating documents found as representing undisclosed income earned. The appellant has contended that in search, no incriminating material indicating any undisclosed income for the year under consideration was found and therefore the assessment has been completed by the AO without referring to any incriminating seized material. (iv) On perusal of the assessment order, it is observed that during the course of search, certain 'developed land allotment letters, note sheet pages of JDA regarding acquisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Dy. Commissioner Zone -15, JDA addressed to the Addl. Commissioner (LPC). JDA intimating the aforesaid fact was found and seized. However, the appellant in the year 2014, made a settlement with the Government to end the long litigation on the issue. In consequence to the said settlement, the Government of Rajasthan issued a Ministerial Order dated 11.09.2014 to settle finally the litigation going on. In the said settlement order, the Government of Rajasthan agreed to allot 25% developed land in lieu of the appellant's agricultural land acquired by the Government. Further the said Ministerial Order was subject to withdrawal of Writ Petition filed by the appellant pending for disposal before the Hon'ble Rajasthan High Court. The appellant in compliance to the terms of the Ministerial Order (supra) filed an Undertaking dated 22.10.2014 accepting the land acquisition consideration determined by the Government of Rajasthan by allotment of 25% developed land. AR (vii) The A.O. also observed that the appellant company has surrendered its rights in the land acquired by JDA vide letter dt. 19.02.2014 addressed to JDA, Jaipur and that this was an unconditional offer for surrende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned assessment order. For ready reference, the relevant para of the order is reproduced herein as under- The construction work of Country Club has been stopped due to State Government has proposed to acquire the major part of the land for the purpose of development of SEZ. In the Ayrs 2006-07 to 2011-12 the disclosures made in the Director's Report in the audited documents and financial statement is as follows:- As informed in the last AGM, the land belonging to the company has been acquired compulsorily for SEZ Project by Rajasthan State Government. The Writ Petition filed by the company against the Government of Rajasthan before Hon'ble Rajasthan High Court Jaipur Bench Jaipur is still pending for disposal. The company is continuously working on various options including purchase of alternate land and/or alternate project. In the audited statements of accounts a Note was put regarding the acquisition proceedings, proposed allotment of land and the amount deposited as per the Demand Notice as follows:- (a) Assessment Year 2011-12 to 2015-16: Rajasthan State Government in exercise of the powers vested under the land acquisition act 1894 has init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition in its returns of income since the initiation of the process of land acquisition by JDA. Further, the AO has himself admitted that the unconditional offer for surrender of land by the appellant company vide its letter dated 19.02.2014 in covered within the definition of transfer as per section 2(47) of the Act. Therefore even as per the AO, the transfer of land falls under the FY 2013-14 relevant to AY 2014-15. Moreover in the given facts and circumstances of the case, merely because the demand notice was issued on 18.06.2015 and the payment was made by the appellant company on 26.11.2015 and 04.01.2016, would not determine the liability of capital gain in the year under consideration, the fact remaining that the possession of the land has still not been handed over to the appellant till date. (xi) In search assessments, any undisclosed income, which can ultimately be added, is only to the extent of any unrecorded assets/material found or any incriminating document found as representing undisclosed income earned. Further, the facts of the present case remains that there is no incriminating evidence related to addition made by the AO found during the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place. The AO has the power to assess and reassess the 'total income of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYS in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (ie. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the regular assessment proceedings. (xiv) Recently Hon'ble Supreme Court vide order dated 02-07-2018 in Meeta Gutgutia Vs. Pr CIT (96 Taxmann.com 468) have held that Invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. The head note of the judgment is as under: Section 153A of the Income-tax Act, 1961- Search and seizure (General principles) - Assessment years 2001-02 to 2003-04 and 2004-05- High Court in Impugned order held that invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year-Whether SLP against said decision was to be dismissed - Held, yes [Para 2] [In favour of assessee] (xv) Further, similar view is also taken in the following judgments, including by Hon'ble ITAT Jaip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO u/s 143(3) r.w.s. 153A for the year under consideration is legally not tenable, not being based on any incriminating document/ evidence found in the course of the search and hence is not liable to be sustained. Accordingly, the Ground of Appeal No. 1 is treated as allowed. 9. Revenue aggrieved from the findings of the ld. CIT(A) has preferred this appeal in ITA No. 264/JPR/2022 on the grounds as reiterated here in above. As the assessee also not satisfied fully with the findings of the ld. CIT(A) the assessee has also preferred the cross objection in CO No. 13/JPR/2022. 10. The ld. DR heard at length, apropose to the grounds so raised by the revenue. The ld. DR vehemently argued that the ld. CIT(A) has to considered the merits of the case and has to considered the appeal of the assessee on merit and should not have decided the appeal based on the technical grounds. As regards the contention of the assessee that the land in question is agricultural land is not correct as raised in their CO as the AO has proved by a detailed discussion that the land in question was not an agricultural land. Relying on the finding recorded by the ld. assessing officer that the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee group Jhai and Newta. 114 to 118 6 Copy of replies received from Tehseeldar Sanganer during the assessment proceedings. 119 to 147 7 Inspector report for the physical enquiry made during the assessment proceedings. 148 It is certified that the above documents have been supplied by the DCIT, Central Circle-03, Jaipur vide letter no. 710 dated 14.09.2022. Report of the assessing officer forwarded by the ld. DR vide letter dated 03.05.2023 Sub:- Appeal before hon'ble bench in ITA No. 264/JPR/2022, 265/JPR/2022, 266/JPR/2022 267/JPR/2022 in the case of M/s Rigid Conductors (Raj.) Pvt Ltd, Ms Chokhi Dhani Developers Pvt Ltd, Ms Vision Estates Pvt Ltd Ms Gee Vee Developers Pvt Ltd.-reg Respected Madam and Sir. Kindly find enclosed herewith AO report in form of copy of SB Civil Writ Petition No. 4181/2007 filed before the Hon'ble Rajasthan High Court by M/s Vision Estate Pvt. Ltd. through its Director Shri Subhash Vaswani S/o Mohan Lal Vaswani, having its registered office at Anjali Chambers, Rajbhawan Marg, Jaipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise. 3. With this background, the contention is not tenable for want of following: 1. There is no Agriculture Income declared by the appellant in any of the financial year. 2. The notes on account annexed to the Audited financial statement also buttress the contention, that the land was never ever used for agriculture but even never intended to be used for agriculture. The relevant extract from notes on account is reproduced as under. for clearing the air over matter. 3. That the reference to the finding of the AO while making assessment u/s 143(3) for AY 2005-06, also cements the contention. The relevant part of the order is verbatim reproduced as under: The construction work of the country club has been stopped due to state government has proposed to acquire the major part of the land for the purpose of development of SEZ Emphasis Supplied The mere glance over the observation will convey your honour that the asessee has prior to date of notification of acquisition has commenced construction of country club which was to be stopped due to proposal of acquisition therefore it is vividly clear like the day light that it was not the intent of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unearthed during the search which was not already available to the Assessing Officer. While granting relief to the assessee, the Ld. CIT(A) has failed to take note of the position that Hon ble Supreme Court of India has admitted SLP against this proposition in the following matters:- (i) Principal Commissioner of Income Tax vs. Gahoi Foods (P.) Ltd. 117 taxman.com 118(SC) 272 Taxman 521(SC) dated 24-01-2020 (ii) Principal Commissioner of Income Tax, Central-4 vs. Dhananjay International Ltd. 114 taxman.com 351(SC)/270 Taxman 15(SC) dated 16-09-2019. 2. The Ld. CIT(A) has erred in law and on facts in not carrying out her duty of adjudicating the grounds on relief on merit, and dismissing them only on a technical ground. 3. Whether in the facts and in the circumstances of the case and in law the Ld. CIT(A) is justified in deleting the addition of Rs. 27,01,95,945/- by holding that the addition made on account of LTCG is without any reference to any incriminating seized material which could justify the addition. 4. The learned CIT Appeal has erred in granting relief to the assessee (i) on the basis of her finding that the transfer of land within the meaning of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of alleged Long Term Capital Gain on compulsory acquisition of the agricultural land by the Jaipur Development Authority (JDA) in the year 2005-2007 under the provisions of Central Land Acquisition Act, 1894. Order of CIT (A) The assessee filed an appeal against the said assessment order before CIT (A), IV, Jaipur and filed written submissions and supporting documents which submissions are reproduced in appeal order. The Ld. CIT (A) considered the submissions of assessee and after detailed discussion in appeal order decided the grounds raised by assessee. The Ld CIT(A) allowed the appeal of assessee on legal ground. The Ld CIT(A) while deciding the appeal on legal ground relied upon the judgment of Hon ble Supreme Court in Meeta Gutfgutia vs Pr. CIT (96 Taxmann. Com468), Delhi High Court in case of Kabul Chawla Vs ACIT (380 ITR 573) (Dlhi HC), All Cargo Global Logistic Ltd. Vs. DCIT (Bombay High Court) and various other recent decisions of Hon ble Jurisdictional ITAT, Jaipur. For ready reference the findings of Ld. CIT (A) on legal ground are reproduced herein below:- Para (xvii) of CIT(A) page no.17 The present appeal concerns AY 2016-17. On the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t submits the following undisputed facts of the case: (i) That during the course of search and seizure action carried under section 132 of the IT Act by the Department no incriminating document was found and/or seized by the Department. (ii) The agricultural land owned by the appellant and acquired by the Government under Central Land Acquisition Act, 1894 revised in the year 1984 was an agricultural land. (iii) The details/particulars of the acquisition proceedings are as under :- (a) Gazette Notification for acquisition of the land was issued on 20.12.2005 and published in the official gazette on 20.12.2005, a copy of the said Notification is enclosed herewith. (b) Final Notification of land acquisition was issued by the Government on 8th May, 2006, copy enclosed (c) Award determining total consideration payable by the Government on account of acquisition of the agricultural land was issued on 06.08.2007. The said award was an allotment order of land, copy enclosed. (d) Land acquisition made by the government was challenged by the appellant before the Hon ble Rajasthan High Court in the year 2007. However, since for a long time no verdict was given by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b has been stopped due to State Government has proposed to acquire the major part of the land for the purpose of development of SEZ. A copy of the assessment order is also enclosed herewith. (h) In the assessment years 2006-07 to 2011-12 the disclosures made in the Director s Report in the audited documents and financial statement of accounts is as follows :- S. No. (i) As informed in the last AGM, the land belonging to the company has been acquired compulsorily for SEZ Project by Rajasthan State Government. The Writ Petition filed by the company against the Government of Rajasthan before Hon ble Rajasthan High Court Jaipur Bench Jaipur is still pending for disposal. The company is continuously working on various options including purchase of alternate land and/or alternate project. A copy of audited financial statements and directors report is enclosed. (iv) In the audited statements of account following Note was put regarding the acquisition proceedings, proposed allotment of land and the amount deposited as per the Demand Notice:- (a) Assessment Year 2012-13 to 2015-16: Rajasthan state Government has compulsorily acquired some of the land on by the company for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. ROI Filling Date 143(2) notice time expiry Date of Search 2016-17 15-10-2016 30-09-2017 30-11-2017 1(b) In the light of the facts narrated in the preceding paragraphs, it is evident that on the date of search i.e. 30-11-2017, income tax assessment for AY 2016-17 was un-abated. It is submitted that the provisions of section 153A of the Act, forms part of Chapter XIV of the Act contain special provisions for completing assessments in case of search conducted u/s. 132 of the Act or requisition made u/s. 132A of the Act. These provisions can be invoked only in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre-conditions prescribed in Section 132 of the Act.. However, it is submitted that section 153A itself creates the fine distinction/differentiation amongst specified six assessment years depending whether prior to the date of search, the assessment proceedings are pending or not before the AO. It is noted that the relevant section i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. The words assess or reassess have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and word reasons has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. 1 (d) The Hon ble jurisdictional Rajasthan High court in the case of Jai Steel limited vs. ACIT (88 DTR 1) held that in case of completed assessments no addition can be made if no incriminating seized material is found during the course of search. The relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read in the context of sections 132 or 132A, in as much as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. . . Para 26 of the Judgement: The plea raised on behalf of the assessee that as the first proviso provides for assessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words assess or reassess have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and word reasons has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis o] evidence found in the course of the search, or other post-search material or information available with the AO which con be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. O6vious/y an a ssessment files to be made under this Section only on the basis of seized material. v. In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word assess' in Section 153 A is relatable to abated proceedings i.e. those pending on the date o/ search) and the word 'reassess to completed assessment proceedings. vi. In so far a spending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of these search and any other material existing or brought on the record of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Jaipur bench, Jaipur and other Benches expressed similar view point in various cases including the following:- a) The Hon ble jurisdictional ITAT, Jaipur Bench, Jaipur in the recent case of M/s Vijeyeta Buildcon Pvt. Ltd. Vs ACIT, CC-1, Jaipur (ITA No. 980/JP/2018) date of order 27-10-2020 held that in the entirety of facts and circumstances of the case where the reassessment completed u/s 153A without any reference to the incriminating material, following the binding precedents as cited above including that of the Jurisdictional High Court, the addition made by the AO u/s 40(A)(3) is not sustainable and the same is hereby deleted. b) DCIT Vs Venus Overseas Pvt. Ltd. (ITAT Delhi) ITA Nos. 276, 277, 278 280/DEL/2015 dated 25-08-2020 : As for the A.Y. 2006-07 to 2010-11 no incriminating material was found appeals are dimissed as per Rule 27 of ITAT Rules on the ground that the impugned assessment are bad in law as no incriminating material was found at the time of search which could trigger the provision of section 153C of the Act. c) Jai Lokenath Oil Extraction P. Ltd. Vs. DCIT (2017) 166 ITD 161 (Kol ITAT). d) Ratan Kumar Sharma Vs. DCIT (ITAT JPR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating seized material found during the course of search. b) In the case of DCIT, CC-2, Jaipur Vs Ksheer Sagar Developers Pvt. Ltd, Jaipur (Appeal No. 472/2016-17) dated 31-07-2019 it was held: 7.1 It is clear from the table above that assessments stood completed on the date of search and there was no time left to issue the notice u/s 143(2). Careful perusal of the assessment orders indicated that none of the additions/disallowances (except Ground of Appeal 4 in A.Y. 2013-14) made are based on seized material found during the course of search on the appellant premises. 7.2 in the remand report the Ld. AO has reffered to decision of Hon ble High Court of Rajasthan in the case of CIT Vs Ravi Mathur (citation not provided) to counter the legal grounds taken. In my view the decision cited is a dated decision and the issue is now settled by the decision of Hon'ble SupremeCourt. After discussion on various judgements including judgment of Hon ble Supreme Court in the case of MeetaGutgutia the Ld CIT(A) held that since no incriminating documents were found as a result of search the addition made by A.O. is not justified and deserves to be deleted. c) Recent judgeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laining the case of the assessee company, the provisions of section 2(14) of the IT Act, 1961 are reproduced hereunder :- 2(14) capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specified in this behalf by notification in the Official Gazette. As per above definition of Capital Asset to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia in the erstwhile Ministry of Finance (Department of Revenue and Insurance) No. S.O. 77 (E) dated February 6, 1973 see [1973] 89 ITR St.) 145, the Central Government having regard to the extent of, and scope for urbanization of the areas concerned and other relevant considerations, hereby specifies the areas shown in column (4) of the Schedule hereto annexed and falling outside the local limits of municipality or cantonment boards, as the case may be, shown in the corresponding entry in column (3) thereof and against the State of Union Territory shown in column (2) thereof for the purposes of the above mentioned provision of the Income-tax Act, 1961 (43 of 1961). No. Name of the State or Union Territory Name of the municipality or cantonment board falling in the State/Union Territory mentioned under column (2) Details of areas falling outside the local limits of municipality or cantonment board, etc., mentioned under column (3). 1 2 3 4 19. Rajasthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the assessee company is situated) was at DCM Ajmera Farm and from the said municipal limits the agricultural land was situated at 17 KM distance. Documentary evidence in support of submission is enclosed. The dispute between the assessee and the department arises because of the expansion of Municipal limits as on the date of allotment of the land in the year 2014 and as on that day the distance of the land in question was not more than 8 kms from the Municipal limits. It is also evident and verifiable from the assessment order that the ld. AO has treated the land in question as not falling under the exclusion clause of section 2(14)(iiib) of the IT Act, for the said reason i.e. the land was within the 8 kms of Municipal limits in the year 2014. In this connection it is further submitted that as per sub-clause (b) of clause (iii) of section 2(14), the notification of the Central Government, is mandatory to bring the land in the definition of capital asset which is not located within the limits of Municipality but located within the distance of 8 kms from the local limits. So far the agricultural land which is located in the limits of Municipal Limits, the same will be treated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also submitted that regarding measurement of distance of the land, there was no direct road from the main road and accordingly the distance has to be measured by the approach road. The amendment brought by the Finance Act, 2013 to measure the distance aerially is effective from 01.04.2014 and accordingly applies for the said assessment year. the above said submissions are drawing support from the Hon ble Jaipur ITAT s judgment in case of Smt.(Dr.) Subha Tripathi in ITA No. 1129/JUP/2011 A.Y. 2008-09 dated 24.05.2013. The relevant part of the order is reproduced hereunder:- 2.7. We have considered the rival submissions as well as the materials on record. The question arises for our consideration and adjudication is whether the land in question though located beyond 8 kms from the Municipal Limits of Jaipur Municipality as on the date of notification dated 06.01.1994 but subsequently it falls within the distance of 8 kms from the Municipal Limits due to the expansion of the Municipal Limits would still be regarded as agricultural land not falling in the definition of capital asset in terms of Section 2(14)(iii)(b) of the Act. There is no dispute that Jaipur Municipality has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no amendment or withdrawal of the said notification except a recent amendment has been brought in the statute by the Finance Act 2013 whereby the requirement of said notification has been dispensed with for invoking sub-clause (b) of clause (iii) of Section 2(14) of the Act w.e.f. 01.04.2014. thus it is discernible from the notification dated 06.01.1994 and the recent amendment in the statute whereby the said notification has been dispensed with that the distance of 8 kms has to be considered from the Municipal Limits as exists on the date of notification for the purpose of invoking sub-clause (b) of clause (iii) of Section 2(14) of the Act. Accordingly we hold that the land in question which was located beyond 8 kms from the Municipal Limits as on 6.01.1994 when the notification was published in the official gazette, the same would fall under the exclusion clause of the term capital asset as per provisions of 2(14)(iii)(b) of the Act. In view of the above facts and a settled law position on the issue the agricultural land of the assessee, acquired by the Government, was situated beyond 8 KMs from the local Municipal Limits. Thus the said agricultural land acquired was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able that the consideration on account of acquisition of agricultural land was decided by the Government on 11.09.2014/22.10.2014 i.e. in the financial year 2014-15 relevant to assessment year 2015-16. Further, a Demand Notice cum Allotment Letter was issued by the Jaipur Development Authority on 18- 06-2015 for the above said land agreed to be allotted to the appellant. The appellant deposited the said amount on 29-01-2016 and the transaction is recorded in regular audited books of accounts. (f) Till date no physical possession of the land is given by the Jaipur Development Authority and accordingly till date the appellant has received no consideration on account of acquisition of the land. (g) The appellant regularly disclosed the facts of compulsory acquisition of land by the State Government in its audited financial statement of accounts submitted/filed along with the Income Tax Returns. The department has also taken cognizance of the same in the assessment year 2005-06 during the course of assessment proceedings under section 143(3) of the IT Act, 1961 and the ld. AO has mentioned the facts in the impugned assessment order. For ready reference, the relevant para of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Acquired by Government of Rajasthan] was not a capital asset within the meaning of section 2(14) of the IT Act, 1961. In this connection the appellant further submits as follows:- 1. As per revenue record and other details available on assessment record, it is evident and verifiable that the land(s) of the appellant was an agricultural land, and was being used for agricultural purposes up to the year 2005 i.e. before the acquisition of the said land by the Rajasthan State Government in the year 2005. The supra facts and submissions are also supported by the acquisition Notification issued by the Government of Rajasthan as well as, Khasra Girdawari reports prepared annually by the Land Revenue Department of Government of Rajasthan. From the said Khasra Girdawari reports it is verifiable that major chunk of land(s) was Barani nature and seasonal crops as per rain fallen in the relevant year(s), were produced L.e. Bajra, Gwar and Chonla etc. As the harvesting/tilling of the land and consequential production of grains and fodders were completely dependent on climatically position in the relevant year(s). Although after meeting the harvesting wages and other expenditure incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified was agricultural land- Moreover, distance from nearest Municipality had also been shown to be beyond 8 kms. Further, even though assessee ran a nursery on agricultural land, same was held to be agricultural operation by jurisdictional High Court - Accordingly, Tribunal allowed assessee's claim- High court by impugned order held that, on facts, no substantial question of law arose from Tribunal's order - Whether Special Leave Petition filed against impugned order was to be dismissed. 3. The same view was also taken held by the Hon'ble Calcutta High Court in case of CIT vs. Borhat Tea Company Ltd. (1982) 138 ITR 783 (Cal.), stated supra. As in the case of appellant it is evident from the relevant legal documentary evidences that land of the appellant company in revenue record was an agricultural land upto the year 2005 i.e. before the date of acquisition of the said land by the Government of Rajasthan. It is therefore prayed to your Honour that the status of the land may kindly be considered as an agricultural land situated more than 8 kms. from the municipal limits in the material year. The appellant again prays for relief accordingly. 12.2 Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrectly claimed that the lands acquired by the JDA/Government of Rajasthan were agricultural land and prays for relief accordingly. 12.3 The ld. AR of the assessee in support of the written submission filed a paper book containing following records: S. No. Particulars Page No. AY 2016-17 1 Copy of letter of Director of M/s Chokhi Dhani Developer Pvt. Ltd. to the Commissioner of JDA which was seized as page no. 16 to 20 of Exhibit-2 seized from Chowki Dhani Tower, S-8, Shyam Nagar, Ajmer Road, Jaipur 1 to 6 2 Page No. 1 to 82 of Exhibit-4 seized from Chokhi Dhani Tower, S- 8, Shyam Nagar, Ajmer Road, Jaipur containing certain developed land allotment letters , note sheet pages of JDA regarding acquisition allotment of land miscellaneous correspondence regarding acquisition of land situated at Village Jhaqi and Nevta, Tehsil-Sanganer, District-Jaipur (Rajasthan) related to Chokhi Dhani Group. 7 to 100 3 Pages of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-62 2. Copy of order passed by Hon ble ITAT, Jaipur Bench, Jaipur in the case of Assistant Commissioner of Income Tax, Central Circle-02, Jaipur vs. Shri Mahendra Singh Ratnawat, Jaipur dated 18.10.2022. 63-123 3. Copy of order passed by Hon ble High Court of Orissa in the case of Principle Commissioner of Income Tax vs. M/s E-City Projects Lucknow (P.) Ltd. dated 05.07.2022. 124-127 4. Copy of order passed by Hon ble High Court of Calcutta in the case of Principal Commissioner of Income Tax vs. M/s Shreeleathers, dated 14.07.2022. 128-134 5. Copy of order passed by Hon ble High Court of Delhi in the case of Principal Commissioner of Income Tax vs. Shri Shiv Kumar Agarwal, dated 28.07.2022. 135-138 13. The ld. AR of the assessee relying on the detailed submission so filed summarily submitted that the company is not carrying any business. The land acquired by the assessee is agricultural land the capital gain is not attracted when the acquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, the ld. CIT(A) has failed to take note of the facts that Hon ble Supreme Court of India has admitted the SLP against this proposition in the case of PCIT Vs. Gahoi Foods P. Ltd. and in the case of PCIT Vs Dhananjay International Ltd. In that case the addition was made based on the statement recorded at the time of search and the second ground raised by the revenue is that the ld. CIT(A) should have decided the case on merits instead on technical ground. 14.2 Thus, the issue in dispute in this appeal whether the view taken by the ld. CIT(A) on technical ground and thereby ordering the deletion of addition made by AO is correct one or not. The ld. DR to support the grounds so raised the order of the ld. AO and vehemently submitted that CIT(A) erred in not considering the merits of the case about the alleged income on account of long term capital gain arises on the acquisition of land of the assessee by the government. The assessee has already agreed on the consideration in terms of the land against the land therefore, the assessee should have offered the long-term capital gain in the year in which JDA issued the letter for payment of lease. As the issue before us that whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is reproduced here in below: S.NO. Particulars Paper Book Page No. 1 The Government of Rajasthan Vide Gazatte Notification Dated 22-12-2005 issued a public notification for acquisition of land by JDA for the proposed SEZ. Paper Book Page no. 1- 34 filed on 08th Aug. 2022 2 Gazzate Notification Dated 08-05-2006 specifiying the details of land of assessee company to be acquired under Land Acquisition Act, 1894 Paper Book Page no. 35- 38 filed on 08th Aug. 2022 3 Award determining total consideration payable by the Government on account of acquisition of the agricultural land was issued on 06.08.2007. Paper Book Page no. 43- 57 filed on 08th Aug. 2022 4 Land acquisition made by the government was challenged by the appellant before the Hon ble Rajasthan High Court in the year 2007. 5 Ministerial order dated 11-09-2014 for allotment of 25% developed land in leiu o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of accounts submitted/filed along with the Income Tax Returns. The disclosures made in the Director s Report in the audited financial statement of accounts are as follows:- A.Y. 2006-07 :- S. No. 2 of directors report :- As the state government has initiated process to complusorily acquire free hold land owned by the company. teh company has filled its objections before the competent authority notified by the state government in this regard and is working on various options including purchase of alternate land and/or alternate project. Paper Book Page No. 217 filed on 8th Aug, 2022 A.Y. 2007-08 to 2011-12: Note No 2 of Directors Report: - Rajasthan Govt. has made compulsory acquisition of some of the lands owned by the company for the purpose of SEZ and the writ petition filled by the company challenging the action of the state govt. before Jaipur bench of High Court of Rajasthan is still pending for disposal. Paper Book Page no. 148, 162, 176, 189, 204 filed on 08th Aug, 2022 A.Y. 2012-13 to 2015-16 :- Note No 6/7/18 :- Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o incriminating material was found, this fact is not only appreciated by the ld. CIT(A) but also not challenged by the ld. DR by filling any evidence / written submission contradicting this fact but has merely stated that based the papers found in the search the same be considered as incriminating material. On the contrary based on these facts the ld. AR of the assessee vehemently argued that the assessment already completed can only be done qua incriminating material and thus the law did not permit to again relook the assessment already completed. To support this contention, he relied on the various judgements of high courts and Supreme Courts amongst them same it includes the jurisdictional high court also. We note that in this case the search was carried out on 30.11.2017 and on that day assessment for AY 2016-17 in the case of the assessee was not pending and even the time limit for issue notice u/s. 143(2) was also passed. Thus, based on these set of facts the assessing officer would reassess the total income of the assessee as per the provisions of section 153A in respect of assessment year 2016-17. As the assessee objected to the proposed addition on the ground that during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of reassessment under section 153A of the Act are without jurisdiction and liable to be deleted and it is nothing but a review by the same rank of officer and the same is not permitted under the law. After appreciating such facts, ld. CIT(A) accepted the contentions of the assessee and held that no addition could be made as no incriminating material was found with respect to the land of the assessee. Thus, it is undisputed that when there is no incriminating material was found no addition could be made in the order passed u/s. 153A of the r.w.s. 143(3) of the Act. 14.5 The ld. AR of the assessee has relied upon various judgment including the jurisdictional high court, but he has argued that recently the Honourable apex court in the case of Principal Commissioner of Income Tax, Central-3 Versus Abhisar Buildwell P. Ltd. has also decided the issue in favour of the assessee and the relevant finding is reiterated here in below: 2. The core issue involved in the present batch of appeals is the scope of assessment under section 153A of the Income Tax Act, 1961 (hereinafter referred to as the Act, 1961 ). According to the Revenue, the Assessing Officer (hereinafter referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent decisions, referred to hereinabove. Only the Allahabad High Court in the case of Pr. Commissioner Of Income Tax v. Mehndipur Balaji, 2022 SCC OnLine All 444 : (2022) 447 ITR 517 has taken a contrary view. 7.1 In the case of Kabul Chawla (supra) , the Delhi High Court, while considering the very issue and on interpretation of Section 153A of the Act, 1961, has summarised the legal position as under: Summary of the legal position 38. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aphs 15 16, it is held as under: 15. On a plain reading of section 153A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under section 132 or a requisition under section 132A of the Act. Once a search or requisition is made, a mandate is cast upon the Assessing Officer to issue notice under section 153A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby; it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 153A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961,it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: 153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall ( a ) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or re-assessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the total income for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed by the learned CIT(A). In the result ground no. 1 2 raised by the revenue is dismissed. 15. Since, the disputed addition has already been allowed by the ld. CIT(A) on technical issue and we have also concurred with the findings of the ld. CIT(A), therefore, on merits this ground is also technical and educative in nature which need not require adjudication. In the results the ground of appeal no. 3 4 taken by revenue dismissed. 15.1 During the course of hearing, the Bench noted that the Ground No. 5 of the revenue is general in nature which does not require any adjudication. Hence, the Ground No. 5 taken by the revenue is dismissed. In the result of the appeal of the revenue in ITA No. 264/JPR/2022 stands dismissed. 16. The fact of the case in ITA Nos. 265 to 267/JPR/2022 is similar to the case in ITA No. 264/JPR/2022 and we have heard both the parties and persuaded the materials available on record. The bench noticed that the issues raised by the revenue in the case of M/s Rigid Conductors (Raj.) Pvt. Ltd. in ITA No. 264/JPR/2022 is equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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