TaxTMI 
TaxTMI 
2017 (5) TMI 775
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.... property, interest and remuneration from firms, 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 fro....
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....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 term 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 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....
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....Income-tax (Appeals) deleted the addition for the following reasons : (a) Cost of acquisition of the property was shown at Rs. 58.50 per square metre in the original returns of income for the assessment years 2005-06, 2006-07 as well as 2007-08. Regular 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 Rs. 58.52 to Rs. 40 per square metre. Moreover, the findings recorded by the learned Commissioner of Inco....
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....s sold by you in the relevant financial year in the same colony and the difference amount of sale consideration added to your income'." 10. The assessee replied as under : "Regarding Sai Lok and your contention of taking the sale rates as charged 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....
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.... cases. (d) The business model and business practice of the assessee and R. B. Enterprises were different. 13. The learned Commissioner of Income-tax (Appeals), however, clarified that no comments were being made about the quality of the evidence which 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 enclose....
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....ed the following written submissions : "1. E. N. Gopakumar v. CIT [2017] 390 ITR 131 (Ker) ; [2016] 75 taxmann.com 215 (Ker) (copy enclosed) Where the hon'ble 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) (para....
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....erved that (page 509 of 352 ITR): 'if it is not in dispute that the document was found in the course of the search of the assessee, then section 153A is triggered. Once the section is triggered, it appears 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 incrimi....
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....on 153A(1)(b) is required to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search was conducted. In the present 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. T....
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....cember 8, 2010." 18. This shows that the basis of the addition was the instances found in the case of M/s. R. B. Enterprises. Further, the learned Commissioner of Income-tax (Appeals) has observed that the assessee 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 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 rec....