2020 (2) TMI 348

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....ction 132[1][a],[b] &[c] of the Act; ii. That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132[2] is bad in law [224 ITR 19 [SC] ] and consequent assessment under section 153 A is null and void-ab-inito on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajith jain, reported in 260 ITR 80. iii. The learned authorities below has not discharged the burden of proving that there is a valid initiation of search under section 132[1][a][b]&[c] of the Act, its execution and its completion in accordance with law to render the proceedings valid and to assume jurisdiction to make an assessment under section 153A of the Act. 3. The authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajit Jain, reported in 260 ITR 80 and also reliance is placed on the decision of the Hon'ble Karnataka High Court in the case of C. Ramaiah Reddy Vs. DCIT, reported in 339....

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....e, probabilities and the facts and circumstances in the Appellant's case. 2. The appellant denies itself liable to be assessed under section 153A r.w.s. 143[3] of the Act under the impugned order on the ground that:- i. The Search initiated in the case of the appellant is illegal and ultra vires the provisions of section 132[1][a],[b] &[c] of the Act; ii. That the search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132[2] is bad in law [224 ITR 19 [SC] ] and consequent assessment under section 153 A is null and void-ab-inito on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of Ajith jain, reported in 260 ITR 80. iii. The learned authorities below has not discharged the burden of proving that there is a valid initiation of search under section 132[1][a][b]&[c] of the Act, its execution and its completion in accordance with law to render the proceedings valid and to assume jurisdiction to make an assessment under section 153A of the Act. 3. The authorities below failed to appreciate that a valid searc....

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....response to which assessee filed return declaring the same income on a December 2008. 2.1. During assessment proceedings, Ld.AO observed that assessee sold land admeasuring 4 acres 28 guntas plus 6 guntas Kharb(hereinafter referred to as the said property), for consideration of Rs. 70,00,000/-. On verification of sale deed, Ld.AO observed that, assessee acquired the land on 29/09/03, which was not declared in balance sheet as on 31/03/03. He was of opinion that, the land was acquired by assessee in previous year relevant to AY 2004-05, and sold during the same year. Ld.AO called upon assessee to produce sale deed, of having purchased the property which assessee failed to do. It was observed that assessee did not file any details for investment in this property and in the absence of any such details Ld.AO treated entire consideration as STCG. While passing assessment order under section 143 (3) read with 153A of the Act, income of assessee was determined at Rs. 72,58,000/- as against returned income of Rs. 1,87,000/- by making addition of Rs. 70,00,000/- being sale of agricultural land as income from short term capital gain which assessee claimed as not taxable, since said pro....

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....rieved by order of Ld.CIT(A), assessee is in appeal before us now. 4. Ld.AR submitted that, said agricultural land was originally purchased by assessee from one Sh.Abdul Khudus, vide sale deed dated 29/09/03 for total consideration of Rs. 4,70,000/-. Ld.AR submitted that assessee made advance payment towards purchase of said land, way back in the year 1994-95 amounting to Rs. 4,00,000/-. It was submitted by Ld.AR that Sh.Abdul Khudus was original owner of the said property situated in Bommasandra, to whom part consideration was paid by assessee. Sh.Abdul Khudus demised on 11/09/94, leaving behind his legal hairs. There was a legal dispute between legal hairs of Sh.Abdul Khudus being the vendor and assessee, which culminated into a Suit before The Court of Principal Civil Judge at Bangalore in original suit No.229/1995 placed at page 1-18 of paper book filed on 06/11/2019. 4.1. It has been submitted that compromise petition was filed and the decree was passed directing the vendor is to execute and register the sale deed in favour of assessee and thus the assessee could get the agricultural land registered only on 29/09/03. Ld.AR referring to page 12, 14, 15 and 16 of paper boo....

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....ors and decree of Principal City Civil Judge are encapsulated in recitals therein. It has been submitted that agreement was registered on 29/09/2003, though it was acquired as on the date of decree by the Civil Court subsequent to which the balance payment was made by assessee to Vendors on 22/04/1995. On the basis of above facts, emanating from record, we agree with Ld.AR that the said property was acquired by assessee in the year 1995, being the date of Decree, pursuant to consent terms, by Hon'ble Principle Civil Judge. As assessee sold the said property vide sale deed dated 31.01.2004, consideration so received therefore cannot be held as STCG. Ld.AR also argued that subject property is agricultural land and is situated outside 8 KM of local limits of Bangalore Minicipal Corporation, therefore it does not amount to be a capital asset as per section 2(14) of the Act. In support of this contention, he placed reliance on certificate dated 28.11.2011from PWD stating that property is situated beyond 12.6 km from BBMP limits, It has been submitted that Ld.AO erred in treating the purchase and sale of said property as business venture, and that, difference in price must be treat....