TaxTMI 
TaxTMI 
2023 (5) TMI 1102
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.... 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 the assessment year 2016-17 dated 21.04.2022, 22.04.2022 & 20.04.2022 which in turn arises from the order passed by the ACIT, Central Circle- 03, Jaipur passed under Section 143(3) r.w.s 153A of the Income tax Act, 1961 (in short 'the Act') dated 27.12.2019. 2. Since the issues involved in all these appeals of the revenue for all four assessee's are almost identical and having common grounds, all these appeals of the revenue and the cross objections of the assessee were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. DR has submitted that the matter pertaining to ITA No. 264/JPR/2022 and Co No. 13/JPR/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact int....
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.... 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. (ii) holding that according to the assessing officer himself, the assessee had surrendered/ relinquished his rights in the land in favor of JDA on 19.02.2014, and therefore the transaction should have been taxed in the assessment year 2014-15. (iii) and in doing so, the learned CIT Appeal has ignored the vital fact that the demand notice for payment was issued on 18.06.2015, a period falling within assessment year 2016-17. Ground 5. The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." Grounds of assessee's C.O.: "1. That on the facts and in the circumstances of the case the Ld. CIT(A) is wrong, unjust and has erred in law in not adjudicating the ground of respondent that agricult....
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.... 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 property Khasra No. Total area (in hectare) M/s Rigid Conductors (Raj.) Pvt. Ltd. Jhai 538, 542, 543, 535, 537/740 0.75 Jhai 664, 663,262-565, 579-586, 558, 661, 566, 567-569, 557 6.975 Total 7.725 The above land was acquired for Special Economic Zone (SEZ) under section 4(1) of the Central Land Acquisition Act, 1894. For this purpose a notification dated 19.07.2007 was issued by the Urban Housing & Development Department, Government of Rajasthan which was published in the official Gazettte on 25.07.2007. 7.1 A representation was made u/s. 5A of the Land Acquisition Act to the state government on 26.11.2007. After considering the representation, notification u/s. 6 of the Land Acquisition Act was published on 23.01.2008 and on 21.6.2008 to 26.06.2008; notice u/s. ....
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....nies were allotted land in lieu of land acquired by JDA. Vide letter dated 19.02.2014 addressed to Deputy Commissioner, Zone 15, Jaipur Development Authority, Jaipur, Shri Subhash Vaswani, Director of M/s Chokhi Dani Developers Private Limited & its sister concerns has furnished an undertaking (Pratigyapatra) regarding withdrawal of writ petitions from the Hon'ble Rajasthan High Court and has stated that JDA may initiate the necessary proceedings for allotment of developed land in lieu of acquired land which means they have agreed with the land acquisition and further allotment against the same. Thereafter cabinet meeting was held on 25.08.2014 in which the issue of land acquisition by UDH, Govt. of Rajasthan was discussed and order no. 123/14 dated 11.09.2014 regarding acquisition of agricultural & converted land situated at Jhai and Nevta was issued on the condition that the land owners (Chokhi Dhani Group) will submit an undertaking regarding withdrawal of all the writ petitions filed by them before the Rajasthan High Court. It was approved that: (a) In lieu of residential land admeasuring 7.38 hectare, equal land will be provided by Mahindra SEZ. (b) In lieu o....
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....d capital gain of the previous year in which such compensation or part thereof was first received. In this case though land acquisition process had started but due to judicial proceedings the compensation of the same in form of land allotment was made in the year under consideration. On the plain reading of section 2(47) makes it amply clear that compulsory land acquisition is one of the forms of land transfer. Hence, the case is squarely covered under the definition of transfer of capital asset. Also section 45(5) of the I.T.Act, 1961 is related to capital gain in case of compulsory acquisition of land which is applicable in this case. Hence, the assessee's theory of 'shifting of land' is nowhere described nor application in case in view of the facts as narrated above. 2. The compensation received on compulsory acquisition of land is exempt from tax u/s 10(37) of the act. The case is covered by CBDT circular no. 63/2016 dated 25-10-2016 in which the taxability of compensation given on compulsory acquisition of land was dealt with. A plain reading of section 10(37) makes it clear that the provisions of this section are applicable in the cases of individual & HUF only up....
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....ntion here that the land was allotted by the JDA through land allotment letter dated 18.01.2016 which makes it clear that the assessee received the compensation on that date itself and the assessee company became the legal owner of the land allotted. Here in this case land was allotted in lieu of compensation of land acquisition and the same was allotted vide allotment letter dated 18.06.2015 which makes it crystal clear that the same would be taxable in the year of allotment itself. So the contention of assessee is devoid of merit and is accordingly rejected. In the submission the AR of the assessee company has contended that as the land was acquired in 2005-06 so capital gain; if any should be chargeable in that year. The assessee is simply trying to give arguments to shift its tax liability from one year to another without any logic or reason. 4 Further, in the next submission the assessee has submitted a report of a surveyor measuring the distance of the land from the municipal limits and has stated that "a portion" of land falls outside the 8 km periphery which is completely vague because the entire land is compulsorily acquired. To investigate this aspect th....
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....IT(A). A propose to the grounds so raised by the assessee the relevant finding of the ld. CIT(A) is reiterated here in below: "5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- (i) A search and seizure operation u/s 132 of the IT Act, 1961 was conducted on 30.11.2017 on Chokhi Dhani Group, of which the appellant is one of the members. Subsequently notice u/s 153A was issued to the appellant for AY 2016-17 wherein the appellant was required to file the return for the relevant assessment year. The appellant filed the return and the assessment was framed thereon. (ii) Before me, the appellant contended that as on the date of search, the time limit for service of notice u/s 143(2) was not available for AY 2016-17. Thus, the assessment proceedings for AY 2016-17 were not pending on the date of search. In search no incriminating material indicating any undisclosed income for the year under consideration was found and as there was no seiz....
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.... was allotted in lieu of compulsory acquired land and that the land owned by the appellant was acquired by the Government under Central Land Acquisition Act, 1894 revised in the year 1984. (v) The details/particulars of the acquisition proceedings are as under :- * Gazette Notification for acquisition of the land was issued on 20.12.2005 and published in the official Gazette on 20.12.2005. * Final Notification of land acquisition was issued by the Government on 8th May 2006. Subsequently under section 4(1) of the Central Land Acquisition Act, 1894, a notification was issued by Urban Housing and Development Department, Govt. of Rajasthan Dt. 19.07.2007 which was published for compulsory acquisition of land for Mahindra Sez in the Gazette of Rajasthan on 25.07.2007. * 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 letter of land. * A representation was made by the appellant u/s 5A of the Land Acquisition Act to the state Government on 26.11.2007. Subsequently notification under section 6 of Land Acquisition Act was ....
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....appellant company vide its letter dt. 19.02.2014 falls under the definition of Transfer. Since the letter is dt.19.02.2014, the transfer falls under the F.Y. 2013-14 relevant to the A.Y.2014-15 and not to the year under consideration. (viii) As per the above facts, it is evident and verifiable that the appellant has surrendered its rights in the land acquired by the JDA vide its letter dt.19.02.2014 i.e. in the FY.2013-14 relevant to A.Y.2014-15. I also find that the consideration on account of acquisition of agricultural land was decided by the Government on 11.09.2014, in response to which the appellant filed an Undertaking dated 22.10.2014 accepting the land acquisition consideration determined by the Government of Rajasthan by allotment of 25% developed land ie. in the FY 2014-15 relevant to assessment year 2015-16. Thereafter, 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 26- 11-2015 & 04-01-2016 and the transaction is recorded in regular audited books of accounts. It was brought to my notice that till date no p....
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....ercial land measuring 11,221 sq. meters in village Raj Darbar and Jhai Jaipur respectively in lieu of its land situated in Nevta and Jhai village which was acquired by the State Government u/s 4(1) of the land acquisition act, 1984 for development of SEZ. In compliance of the allotment letter dated 18.06.2015 issued by JDA, the company has deposited Rs. 63,39,729 towards one time Lease Demand to JDA and shown this amount under Note No. 6 "Long Term Loans and Advances" as the lease deed of the land has not been executed in the name of company as of now. AR (x) In view of the above facts and on perusal of the assessment order, it is observed that the additions made by the A.O. is based on the aforesaid documents pertaining to compulsory acquisition of land in lieu of which, though the land was allotted by the JDA, however possession of this land has not yet been given to the appellant. Infact on perusal of the financials disclosed by the appellant company which itself is part of its Income Tax return, it is observed that all these facts are available in the income tax returns filed by the appellant company for last several years as mentioned supra and therefore cannot be con....
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....e jurisdictional High Court in case of Jai Steel (India) Ltd. Vs. ACIT (88 DTR 1). The relevant part of the decision of the Rajasthan High Court in Jai Steel (India) Ltd. Jodhpur vs. ACIT (Supra) is reproduced herein as under:- "22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of il proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made." (xii) Similar view is expressed by Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla 380 (Delhi HC). The Hon'ble High Court, while analyzing the provisions of s....
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....leted assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 38. The present appeals concern AYS, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." Thus the Hon'ble High Court has held that in the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The Hon'ble High Court has also referred the term used in section 153A as "assess" which is relatable to abated proceedings and the word "reassess" related to completed assessment proceedings. Therefore, the completed assessments can be interfered with by the AO while making the assessment under section 153A only on the basis of so....
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....ton Kumar Sharma vs. DCIT ITA 797 & 798/Jaipur/2014 (e) Vikram Goyal vs. DCIT ITA 174/lalpur/2017 etc. (f) Jadau Jewellers & Manufacturer PL Vs. ACIT (686/Jaipur/2014) (xvi) Thus the essential corollary of these decisions and also the decision relied upon by the appellant is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. (xvii) The present appeal concerns AY 2016-17. On the date of the search, the said assessment already stood completed, as discussed supra and the additions made by the AO u/s 143(3) r.w.s. 153A on account of long term capital gain is without any reference to any incriminating seized material which could justify the addition. Since no proceedings under the Income Tax Act were pending for AY 2016-17 as on the date of search, and accordingly scope of examination of issues in the assessment u/s 153A was required to be restricted to the incriminating material, if any, found as a result of search. It is observed that the addi....
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....nd therefore the finding of the ld. CIT(A) is not correct. In the search proceeding the team has found the case records of the proceeding contested before High Court and after that the settlement reached between the parties, wherein the assessee has agreed to accept the land against the land acquired in 2005-2006. This communication was finalized and agreed in the year 2014. Based on these facts this transaction is covered within the meaning of transfer and the assessee is liable for capital gain and the ld. AO has based on the prevalent rate charged the capital gain to the assessee and the same should be sustained. To support the various contentions so raised the ld. DR has filed the following submissions: A paper book containing following record filed vide letter dated 06.10.2022 S.No. Particulars Page No. A.Y 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- 08, Shyam Nagar, Ajmer Road, Jaipur conta....
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....tion only on the ground that it had been converted from agricultural to residential purposes, but similar treatment has not been given to the petitioners whereas in their case also conversion order for converting the land use from agricultural to residential has also been passed. Thus, it is clear that the entire exercise of acquisition undertaken by the respondents is discriminatory." 3. The appellant in above para have submitted to the Hon'ble High Court that their land has been converted from agricultural to residential. Hence, the land under discussion in the above mentioned cases is not agricultural land as already submitted by the appellants themselves before the Hon'ble High Court. Submitted for kind consideration." Written submission forwarded vide letter dated 09.05.2023 "In this connection it is submitted that the contention of learned counsel of the appellant is superficial & camouflage and solely with pretext to any how justify, a land which was neither put to agriculture use nor intended to be used for agriculture purpose. 2. In the submission of the appellant received on 08.05.2023, there are some unprecedented & un....
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....l converted area. It is pertinent to mention that the issue of converted land have seen light of day first time before the Worthy bench as the appellant deliberately concealed the fact of the converted land during the course of assessment. Thus, taking all above factors in conjunction, will convey to your honour. without any iota of doubt that the contention of the appellant that land is agriculture is after thought & contrary to information on record. Submitted for kind consideration." Written submission dated 18.05.2023 "The relevant part of Notes on Accounts attached with Audited Financial Accounts (as at 31st March, 2006) in the case of M/s Chokhi Dhani Developers Pvt. Ltd. is reproduced as under:- "The Rajasthan State Government in exercise of the power vested under "The Land Acquisition Act 1894" has initiated process to compulsorily acquire some of the land owned by the company at Jaipur. The company has filed its objections before the competent authority notified by the state government in this regard which are yet to be disposed off." Submitted for your kind consideration." 11. The ld. AR of the assessee submitted tw....
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....ssessment year 2014-15. (iii) and in doing so, the learned CIT(A) has ignored the vital facts that the demand notice for payment was issued on 18-06-2015, a period falling within assessment year 2016-17. 5. The appellant craves leave or reserves rights to amend, modify, alter add or forego any grounds(s) of appeal at any time before during the hearing of this appeal. Cross objection of Assessee In the C.O. assessee has taken following grounds: 1. That on the facts and in the circumstances of the case the Ld. CIT (A) is wrong, unjust and has erred in law in not adjudicating the ground of respondent that agricultural land measuring to 7.725 hectares situated at Village Jhai, Jaipur is situated outside 8 KM of municipal limit of Jaipur and therefore not a capital asset within meaning of section 2(14) of the I.T. Act, 1961 and therefore no capital gain is chargeable on its compulsory acquisition. 2. The respondent craves permission to add to or amend to any of grounds of appeal or to withdraw any of them. (1) FACTS OF THE CASE: The appellant is a private limited company. A return of income declaring total income at Rs. 1,14....
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....for AY 2016-17 as on the date of search, and accordingly scope of examination of issues in the assessment u/s l53A was required to be restricted to the incriminating material, if any, found as a result of search. It is observed that the addition is neither based on any single loose paper found/seized nor on any statement recorded during the course of search conducted in the case of the appellant which can be considered as incriminating as is evident from the order of the AO. Further the reference made by the AO to the documents pertaining to allotment of land under compulsory acquisition cannot be considered as incriminating in view of the fact that these were already part and parcel of the returns of income filed by the appellant and forms part of the financials of the appellant company since A.Y.2005-06. Infact the department has also taken cognizance of this issue in the assessment proceedings u/s 143(3) of the Act for the A.Y.2005-06, as mentioned supra. Therefore in view of the aforesaid discussion and respectfully following the binding decision of the Hon'b1e Jurisdictional High Court, decision of various other High Courts and the decision of Hon'ble Supreme Court as discusse....
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....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 minister order was subject to withdrawal of Writ Petition filed by the appellant pending for disposal before the Hon'ble Rajasthan High Court. A copy of Ministerial Order is enclosed. (e) 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. The appellant also withdrew the Writ Petition pending for disposal before the Hon'ble Rajasthan High Court. A copy of Undertaking filed with the Government is enclosed herewith. As per above facts, it is evident and verifiable 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....
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....6-17 : Note No. 21. The company has been allotted residential land measuring 13,950 sq. meters and commercial land measuring 129.84 sq. meters in village Raj Darbar and Jhai Jaipur respectively in lieu of its land situated in Nevta and Jhai village which was acquired by the State Government for development of SEZ. In compliance of the allotment letter dated 18-01- 2016, the company has deposited Rs. 20,68,936/- towards one time Lease Demand to JDA and shown this amount under Note No. 9 "Long Term Loans and Advances" as the company has not yet received the Lease Deed from the JDA. 3. GROUND-WISE SUBMISSIONS OF THE APPELLANT: The ground no. 1 to 4 are inter connected and on the similar issue hence combined submission is made as follows:- As evident and verifiable from the assessment order that no incriminating document was neither found nor seized by the department for the above said assessment year. As no incriminating documents/loose papers were found / seized during the course of search at the residential premises of the assessee indicating any on money receipt/investment/advances made and any unexplained/overstated expenditure etc. in ....
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....ive carte blanche to the Department to subject such an assessee to the rigors of the assessment afresh for all the six years. It is for this reason that the Parliament in its wisdom has categorically created two classes among the six years, (a) un-abated assessment and (b) abated assessments. Consequent to a search conducted u/s. 132 of the Act, the AO is required to issue notices u/s. 153A of the Act to assess the income of the assessee for six assessment years preceding the date of search. These six assessment years comprise of assessments which are not abated (non-pending assessment before AO on the date of search ); and assessments which are pending before the AO on the date of search, which would be treated as abated. In the case of abated assessments, the AO is free to frame the assessment in regular manner and determine the correct taxable income for the relevant year inter alia including the undisclosed income un-earthed during search, having regard to the provisions of the Act. However, in relation to unabated assessments (AYs), which were not pending on the date of search, there is a restriction on the powers of the AO. In case of unabated assessments, the AO can re-asses....
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....ct, it is apparent that: (a) The assessments or reassessments, which stand abated in terms of proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) Regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made The above submissions are fully supported by series of judicial pronouncement, few of which are reproduced herewith: (i) All Cargo Global Logistic Ltd. Vs. DCIT 137 ITD 287 (Mum)(SB) - Upheld by Bombay High Court. Relevant extracts: Para 58 of SB decisions: Thus, question No. 1 before us is answered as under:- (a) In assessments that are abated, the A.O. retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately : (b) In other cases, in addition to the income that has already been ....
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.... (iv) Recently Hon'ble Supreme court vide order dated 02-07-2018 in Meeta Gutgutia Vs. Pr CIT (96 Taxmann.com 468) has 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 quae ach 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 reopen 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 SIP against aid decision was to be dismissed- Held, yes [Para2][In favour of assessee] (v) Similar view point was expressed by the Hon'ble Delhi High Court in the case of Kabul Chawla vs. ACIT 380 ITR 573 (Del HC). The relevant observation of Hon'ble court could be seen in para 37 & 38 of order. 1 (e) Summary of the legal position: "37.On a conspectus of Section 153....
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....me incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The SLP filed against the above said order has been dismissed by the Hon'ble Supreme Court vide order dated 7th December, 2015. 1 (f) The appellant also places reliance on the following judgements of Hon'ble Supreme Court and Hon'ble High Courts: (i) Scope of section 153A is limited to assessing only search related income and thereby revenue is denied opportunity of taxing other escaped income that came to notice of the Assessing Officer - Principal CIT v. Vimal Kumar Rathi (2020) 115 taxmann.com 219 (Bom.), [SLP dismissed in Principal CIT v. Vimal Kumar Rathi (2020) 115 taxmann.com 220/273 Taxman 274 (SC). (ii) There has to be incriminating material recovered during search qua assessee in each of years for purposes of framing an assessment under section 153A - Principal CIT v. Ms. Lata Jain (2016) 384 ITR 543 (Delhi). (iii) Assessment under section 153A can be made only on the ba....
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.... Pvt. Ltd. (Kolkata ITAT ITA No. 873/KOL/2018) dated 20-03-2020 held: " No addition u/s 153A if incriminating material not found in search." 1 (g) Further Ld. CIT(A), Central, Jaipur in the various recent cases also allowed the appeal on similar ground. Few of them are as follows:- a) The Ld. CIT (A), Central, Jaipur in the case of ACIT CC-3, Jaipur vs Bitthal Das Parwal HUF, Jaipur (Appeal No. 362/JP/2017-18) dated 26- 03-2019 held that:- "In the assessment order there is no mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The AO has solely relied upon the report of the Investigation Wing Kolkata and statement of one Shri Anand Sharma recorded by the Investigation Wing during the survey under section 133A of the Act. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure under section 132 of the IT Act in case of the assessee. The requirement for making the additio....
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....21 (i) Dy. CIT, Central V. Smt. Ratan Kanwar RatnawatA.No. 1057/2019-20 A.Y. 2015-16 date of order 25-10-2021 (ii) Shri Mahendra Singh RatnawatA.No. 1089/2019-20 A.Y. 2016-17 date of order 24-11-2021 As per above decided cases, the appellant's case is squarely covered by the ratio decided in the above said judgments and the legal position on the issue is finally settled. It is therefore prayed to your honour, that since no incriminating documents were found as a result of search and the assessment was an unabated one. Accordingly, the assessment made by Ld. A.O. is wrong, bad in law and without jurisdiction deserves to be set aside. Cross objection of Assessee In the C.O. assessee has taken following grounds: 1. That on the facts and in the circumstances of the case the Ld. CIT (A) is wrong, unjust and has in law in not adjudicating the ground of respondent that agricultural land measuring to 7.725 hectares situated at Village Jhai, Jaipur is situated outside 8 KM of municipal limit of Jaipur and therefore not a capital asset within meaning of section 2(14) of the I.T. Act, 1961 and therefore no capital gain is chargeable on its....
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....inition of Capital Asset to include the agricultural land was brought on the Statute by the Finance Bill, 1970 and it would, therefore, be relevant to refer to the statement of objects and reasons vide introductory amendment to the Capital Asset contained in section 2(14) by the Finance Bill, 1970 as reported in 75 ITR (St.) 69 and relevant extracts is reproduced as under :- "Sub-clause (a) seeks to amend clause (14) of section 2 of the Income-tax Act which defines the term 'capital asset'. The amendment seeks to bring within the term 'capital asset' agricultural land situated within the limits of any municipality (whether known as a municipality, municipal corporation, notified area committ4ee, town area committee, town committee or by any other name) or a cantonment board having a population of 10,000 or more according to the last census for which the figures have been published before the first day of the previous year. Further, agricultural land situated in areas lying within a distance not exceeding 8 kilometers from the local limits of such municipalities or cantonment boards will also be covered by the amended definition of 'capital asset', if such areas are, having....
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....** ** Explanation 1.(1) In this notification, "Municipality" shall mean any areas which is comprised within the jurisdiction of a Municipality (whether known as a municipality, municipal corporation, notified areas committee, town areas committee, town committee or by any other name) 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. (2) The reference to municipal limits or the limit of Cantonment Board in the schedule to this notification is to the limits as existing on the date on which the limits as existing on the date on which the notification is published in the Official Gazette." 2(b). A perusal of the above provisions read with notification makes it clear that what is intended to be covered in the term "capital asset" is agricultural land comprised within the jurisdiction of a municipality or within the specified distance from the local limits of municipality or other local bodies mentioned therein as specified in the said notification is, therefore, mandatory to bring the land in the definition of "capital asset....
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....uestion falls under mischief of subclause (b) of section 2(14)(iii) of the IT Act, the distance of 8 kms has to be taken into account in terms of notification dated 06.01.1994. 2 (c). Further, as per Explanation-2 of the said Notification dated 06.01.1994, the Municipal Limits is to be the limits as existing on the date on which the notification is published in the official Gazette. For ready reference or for the sake of convenience, the Explanation-2 of the Notification is reproduced hereunder :- "(2) The reference to the municipal limits or the limit of Cantonment Board in the Schedule to this notification is to the limits as existing on the date on which on which the notification is published in the official gazette." As per the above position in law, it is clear that section 2(14)(iiib) of the IT Act covers the situation where the subject land is not only located within the distance of 8 kms from the local limits which is covered by clause (a) to section 2(14(iii) of the IT Act, but also requires the fulfillment of the condition that the Central Government has issued a notification under this Clause for the purpose of including the area up to 8 kms fr....
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....of the expansion of Municipal Limits and thereby the said distance from the Municipal Limits as on the date of sale of the land in question is only 2 kms and thereby the authorities below have treated the land in question as not falling under the exclusion clause of Section 2(14)(iii)(b) of the Act. There is no quarrel on the point that as per sub-clause (b) of clause (iii) of Section 2(14), the notification of the Central Govt. is mandatory to bring the land in the definition of capital asset which is not located within the limits of the 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 as capital asset and no further requirement is to be examined. Since the land in question is located outside the local limits of Municipality, therefore, in order to determine whether the land in question falls under mischief of sub-clause (b) of Section 2(14)(iii) of the Act, the distance of 8 kms has to be taken into account in terms of notification dated 6.01.1994. As per explanation 2 of the said notification dated 6.01.1994, the Municipal Limits is to be the lim....
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....ddition to the above written submission on 27/12/2022, the ld. AR appearing on behalf of the assessee submitted as under:- "As directed by Hon'ble Bench during the course of previous hearing the appellant company submits the brief summary of events occurred in the course of acquisition of land by Government under Central Land Acquisition Act, 1894. 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 has already been filed. (b) Final Notification of land acquisition was issued by the Government on 8th May, 2006. (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. (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 Hon'ble Rajasthan High Court, the appellant in the year 2014, ....
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.... 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 development of SEZ. The writ petition f....
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....rther as held by the Hon'ble Calcutta High court in case of CIT Vs. Borhat Tea Company Ltd. (1982) 138 ITR 783 (Cal.), That "for the purpose of land being agricultural land, actual operation of cultivation or tilling of the land is not necessary what is to be seen whether such land is capable of agricultural operation being carried on". Thus the said land was an agricultural land as defined in section 2(1A) of the Income Tax Act, 1961. Further, the appellant company treated the said agricultural land(s) as capital investment in its books of accounts and presented in financial statement of accounts (audited) Balance sheet under the head fixed assets and not as stock in trade i.e. business assets. The submissions are verifiable from the copies of financial statement(s) i.e. Balance Sheets regularly filed along with the return(s) of income with the Income Tax Department. Copy of the said Balance Sheet(s) is also enclosed herewith (Paper Book Page No. 88- 222). In view of the above facts, duly supported by legal documents/evidence that there is absolutely no dispute regarding status of land as an agricultural land and cultivation was carried on the said land till the date of acquis....
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....ced as under:- "This is with reference to the written submissions dated 03.05.2023 filed by the id. Senior D/R-II, ITAT, Jaipur. A copy of the said submission was supplied by the Hon'ble Bench on 04.05.2023 to the appellant. In this connection the appellant submits as follows:- 1. The reference made by the ld. Sr. D/R regarding the conversion of agricultural land to residential is based on the SB Writ Petition No. 4181/2007 filed before the Hon'ble Rajasthan High Court by M/s. Vision Estate Developers Pvt. Ltd. The relevant para and page number of the said Writ Petition has also been mentioned in the said written submissions. The plea taken by the ld. Sr. D/R is that the appellant's land is a converted land and not an agricultural land as claimed by the appellant. In this connection, the appellant submits that there were two types of lands- one was agricultural lands and another was converted residential agricultural land. The total area of the agricultural land was 6.975 hectare and another was a very small converted area of land measuring 0.75 hectare. The facts are verifiable from page nos. 2 & 27 of the assessment order. Thus the observation/submis....
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....opy of Allotment letter dated 18.06.2015 for the land situated at Vill-Jhai, Teh-Sanganer, Distt.-Jaipur in the name of assessee group. 113 5 Copy of revised allotment letter with details of land allotted to 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 PAPER BOOK S. No. PARTICULARS PAGE NO. 1 Copy of Rajasthan Gazette notification dated 20.12.2005 1-34 2 Copy of Rajasthan Gazette notification dated 08.05.2006 35-38 3 Copy of Ministerial order dated 11.09.2014 39 4 Copy of Undertakings/surrender letter 40-42 5 Copy of final award/allotment order. 43-57 6 Copy of letter submitted to JDA in regards to possession not received of allotted plots. 58-79 7 Copy of Rajasthan Gazette notification dated 06.09.1994 80-88 8 Binder book of ITR Computation of total income and audited report and financial statements and Director report for the A.Y 2005-06 to A....
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....based on the JDA letter and the said offer letter cannot be considered as incriminating material. Based on these arguments he supported the order of the ld. CIT(A). He further submitted that recently the even the supreme court uphold the finding that the scope of section 153A was limited to assessing only search related income. Therefore, based on the detailed arguments prayed that the appeal of the revenue is not maintainable merely the SLP was filed. But now the recent judgement of the apex court even more strength the finding of the ld. CIT(A). 14. We have heard the rival contentions and perused the material placed on record. We have also gone through the various judicial ruling cited and placed before us by both the parties to drive home to their contentions. 14.1 The first ground that the revenue has challenged before us it that the ld. CIT(A) erred in holding that no additions can be made in proceedings under section 153A of the act in respect of the assessment which were completed prior to the date of search, except based on some incriminating material unearthed during the search which was not already available to the assessing officer. The revenue also contended that ....
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....r consideration before us. (ii) holding that according to the assessing officer himself, the assessee had surrendered/ relinquished his rights in the land in favor of JDA on 19.02.2014, and therefore the transaction should have been taxed in the assessment year 2014-15. 14.3 Whereas before us the ld. DR contended that CIT(A) has ignored the vital fact that the demand notice for payment was issued on 18.06.2015, a period falling within assessment year 2016-17 and therefore his finding is also not correct on facts but to substantiate this argument the ld. AR of the assessee vide his submission contended that the land was acquired in the year 2005-06 even if the capital gain is to be charged the same is required to be charged in that year and the land being the agricultural land the same is not chargeable to tax. He alternatively submitted that the revenue cannot take two stands of charging the capital gain, as they cannot tax the assessee in 2005-06 taxed in the year 2016-17 which is also not correct as the settlement was reached on 11-09-2014 the same at all be taxed pertains to the assessment year 2015-16 and not A. Y. 2016-17. On this issue the sequence of event filed will make....
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.... 8 Lease Deed (Patta) issued on 07-07-2017 and 21-08-2017 for 19182.16 Sq Mtr of Land. For remaining 129.16 Sq. Mtr. no lease deed (paata) issued till date. However till date possession of 13950 Sq. Mtr. hasnot Given by JDA hence no consideration received on account of acquisition of Land. 9 Reminder letter(s) Dated 16-11-2018, 19-03-2019, 21-09-2020 and 12-04- 2021 filed to Jaipur Development Authority (JDA) with regard to possession not received on allotted plot(s) of Land. Copy of letter dated 12-04-2021 is enclosed. Paper Book Page no. 58- 78 filed on 08th Aug. 2022 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 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 ....
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....minating material. The revenue has not substantiated that how that official documents can be considered as incriminating documents. The bench noted from the records that in the year under consideration the time limit for making the regular assessment in this case was expired. Thus, if it so then whether in this case as on the date of search, the time limit for service of notice u/s. 143(2) was not available for A.Y. 2016-17, the answer is No. Thus, the assessment for the year was not pending on the date of search. As it is evident that in search no 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 C....
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....ived from material / documents seized as a result of search. The completed assessment can be interfered or disturbed by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search and requisition of income disclosing undisclosed income not already disclosed or made known in the course of original assessment. Therefore, in the absence of any incriminating material found or seized during the course of search and seizure proceedings, the additions made by the AO during the 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 judgmen....
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....rt, Calcutta High Court, Rajasthan High Court and the Kerala High Court have taken the view that no addition can be made in respect of completed/unabated assessments in absence of any incriminating material. The lead judgment is by the Delhi High Court in the case of Kabul Chawla (supra), which has been subsequently followed and approved by the other High Courts, referred to hereinabove. One another lead judgment on the issue is the decision of the Gujarat High Court in the case of Saumya Construction (supra), which has been followed by the Gujarat High Court in 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 ....
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....urse of search which were not produced or not already disclosed or made known in the course of original assessment." 7.2 Thereafter in the case of Saumya Construction (supra), the Gujarat High Court, while referring the decision of the Delhi High Court in the case of Kabul Chawla (supra) and after considering the entire scheme of block assessment under Section 153A of the Act, 1961, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no additional can be made by the AO and the AO has no jurisdiction to re-open the completed assessment. In paragraphs 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 wh....
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.... plain and clear, then the heading used in the section strengthens that meaning From the heading of section 153, the intention of the Legislature is clear, viz, to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income Thus, while in view of the mandate of sub-section (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 e....
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....search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed 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....
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....ment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending 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 ....
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.... Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that 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 ....
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....se of search relating to the addition sought to be made on account of the capital gain so arising on account of compulsory acquisition, the land is already accepted 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. In view of the above and for the reasons stated above and considering the binding decisions of various High Courts and final findings of the apex court on the decision cited here in above, we see no reason to interfere with the impugned judgment and order 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 ge....