TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 202
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....ducted at the premises of the appellants on 18.03.2010. During the course of search, Cash and Fixed Deposit Receipts [FDRs] were seized. The two assessees namely M/s. Balaji Salt Works and M/s. Radhaswami Salt Works were having lease hold rights on 680 acres of lands from Government of Gujarat for their Salt manufacturing business. M/s. Coastal Gujarat Power Limited [CGPL] a power generating company of TATA group needed part of these lands for set up of their Power Plants. Therefore the assessees proposed to surrender part of their lease hold rights back to Government of Gujarat and also entered into an Memorandum of Understanding with M/s. CGPL on 05-08-2008. Pursuant to the same M/s. Balaji Salt Works and M/s. Radhaswami Salt Works received a sum of Rs. 6.84 Crs and Rs. 29.92 Crs from M/s. CGPL for surrender of their respective pieces of lands. Though the assessees had taken a stand that the receipt of money from M/s. CGPL are not in the nature of income, but however after the search action, the assessees herein filed their respective Returns of Income on 31-05-2010 disclosing capital gains of Rs. 6,76,27,156/- and Rs. 29,43,34,415/-. The Ld AO accepted the returned income by pas....
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....ht is a capital asset and it has been transferred to the Associated Batteries with the consent of the landlords and on such transfer his nights in it stood extinguished Mr. Banerjee finally argues that the aforesaid amounts received by the assessee cannot be held to be capital gains because it was not received from the landlords for the extinguishment of his monthly tenancy under them. But there is no merit in his contention Section 45(1) of the Act is wholly silent as to the person from whom the consideration money for transferring a capital asset is to be received by the assessee. Moreover, it, inter alia, provides that any profits or gains arising from the transfer of a capital asset shall he chargeable to income-tax under the head "Capital gains". The assessee has transferred this capital asset to the Associated Batteries from whom it has received the aforesaid amount and, therefore, if must be held that this receipt is assessable to tax as the capital gains in the hands of the assessee. Further, simultaneously with the aforesaid transfer the right of the assessee in the monthly tenancy under the landlords or his leasehold interest was extinguished and, therefore, it does n....
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....which was passed pursuant to such illegal search & seizure operation. a) That the impugned assessment order u/s 143(3) was passed on the basis of a search carried out u/s 132 of the Income Tax Act, 1961 at the business premises of the appellant assessee on 18/03/2010, which action has no sanctity in the eyes of law for the reason that no warrant of authorization u/s 132 was furnished to the appellant assessee till to date and therefore the search u/s 132 and subsequent assessment proceedings are null and void in the eyes of law. The appellant is not aware whether a legally valid warrant of authorization for search u/s 132 of the Income Tax Act, 1961 was issued at all in the case of the appellant assessee because the appellant had not been furnished copy of any search authorization. The appellant is also unaware whether any satisfaction note was ever recorded for authorizing search u/s 132 in the case of the appellant. b) The appellant submits that the search u/s 132 of the Income Tax Act, 1961 and the subsequent proceedings did not reveal any unaccounted/ undisclosed income for any of the assessment years, referred to in section 153A or search related assessment year, which i....
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....fore prayed that the interest charged u/s 234B may please be deleted. 5.1 The Learned CIT(A) grossly erred in Law and facts of the case in not directing the AO to release the seized cash / FDRs which are still retained by the department despite the fact that the assessment proceedings & penalty proceedings for all the assessment years covered by the search u/s 132, including the assessment for A.Y.2010-11 had been finalized and concluded. 5.2 The Learned CIT(A) grossly erred in Law and facts of the case in not directing the AO to release the seized cash / FDRs in accordance with the second proviso to section 132B of the Income Tax Act which provides that the assets are required to be released within a period of 120 days from the date on which the last of the authorization for search u/s 132 was executed. It is therefore prayed that the assessing officer may please be directed to release the seized cash and FDRs which are still in the custody of the department along- with interest u/s 132B(4) r.w.s. 244A of the Income Tax Act and such interest may be granted upto the date of release of the seized assets. 5. Learned Senior Counsel Sri Tushar Hemani appearing for the assess....
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.... be a ground to treat the underlying sum as capital gains when, as a matter of fact, such sum is a 'capital receipt'. It is well settled that 'entries in the books of accounts are not the guiding factor for determining the correct nature of any income" and reliance is placed on following decisions: (i) Kedarnath Jute Mfg. Co. Ltd.-82 ITR 363 (SC); (ii) Guj Mineral Development Corpn-132 ITR 526 (Guj); (iii) Guj Mineral Development Corpn-249 ITR 787 (SC); (iv) Tuticorin Alkali Chemicals-227 ITR 172 (SC); 6.3. Ld Senior Counsel further submitted that the AO is duty bound to determine correct income of the assessee and ensure the only legitimate tax on the correct income is to be collected from the assessee and relied upon Article 265 of the Constitution of India. 7. Per contra Ld. CIT DR Shri Sharamdeep Sinha appearing for the Revenue submitted that when the assessee voluntarily filed the Return of income accepting the capital gains on surrender of leasehold rights, thereafter the assessee is not aggrieved and not correct in challenging by way of appeal further. The claim of the assessee that its surrender of lease hold rights to Government of Gujarat is independ....
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.... 4 Weeks 3. Surrender of leasehold rights 6 Weeks 4. Payment to Lessees 7 Weeks 5. CGPL's application to GoG for allotment 8 Weeks 6. Exploring & finalizing New Business area ....
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....t stipulate as to the person from whom consideration is to be received. Further perusal of the MOU entered between the parties, it is a clear cut case that the assessees were compensated by a sum of Rs. 8.55 lakhs per acres of lands surrendered to Government of Gujarat and a week thereafter the above compensation payment is payable to the assessees by M/s. CGPL. 11. On an identical transaction where compensation received from third party was held to be a "transfer" within the meaning of Section 2(47) r.w.s. 45(1) of the Act, by Hon'ble Calcutta High Court in the case of A Gasper Vs. CIT (already reproduced in Para 3 herein above) which was approved by Hon'ble Supreme Court reported in 192 ITR 382. Thus we do not find any legal force in the submissions made by the assessee, further the case laws relied by the assessee are clearly distinguishable with the facts of the present assessee's case. Therefore, we do not find any infirmity in the order passed by the Ld. CIT(A) who was confirmed the surrender of leasehold rights is liable to capital gains, which was rightly disclosed by the assessees in their respective Returns of Income. Therefore Ground No. 2 raised by the assessee is devo....
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.... land owned by the Government, in current financial year i.e. assessment year 2010-11. Further, Shri Madhukant B. Patel, who is a partner in both the firms had also admitted this position vide his letter dated 30/04/2010, requested them to treat the same as statement u/s 132(4) of the Income Tax Act only. The unpaid advance tax in respect of income which has been admitted in the statement recorded u/s 132(4), takes the character of existing tax liability within the meaning and scope section 132B. The assessee could not pay advance tax on such income, because the FDR's etc were seized by the department during the search u/s 132 before the end of financial year, on 18th and 19th March 2010, It is further submitted before your honour that the as the prohibitory order is still not revoked and consequently search proceedings are still in force on date 04/05/2010. In view of this neither self-assessment tax can be paid due to un-lawful seizure of Disclosed FDR's, in the name of the firm. Therefore, the unpaid advance tax and/or self-assessment tax for A.Y. 2010-11 is an existing tax liability." 14. Taking into account above factual details, let us analyze the case with the P....
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....release of the seized goods and thereby retained the seized FDRs beyond the period of 120 days prescribed in the 2nd Proviso to section 132B(1)(i) of the Act. 14.4. Now coming to the main section 132B(1) of the Act, which prescribes that the assets seized u/s. 132 can be adjusted against any "existing liability" as per IT, WT or the amount of liability determined on the completion of regular assessment or reassess ment including any penalty levied or interest payable in connection with such assessment or reassessment. As per this sub-section, the Ld AO ought to have adjusted against the tax liability of Rs. 1,44,51,943 and Rs. 6,26,79,658/- while framing the regular assessment as against the FDRs of Rs. 1,60,75,905/- and Rs. 6.44 crores seized from M/s. Balaji Salt Works and M/s. Radhaswamy Salt Works respectively. In that event also, the assessee is entitled for refund of surplus FDRs seized by the Department as per section 132B [3] of the Act and therefore there is no question of levy of interest under section 234 B and C of the Act. Thus in our considered view, the Ld AO miserably failed to adhere to the provisions of section 132B[1] of the Act and the Ld CIT [A] is not justifi....