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2024 (3) TMI 202
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....e action under section 132 of the Act was conducted 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/-. ....
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....ecause the assessee's monthly tenancy right or the leasehold right 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 ....
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....o the illegality of the search & seizure operation u/s 132 and consequential illegality of the assessment order u/s 143(3) dated 11/03/2011 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 di....
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....#39;s towards Income Tax Liability. Therefore, the learned CIT(A) is not justified in confirming the interest charged u/s 234B for the period upto 01.05.2010. It is therefore 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....
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..... Ltd. vs. JCIT-245 ITR 84 (Guj); (vii) Sushil Kumar Das v. ITO-48 SOT 102 (Kol); 6.2. Ld Senior Counsel further submitted that the mere fact that the assessee has declared the underlying sum as income under the capital gains cannot 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 Ret....
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....usiness options on the contiguous plots of land ("a" & "c" above) within 6 months of signing of this proposal note. 8.1. On execution of the above MOU a timelines for actions also proposed in the MoU as follows: 2. Measurement of land under "b" above 4 Weeks 3. Surrender of leasehold rights 6 Weeks 4. Payment to Lessees &nbs....
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....it amounts to extinguishment of the rights of the assessees, which is a "capital asset" as per Section 2(14) of the Act. Though the consideration is received from M/s. CGPL, a third party, not from Government of Gujarat on account of surrender of leasehold rights, the same is assessable to tax as capital gains, since Section 45(1) of the Act does not 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 disti....
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....ement of Shri NT Rayudu, who is a partner in the firm of M/s Balajl Salt Works and who is spouse of MRS. N. SUJATHARANI, partner of the firm of M/s Radhaswamy Salt Works was recorded u/s 132(4) of the Income Tax Act. In the said statement, Shri NT Rayudu, partner has clearly stated that the respective firms will pay tax on the amount received in respect of the transaction of surrender of the leasehold rights on the 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 ....
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.... makes it clear that the assets are required to be released within a period of 120 days from the date on which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed. In the present cases, last date of search action concluded on 15-05-2010 and the outer time period of 120 days expired on 15-09-2010, but the Ld AO has not acted upon the Application for 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. Ba....