TaxTMI 
TaxTMI 
2024 (7) TMI 783
X X X X Extracts X X X X
X X X X Extracts X X X X
....case of Mallika Roy) and 30th September, 2021 (in the case of Samit Ray) for passing a de novo assessment in each case is in accordance with law or not. 3. We take note of the facts from each appeal. ITA No. 778/KOL/2024 The assessee is an individual. She has filed her return of income on 27th September, 2014 declaring total income at Rs. 22,65,411/-. A search was conducted upon the assessee and consequent to that, a notice under section 153A of the Income Tax Act was issued on 25.06.2021. The ld. Assessing Officer has passed an assessment order under section 153A read with section 144 of the Income Tax Act. It is a very brief order running into one & half page, but the substantial paragraph no. 3 reads as under:- "3. After verification of seized materials and as no adverse findings is mentioned in appraisal report, and as the case is getting barred by limitation on 30.09.2021, the assessment is concluded as per section 144 of the Income Tax Act, 1961 accepting the return income filed by the assessee u/s 139(1). Computation of Income: Returned income u/s 139(1) dt. 27.09.2014 Rs. 22,65,411/- Assessed Income Rs. 22,65,411/- This order is passed with the prior approval....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case of Arati Ray. She has sold a land for a consideration of Rs. 1,13,04,724/-. The ld. Pr. CIT noted down that Stamp Duty Valuation Authority has determined the value of the property at Rs. 1,35,19,972/-. Therefore, according to him, as per section 50C of the Income Tax Act, full sale value for the purpose of computing the long-term capital gain under section 48 of the Income Tax Act ought to be deemed equivalent to the amount on which stamp duty was paid. In other words, this valuation of the Stamp Duty Authority amounting to Rs. 1,35,19,972/- ought to be deemed as full sale consideration for the purpose of computing long-term capital gain. Therefore, in his opinion, the assessment order is erroneous, which has caused prejudice to the interest of revenue and which deserves to be set aside for passing a de novo assessment on this issue. The ld. Pr. CIT has worked out the alleged escaped long-term capital gain at Rs. 22,15,248/-. 7. In the case of Mallika Roy (ITA No. 779/KOL/2024), ld. Pr. CIT observed that the assessee sold a land for a consideration of Rs. 76,82,294/-, whereas the stamp duty value of this land was Rs. 1,78,86,222/-. The ld. Pr. CIT was of the view that val....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Counsel for the assessee drew our attention towards paragraph no. 11 of this judgment. He further submitted that Hon'ble Supreme Court has upheld the judgment of the Hon'ble Delhi High Court in the case of CIT -vs.- Kabul Chawala [2015] 61 taxmann.com 412 (Delhi). In this judgment, Hon'ble Delhi High Court has propounded that processment of the return under section 143(1) is to be construed as completion of the assessment. This judgment of the Hon'ble Delhi High Court has been upheld by the Hon'ble Supreme Court. The ld. Counsel for the assessee thereafter drew our attention towards judgment of the Hon'ble Punjab & Haryana High Court in the case of Vipin Khanna -vs- CIT reported in {2002] 255 ITR 220 (P&H), wherein it was held that - "Therefore, in a case where a return is filed and is processed u/s 143(1)(a) of the Act and no notice under sub-section 2 of section 143 thereafter is served on the assessee within the stipulated period of 12 months, the assessment proceeding u/s 143 come to an end and the matter becomes final. Thus, although technically no assessment is framed in such a case, yet the proceedings for assessment stand terminated". 12.. The ld. Counsel for the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) "record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....263 could be exercised by the ld. Commissioner. We may elaborate further, for example- an assessment order was passed, it contains five issues, which were challenged before the ld. CIT(A), but ld. Assessing Officer failed to look into few issues, which may arise from the record, then inspite of the assessment order being challenged before the ld. CIT(A), the ld. Commissioner would have jurisdiction on such items, which are not subject matter of appeal in that assessment order. 17. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the returns have been issued upon the assessee before the search carried out. Even the time limit for issuance of such notice have already been expired before the search. During the course of search, no incriminating material was found which can authorize the ld. Assessing Officer to assess the income under section 153A of the Income Tax Act. To buttress this observation, we have taken note of the relevant part of the assessment orders in the case of each assessee in the earlier part of this order. The Hon'ble Delhi High Court has considered the scope of section 153A in the case of CIT -vs.- Kabul Chawala (supra). The assessment years involved therein were A.Ys. 2001- 02, 2005-06 and 2006-07. In all these assessment orders, return was processed under section 143(1) and there was no scrutiny assessment. Thereafter search was carried out under section 132 of the Income Tax Act on 15.11.2007. The revenue sought to make addition on account of deemed dividend under section 2(22)(e) of the Income Tax Act. 19. The Hon'ble Delhi High Court after considering host of decisions propounded following propositions in the concluding paragraph of the judgment, which read as under:- "Summary ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. Conclusion 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. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue. 40. The appeals are accordingly dismissed but in the circumstances no orders as to costs". 20. This judgment and other judgments on this school of thought have fallen for consideration of the Hon'ble Supreme Court, who concurred with the Hon'ble Delhi High Court as well as Hon'ble Gujrat High Court. The relevant part of the finding of the Hon'ble Supreme Court in this aspect reads as under:- "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 jurisdic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the 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 ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n in their regular returns of income and then a discovery of this factum was unearthed during the course of search. The situation would be different. The ld. PCIT has not made reference to any seized material found during the course of search. He is of the view that the subject matter of a regular assessment, which would have taken under section 143(3) after issuance of a notice u/s 143(2) ought to have been considered in this search assessment under section 153A, but this proposition harbored by the ld. PCIT is contrary to the position of law laid down by the Hon'ble Supreme Court. It is pertinent to note that section 48 of the Income Tax Act contemplates mode of computation of long-term capital gain. It provides that from the full value of the consideration received or accrued to an assessee on transfer of capital assets, the cost of acquisition, cost of any improvement and any expenditure incurred in connection with the transfer are to be debited. This expression "full value of the consideration" is to be deemed equivalent to the amount on which stamp duty was paid. This deeming fiction is provided under section 50C of the Income Tax Act. Sub-clause (2) of section 50C further au....