TaxTMI 
TaxTMI 
2024 (7) TMI 783
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of Arati Ray), 21st September, 2021 (in the 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/- Ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....three assesses have sold lands, which has resulted into earning of long-term capital gains. The ld. Pr. CIT took note of specific details, namely in 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Court in the case of Pr. CIT, Central -3 -vs.- Abhisar Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC). He placed on record copy of this decision. The ld. 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 become....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income Tax Officer on the basis of the directions issued by the Joint 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-sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r. 16. A perusal of sub-clause (c) of the above would contemplate that if any order, which is subject matter for revision under section 263 is challenged in appeal, then, on the items which are subject matter of appeal, no power under section 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....returns within due date provided under section 139(1) of the Income Tax Act. They have disclosed the long-term capital gain assessable in their hands. Those returns have been accepted under section 143(1) of the Income Tax Act. The assessments have attained finality. No notice under section 143(2) for scrutinizing 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A 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. 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch would not come to the light if search or consequential search assessment had not taken place. The ld. PCIT thereafter made reference to section 50C of the Income Tax Act. We have considered this finding of the ld. PCIT, but these findings are not in consonance with the proposition of law laid down by the Hon'ble Supreme Court in the case of Abhisar Buildwell (P) Ltd. Had the assessees have not disclosed long-term capital gain 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....