AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1043
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....3C of the Act of 1961 by the Assessing Officer (hereinafter referred to as "AO") and rejecting the objections vide his order dated 21.07.2010, as also the order dated 27.02.2013 passed by the Commissioner of the Income Tax (Appeals) (Central), Jaipur rejecting the appeal preferred by the appellant. Thus, all three orders are under challenge before this Court. 2. The Division Bench of this Court on 26.08.2019 admitted the present appeal on the following questions of law: "1. Did the ITAT fall into error in holding that the block assessment could be completed having regard to the circumstances of this case and the nature of documents seized under Section 153C of the Income Tax Act; 2. Did the ITAT fall into error in holding that the income derived from the property sold could be taxed having regard to the fact that capital asset which was an agricultural fall into the description of Section 2(14)(iii) of the Act." 3. The case of the appellant company is that it had filed its return of income for the A.Y. 2007-08 under Section 139(1) of the Act of 1961, declaring the income as Rs. 2,31,210/- on 29.10.2007. 3.1 A search operation was conducted on 17.09.2008 i....
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....en of would have to be identified with respect to the A.Y. to which it relates or may be likely to impact before initiation of proceedings under Section 153C of the Act of 1961. He also relies on the judgment passed by the Hon'ble Supreme Court in the case of Principal Commissioner of Income Tax Central-3 vs. Abhisar Buildwell Private Limited (2024) 2 SCC 433 and followed in the case of Misty Meadows Private Limited (supra), which was delivered by one of us (Sanjeev Prakash Sharma, J.) on 13.05.2024 in Punjab and Haryana High Court. A Special Leave Petition [Special Leave Petition (Civil) Diary No. 55770/2024] (hereinafter referred to as "SLP") preferred against the same was also dismissed on 15.01.2025 by the Supreme Court. 9. Learned Senior Counsel has also invited our attention to the notice dated 10.05.2010 to submit that there was no satisfaction arrived at on the basis of any material for reopening of the concluded assessments. All the documents which were seized during search were belonging to the person searched under Section 132(4A) of the Act of 1961 and nothing incriminating was found in the documents. Merely mentioning that there is a Partnership Deed and Dissolution....
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....ave been treated in the nature of business. 14. The pre-conditions of Section 2(14) of the Act of 1961 were duly satisfied and exemption was required to be given. 15. Learned Senior Counsel also relied on the judgment passed in the case of Principal Commissioner of Income Tax Central Jaipur vs. M/S Focal Point Builders and Promoters Pvt Ltd. D.B. Income Tax Appeal No.229/2016, decided by this Court on 20.12.2016 which has been upheld by the Supreme Court Diary No. 42427/2017, decided on 24.09.2018. 16. Learned Senior Counsel has further relied on Kikabhai Premchand KT vs. Commissioner of Income Tax (Central), Bombay (1953) 2 SCC 341, wherein it was held that: ".........as he derived no immediate pecuniary gain the State cannot tax them, for under the Income Tax Act the State has no power to tax a potential future advantage. All it can tax is income, profits and gains made in the relevant accounting year." 17. Learned Senior Counsel has relied on following judgments: (i) Principal Commissioner of Income Tax 19 Mumbai vs. M/S Jogani and Dialani Land Developers and Builders Special Leave Petition (Civil) Diary No. 40693/2019. (ii) Commissioner of....
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....nment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) which has a population of more than ten lakh. Explanation.- For the purposes of this subclause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;]]" (b) The above definition also defines the following as a "capital asset": "(14) ["capital asset" means- (a) property of any kind held by an assessee, whether or not connected with his business or profession; (b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); [(c) any unit linked insurance policy to which an exemption under Clause (10D) of section 10 does not apply [on account of the applicability of the fourth and fifth provisos thereof],] but does not include- ....
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....Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A]:] [Provided that in case of such ....
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....requisitioned under section 132A on or after the 1st day of April, 2021.]" 22. As have come on record, the proceedings under Section 153C of the Act of 1961 were initiated based on a satisfaction note which stated as under: "Satisfaction note : M/s Superb Infotech Pvt. Ltd. On going through the document seized as per page no. 44 to 69 of annexure B-2 of Panchnama dated 17.09.2008 drawn during the search at C-13. Shushant Lok-1. Gurgaon, Haryana in the case of M3M India Ltd., Sh. Basant Bansal, Roop Bansal, Sh. Lal Chand Bansal, M/s Bench Mark Infotech Pvt. Ltd., M/s Mangalan Multi Plex Pvt. Ltd., M/s Good Luck Buildcon Pvt. Ltd., M/s Marigold Merchandise Pvt. Ltd., M/s Martial Buildcon Pvt. Ltd., M/s Misty Meadows Pvt. Ltd., M/s Focal Point Builders & Promoters Pvt. Ltd., it is seen that these documents are Partnership Deed, Dissolution Deed and miscellaneous papers which belong to M/s Superb Infotech Pvt. Ltd.4119/6, 1st Floor, Naya Bazar, Delhi. On going through these documents I am satisfied that to find any tax implication on the basis of these documents it would be better to examine these documents by Initiating assessment proceedings in the case ....
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....mpt, should not be considered to be its business income and taxed accordingly. 3.2 The assessee had replied vide its letter dated 08.10.2010 that the land under consideration is agricultural land which is not a capital asset within the meaning of the definition of section 2(14) of the Income-tax Act, 1961. The land is situated beyond 10 kilometers of the Municipal limits of Gurgaon......." 24. It appears the AO reexamined the matter while considering the notice and proceeded to hold that it was an adventure of business in the nature of trade and it was held that the profit earned on sale of agricultural land would be an income from business. 25. In the case of Union of India & Ors. vs. Misty Meadows Private Limited Special Leave Petition (Civil) Diary No. 55770/2024, the Hon'ble Supreme Court upheld the order passed in the case of Misty Meadows (supra), where the provisions of Section 153C of the Act of 1961 were examined and after considering the law, it was held as under: "30. Thus, we find that a particular procedure has been prescribed, as above. Following the salutary principles of law as laid down in Nazir Ahmad and followed in Rao Shiv Bahadur Singh a....
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....ssment, 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 153-A of the Act is linked with the search and requisition under Sections 132 and 132-A of the Act. The object of Section 153-A 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 153-A, 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, the second proviso to Section 153-A and sub-section ....
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....purpose of Section 153C of the Act of 1961. 29. We also noticed that virtually, the AO has reassessed the income of the appellant for A.Y. 2007-08 based on the same agriculture transaction which was already in knowledge at the time of earlier assessment. Moreover, if in the earlier assessment, something escaped from notice, the remedy lies elsewhere. The recourse to Section 153C of the Act of 1961, is not available for correction of the assessment without any new incriminating material. 30. Even if any document received is found belonging to another assessee during the search, that itself would not be a ground to initiate proceedings under Section 153C of the Act of 1961. 31. The contention that it was an adventure in the nature of trade is also found to be misconceived. It is not that the land was frequently sold and purchased and there is only a single transaction of agriculture land, out of which, certain profits have been received. The same would, therefore, not fall within the four corners of capital gain, as it is not derived on immediate pecuniary gain. 32. We also noticed that the assessee has not denied the belonging of the documents. Mere finding of the docume....