DCIT Vs Rigid Conductors (Raj.) Pvt Ltd (ITAT Jaipur)
Held that in the absence of any incriminating material found or seized during the course of search and seizure proceedings, the additions made by the AO during the course of reassessment under section 153A of the Income Tax Act are without jurisdiction.
Facts- A search was conducted in the case of “Chokhi Dhani Group, Jaipur” to which the assessee belongs. Accordingly, notice u/s 153A of the IT Act, 1961 was issued.
During the course of search action, certain ‘developed land allotment letters’, note sheet pages of JDA regarding acquisition & allotment of land & miscellaneous correspondence regarding acquisition of land were found and seized. The seized documents were being analyzed during the assessment proceedings and it was observed that land of the company was acquired and another land was allotted in lieu of compulsorily acquired land. From the seized material it was gathered that the lands belonging to the assessee of Choki Dhani Group were compulsorily acquired by the Jaipur Development Authority ( here in after JDA) , Jaipur in accordance with Central Land Acquisition Act, 1894.
As per settlement made u/s 44 of the JDA Act, 1982 between the Chokhi Dhani Group of Companies & JDA, Jaipur, the Chokhi Dhani Group of companies had surrendered the land under reference in favour of JDA. The assessee company has surrendered its rights in the land acquired by JDA vide letter dated 19.02.2014 addressed to JDA, Jaipur. This was an unconditional offer for surrender of land which is covered within the definition of relinquishment of rights in the land. Also this unconditional surrender of land in favour of JDA is duly covered within the definition of Transfer which includes relinquishment of the assets as per provisions of section 2(47) of the I.T. Act, 1961.
Accordingly vide show cause notice, the assessee was asked to show as to why the company has not shown income under the head capital gain while the provisions of capital gain are applicable on the assessee in the light of allotment of land in lieu of compulsory acquisition of land.
Conclusion- Held that in the absence of any incriminating material found or seized during the course of search and seizure proceedings, the additions made by the AO during the course of reassessment under section 153A of the Act are without jurisdiction and liable to be deleted and it is nothing but a review by the same rank of officer and the same is not permitted under the law. After appreciating such facts, ld. CIT(A) accepted the contentions of the assessee and held that no addition could be made as no incriminating material was found with respect to the land of the assessee. Thus, it is undisputed that when there is no incriminating material was found no addition could be made in the order passed u/s. 153A of the r.w.s. 143(3) of the Act.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
There are four appeals of the different assessee filed by the revenue and four cross objections filed by the assessee on the appeal of the revenue. These four appeals and four cross objections are arising out of the order of the Commissioner of Income Tax (Appeals)-4, Jaipur [hereinafter referred to as Ld. CIT(A)’] for the assessment year 2016-17 dated 21.04.2022, 22.04.2022 & 20.04.2022 which in turn arises from the order passed by the ACIT, Central Circle- 03, Jaipur passed under Section 143(3) r.w.s 153A of the Income tax Act, 1961 (in short ‘the Act’) dated 27.12.2019.
2. Since the issues involved in all these appeals of the revenue for all four assessee’s are almost identical and having common grounds, all these appeals of the revenue and the cross objections of the assessee were heard together with the agreement of both the parties and are being disposed off by this consolidated order.
3. At the outset, the ld. DR has submitted that the matter pertaining to ITA No. 264/JPR/2022 and Co No. 13/JPR/2022 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount added and disputed and relates to the same assessment year. The ld. AR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of revenue in ITA No. 264/JPR/2022 and cross of assessee in CO No. 13/JPR/2022 taken as a lead case.
4. Based on the above arguments we have also seen that for all these bunch of four appeals and four cross objections grounds, facts and arguments were similar. Therefore, we have heard together these bunch of appeals and cross objections and are disposed by taking lead case facts, grounds and arguments from the folder in ITA No. 264/JPR/2022 and CO No. 13/JPR/2022.
5.Before moving towards the facts of the case we would like to mention that the revenue has assailed the appeal in ITA No. 264/JPR/2022 before us on the following grounds and grounds of cross objections of the assessee also reiterated here in below;
Grounds of revenue’s appeal:
“Ground 1. The Ld. CIT(Appeal) has erred in law in holding that no additions can be made in proceedings under section 153A of the Income Tax Act 1961 in respect of the assessments which were completed prior to the date of search, except based on some incriminating material unearthed during the search which was not already available to the Assessing Officer. While granting relief to the assessee, the Ld. CIT(Appeal) has failed to take note of the position that Hon’ble Supreme Court of India has admitted SLP against this proposition in the following matters:- i Principal Commissioner of Income Tax vs. Gahoi Foods (P.) Ltd.117 taxmann.com 118(SC)/272 Taxman 521(SC) dated 24.01.2020 ii Principal Commissioner of Income Tax, Central-4 vs. Dhananjay International Ltd. 114 taxmann.com 351(SC)/270 Taxman 15(SC) dated 16.09.2019.
Ground 2. The Ld. CIT(Appeal) has erred in law and on facts in not carrying out her duty of adjudicating the grounds on merit, and dismissing them only on a technical ground.
Ground 3. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in deleting the addition of Rs. 27,01,95,945/- by holding that the addition made on account of LTCG is without any reference to any incriminating seized material which could justify the addition.
4. Ground 4. The learned CIT Appeal has erred in granting relief to the assessee (i) on the basis of her finding that the transfer of land within the meaning of provisions of section 2(47) was completed on 19.02.2014 itself, a period falling in assessment year 2014-15 and not in assessment year 2016-17 being the year under consideration. (ii) holding that according to the assessing officer himself, the assessee had surrendered/ relinquished his rights in the land in favor of JDA on 19.02.2014, and therefore the transaction should have been taxed in the assessment year 2014-15. (iii) and in doing so, the learned CIT Appeal has ignored the vital fact that the demand notice for payment was issued on 18.06.2015, a period falling within assessment year 2016-17.
Ground 5. The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
Grounds of assessee’s C.O.:
“1. That on the facts and in the circumstances of the case the Ld. CIT(A) is wrong, unjust and has erred in law in not adjudicating the ground of respondent that agricultural land measuring to 7.725 hectares situated at Village Jhai, Jaipur is situated outside 8 KM of municipal limit of Jaipur and therefore not a capital asset within meaning of section 2(14) of the I.T. Act, 1961 and therefore no capital gain is chargeable on its compulsory acquisition.
2. The respondent craves permission to add to or amend to any of grounds of appeal or to withdraw any of them.”
6. The fact as culled out from the records is that in this case, original return of income was e-filed by the assessee on 12.10.2016, declaring total income at Rs. 1,14,000/- for the A.Y 2016-17.
6.1 A search was conducted on 30.11.2017 in the case of “Chokhi Dhani Group, Jaipur to which the assessee belongs. Various assets/books of account and documents were found and seized as per annexure prepared during the course of search. Thereafter, jurisdiction over the case was assigned to this office vide order u/s 127 of the Income-tax Act, 1961 dated 04.04.2018 by the Pr. CIT of Income tax-1, Jaipur circulated vide no. Pr. CIT-1/ITO(Hq.)/JPR/2018-19/58 dated 09.04.2018.
6.2 Accordingly, notice u/s 153A of the IT Act, 1961 for this year was issued on 25.07.2018 and duly served upon the assessee. In compliance to the notice u/s 153A of the IT. Act, 1961, return of income was e-filed on 01.09.2018 declaring total income of Rs. 1,14,000/- for the year under consideration. Notice u/s 143(2) & 142(1) of the Income Tax, 1961 were issued along with questionnaire requiring certain details/information, which was duly served upon the assessee.
7. During the course of search action at the corporate office of M/s Chokhi Dhani Resorts Pvt. Ltd., & its sister concerns at Chokhi Dhani Tower, S-5, Shyam Nagar, Jaipur on 30.11.2017, certain ‘developed land allotment letters’, note sheet pages of JDA regarding acquisition & allotment of land & miscellaneous correspondence regarding acquisition of land situated at Village-Jhai and Nevta, Tehsil- Sanganer, District-Jaipur (Rajasthan) related to Chokhi Dhani Group of assessee were found and seized. The company owned land in village Nevta as evident from the Balance Sheet. The seized documents were being analyzed during the assessment proceedings and it was observed that land of the company was acquired and another land was allotted in lieu of compulsorily acquired land. From the seized material it was gathered that the lands belonging to the assessee of Choki Dhani Group were compulsorily acquired by the Jaipur Development Authority ( here in after JDA) , Jaipur in accordance with Central Land Acquisition Act, 1894. The details of the land acquired by the JDA of the assessee company is as detailed here in below:
