Case Law Details
Ickon Projects Vs ITO (ITAT Bangalore)
ITAT Bangalore held that initiation of proceedings against the person other than the searched person under section 148, instead of section 153C, of the Income Tax Act is without any jurisdiction and hence held liable to be set aside.
Facts- The appellant firm purchased a piece of land for a consideration of Rs.8,90,00,000/- on 03.01.2007. Thereafter the assessee entered into an agreement dated 16.03.2009 with M/s. Sobha Developers Ltd. for sale of the said property for a consideration of Rs.10,05,00,000/-. The above fact was found during a search conducted in case of one M/s. Davanam Jewellers Pvt. Ltd. on 02.09.2010. On the basis of said agreement dated 16.03.2009, AO formed an opinion that the appellant had transferred land purchased from M/s. NTC Ltd. to M/s. Sobha Developers Ltd., during F.Y. 2005-06, and thereupon derived profit of Rs.1,15,00,000/- taxable for the A.Y. 2006-07 which was not offered to tax for the said A.Y. 2006-07. AO came to a very conclusion as the appellant had collected a substantial amount of consideration by way of advance during F.Y. 2005-06 from Ms. Sobha Developers Limited.
Consequently, the appellant was served with a notice issued u/s. 148 of the Act dated 22.03.2013 for A.Y. 2006-07 and the proceeding was ultimately finalized upon making addition of Rs.1,15,00,000/- on account of capital gain, which was, in turn, confirmed by the First Appellate Authority. Hence, the instant appeal before us.
Conclusion- Held that the basic objects and purpose of the provision of Section 153C of the Act is to address the persons other than the searched person. As per the un-amended provision of Section 153C of the Act, the proceeding against the persons other than the searched person was on the basis of seized and/or requisition “belongs or belong to” the person other than the searched person. The particular word “belongs or belong to” has been substituted subsequently by the Parliament to “pertains or pertain to”, in view of the wrong interpretation made by the Hon’ble Delhi High Court in the case of Pepsico India Holdings Private Limited clarifying the position of initiation of proceedings against the person other than the searched person under Section 153C of the Act. Therefore, the right provision of law is also required to be applied in the instant case. Instead the provision laid down under Section 148 of the Act was followed by the Ld. AO in reopening assessment against the assessee. Such wrong initiation of proceeding by issuing notice under Section 148 of the Act culminating into the order of addition under Section 147 of the Act, is, therefore, found to be without any jurisdiction and hence, the same is liable to be set aside. We, therefore, set aside the entire proceeding.
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