Shri.T.Prasanna Gowda, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

ITA 2224/BANG/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5943 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 28-01-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI JT C IT BENGALURU
• Assessee Lawyers: ASHOK KULKARNI
• Keywords: Capital asset; Documents seized
• Section: 153A; 153C; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO S . 2224 & 2225/BANG/2016 ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10 SHRI T. PRASANNA GOWDA, NO.2/1, RANGA, 26 TH A MAIN, 4 TH T BLOCK, JAYANAGAR, BENGALURU. PAN: ACAOO 6356J VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : S HRI ASHOK KULKAR NI, ADVO CATE. RESPONDENT BY : S MT. R. PREMI, JT.CI T(DR)(ITAT), BENGALURU. DATE OF HEARING : 28.01 .202 1 DATE OF PRONOUNCEMENT : 03 .0 2 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS ARE BY THE ASSESSEE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(APPEALS)-11, BENGALURU BOTH DATED 30.9.2016 FOR THE ASSESSMENT YEARS 2008-09 & 2009-10. 2. THE ISSUES RAISED IN THESE APPEALS ARE AS FOLLOW S:- ITA NO.2224/B/16 1. ASSUMPTION OF JURISDICTION U/S. 153C IS NOT IN ACCO RDANCE WITH LAW. ITA NOS.2224 & 2225/BANG/2016 PAGE 2 OF 4 2. ADDITION MADE DID NOT PERTAIN TO INCRIMINATING MATE RIAL FOUND DURING THE COURSE OF SEARCH ACTION U/S. 132. 3. NO CAPITAL GAIN COULD BE BROUGHT TO TAX AS THE ASSE T SOLD WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2 (14) OF THE ACT. 4. WITHOUT PREJUDICE TO THE ABOVE, THE QUANTIFICATION OF LONG TERM CAPITAL GAIN IS NOT IN ACCORDANCE WITH THE LAW . ITA NO.2224/B/16 1. ASSUMPTION OF JURISDICTION U/S. 153C IS NOT IN ACCO RDANCE WITH LAW. 2. ADDITION MADE DID NOT PERTAIN TO INCRIMINATING MATE RIAL FOUND DURING THE COURSE OF SEARCH ACTION U/S. 132. DEDUC TION U/S. 54 OF TH ACT IN RESPECT OF CAPITAL GAIN ARISING PURSUA NT TO JOINT DEVELOPMENT AGREEMENT TO BE GRANTED. 3. NO CAPITAL GAIN COULD BE BROUGHT TO TAX AS THE ASSE T SOLD WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2 (14) OF THE ACT. 4. WITHOUT PREJUDICE TO THE ABOVE, THE QUANTIFICATION OF LONG TERM CAPITAL GAIN IS NOT IN ACCORDANCE WITH THE LAW . 3. AT THE OUTSET, THE LD. AR ARGUED THAT ASSUMPTION OF JURISDICTION IN THESE CASES IS NOT IN ACCORDANCE WITH THE LAW. ACC ORDING TO HIM, NO SATISFACTION NOTE IS RECORDED BY THE AO OF THE SEAR CHED PARTY. THE AO OF THE SEARCHED PARTY HAS TO FIRSTLY SATISFY THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCO UNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO ANY PERSON, OTHER THAN T HE PERSON REFERRED TO IN SECTION 153A. THEREAFTER, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER BY THE ASSESSING OFFICER OF THE SEARCHED PERSON TO THE ASSESSING OFFICER HAVING JUR ISDICTION OVER SUCH OTHER PERSON. ACCORDING TO HIM, THIS MANDATORY RE QUIREMENT WAS NOT COMPLIED BY THE AO OF THE SEARCHED PERSON. AS SUCH , FURTHER PROCEEDINGS ITA NOS.2224 & 2225/BANG/2016 PAGE 3 OF 4 ARE BAD IN LAW. HE RELIED ON THE JUDGMENT OF THE H ONBLE SUPREME COURT IN THE CASE OF CIT V. CALCUTTA KNITWEARS (2014) 6 SCC 444. SINCE IN THESE CASES, THERE WAS NO SATISFACTION NOTE BY THE AO OF THE SEARCHED PERSON, AS PER CBDT CIRCULAR NO.24/2015 DATED 31.12.2015, THE REQUIREMENT IS NOT FOLLOWED BY THE REVENUE AUTHORITIES. 4. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE AO PRODUCED THE ENTIRE DETAILS OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH ARE RELATING TO THE ASSESSEE CONCERNED AND THAT IT SHOWS THAT THE AO OF SEARCHED PERSON CAME TO KNOW THAT THERE WAS UNDISCL OSED INCOME OF THIS ASSESSEE AND NOTICE U/S. 153C WAS ISSUED. SINCE TH E ASSESSEE HAS NOT RAISED ANY OBJECTION WITH REGARD TO SATISFACTION RE CORDED BY THE AO OF THE SEARCH PERSON, NOW HE CANNOT RAISE THE SAME. HE R ELIED ON THE ORDERS OF THE CIT(APPEALS). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. AS PER SECTION 153C OF THE ACT, THE ASSESSING OFFIC ER OF SEARCHED PERSON SHALL PROCEED AGAINST SUCH OTHER PERSON AND REACH S UCH SATISFACTION THAT ANY UNDISCLOSED INCOME BELONGS TO SUCH OTHER PERSON OVER WHOM HE HAS NO JURISDICTION, THEN HE HAS TO TRANSMIT THE MATERI AL TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON IN SUCH A CASE, THE ASSESSING OFFICER WHO HAS JURISDICTION WILL PROCEED AGAINST S UCH OTHER PERSON BY ISSUING THE REQUISITE NOTICE AS CONTEMPLATED U/S. 1 53C R.W.S. 153A OF THE ACT. 6. IN THE PRESENT CASES, THE CIT(APPEALS) HAVING EX AMINED THE ISSUE OF RECORDING SATISFACTION BY THE AO OF SEARCH PERSON, CAME TO THE CONCLUSION THAT THERE WAS RECORDING OF SATISFACTION BY THE AO. HOWEVER, HE HAS NOT SPECIFIED ON WHAT BASIS HE HAS COME TO THE CONCLUSI ON THAT THERE WAS RECORDING OF SATISFACTION BY THE AO. HENCE, WE A RE OF THE OPINION THAT THE RECORDING OF SATISFACTION IS REQUIRED TO BE EXAMINE D BY THE CIT(APPEALS) ITA NOS.2224 & 2225/BANG/2016 PAGE 4 OF 4 AFTER CALLING FOR RELEVANT RECORD FROM THE AO OF TH E SEARCHED PERSON AND DECIDE THE ISSUE ACCORDINGLY. WITH THESE OBSERVATI ONS, WE ARE INCLINED TO REMIT THIS LEGAL ISSUE TO THE FILE OF THE CIT(APPEA LS) FOR FRESH ADJUDICATION. 7. SINCE WE HAVE REMANDED THE LEGAL ISSUE TO THE CI T(APPEALS) FOR FRESH ADJUDICATION, AT THIS STAGE, WE REFRAIN FROM GOING INTO THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 8. IN THE RESULT, BOTH THE APPEALS BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 03 RD DAY OF FEBRUARY, 2021. SD/- SD/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 3 RD FEBRUARY, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.