2022 (4) TMI 1608 - ITAT BANGALORE

Assessment u/s 153C - search and seizure action was conducted in the office premise in the Appellant’s group cases - AO opined that the Appellant is engaged in the purchase and sale of agricultural lands, hence proceeded to treat the activity of sale of agricultural lands to be ‘adventure in the nature of trade’ - HELD THAT:- Similar issue was considered by the coordinate Bench in the case of D. Dasappa [2009 (12) TMI 929 - ITAT BANGALORE] as held judgment of the Supreme Court in the case Sinhgad Technical Edn. Society [2017 (8) TMI 1298 - SUPREME COURT] is squarely applicable to the facts of the present case. Since the assessment framed u/s. 153C of the Act to be based on material found during the course of search which relate to or belong to the assessee and since we have held that there is no seized material for addition made by the AO, we do not wish to address the arguments made by the ld. AR for the assessee that the condition precedent for initiating the proceedings u/s. 153C of the Act having not been satisfied in the present case, therefore the assessment is liable to be annulled. Accordingly, we hold that the addition made by the AO is not based on seized material found in the course of search and therefore the addition cannot be sustained.

Nature of land sold - treatment of the gain arising out of sale of land as capital gain against the claim of assessee that it is exempt - HELD THAT:- This agricultural income offered by the assessee has been accepted and assessed in these assessment years. Contrary to this, the lower authorities are not ready to accept the sale of said land as agricultural land. In our opinion, the sale of land is to be treated as sale of agricultural land since there was continuous agricultural operations in the said land and though the land was converted, the land remained as agricultural land till sale of the same. In view of this, we allow the ground taken by the assessee. The other grounds are academic and dismissed accordingly.