2021 (12) TMI 926 - AT - Income Tax

Validity of assessment u/s 153C - seized assets/documents belonging to a person other than a searched person - relevant date for applying the provisions of Section 153A - HELD THAT - AO has considered six assessment years from 2005-06 to 2010-11 for assessment under section 153C of the Act corresponding to search period in the case of M/s SDS Group of Companies, i.e., six assessment years corresponding to the previous years immediately prior to the previous year in which search was conducted. Whereas, the Hon ble Delhi High Court in the case of RRJ Securities Ltd. 2015 (11) TMI 19 - DELHI HIGH COURT held that wherever seized documents belonging to third-party have been found during the course of the search, then for assessment u/s 153C of the Act has to be taken for six assessment years corresponding to the previous years prior to the previous year in which such seized material/document along with satisfaction note of the Assessing Officer of the search person are received by the Assessing Officer of the assessee. In the case of the assessee, relevant seized document belonging to the assessee along with satisfaction note of the Assessing Officer of the searched person, have been received on 05/04/2013 and therefore assessment proceedings u/s 153C should have been initiated only from assessment year 2008-09 to assessment year 2013-14. Thus, assessment year under consideration was not to be completed u/s 153C of the Act. In our considered opinion, there is no error in the order of the Ld. CIT(A) in following the binding precedent of the jurisdictional High Court. Profit earned from sale of land transaction - development agreement between the assessee company and another associated company M/s Parasvnath Developers Ltd., the assessee purchased certain lands at Jodhpur in the assessment year 2006-07, which were subsequently developed and sold by M/s Parasvnath Developers Ltd. - HELD THAT - We find that the Assessing Officer has not disputed the fact that M/s Parasvnath Developers Ltd. has declared profit in their books of account on sale of the land developed by them under the development agreement with the assessee, though the land remained registered in the name of the assessee. This profit declared has been assessed in substantive capacity in the case of M/s Parasvnath Developers Ltd. The Assessing Officer has simultaneously assessed income in the hands of the assessee for profit on the sale of the same land and that too on substantive basis in the case of the assessee also. In our opinion, this action of the Assessing Officer of assessing same income on substantive basis in the hands of two assessess is not justified. If the income in the hands of M/S Parasvnath Developers has been accepted by the Department, assessing again the same income in the hands of the assessee, amounts to taxing same income twice. Further, the Assessing Officer has failed to bring on record any evidence that said developed land has been sold by the assessee. In view of the above facts and circumstances, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute, and accordingly, uphold the same. The grounds raised by the Revenue are, accordingly, dismissed.

Summary

Issues Involved:
1. Validity of assessment under section 153C read with section 153A.
2. Deletion of various additions by the CIT(A) for the assessment year 2006-07.
3. Deletion of addition of profit from sale of land for the assessment year 2012-13.

Issue-wise Detailed Analysis:

1. Validity of Assessment under Section 153C Read with Section 153A:

The primary issue was whether the assessment completed under section 153C read with section 153A was valid. The CIT(A) quashed the assessment as void ab initio, relying on the Delhi High Court's decision in CIT vs. M/s RRJ Securities Ltd., which stated that the reference date for initiating action under section 153C is the date of handing over the material, not the date of the search. The documents were handed over to the jurisdictional AO on 05/04/2013, making the relevant assessment years 2008-09 to 2013-14. Consequently, the notice for assessment year 2006-07 was beyond the six-year limitation period. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal on this ground.

2. Deletion of Various Additions by the CIT(A) for the Assessment Year 2006-07:

Since the Tribunal upheld the quashing of the assessment proceedings under section 153C, the other grounds raised by the Revenue concerning the deletion of various additions by the CIT(A) became academic and were not adjudicated upon. These included:
- Deletion of ?39,112,550/- by relying on CIT vs. Kabul Chawla.
- Deletion of ?8,871,950/- and ?1,000,000/- based on documents furnished during appellate proceedings.
- Deletion of ?6,400,000/- concerning cash deposits.
- Deletion of ?23,840,600/- based on documents furnished during appellate proceedings.

3. Deletion of Addition of Profit from Sale of Land for the Assessment Year 2012-13:

The CIT(A) deleted the addition of ?18,719,545/- made by the AO on account of profit from the sale of land. The AO had added this amount based on the sale of developed plots by M/s Parsvnath Developers Ltd., where the assessee was the registered owner. The CIT(A) found that the land was held on behalf of M/s Parsvnath Developers Ltd., and the profit from the sale was declared by them. The AO failed to bring any evidence that the assessee sold the land. The Tribunal upheld the CIT(A)'s decision, noting that taxing the same income in the hands of both the assessee and M/s Parsvnath Developers Ltd. was unjustified. The Revenue's appeal on this ground was also dismissed.

Conclusion:

In conclusion, the Tribunal upheld the CIT(A)'s decisions, quashing the assessment under section 153C read with section 153A for the assessment year 2006-07 and deleting the addition of profit from the sale of land for the assessment year 2012-13. Both appeals by the Revenue were dismissed.