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TMI Blog2016 (4) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... found during the course of search is not sustainable and respectfully following the precedent laid down by the Hon'ble High Court, in the case of Kabul Chawla [supra] addition made by the AO and upheld by the ld. CIT(A) is demolished. - Decided in favour of assessee - ITA No. 5728/Del /2013 - - - Dated:- 26-2-2016 - SHRI N.K. SAINI, ACCOUNTANT MEMBER, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For The Assessee : Shri Sanjay Kumar, CA For The Department : Shri Sulekha Verma, CIT-DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal filed by the assessee has been directed against the order of the CIT(A)-XXXIII, New Delhi, dated 28/06/2013 for A.Y 2005-06 passed in first appeal No. 949/10-11/483. 2. Grounds raised by the assessee read as under: (1.1) Because the ld. CIT(A) has erred in law and on facts in sustaining the addition of ₹ 4,03,000/- on account of long term capital gain by invoking the provisions of section 50C. (1.2) Because on a due consideration of facts and circumstances of the case, particularly that (i) property was agreed to be sold in June, 2003 for ₹ 20 lakhs and an advance of ₹ 5 lakhs w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.12.10 2004-05 01.02.10 11,99,366 Nil 11,99,366 10.12.10 2005-06 01.02.10 39,89,607 *4,03,000 43,92,607 10.12.10 2006-07 01.02.10 7,56,372 Nil 7,56,372 10.12.10 2007-08 01.02.10 4,59,485 Nil 4,59,485 10.12.10 2008-09 01.02.10 60,389 Nil 60,389 10.12.10 2009-10 31.07.09 3,75,943 Nil 3,75,943 10.12.10 * U/s 50C Thus, only addition made was of ₹ 4,03,000/- on account of longterm capital gain by invoking the deeming provisions of section 50C in the assessment year 2005-06 i.e. the year under appeal. Relevant finding of the Assessing Officer appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, written submission and argument of Ld. AR during the appellate proceedings. It is undisputed fact that the stamp valuation is higher than the sale consideration. Ld. AR has only argued that the property was agreed to be sold in June 2003 whereas registration was done on 11.5.2004. Therefore, the stamp valuation is of 11.5.2004. This fact does not affect the work ability of section 50C. The appellant herself has declared the long term capital gain for assessment year 2005-06 for the transfer of assets on the basis of date of registration and not on the basis of part performance under section 2(47) of I.T. Act. Therefore, this argument of Ld. AR does not help the appellant. As regards the 3rd contention, it is held by the CIT(A) in para 5.3 at page 11 of the order as under: Next argument of Ld. AR is that the assessing officer should have referred the matter for valuation to the district valuation officer as per the provision of subsection (2) and (3) of the section 50C as stamp valuation was more than the market value. I do not agree with this argument of ld. AR. Subsection (2) of section 50C cannot be invoked automatically. Forthe operation of subsection (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Mills P. Ltd. [ITA No. 369 of 2015 dt. 6.7.2015] (Para 32); (vii) Jai Steel (India) v. ACIT [2013] 36 Taxmann. Com 523 (Raj) (Para 33-34); (viii) CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 374 ITR 645 (Bom) (Para 35-36) It has been reiterated that settled legal proposition is if no incriminating material was unearthed during the search, no addition could be made to the income already assessed and the related legal proposition has been summarized in para 37 of the said order. 1. Further, it is submitted that under the circumstances as the said sale deed was available at the stage of original assessment itself, and all the facts stood already disclosed and provisions of section 50C were not invoked, therefore, in the present assessment no addition can be made by invoking the deeming provisions of section 50C. Reliance is placed on the decision of Hon ble Agra Bench of ITAT in the case of ITO v. Haresh Chand Agarwal, HUF [ITA No. 282/Agra/2013] dated 20.12.2013, wherin under similar circumstances, reassessment made U/s 147 was quashed, kind attention is invited to para 5 of the said order. 2. Further on merits, apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deeming provisions of section 50C of the Act which is the year under appeal. On careful perusal of the operating paras at page 2 of the assessment order, it is amply clear that the said addition is not based on any incriminating material found during the course of search. At this juncture, when we consider the dicta laid down by the Hon'ble Jurisdictional High Court in the case of Kabul Chawla, we note that their Lordships, after referring to all the relevant earlier judgment of Hon'ble Supreme Court and various Hon'ble High Courts summarized a legal position in para 37 of the order wherein it was explicitly held that an assessment u/s 153A of the Act has to be made only on the basis of seized material. For the sake of completeness of our conclusion, we respectfully reproduce para 37 of this order as under: Para 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(l) will have to be mandatorily issued to the person searched requiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cta laid down by the Hon'ble Jurisdictional High Court in the case of Kabul Chawla [supra] when we analyse the action of the AO in the present case, then we observe that the AO has made addition by invoking deeming provision of section 50C of the Act and addition for A.Y 2005-06 has been made on the basis of facts and evidence which was already available with the AO at the time of original assessment proceedings as well as subsequent assessment proceedings which were completed on 26.12.2007 u/s 143(3) r.w.s. 153A of the Act. It is pertinent to note that the AO has not made any addition in the other A.Ys which fall within the block of A.Ys as well as in the A.Y wherein search and seizure operation was conducted. In this situation, when there was no incriminating material with the AO, found during the course of search and seizure action u/s 132 of the Act on 19.1.2009 which was second search operation in sequence, then no addition can be held as sustainable de hors incriminating material found during the course of search. On the basis of foregoing discussion, we are inclined to held that the addition made for the year under consideration, which is not based on any incriminating m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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