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TMI Blog2021 (4) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... ere should be material or document seized which belong to the OP. As such statement recorded during search is not a material or document found and seized. Therefore the statement recorded under section 132(4) cannot be construed as material/document for invoking proceeding under section 153C of the Act specially, in the circumstances where no material of incriminating in nature found belonging to OP. What could be documents having bearing on the determination of the total income of the person searched or other ? - whether the document in the form of tally and balance sheet found during the course of search is an incriminating document in nature? - In our considered view such document are not an incriminating material, as such those documents are part of the books of account maintained by the SJSL wherethe transactions for the purchase and sales of the lands were duly disclosed. Likewise, the corresponding entries in the books of accounts of the assessee and corresponding capital gain was offered to tax in the income tax returns. Thus the impounded documents were belonging to the SJSL and not the assessee company where all the material facts were disclosed. Hence the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that consideration was decided along with agreement to sale i.e. before the execution of sale deed and also received part payment - As we note that the2nd proviso clearly stipulates that the stamp duty to be taken as the sale consideration of the agreement date where the amount of consideration or a part thereof has been received by an account payee cheque or by account payee bank draft or by use of electronic clearing system through the bank account on or before the date of agreement for transfer. Admittedly in the case on hand, the assessee has received a sum of R11,000 in cash at the time of agreement. The cheque payment was received by the assessee 1st time dated 05-10-2009 for ₹ 65,00,000/-. In other words the conditions as stipulated under the 2nd proviso to section 50C of the Act in order to enjoy the benefit of 1st proviso was not complied with by the assessee. Therefore we are of the view that the finding of the learned CIT (A) to this extent is not correct. - IT(SS)A No. 264/AHD/2018 With C.O. No.113/Ahd/2019 - - - Dated:- 12-4-2021 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Dhiren Shah, A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely Shri Lalit K Rathodhas admitted in the statement, furnished dated 26-10-2012 during the search proceedings, under section 132(4) of the Act and also under section 131 of the Act dated 07-05-2012 that the company (SJSL) is engaged in providing accommodation entries. As such the company namely SJSL was a paper company. This fact was also admitted by another director of SJSL namely Shri Partik R Shah in the statement furnished under section 131(1A) of the Act dated 01-08-2014, whowas also handling other companies which were only paper companies and engaged in providing accommodation entries. 3.4 In view of the above the AO sought clarification from the assessee proposing the entire transaction between the assessee and SJSL as a colorable device used by the assessee for transferring the capital gain on the sale of land to the SJSL which was subsequently set off against the loss on the sale of commodities. 3.5 In response to the notice, the assessee vide letter dated 19-11-2015 submitted that it has transferred both the plot of land to the SJSL vide Banakhat dated 12-03-2008 for a consideration of ₹ 2,02,08,750/- only and against such Banakhat, has received part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the contention of the assessee that the jantri prevailing at the time of execution of banakhat, is not acceptable. The jantri prevailing at the time of transfer and for the purpose of payment of stamp duty, shall be applicable. Therefore, the provisions of section 50C is applicable and the same are invoked. 11.1 Secondly, the total land area of survey No 548 and 549 was 33792 sq meter. The entire land of survey No 548 and 549 has been sold as it no more appears in the balance sheet of the assessee in the subsequent year. When the assessee is selling the entire land at survey no. 548 and 549 and when the land as per balance sheet is exhausted and when the income is worked out under the head Capital Gain, the taxable capital gain is worked out on the entire sale of land of 33792 sq meters. Further, while reducing the cost of acquisition, the same is allowed on the entire land of 33792 sq meters. Therefore, the capital gain u/s 50C is worked out as under: Sale consideration as per circle rate @ ₹ 5,500 per sqm of total land sold 33792 sqm. 18,58,56,000 Less : Cost of acquisition (Survey No. 548 and 54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Harmony Homes for which the plan was also submitted with AMC for approval. The developer SJSL also made part performance of the agreement by paying the part of consideration. The assessee further submitted that in any situation it has to execute conveyance deed in favor of SJSL and in case of failure, SJSL has an option to file suit and compel it to execute conveyance deed. Thus as per the definition of transfer provided under the provision of section 2(47) (ii) and (vi) of the Act, the impugned property was transferred as on 12-03-2008. The assessee in this regard placed reliance on the judgment of the Hon ble Supreme Court in case of SanjiveLal vs. CIT reported in 365 ITR 389. Accordingly the assessee claimed that considering the date of transfer as on 12-03-2008, there is no violation of the provisions of section 50C of the Act as on that date the stamp value was much lower than the actual consideration received by it. 4.2 The assessee also submitted that the AO s allegation that SJSL is a paper company is based on his surmise and conjuncture. The assessee claimed that none of the person in their statement have given any adverse comment about the genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings in the case of S.J. Securities Ltd and even in the assessment proceedings, the AO not brought on record any cogent material and/or independent evidences that sales consideration of ₹ 23 plots sold by S.J. Securities Ltd to actual buyers and received the aggregate consideration of ₹ 13,52,35,250/- which has been gone back to the appellant company by cheque or cash and the appellant company is the ultimate beneficiary of the said amount, such concluded assessment cannot be disturbed by the A.O for making an addition by invoking deeming provision u/s. 50C of the Act in the case of the appellant] In view of the aforesaid facts, in absence of any incriminating material found during the course of search proceedings in the case of S.J. Securities Ltd and in absence of any incrementing material and/or independent evidences being brought on record by the AO in the assessment proceedings against the appellant has worked out undisclosed income in the case of appellant by invoking deeming provision u/s. 50C and made addition of short term capital gain of ₹ 16,67,49,036/- in the case of appellant is not justified in view of the of the judicial pronouncement of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution of Banakaht (agreement to sale ) is not acceptable and the Jantri prevailing at the time of transfer and for the purpose payment of stamp duty, shall be applicable and therefore, the provisions of section ' 50C is applicable and the same being invoked is not justified. I hold that the AO has wrongly invoked the deeming provision of section 50C in the case of appellant in respect of 23 sale deeds executed by SJ Securities Ltd in favour of actual buyers and the addition made by the AO on account of short term capital gain u/s. 50C of the Act for an amount of ₹ 16,67,49,036/- is not justified. Hence, deleted. 4.2.3. It is a fact that the plots of land under consideration were sold by Banakhat dated 22.03.2008 for ₹ 2,02,08,750/- and on the date of the Banakhat , Jantri rate was ₹ 283.50 sq. mtr, whereas. The appellant had executed Banakhat @ ₹ 598A sqmtr., which is more than the jantri rate on the date of Banakhat . Provisions of section.50C have been amended by finance Act 2016 w.e.f. 01.04.2017. Two provisos inserted which contain that where the date of the agreement fixing the amount of cons/deration and the date of registration fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments recorded during the search proceedings despite repeated requests were made by the assessee. The learned AR further claimed that the agreement for sale of the lands in dispute were made on 12 March 2008 at a price which was more than the registered value declared for the purpose of stamp duty. The learned AR vehemently supported the order of the learned CIT (A). 8. We have heard the rival contentions of both the parties and perused the materials available on record. The 1st controversy that arises before us for the adjudication is as to whether the proceedings initiated under section 153C of the Act are valid and sustainable in the eyes of law in the given facts and circumstances. In this regard we note thatprior to amendment by Finance Act 2015 i.e. before 1-06-2015, section153C(1) provided that if any valuable assets (any money, bullion, jewellery or other valuable article or thing) or books of accounts or documents found and seized/requisitioned during the search and AO of the person searched (PS, in short) is satisfied that such valuable assets or books of accounts or documents seized/requisitioned belongs or belong to a person other than person searched (other perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through Banakhat. The SJSL on such purchase and sales has shown a profit amounting to ₹ 14,27,69,950 in its books of accounts. In other words, the SJSL has shown purchases of the lands from the assessee which was subsequently sold to the other parties. The corresponding entries of the sales by the assessee to SJSL were duly disclosed by the assessee company in its accounts and accordingly the income under the head capital gain was offered to tax. 8.3 The 1st question that arises for our adjudication whether the document in the form of tally and Balance sheet as discussed above found during the course of search belong to the assessee. To our mind, the documents found during the search in the given facts and circumstances, were of the SJSL where the transactions for the impugned land were recorded. Thus, these were the documents which were not belonging to the assessee but to M/s SJSL. Hence, in the absence of any document found belonging to the assessee, the proceedings under section 153C of the Act cannot be initiated against the assessee. In holding so we draw support and guidance from the judgment of Hon ble jurisdictional High Court in case of Anil Kumar Gopi Ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of jurisdiction assumed under section 153C in the hands of the assessee company, cannot be accepted. Even otherwise as the disclosure of additional income made by AL in his statement recorded under section 132(4), in the hands of the assessee-company is relatable to Assessment year 2011-12, and does not pertain to any of the years in respect of which jurisdiction had been assumed by the Assessing Officer under section 153C in the case of the assessee company, therefore, the same on the said count also shall in no way go to confer validity to the assumption of jurisdiction by the Assessing Officer under section 153C. [Para 12] 8.5 Without prejudice to the above, we note that the purpose of the search or seizure operation is to unearth the undisclosed or unaccounted income. Normally during the search proceeding different types of material or document seized and requisitioned by the search party and information collected. Thereafter those information collected and seized materialsare examined weather the same is having bearing on the income which is not disclosed. Accordingly assessment proceeding under section 153A or 153C of the Act as the case may carried out by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing capital gain was offered to tax in the income tax returns. Thus the impounded documents were belonging to the SJSL and not the assessee company where all the material facts were disclosed. Hence the same cannot be termed as incrimination document found against the assessee company. Furthermore, there is no ambiguity to fact that in case of the assessee normal assessment under section 143(3) of the Act was already completed vide order dated 22-02-2012. Thus the year under consideration is unabated assessment year which can be disturbed only based on incriminating document against the assessee found during the course of search as held by the Hon ble jurisdictional High Court in the case of Pr. CIT vs. Saumya Construction reported in 387 ITR 529. The relevant extract of the judgment is reproduced as under: Section 153A bears the heading 'assessment in case of search or requisition'. From the heading of section 153, the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to sale made by the assessee for transferring the land in dispute with the buyer dated 12-03-2008 is the date of transfer in the given facts and circumstances. In this regard, we note that the assessee by virtue of the agreement to sale dated 12-03-2008a right in favour of SJSL was created which gives a right to the buyer (SJSL) to enjoy the property. This fact can be established from the finding of the learned CIT (A) which has been reproduced as under: On verification of one of the sale deed / conveyance deed in respect of one of the residential plot sold by SJ Securities Ltd. to the actual buyer wherein the appellant company is also party to the said conveyance deed, which has been compiled as per Exhibit V, Page No. 70 to 86 of the Synopsis of Arguments dated dated 06.09.2017 along with English Translation as per Exhibit VI Page No. 87 to 107, it is very clear from the clauses of the conveyance deed that after acquiring the rights in the said land by agreement to sale dated 12.03.2008, SJ Securities Ltd. divided the said land into sub-plots as per the plan submitted with Ahmedabad Municipal Corporation and in respect of such sub-divided plots of the said land into 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the property. In holding so we draw support and guidance from the judgement of Hon ble Apex court in the case of Sanjeev Lal Vs. CIT Chandigarh reported in [2014] 365 ITR 389 (SC) where the Hon ble court held as under: The question to be considered by this Court is whether the agreement to sell which had been executed on 27-12-2002 can be considered as a date on which the property i.e. the residential house had been transferred. In normal circumstances by executing an agreement to sell in respect of an immovable property, a right in personam is created in favour of the transferee/vendee. When such a right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because the vendee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the vendor, for some reason is not executing the sale deed. Thus, by virtue of the agreement to sell some right is given by the vendor to the vendee. The question is whether the entire property can be said to have been sold at the time when an agreement to sell is entered into. In normal circumstances, the aforestated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e guideline value changes, the10/04/2021 www.taxmann.com 17/18 guideline value as on the date of agreement has to be considered as the full value of the consideration of the capital gains. In the present case, since enforceable agreement was entered in the financial years 2006- 2007 and 2007-2008 and for the purpose of computation of capital gains in the hands of the assessee, the A.O. has to be adopted the guideline value as on the date of sale of the agreement and not on the date of sale deed. In view of the above discussion and in the light of above orders we do not find any infirmity in the order of the learned CIT (A). Accordingly we dismiss grounds of appeal raised by the Revenue on this count also. 8.10 Before parting we find that the learned CIT (A) alternately also held that by virtue of first provisoinserted in the provision of section 50C (1) vide finance Act 2016, the assessee will get relief due to the fact that consideration was decided along with agreement to sale i.e. before the execution of sale deed and also received part payment. In this regard we note that the2nd proviso clearly stipulates that the stamp duty to be taken as the sale consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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