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TMI Blog2024 (12) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the satisfaction note to depict application of mind and initiation of action u/s 153C of the Act qua such assessment years. The AO has failed to do so. As a corollary, the notice issued under section 153C of the Act and consequent assessment order passed under section 153C of the Act is vitiated in law and requires to be quashed. Difference between the sale consideration mentioned in Agreement to Sale and Sale Deed is undisclosed part of the transaction - Noticeably, the Department referred said property to the DVO for determination of FMV under section 142A of the Act. The DVO issued a Valuation Report as per which the total value of the property is INR 1,68,59,788/- approximately wherein the cost of land was valued at INR 94,71,341/- and the cost of building was valued at INR 73,88,447/-. The assessee contends that the valuation report derived by the DVO after inquiry is quite close to the sale consideration declared by the assessee. The staggering difference as per the Agreement to Sale and Sale Deed is thus unconceivable and totally contrary to the estimated market value of the property. The Report of the DVO thus assumes significance for the cause of the assessee and cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and in law, the Ld. CIT(A) grossly erred in not considering that the Ld. AO failed to provide the copy of the satisfaction note of the AO of the searched person to the appellant during the assessment proceedings; 5. That on the facts and circumstances of the case and in law, the Ld. CIT(A) grossly erred in sustaining the order of the Ld. AO whereby impugned addition amounting to Rs. 75,08,750/- was made; 6. That on the facts and circumstances of the case and in law the Ld. AO grossly erred in not considering the valuation report furnished by the Ld. Valuation Officer -1, Income Tax Department, New Delhi; 7. That in the facts and circumstances of the case and in law, the order passed by the Ld. CIT(A) and by the Ld. AO is against the principles of natural justice, equity, judicial discipline and fair play; 8. That in the facts and circumstances of the case and in law, the Hon'ble CIT(A) grossly erred in upholding the order of Ld. AO in charging interest under Section 234B and Section 234C of the Act; 9. That the penalty proceedings initiated under Section 270A and 271D of the Act is incorrect, illegal and bad in law; All of the above gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale consideration having regard to the percentage share held in the property sold and consequently, additions were made which worked out to INR 75,08,750/- as under reporting of Short Term Capital gain ["STCG"]. 6. Aggrieved by the additions on account of alleged under reporting of sale consideration for the purposes of determination of capital gains, the assessee preferred appeal before the Ld.CIT(A). The CIT(A) however, also declined any relief on the additions so made by the AO. 7. Further aggrieved, assessee filed appeal before the Tribunal. 8. When the matter was called for hearing, the Ld. Counsel for the assessee adverted to the grounds of appeal and made wide ranging submissions on lack of jurisdiction under section 153C of the Act as well as placed arguments towards untenability of additions on merits. 8.1. On aspects of lack of jurisdiction, Ld. Counsel for the assessee referred to 'satisfaction note' drawn by the AO for assumption of jurisdiction under section 153C of the Act and submitted that the 'satisfaction note' prepared apparently suffers from the vice of being vague, non-descript and unintelligible. 8.2. Besides, it was contended that the AO has derived u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of assumption of jurisdiction under section 153C of the Act, the assessment for Assessment Year 2019-20 stood concluded/completed under the normal provisions of Act. Consequently, as per the judgement referred by Hon'ble High Court of Delhi in the case of Pr.CIT vs Ankush Saluja [2020] 115 taxmann.com 370 (Delhi), no addition could be made in the absence of any incriminating documents found in the course of search. The Ld. Counsel for the assessee pointed out that the assessee raised objection to the impugned 'satisfaction note', prepared by the AO vide letter dated 06.12.2022. The AO, in turn, disposed off the objection vide interim order dated 08.12.2022 by a cryptic order. 10. On merits, the Ld. Counsel for the assessee pointed out the additions made, are not justified for multiple reasons:- [i] the Agreement to Sale dated 06.08.2018 found in the course of search in the case of Pranjil Batra cannot be regarded as sacrosanct for the reason such as the Agreement to Sale was not signed by the Shri Pranjil Batra. Secondly the Agreement to Sale found in reason was only a zerox copy; [ii] the valuation report obtained by the AO from the Department Valuation Officer ["DVO"] it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, is totally unjustified in the facts of the present case. The satisfaction note broadly provides the nature of undisclosed income emanating from the incriminating material found in the course of search. The Ld.CIT DR for the Revenue also submitted that report of DVO showing lesser fair market value as not bearing in the instant case where the assessee and the purchaser have mutually agreed for a higher consideration. 13. In re-joinder, the Ld. Counsel for the assessee reiterated the factual aspects and submitted that apart from the DVO report, affidavit of Shri Pranjil Batra dated 18.12.2022 placed in the Paper Book also supports the sale consideration received by the assessee. As per the affidavit of the purchaser Shri Pranjil Batra, the total sale consideration involved in the property transaction stands at INR 1,49,15,000/- only and no more. Some photocopy of Agreement to Sale remaining unsigned by the purchaser is thus, of no consequence, more so, when the purchaser as well as the DVO report supports the veracity of actual sale consideration. 14. We have carefully considered the rival submissions and perused the assessment order, first appellate order, documents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash exchange of Rs. 90 Lacs. Panchnama was signed on 18/08/2020. The above documents have been examined and I am, being the assessing officer of the searched person. satisfied that the information contained in documents seized during the course of search u/s 132 of the 1.T. Act, 1961 at the premises of Shri Pranjil Batra, pertains to the assessee, who is a case of a person other than the person referred to in Section 153A ie. Shri Pranjil Batra. Hence, the information is being sent to the assessing officer of the such other person. Further, I am satisfied within the meaning of Section 153C r.w.s. 153A of the Act, that the documents have bearing on the determination of the total income of Renu Singh for the A.Y. 2015-16 to 2021-22." 18. The AO being common to the searched person as well as the assessee. The 'satisfaction note' prepared in the capacity of the AO of the searched person is identical and therefore, not reproduced. 19. Section 153C of the Act pertains to the assessment if income in cases where certain documents, assess or books of accounts etc. pertains to or relates to person other than the person on whom search was conducted under section 132 of the Act or requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of total income of Smt.Renu Singh for AY 2015-16 to 2020-21, is without legal foundation as the AO has even failed to name the alleged documents and further failed to mention as to how it is related /pertained to which Assessment Year; [iv] the AO on receipt of material/documents from the AO of the searched person must necessarily apply his mind on the material received and ascertain precisely the specific year to which incriminating material relates. It is only when this determination/ascertainment is complete that the flood gates of an assessment would open qua those particular years. The issuance of notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by the AO in the light of judgement rendered in the case of Agni Vishnu Feature Pvt.Ltd. vs DCIT [2023] 157 taxmann.com 242 (Madras); [v] the 'satisfaction note' do not provide any particulars of documents seized from the premises of Shri Pranjil Batra. Nothing is mentioned with regard to Annexure No., page no. of the panchnama through which the documents were seized and the basis which prompted the AO to record satisfaction that the same pertains to the assessee herein. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Technical Education Society wherein the Hon'ble Supreme Court held that 'the assessment under section 153C could be made only for the year to which material relates to and exercise of power under section 153C of the Act in respect of other AYs would not sustain'. The Hon'ble Delhi High Court also noted that the AO is bound to ascertain and identify the AY to which the material recovered relates and AYs which can then be subject to action under section 153C of the Act will have to be necessarily those in respect of which the assessment is likely to be influenced or impacted by the material discovered. The Hon'ble Delhi High Court went one step further to hold that where material discovered in the course of search has the potential of constituting incriminating material for more than one AYs, even in such a situation, it will be incumbent upon the AO to duly record reasons that material is likely to be incriminating for more than one AY and thus, warranting the action under section 153C of the Act for years in addition to those to which material may be directly relatable. Thus, a nuanced application of mind and recording of reasons for drawing satisfaction as contemplated under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153C of the Act and consequent assessment order passed under section 153C of the Act is vitiated in law and requires to be quashed. 23. We however, also advert to the objections raised on merits of the additions made in the assessment order. On facts, the AO has relied on some photographs of the Agreement to Sale dated 06.08.2018 and alleged that the total sale consideration of the property situated at Laxmi Nagar, Delhi stands at INR 4,49,50,000/- instead of amount of INR 1,49,15,000/- and that the assessee holds 25% share in such property. The assessee on the other hand, claims that as per the Sale Agreement, the property sold as per 'Sale Deed' stands at actual sale consideration at INR 1,49,15,000/- in which she holds 25% shares and accordingly, declared the capital gains based on actual such sale consideration. The AO on the other hand, alleged that the difference between the sale consideration mentioned in Agreement to Sale and Sale Deed is undisclosed part of the transaction. The basis of making additions is the photocopy of the Agreement to Sale alone as stated to be found from the premises of searched person. No other documents of independent nature or any inquiry with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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