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TMI Blog2025 (1) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived because of compromise deed should not be taxed in your hand as income as per the provisions of Income Tax Act 1961. It seems there was no response to same to satisfaction of AO, so the AO treated relinquishment of rights under compromise as transfer of capital asset. Capital gains are calculated by the AO on the basis of value of land received in lieu of relinquishment of rights in litigation. Nothing was submitted before us, to allege, that on facts and law same is not sustainable. Single line argument of the ld. AR that capital gains have been calculated in spite of the assessee being a purchaser of the immovable property is not factually correct and nor admitted by Revenue. The orders of tax authority cannot be interfered. Decided against assessee. - Dr. B.R.R. Kumar, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Saurav Rohtagi, CA For the Revenue : Shri Vijay B. Vasanta, CIT-DR ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the final assessment order dated 23.05.2023 passed by the Asstt. Commissioner of Income Tax, International Taxation, Circle 2(1)(2), New Delhi (hereinafter referred to as the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, the Id. AO has not followed directions of Hon'ble DRP whereby the Hon'ble DRP directed the Ld. AO to pass a speaking order, however, the ld AO has not passed a speaking order and has just copied the old draft order. Without prejudice, the Ld. AO has not even mentioned the statutory section(s) of Income Tax Act, 1961 under which he is proposing the said addition(s). 7.3. That in the absence of DVO report the Ld. AO has made addition of the properties by taking prices of the same from some third party websites which are not mandated in the eyes of law or is authorised under the Income Tax Act, 1961. The Ld. AO has gone beyond the statutes of Income Tax Act 1961 in taking help of private websites in getting cost of properties which websites are operated by private entities for profit making purposes. Nowhere in the statues it is allowed or written that in the absence of DVO report the Ld AO can take support of third party websites. The Ld, AO erred in law in not taking any steps for getting the DVO report in time 7.4. The Ld. AO grossly erred in taking entire sale consideration of 1property at Rs.15,62,43,720/- as sale consideration received by the assessee, however, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of certain piece of land in Goa and Karnataka and paid Rs.1,20,00,000/- on 04.08.2007, Rs.1,01,31,081/- on 22.08.2007 and Rs.30 lakhs on 06.04.2009. However, this vendor was not found to be having title in these properties and, accordingly, the assessee initiated civil and criminal cases which was compromised by executing a compromise deed and in furtherance of which the Hon ble Delhi High Court had quashed the criminal cases also which helped these accused get the bail. 6. The AO observed that as in consequence to the compromise deed the assessee has received certain properties, thus, considering it to be a form of capital gains, possibly arising out of relinquishment of an interest out of MOUs, had show-caused the assessee. The copy of show cause notice dated 17.09.2022 is available at pages 62-63 of the paper book and it will be beneficial to reproduce the contents of this notice to understand as to what issue the AO was actually examining. The content is as follows:- SHOW CAUSE NOTICE CORRIGENDUM TO EARLIER SHOWCAUSE Please ignore the show cause notice issued to you vide DIN Notice No: ITBA/AST/F/147(SCN)/2022-23/1045560349(1) dated 16/09/2022 as an incomplete SCN was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easuring 2590 * 2300 sq. mtrs) - 21 acres of Island situated in North of Karnataka (b) The assessee alongwith other co-owners had made payment as under:- - Cheque No. 0553323 dated 15.12.2006 drawn on Standard Chartered Bank for Rs. 2 crores (paid by Hotel Country India Pvt. Ltd.) - Cheque No. 0152330 dated 16.03.2007 drawn on Standard Chartered Bank for Rs. 3,01,00,000/- (paid by Hotel Country India Pvt. Ltd.) - Bank Transfer on 04.08.2007 from Standard Chartered Bank for Rs.1,20,00,000/- by assessee - Transfer from Crosswood Ltd., UK through its director Charnesh Kapoor (assessee) on 22.08.2007 amounting to Rs. 10,31,081/- - Cheque No. 0642228 dated 31.08.2007 drawn on HDFC Bank for Rs. 10,00,000/- (paid by Lex Land Securities Pvt. Ltd.) - Cheque No. 0642231 dated 12.12.2007 drawn on HDFC Bank for Rs. 1,00,00,000/- (paid by Lex Land Securities Pvt. Ltd.) - Cheque No. 0642244 dated 28.01.2008 drawn on HDFC Bank for Rs.1,34,00,000/- (paid by Lex Land Securities Pvt. Ltd.) - In cash Rs. 5,60,000/- (c) In part performance of the obligation in respect of MOU dtd. 02.03.2007 the property at Valsao, South Goa was transferred vide sale deed dtd. 18.12.2007 for a consideration of Rs. 30,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Hon ble Delhi High Court. (k). That during the pendency of the matter before the Hon ble Delhi High Court an compromise deed dtd. 28.05.2015 was executed between the seller of property and assessee alongwith the other co-owners. (1). The Hon ble Delhi High Court vide order dtd. 13.07.2015 had recorded the terms of Compromise deed dtd. 28.05.2015 and has held that in view of compromise deed the Writ petition is disposed off. (m). Compromise deed dtd. 28.05.2015 has been executed by assessee alongwith M/s. M/s. Hotel Country India Pvt. Ltd. and M/s. Lex Land Securities Pvt. Ltd. (n). That Compromise deed dtd. 28.05.2015 was later modified vide Deed of Compromise dtd. 03.07.2015. (o) That pursuant to Deed of Compromise the accused had transferred the property in favour of assessee and other 2 co-owners or their nominees. (p) That it has been specifically mentioned in all sale deed that Vendor and Purchaser had entered into a compromise deed wherein the total amount to be paid by the Vendor to the Purchaser was Rs. 14.50 crores. Under the said compromise the Vendor in partial discharge of its liabilities has agreed to transfer the said property in the name of the Purchaser. (q). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / disallowance made in a assessment has to be made on a reasonable basis. In the present case there is no reasonable basis on account of which addition can be made in the hands of assessee. The assessee has supplied ample number of documents and information as asked for from time to time. In case, the same are not upto the satisfaction of .your goodself, in that case, the same be made known to the assessee for his further reply / explanation. The assessee also requests your goodself that the basis for not accepting the explanation of the assessee be also made known to the assessee i.e. legal provisions invoked, documents with your goodself any other relevant material ought to be used against the assessee. It is a settled legal preposition of law that no addition can be made on the back of the assessee and it is always necessary that all incriminating material/ information ought to be used against the assessee should be made available to the assessee for his reply and explanation. 8. Thus, going through the case of the AO as stands approved by the DRP, the only contention of the ld. AR that the assessee is a purchaser, therefore, capital gains cannot be taxed has no substance. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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