Income Tax Appellate Tribunal - Kolkata
Shakuntala Kanoi, Kolkata vs Assessee on 19 October, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL "B", BENCH KOLKATA
BEFORE SHRI M. BALAGANESH, AM & SHRI S.S.VISWANETHRA RAVI, JM
IT(SS)A No.59/Kol/2013
( नधा रण वष / Assessment Year :2009-2010)
Smt. Shakuntala Kanoi, Vs. ITO Ward-29(4), Kolkata,
23, Raja Santosh Road, Kolkata-700068
Alipore, Kolkata-700027
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AGDPK 2663 G
(अपीलाथ /Appellant) .. ( यथ / Respondent)
नधा रती क ओर से /Assessee by : Shri S.Jhajharia, FCA
राज व क ओर से /Revenue by : Shri G.Mallikarjuna CIT DR
सन
ु वाई क तार ख / Date of Hearing : 03/10/2016
घोषणा क तार ख/Date of Pronouncement 19/10/2016
आदे श / O R D E R
PER M.BALAGANESH, AM
This appeal of the assessee arises out of the order of Learned CIT(A)-XVI, Kolkata, in Appeal No.84/CIT(A)-XVI/Wd-29(4)/11-12/Kol, dated 27.02.2013 passed against the assessment framed u/s. 143(3)/ 153C of the Income Tax Act, 1961 (hereinafter referred to as the 'Act').
2. The first issue to be decided in this appeal is as to whether the ld CITA is justified in upholding the addition made towards long term capital gain u/s 153C of the Act in the facts and circumstances of the case.
2.1. The brief facts of this issue is that the assessee filed her return of income for the Asst Year 2010-11 u/s 139(1) of the Act declaring taxable income of Rs. 3,38,161/-. A search and seizure operation u/s 132 of the Act was carried out on Karan Group of Cases, Dhanbad at the residential and office premises on 17.10.2008. The ld AO observed that in the letter of ACIT, Central Circle, Dhanbad, that during the course of search and seizure of Karan Group of Cases, some incriminating documents were found and seized from the residential and business premises which are related to assessee. During the course of search and seizure, documents 2 IT(SS)A No.59/13 marked as PK-34 was seized. The incriminating documents of PK-34 reflects the payments made by the persons of Karan Group of cases for the purchase of the build up area of the premises to the assessee both in cheque as well as in cash on different dates. Consequent to this information, notice u/s 153C of the Act was issued on 28.3.2011 on the assessee calling for return of income. The assessee filed her return of income on 20.4.2011 in response to notice u/s 153C of the Act declaring income of Rs. 3,38,160/- which was same as income declared by her in the regular return u/s 139(1) of the Act.
2.2. The ld AO observed that the assessee during the relevant previous year had income from salary, capital gains and income from other sources. The bank statements and other documents called for were produced by the assessee. The ld AO observed that the assessee was the owner of a landed property measuring about 8 kathas 11 chhatak at Plot No. 2972 & 2973 under ward no. 2 , Holding No. 96 of Dhanbad Municipality, Jharia Mauza at Hirapur , and had entered into Development Agreement on 18.5.2003 with a developer named M/s Shrishti Builders Pvt Ltd, Dhanbad for construction of a residential / commercial premises on the said land. The building was constructed on the said land by virtue of the agreement which was popularly known as 'Yashoban Plaza'. The building was constructed by the developer at its own cost. The assessee was allotted 52 % of the built up area of the premises measuring about 9750 sq.ft as consideration in lieu of land. After completion of the construction of the said premises, the said developer as well as the assessee sold a considerable portion of respective share of the constructed premises to M/s Park Clinic, the flagship concern of Karan Group(comprising of M/s Park Clinic, S K Saran HUF). The assessee sold 4824 sq.ft of built up area to M/s Park Clinic & S K Karan (HUF) and 200 sq.ft to Sita Projects, 200 sq.ft to O.P.Agarwal and 140 sq.ft to Murali Prasad.
3 IT(SS)A No.59/132.3. The ld AO explained in his order the page wise detail analysis of the incriminating documents marked as PK-34 vide page no. 27, its back side, page 27A , its back side, page 27B , its back side , page 28, its back side, page 29 , page 30 and its back side which were seized from the bedroom of Dr S.K.Karan of Karan Group.
Page-27: This is a hand written sheet containing account of payments for the purchase of shops at Yashovan Plaza- Dr. S.K.Karan, a key person of the Karan Group of cases stated under oath that--- "This is the detail of accounts disclosed as well as undisclosed with Smt. Shakuntala Devi Kanoi for purchase of shop no. 2&4 and approximate area of 5000 sq. feet on third floor. The amount indicated against the "Books" are disclosed one and tinder the "Cash" are unaccounted. Under the heading "quick List" the month wise payment of account of pan i.e, amount paid by cheque totaling Rs.24,16,011/- has been written and under the head "cash "totaling Rs.15,48,639/- has been written. Second half of the page is the duplication of the aforesaid payment. All these entries are prepared by representative of Shakuntala Kanoi which has been duly acknowledged by me and my signature along with the date is appearing under the 3rd item. The page 27A is the back side of visiting card which is the receipt of unaccounted amount paid by me from Anshuman Agarwal representative of Shakuntala Kanoi The back page of Page 27 gives the details of payment for the shop no.2 which reflects the cash payment for Rs. 6,00,000/-
Page No.27A & 27B of seized documents PK-34: As per statement of Dr. Karan under oath, these are visiting card of Sri Anshuman Agarwal, Executive Director of Data Alloys Pvt. Ltd. Back of the card marked as 27 A shows payment of Rs.5,48,640/- on 29/09/2006 by Dr. S.K.Karan. Back of the card marked as 27B shows payment of Rs.5,00,000/- on 22/07/2006 by Dr.S.K.Karan. These payments have been made to Anshuman Agarwal out of undisclosed income of Dr. Karan.
Page No.28 and its back of seized documents PK-34: It is again hand written account of purchases of shop at Yashovan Plaza. Dr. S.K.Karan, under oath, explained this page as under:-
" This is a detail account of purchase of various floors in Yashovan Plaza. This gives the detail of floor area, rate, accounted payment i.e. by cheque and unaccounted payment i.e.in cash. The payments I have made partly to Mrs. Shakuntala Kanoi and Srishti Builders. Under the item, cash a reference has been made to a name" Giriji".
Giriji was a person running a school in the old building and Rs.12.50,440/- was paid to him for vacating this space. This payment was a part of agreement between builder and Giriji and the cash payment was paid by me to the builder for Giriji for vacating the space. Similar things are applicable for entry for shop LG-3 & 4 4 IT(SS)A No.59/13 Rs. 2, 50, 000/- for each shop by cheque and 7 & 8 lakh respectively in cash. The second half of 'he page gives the details of payments made by cheque under the head "books" and in" cash"
to Kanoiji and Srishti Builders. As per this page the total payment made by cheque was Rs.99,81,439/- and in cash was Rs. 77,61,896/-"
Page No.29 of seized document PK-34 is written as under :-
SK' S A/c Area Book's Cash rd
3 Floor 4483 @617 27,66,011 @433 19,41,139---" #"
Shop 2,50,000 7,00,000---" @"
30,16,011(a) 26,41,139 (c)
PAID 4,25,000 (b) 9,55,000 CASH
1,10,000 MISC Exp
16,000 Co.Mobile phone
11,500 Mutation
10,92,500 (d)
HENCE : Due A/C From DR.K.
Book's = (a) - (b) = 25,91,011
CASH = (c) - (d)= 15,48,639
Page No. 29 & 30 are again hand written account of purchases of shop at Yashovan Plaza. Dr. S.K.Karan under oath, explained this page as under:
"Page 29 is again the handwriting of Srishti Builders and it gives a summarrized of Page 27 with a different that builder had claimed slighter higher area on 3rd floor which was disputed by me"
Page 30 is the duplicate copy of' page: 28 except the second half of the back page which is details of payment written in my handwriting, These payments are part of the payments explained in page 28"
"Page 30 is the duplicate copy of page 28. However, it also mention the various payments in respect of the purchase of spaces at Yashovan Plaza along with dates. "
Dr. S.K.Karan in statement under oath recorded during the course of search and seizure operation on 18/10/2008 narrated the above facts and mentioned that payment made in cash which is not reflected in the books of accounts and offered the amount to tax under the head investment not fully disclosed in the books.
(Copy of the relevant portion of statement under oath of Dr. S.K.Karan and copies of Page No.27 and its back side,27A and its back side, 27B and its back side,Pg.28 and its back side,Pg.29,Pg.30 and its back side under seized documents 5 IT(SS)A No.59/13 marked as PK-34 were given to tile assessee during tile assessment proceeding for explanation) Considering the above facts and circumstances, the capital gain on transfer of the above mentioned property is calculated as under-
Total value of sales of 5364 sq. feet sold out of 9750 Cheque = Rs.39,78,011/-
Cash = Rs.32,41,139/- (Karan Group)
Total Rs.72,19,150/-
Add: Rs.3,36,000/- (Others)
Rs.75,55,150/-
(Rs. 3,36,000/- is the difference of sale consideration and stamp authority valuation in the case of Sita Projects,O.P.Agarwal and Murali Prasad with reference to section 50C) Cost of acquisition of 5364 sq. feet area Value of building as on 9/911987 = Rs.12,57,500/-
Proportionate value of acquisition for the sold area == Rs.6,91,818/-
Indexed cost of acquisition for the sold area = Rs.29,14,860/-
Long Term Capital Gains(H.P)=Rs.75,55.150 - Rs.29,14,860 = Rs.46,40,290/-
Where as in the return for the A. Y.20 1 0-11, the assessee disclosed long term capital loss for Rs.2,37,924/- from house property by taking full value of consideration for Rs.39,78,011/- and indexed cost of acquisition for Rs.42,15,935/-.
The assessee was requested to give explanation on the observations made above and also requested to show cause why capital gains on transfer of the above mentioned property should not be taken for Rs.46,40,290/-"
2.4. The ld CIT(A) upheld the action of the ld AO. Aggrieved, the assessee is in appeal before us on the following grounds:-
Grounds of Appeal
1. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the AO's action in initiating the proceeding u/s 153C of the Act by issue of notice u/s 153C on 28.03.2011 for the AY 2010-11 after an abnormal and unreasonable delay of around 2½ years since the date of search conducted u/s 132 of the Act on 17.10.2008 in the premises of a third party simply holding that there is no time limit for 6 IT(SS)A No.59/13 issue of notice u/s 153A / 153C of the Act. The proceeding u/s 153C and the notice u/s 153C, being totally invalid and void ab initio, are liable to be quashed / cancelled.
2. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the AO's action in initiating the proceeding u/s 153C of the Act for the AY 2010-11 by issue of notice u/s 153C on 28.03.2011 after the date of completion of the search assessment u/s 153A of the Act in the case of the said third party Dr. S. K. Karan, whose premises were searched u/s 153A on 17.10.2008. The proceeding initiated u/s 153C and the issue of notice u/s 153C, which are barred by limitation and hence invalid and void ab initio, are liable to be quashed / cancelled.
3. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming (i) the initiation of the proceeding u/s 153C and (ii) the subsequent assessment made u/s 143(3) /153C for the later AY 2010-11 without ever considering and analyzing the fact that the seized documents nowhere contained any entry or information that any sum of money, by cash or otherwise, was received by the assessee at any time after 17.10.2008 (search was made on 17.10.2008) which can be the basis for initiation of such proceeding and subsequent completion of a high-pitched assessment for the AY 2010-11.
The proceeding u/s 153C and the assessment made u/s 143(3) / 153C, being totally invalid and void ab initio, are liable to be quashed / cancelled.
4. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the assessment u/s 143(3) / 153C of the Act for the AY 2010-11 made in a hurry arbitrarily assessing the total income at Rs. 49,80,910/-, without at all considering the facts and explanation of the assessee and without allowing proper and adequate opportunity of hearing and without providing even a copy of the reasons recorded for initiation of the proceeding u/s 153C till the date of completion of the search assessment grossly violating the principle of natural justice.
The assessment u/s 143(3)/153C made after initiating an invalid proceeding u/s 153C, being illegal and void ab initio, is liable to be quashed / cancelled.
5. Without prejudice to the Gr. Nos. 1 to 4 above, the Ld. CIT(A) was wholly wrong and unjustified in confirming the A.O's action in determining the Long Term Capital Gain at Rs. 46,40,290/- on, sale of the assessee's house property in the search assessment U/S 143(3) / 153C blindly relying upon certain vague, casual and unsubstantiated entries in the documents seized from the premises of the third party and the statement of that third party alleging that in 7 IT(SS)A No.59/13 addition to the consideration money paid by cheque recorded in the registered sale deeds the third party, the purchaser, had also paid towards sale proceeds of the property further unaccounted sum of Rs. 32,41,139/- in cash recorded in the seized documents to the assessee.
6. Without prejudice to the Gr. Nos. 1 to 4 above, the Ld. CIT(A) was wholly wrong and unjustified in confirming the A.O's action in making arbitrary addition of the said undisclosed sum of Rs. 32,41,139/- (allegedly received from the third party, purchaser) to the sale proceeds of the house property while assessing the L.T.C.G for the A.Y 2010-11 without considering the basic undenying fact that no portion of the said sum of Rs.32,41,139/-, allegedly recorded in the seized documents, was received by the assessee during the F. Y 2009-10 relevant to the A. Y 2010-11.
The wrong full addition of the said sum of Rs.32,41,139/- in the assessment for the A.Y 2010-11 and its confirmation by the Ld. CIT(A) were wholly unreasonable, uncalled for, illegal and bad in law.
7. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in confirming the A.O's action in enhancing the sale price of three shops in the said property sold to 3(three) other purchasers by a sum of Rs.3,36,000/- while assessing the L.T.C.G by adopting the higher valuation of the stamp valuation authority ( in short S.V.A ) U/S 50C of the Act in lieu of the actual consideration money recorded in the registered sale deeds without considering the fact that no extra money was ever received by the assessee in addition to the sale price recorded in the registered sale deeds and further that the valuation made by the S.V.A was without any basis.
The actions of the A.O & the Ld. CIT(A) were wholly biased, uncalled for and bad in law.
8. For that in view of the facts and circumstances of the case the Ld. CIT(A) was wholly wrong and unjustified in rejecting the assessee's computation of actual proportional cost of acquisition of the portion of the property sold at Rs. 10,42,700/- before indexation ( cost of acquisition Rs.12,57,500/- x portion sold 5,364 sq. ft 1 total area 6,469 sq.ft ) while computing the Long Term Capital Gain and instead confirming the A.O's action in computing the proportional cost of acquisition of the property sold at Rs. 6,91,818/- before indexation ( cost of acquisition Rs.12,57,500/- x 5,364 sq. ft sold total area wrongly taken at 9,750 sq.ft ) while assessing the L.T.C.G at Rs. 46,40,290/- without assigning any reason for rejection of the assessee's computation.
3. The ld AR raised a preliminary objection by stating that there was no incriminating materials that were found in the course of search of Dr S K 8 IT(SS)A No.59/13 Karan which apparently 'belonged to' the assessee and hence there could not be any proceeding that could be lawfully initiated against the assessee u/s 153C of the Act. He also argued that the satisfaction note in terms of section 153C of the Act was recorded on 28.3.2011 which was after two and half months after completion of assessment u/s 153A of the Act in the hands of M/s Park Clinic (Dr S K Karan group ) on 31.12.2010. In support of these propositions, he placed reliance on the following decisions :-
(a) Decision of this Tribunal in the case of Jyotsna Desai vs ACIT in IT(SS) A Nos. 114 & 115/Kol/2011 dated 6.11.2015.
(b) Decision of Hon'ble Delhi High Court in the case of CIT vs Bharat Bhushan Jain & Ors reported in (2016) 138 DTR (Del) 97 dated 8.1.2015.
(c) Decision of Delhi Tribunal in the case of Tanvir Collections (P) Ltd vs ACIT reported in (2015) 54 taxmann.com 379 (Delhi- Trib.) dated 16.1.2015.
(d) Decision of Hon'ble Delhi High Court in the case of Pepsico India Holdings (P) Ltd vs ACIT reported in (2014) 50 taxmann.com 299 (Delhi) dated 14.8.2014.
(e) Decision of Jaipur Tribunal in the case of Satyam Food Specialities (P) Ltd vs DCIT reported in (2015) 57 taxmann.com 194 (Jaipur - Trib.) dated 27.2.2015.
(f) Decision of Hon'ble Supreme Court in the case of CIT vs Calcutta Knitwears reported in (2014) 362 ITR 673 (SC)
(g) Decision of Hon'ble Gujarat High Court in the case of Vijaybhai N. Chandrani vs ACIT reported in (2011) 231 CTR 474 (Guj) 3.1. He also placed reliance on the CBDT Circular issued to this effect vide Circular No. 24/2015 dated 31.12.2015.
3.2. He also placed reliance on the Finance Bill, 2015 wherein the provisions of section 153C of the Act has been amended conferring powers to the ld AO to proceed with such other person even if the said documents / entries relates to such other person other than the person searched u/s 132 of the Act.
3.3. On merits, the ld AR argued that in any case, the capital gains in respect of 4824 sq.ft of building of the subject mentioned property cannot 9 IT(SS)A No.59/13 be assessed in Asst Year 2010-11 as the possession was handed over to the buyer ie Dr S K Karan / Park Clinic on or before 17.10.2008 itself. Admittedly, the search in the premises of Karan Group of Cases happened in the subject mentioned property on 17.10.2008 which falls in Asst Year 2009-10. Hence he argued that on the date of search itself, the possession was in the hands of the buyer and only the registered sale deed happened in Asst Year 2010-11 which triggered the assessee to offer capital gains in the return and it is well settled that the revenue cannot be unjustly enriched with the mistaken understanding of the provisions of law by the assessee by collecting unjust taxes in the wrong year. He argued that there is no estoppel against the statute.
4. In response to this, the ld DR argued that the seized documents clearly proves that the same belongs to the assessee herein and the same is also corroborated with the statement given on oath by Dr S K Karan (i.e the searched party) that the cash portion was handed over to Mr Anshuman Agarwal, representative of the assessee. It is also proved beyond doubt that the entire workings were prepared by the assessee as could be evident from the seized documents and the statement given by Dr S K Karan. The assessee had not disputed the same before the lower authorities. With regard to the recording of satisfaction note u/s 153C of the Act on 28.3.2011, the same was done expeditiously by the ld AO within 3 months and since there was no time limit prescribed in the statute for the same, the Hon'ble Supreme Court had interpreted the same as one of the option that the same is to be done immediately after the completion of assessment of searched person. He argued that the recording of the same within 3 months should have to be construed as 'immediate' and the decision relied upon by the ld AR on the Hon'ble Delhi High Court in the case of Bharat Bhushan Jain supra does not apply to the facts of the case. He further argued that there is no malafide intention on the part of the ld AO to delay the process of recording of satisfaction u/s 153C of the Act. With regard to the addition made on 10 IT(SS)A No.59/13 merits, he argued that the assessee herself had offered the capital gains in Asst Year 2010-11 (i.e the year under appeal) both in the original return as well as in the return filed in response to notice u/s 153C of the Act and she cannot be allowed to withdraw her plea and take a different stand that capital gains did not arose in respect of 4824 sq.ft in Asst Year 2010-11. Moreover, the assessee had not informed the revenue about the actual date of handing over of possession to M/s Park Clinic and the capital gains cannot go unescaped from the levy of taxation.
5. We have heard the rival submissions and perused the materials available on record. We find that the assessee had filed her return of income in response to notice u/s 153C of the Act on 20.4.2011 declaring total income of Rs. 3,38,160/- and total short term and long term capital loss of Rs. 2,38,736/- as were declared in the original return. The long term capital loss on sale of a portion of the house property at Dhanbad declared in both the returns was Rs. 2,37,924/- (sale consideration of Rs. 39,78,011/- less indexed cost of acquisition Rs. 42,15,935/-). We find from the development agreement dated 18.5.2003, the developer after demolishing the old structure had constructed a multi storied building on the subject mentioned land at its own cost and the new building was named 'Yashoban Plaza'. The assessee was allotted 52% of the total built up area of the newly constructed building in exchange of her land and old building. The total built up area allotted in her 52% share was 9750 sq.ft and the Developer got the balance 48% of the total built up area of the said building. It is not in dispute that the assessee out of the 9750 sq.ft area of the said building 'Yashoban Plaza' allotted to her, had sold 5364 sq.ft area of that building comprised of flats / shops to 5 parties at total consideration of Rs. 39,78,011/- recorded in the registered sale deeds and the same was received by assessee by cheque. The total value determined by the stamp valuation authority for these registered sale deeds was Rs. 50,36,000/-. The value of the land and the old building as on 9.9.1987 prior to taking up the construction of the building 11 IT(SS)A No.59/13 by the Developer was Rs. 12,57,500/-, which after indexation had resulted in a long term capital loss of Rs. 2,37,924/- and the same was returned by the assessee. The ld AO determined the long term capital gain at Rs. 46,40,290/- by placing reliance on the entries in the seized loose sheets marked as PK-34 (pages 27 to 30) and statement of Dr S K Karan recorded by search team u/s 132(4) of the Act on 18.10.2008.
5.1. We find that the preliminary objection raised by the ld AR on the validity of assessment framed u/s 153C of the Act on the following counts:-
(a) that the seized document found from Dr S K Karan does not 'belong to' the assessee and hence no proceedings u/s 153C of the Act could be validly initiated on the assessee herein ; and
(b) that the satisfaction note u/s 153C of the Act was recorded beyond the guidelines stipulated by the Hon'ble Supreme Court in the Calcutta Knitwears case supra
(c) that there cannot be any capital gains in respect of sale of 4824 sq.ft of building to Dr S K Karan in Asst Year 2010-11 in the hands of the assessee as the possession was already handed over to the buyer (Dr S K Karan) which is quite evident from the fact that the search was conducted on the buyer u/s 132 of the Act on 17.10.2008 in the subject mentioned premises.
We find that the reliance placed by the ld AR on the amendment brought in by the Finance Act 2015 in section 153C of the Act only advances the case of the revenue as the said amended section confers powers on the ld AO to proceed with such other person other than the person searched u/s 132 of the Act even if the entries / documents relate to such other person provided the ld AO of such other person (i.e section 153C person) is satisfied that those documents / entries would have a bearing on the determination of total income of such other person. Admittedly, in the 12 IT(SS)A No.59/13 instant case, the loose sheets clearly reflected the payments of cash by Dr S K Karan to the assessee towards purchase of building from the assessee and those cash was handed over to Mr Anshuman Agarwal , representative of the assessee. It is not in dispute that the cheques were handed over to Anshuman Agarwal by Dr S K Karan which had found place in the books of accounts of the assessee as sale consideration of building. It is the case of the revenue that the cash portion also was received by the said party at the behest of the assessee from Dr S K Karan. Hence we have no hesitation to conclude that the seized document found in the premises of Dr S K Karan during the course of search 'belongs to' the assessee herein and proceedings u/s 153C had to be initiated on her as per law. We do not deem it fit to dwell into the case laws relied upon by the ld AR as in those cases, there was a finding that the document did not belong to section 153C person. Hence those cases are factually distinguishable from the assessee's case. Accordingly the arguments advanced by the ld AR in this regard are dismissed.
5.2. The next argument advanced by the ld AR is with regard to the recording of satisfaction note u/s 153C of the Act after a gap of two and half months. We find that the assessment was framed u/s 153A of the Act on the searched person u/s 132 of the Act on 31.12.2010. The satisfaction note was recorded by the ld AO of the searched person that certain loose sheets / documents found in search 'belongs to' assessee herein and accordingly proceedings were to be initiated u/s 153C of the Act. We find from the satisfaction note that the same was recorded after ascertaining / satisfying that the said cash portion received on sale of property had not been found reflected in the return of income of the assessee. This fact was further sanctified / approved by the ld AO of the assessee also that the same had not found reflected in the IT return of the assessee. We find that the Hon'ble Supreme Court in the case of CIT vs Calcutta Knitwears reported in (2014) 362 ITR 673 (SC) had with regard to the timing of recording of satisfaction note had held as under:-
13 IT(SS)A No.59/1344. In the result, we hold that for the purpose of section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the AO before he transmits the records to the other AO who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages :
(a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act;
(b) along with the assessment proceedings under section 158BC of the Act; and (c ) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person.
5.3. We find that the Circular No. 24/2015 dated 31.12.2015 also endorses the views of the Hon'ble Supreme Court in Calcutta Knitwears supra.
5.4. It is well settled that the provisions of section 158BC are pari materia with section 153A of the Act and that of section 158BD are pari materia with section 153C of the Act. The instant case falls under the category (c) above of the Hon'ble Apex Court judgement i.e recording of satisfaction after the assessment proceedings are completed u/s 153A of the searched person. In the instant case , satisfaction note u/s 153C of the Act was recorded on 28.3.2011 which is after two and half months of completion of assessment u/s 153A of the Act. Whether the same could be construed as recording of satisfaction 'immediately after the completion of assessment of searched person' as contemplated in the guidelines of Hon'ble Apex Court. The ld AR placed reliance in this regard on the decision of the Hon'ble Delhi High Court in the case of CIT vs Bharat Bhushan Jain & Ors reported in (2016) 138 DTR (Del) 97 dated 8.1.2015 wherein it was held as below:-
Satisfaction note recorded under section 158BD almost one year or more than one year after the completion of assessment of the searched person cannot be considered to be contemporaneous to the assessment proceedings and therefore, impugned notices issued pursuant to such satisfaction notes were not in conformity with the requirements of section 158BD.14 IT(SS)A No.59/13
It could be seen that in the said case , the satisfaction note was recorded after one year after the completion of assessment and hence the Hon'ble Delhi High Court relying on Hon'ble Apex Court in Calcutta Knitwears supra held that the same cannot be considered to be contemporaneous to the assessment proceedings. In the instant case, the satisfaction note was recorded within 3 months from the date of completion of assessment proceedings which could be considered as being done expeditiously by the ld AO and hence the decision relied upon on the Hon'ble Delhi High Court does not support the case of the assessee and the arguments of the ld AR.
5.5. The next argument advanced by the ld AR is that in any case , there cannot be any capital gains in Asst Year 2010-11 in respect of 4824 sq.ft of building sold to M/s Park Clinic as admittedly the possession was handed over to the buyer on or before 17.10.2008. In this regard, we find that admittedly, the search in the premises of the buyer happened in the subject mentioned property on 17.10.2008. It is not the case of the revenue that the buyer was in illegal possession of the subject mentioned property of the seller (i.e the assessee herein) on the date of search. No legal proceedings for the same ( i.e for illegal possession) were pending in any judicial forums that were brought to our knowledge by both the parties. In this regard, hence it could be safely concluded that on the date of search, the possession of the subject mentioned property was very much in the hands of the buyer. We find that the buyer Dr S K Karan had in his statement on oath u/s 132(4) of the Act on the date of search on 17.10.2008 / 18.10.2008 had vide reply to Question No. 8 deposed as under:-
Ans to Q. No. 8 - Park Clinic a firm in which I am a partner is the owner of second, third and fourth floor. Although it is yet to be registered in the favour of Park Clinic. The above mentioned property has been purchased from Shristi Builder, Smt. Shakuntala Kanoi.15 IT(SS)A No.59/13
This reply has not been retracted by the buyer at any time in future during the subsequent proceedings. We find that only the registration of the property had happened on 30.7.2009 relevant to Asst Year 2010-11. The assessee, no doubt, had reported capital loss on the subject mentioned property in Asst Year 2010-11 in the original return as well as in the return filed in response to notice u/s 153C of the Act. But what we see is the possession of the property had already been handed over by the assessee to the buyer and only registration has been delayed which was ultimately done in Asst Year 2010-11. In these circumstances, it could be safely held that the capital gains cannot be assessed in the Asst Year 2010-11 as that is the not the year of handing over of the possession of the property . We find lot of force in the argument of the ld AR that there is no estoppel against the statute and revenue cannot take advantage of the ignorance of the assessee with regard to assessability of income in a particular year. We find that the Hon'ble Jurisdictional High Court had addressed this aspect while rendering the decision in the case of CIT vs. Bhaskar Mitter reported in (1994) 73 Taxman 437 (Cal) at para 8 at pg. 442 referred in Maynak Poddar (HUF) vs Wealth Tax Officer reported in (2003) 262 ITR 0633 (Cal) by observing as under:-:
"....... An assessee is liable to pay tax only upon such income as can be in law included in his total income and which can he lawfully assessed under the Act. The law empowers the ITO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so, he cannot assess an assessee on an amount, which is not taxable in law, even if the same, is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law (sic). It is always open to an assessee to take the plea that the figure, though shown in his return of total income, is not taxable in law. ........"
5.6. We also place reliance on the decision of the Hon'ble Supreme Court in the case of CIT vs Podar Cement (P) Ltd reported in (1997) 226 ITR 625 (SC) wherein it was held as below:-
16 IT(SS)A No.59/1352. From the circumstances narrated above and from the Memorandum explaining the Finance Bill, 1987 (supra), it is crystal clear that the amendment was intended to supply an obvious omission or to clear up doubts as to the meaning of the word 'owner' in section 22. We do not think that in the light of the clear exposition of the position of a declaratory/clarificatory Act it is necessary to multiply the authorities on this point. We have, therefore, no hesitation to hold that the amendment introduced by the Finance Bill, 1988 was declaratory/clarificatory in nature so far as it relates to section 27(iii), (iiia) and (iiib ). Consequently, these provisions are retrospective in operation. If so, the view taken by the High Courts of Patna, Rajasthan and Calcutta, as noticed above, gets added support and consequently the contrary view taken by the Delhi, Bombay and Andhra Pradesh High Courts is not good law.
53. We are conscious of the settled position that under the common law owner means a person who has got valid title legally conveyed to him after complying with the requirements of law such as Transfer of Property Act, Registration Act, etc. But in the context of section 22 having regard to the ground realities and further having regard to the object of the Act, namely, 'to tax the income', we are of the view that the owner is a person who is entitled to receive income from the property in his own right.
54. In the light of the above narration and discussion, we do not think it necessary to discuss any more separately the submissions advanced across the bar.
55. We answer the question referred to this Court in I.R.C. Nos. 9- 10 of 1986 in the negative and in favour of the revenue. The Civil Appeal No. 4165 of 1994 filed by the revenue stands dismissed and Civil Appeal No. 4549 of 1996 by the assessee, stands allowed.
However, there will be no order as to costs.
In the instant case, the subject mentioned property (i.e the property for which possession was handed over to the buyer by the seller ) was the address of the property in which the search and seizure action u/s 132 of the Act was conducted by the Income Tax Department on 17.10.2008 which goes to prove that the possession was handed over to the buyer by the assessee on or before the date of search. The buyer (i.e Dr S K Karan and Park Clinic) would be entitled to the fruits of the subject mentioned property either being used for their own business without any attached costs thereon. In other words, the buyer need not pay any 17 IT(SS)A No.59/13 rentals to anybody for the subject mentioned property as they were already in possession of the property on paying the consideration to the seller and only the registration of the property happened on 30.7.2009 falling in Asst Year 2010-11.
5.7. In view of the aforesaid facts and findings and respectfully following the decisions of the Hon'ble Jurisdictional High Court and Hon'ble Supreme Court supra, we hold that the capital gains / loss cannot be considered in the hands of the assessee in respect of sale of 4824 sq.ft of building to Dr S K Karan / Park Clinic in Asst Year 2010-11 . Accordingly the grounds 1 to 6 raised by the assessee are partly allowed.
5.8. The other ground raised by the assessee with regard to claim of indexation becomes infructuous to the extent of 4824 sq.ft alone in view of our decision rendered hereinabove that capital gains for 4824 sq.ft of building would not be assessable in Asst Year 2010-11 in the hands of the assessee.
5.9. We hold that with regard to the sale of remaining square feet of building (i.e 540 sq.ft) by the assessee to (i) Sita Projects ; (ii) O.P.Agarwal and (iii) Murali Prasad, the same would be assessable in Asst Year 2010-11. There is no contrary evidence brought on record for not taxing the same in Asst Year 2010-11 as was present in the case of sale of building to Dr S K Karan / Park Clinic. In this regard, we find that the ld AO had adopted the sale consideration at the rates prescribed by the stamp valuation authority in terms of section 50C of the Act. We find that the assessee had objected to the adoption of the value determined by the stamp valuation authority u/s 50C of the Act. In such case, the law provides in section 50C(2) of the Act that the reference need to be made to the District Valuation Officer for ascertaining the value of property and necessary precautions are also provided thereon in the statute to the assessee. We find support from the decision of the Hon'ble Jurisdictional 18 IT(SS)A No.59/13 High Court in the case of Sunil Kumar Agarwal vs CIT reported in (2015) 372 ITR 83 (Cal) had held as below:-
7. We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying.
Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer.
8. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law.
9. For the aforesaid reasons, the order under challenge is set aside.
10. The impugned order including orders passed by the CIT(A) and the assessing officer are all set aside. The matter is remanded to the assessing officer. He shall refer the matter to the departmental valuation officer in accordance with law. After such valuation is 19 IT(SS)A No.59/13 made, the assessment shall be made de novo in accordance with law.
Respectfully following the decision of Hon'ble Jurisdictional High Court in the case of Sunil Kumar Agarwal supra, we direct the ld AO to make a reference to District Valuation Officer (DVO) of the subject mentioned property (i.e the shops pertaining to 540 sq.ft alone which were sold to three parties namely Sita Projects, O.P.Agarwal and Murali Prasad), in accordance with provisions of section 50C(2) of the Act. 5.10. Since this limited issue of determination of sale consideration for 540 sq.ft of building is set aside to the file of the ld AO as directed above, we deem it fit and appropriate to set aside the related claim of indexation thereon also to the file of the ld AO as it would become academic in terms of computation of capital gains / loss. The grounds raised in this regard by the assessee are allowed for statistical purposes.
6. The Ground No. 9 raised by the assessee is general in nature and does not require any adjudication.
7. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on this 19/10/ 2016.
Sd/- Sd/-
(S.S.VISWANETHRA RAVI) (M.BALAGANESH)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
कोलकाता /Kolkata; $दनांक Dated 19/10/2016
काश (म*ा/Prakash Mishra, न.स/ PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आय4
ु त(अपील) / The CIT(A), Kolkata.
4. आयकर आयु4त / CIT
5. 5वभागीय त न8ध, आयकर अपील य अ8धकरण, कोलकाता / DR, ITAT, Kolkata
6. गाड फाईल / Guard file.
20 IT(SS)A No.59/13स या5पत त //True Copy// ु ार/ BY ORDER, आदे शानस उप/सहायक पंजीकार (Asstt. Registrar) आयकर अपील&य अ'धकरण, कोलकाता / ITAT, कोलकाता