Assessment of a third party (under Section 153C) is invalid if based on non-incriminating material related to transactions already disclosed in their tax return.

ORDER

Rathod Kamlesh Jayantbhai, Accountant Member.- The present appeal filed by the revenue which is which is arising out of the order of the learned Commissioner of Income Tax, Appeals-4, Jaipur [for short CIT(A)] dated 30.11.2024 for the assessment year 2014-15. That order was passed by the ld. CIT(A) because the assessee challenged the order of assessment passed on 30.03.2023 as per provision of section 144 r.w.s. 153C of the Income Tax Act, 1961 [for short “Act”] by the ACIT, Central Circle-2, Jaipur [for short AO]. Against that appeal of the revenue the assessee also preferred to file the cross objection.

2. Since the issue is involved in the Revenue’s appeal and cross objection of the assessee relates to the same assessment year we considered to dispose together.

3. Before moving towards the facts of the case, we would like to reiterate the grounds upon which revenue has assailed the appeal in ITA No. 94/JPR/2025:-

4. On the other hand, the assessee has filed cross objection in CO No. 22/JPR/2025 against the revenue’s appeal, on the following grounds:-

“1. The Id. CITA erred in not deciding that the impugned notice issued us 153C of the Act for A.Y. 2014 15 is also barred by limitation. Since the time limit to complete the assessment us 153B of the Act itself expired on 31.03.2020, any notice issued under section 153C thereafter is also barred by limitation and thus, being a nullity, deserves to be quashed.

2. The Id. CITA erred in not deciding that the impugned assessment order passed us 144 r.w.s. 153C of the Act dated 30.03.2023 for A.Y. 2014 15 is barred by limitation us 153B r.w.s 153C of the Act. Considering that the date of receipt of the seized record and information was 02.12.2019, the impugned assessment should have been passed on or before 31.03.2020. As against this, the same was passed on 30.03.2023 and thus, being a nullity, deserves to be quashed.

3. The Id. CITA erred in not deciding that the impugned assessment order for the subject A.Y. 2014 15 has been passed completely without jurisdiction. This is because the same falls completely outside the block of 6 years prior to the date of search i.e., the date of receipt of the seized record being 03.03.2022 as admitted by the learned Assessing Officer himself. The period of 6 assessment years is for and from Assessment Year 2016 17 to 2021 22. Thus, the impugned assessment order is a complete nullity being without jurisdiction and hence deserves to be quashed.

4. Addition of Rs.4,44,60,476 The Id. CIT-A erred in not deciding the ground that the learned Assessing Officer also seriously erred in law as well as on the facts of the case in making an addition of Long Term Capital Gains i.e. LTCG of Rs.4,44,60,476 LTCG declared by the assessee was Rs.0 as against that assessed by the Assessing 4 Officer at Rs.4,44,60,476, including Rs.4,30,51,976 on account of index cost of acquisition and Rs. 14,08,500 by making a disallowance of the index cost of improvement which relates to expenses incurred by the assessee on account of boundary wall construction. The addition so made, being completely contrary to the provisions of law and facts, deserves to be deleted in full.

5. The appellant prays for your kind indulgence to add, amend, or alter any of the grounds of this appeal on or before the date of hearing.”

5. The fact as culled out from the records is that a search and seizure action u/s 132 of the Act and/or survey action u/s 133A of the Act was carried out by the Income Tax Department in the “Oswal Group” of Jaipur on 06.09.2018. During the Search, residential premises of Shri Surya Singhal 278, Dada Badi Extn, Kota was also covered u/s 132 of the Act on 06.09.2018. In that action certain incriminating documents were found & seized from the premises of Residence of Shri Surya Singhal belonging to the assessee Late Shri Gopal Lalji Goswami, legal heir of Late Shri Gopal Lalji Goswami is Smt. Kamalaprabha i.e. the assessee. Consequent to the search jurisdiction over the assessee was assigned to ACIT, Circle-2, Kota vide order u/s 127 of the Act, dated 03.03.2022 issued by office of the PCIT, Udaipur. Necessary satisfaction note was drawn up by ACIT, Central Circle-2. Jaipur for initiating action u/s 153C of the Act for AY 2013-14 to 2019-20 and accordingly, notice u/s 153C of the Act dated 22.03.2022 for AY 2014-15 issued through ITBA requesting to file your return for AY 2014-15 within 30 days of the receipt of the notice. The notice was duly served on e-mail id as well as e-filing portal.

5.1 In response to the notice issued u/s 153C of the Act no return was filed by the assessee, even no relevant details / documents / response received in relation to that notice while the assessment proceedings. Record reveals that the assessee has filed its return of income on 18.03.2023 at the fag end of the proceedings for which ld. AO noted that this is an act by the assessee to delay & to avoid the assessment proceedings, therefore, the same return as filed on 18.03.2023 was not accepted and not considered as return filed in response to the Notice u/s 153C for the assessment year under consideration.

5.2 While assessment proceeding assessee objected to the proceeding and the ld. AO disposed of those objections vide notice dated 16.03.2023 which reads as under :

Para 1.1, 1.2, 1.3:- Regarding the time limit of issuance of notice- the same has been already discussed above that jurisdiction over the case assigned to this office on 03.03.2022, therefore, Notice was issued properly within the time limit as per section 153C of the Income Tax Act, 1961. Further, the information shared by the DDIT(nv.)-II, Jaipur vide letter dated 18.03.2019 to ACIT/DCIT, Circle-2, Kota was the only information belonging to only the AY 2012-13, no seized record or material has been shared to the ACIT/DCIT, Circle-Kota, therefore, the claim of the assessee regarding time limitation on 31.03.2020 is not acceptable.

Para2:- Regarding assessment completed u/s 143(3) for AY 2014- 15, it is held that case of the assessee for AY 2014-15 was selected only for ‘Limited Scrutiny’ being reasons: (i) Large cash deposit in Saving Account (ii) Large deduction claimed u/s 5411, 54C, 54D, 546, 54GA, therefore, the other issues containing in the incriminating material/seized material are not open for the AO for assessment due to the limited scrutiny.

Para 3: Regarding satisfaction note, since the satisfaction note was based on the finding as declared by the assessee on its own in the ITR filed for AY 2012-13. Further, AO only compare the inputs of ITR filed by the assessee for AY 2012-13 & AY 2014-15 on the basis of the incriminating material available, therefore, satisfaction note is well prepared by the AO as per the provisions of section 153C of the Act.

In view of the above discussion, all the objections raised by the assessee has been disposed of accordingly, following the kind directions as mentioned in the order of the Hon’ble High Court vide order dated 09.11.2022 and therefore, the objections as raised by the assessee are of no means, only the assessee is trying to avoid due taxes by using its colorful & camouflage objects. Ld. AO thereby also issued a Show-cause notice to pass best judgment assessment u/s 144 of the Act was to the assessee considering the regular non-compliance of the assessee regarding the statutory notices issued to the assessee. In reply the assessee only filed its objections against the initiation of proceedings, however, the assessee has not filed the requisite details/documents as called for.

5.3 Ld. AO noted that the assessee has declared total income of Rs.32,64,680/- in its return dated 29.07.2014, filed u/s 139(1) of the Income Tax Act, 1961. The assessee derives income from house property, rental income, interest from Banks during the period under consideration. Further, Assessment u/s 143(3) of the Act was completed for AY 2014-15 on 31.07.2016 assessing total income at Rs.41,42,410/-. The additions made to the returned income in the assessment order u/s 143(3) of the Act, were as follows;

5.4 Ld. AO noted that while search action u/s 132(1) of the Act as carried out on 06.09.2018 at Oswal Group of Jaipur and residential premises of Shri Surya Singhal located at 278, Dada Badi Extn, Kota on 06.09.2018 was also covered in search action. During the search proceedings carried out at residential premises of Shri Surya Singhal, certain property documents regarding purchase & sales of properties were seized belonging to the assessee L/H Kamalaprabha of Late Sh. Gopal Lalji Goswarni. To verify the actual position of the transactions, summon was issued to the assessee Shri Gopal Lal (being alive at that time) u/s 131(1A) of the Income-tax Act, 1961 by the Investigation Wing, but the assessee did not appear before the Investigation Authorities. However, no compliance was made to summons issued u/s 131(1A) of the Income-tax Act, 1961. The details of the Ikrarnama (sale agreement) dated 12.06.2013 executed between Shri Gopal Lal S/o Shri Purushottam Lal resident of Mahaprabhu Ji Ka Mandir, Kota (as seller) and M/s S.G. Enterprises through its partners Shri Brijmohan Parcta S/o Shri Roopchand Pareta (as purchaser) for sale of land admeasuring 2.36 hectares of Khasra Nos. 1126 rakba 0.21 hectare, 1152 rakba 0.21 hectres, 1153 rakba 21 hectare, 1154 rakba 35 hectares, 1155 rakba 0.34, 1159 rakba 0.02 hectare, 1160 rakba 0.41 hectare and 1161 rakba 0.61 hectare (having total area 2.36) for total sale consideration of 3,77,00,000. The sale consideration was paid as under:-

5.5 Copy of ikrarnama (sale agreement) dated 12.06.2013 executed between Shri Gopal Lal S/o Shri Purushottam Lal resident of Mahaprabhu Ji Ka Mandir, Kota (as seller) and M/s S.G. Enterprises through its partners Shri Brijmohan Parcta S/o Shri Roopchand Pareta (as purchaser) for sale of land admeasuring 0.96 hectares of Khasra Nos. 1160 rakba 0.27 hectare and 1163 rakba 0.69 hectare (having total area 0.96) for total sale consideration of 1,50,00,000. The sale consideration was paid as under:-

5.6 Copy of irrarnama dated 12.06.2013 written by Shri Brijmohan Pareta S/o Shri Roopchand and Om Prakash Gupta S/o Shri Ram Pratap for M/s S.G. Enterprises, 3-A-12, Rangbadi Main Road, Talwandi, Kota regarding aforementioned lands specified in para (i), (ii) and (iii)]. In this ikrarnama, it has been clearly admitted by the purchaser and seller that the land mentioned above has been sold by the seller in favour of purchaser and the consideration has also been received by the seller which is totaling to 8,27,00,000. It is also mentioned that the possession over the land has been handed over to the purchaser and from now the seller has no right in these lands.

5.7 Copy of ikrarnama dated 17.08.2011 executed between Shri Gopal Lal S/o Shri Purushottam Lal resident of Mahaprabhu Ji Ka Mandir, Kota (as seller) and M/s S.G. Enterprises through its partners Shri Brijmohan Pareta S/o Shri Roopchand Pareta, Shri Shyam Sunder Goyal S/o Shri Ramnarayan Goyal and Shri Om Prakash Gupta S/o Shri Ram Pratap (as purchaser) for sale of land admeasuring 6.55 hectares of Khasra Nos. 1123, 1125, 1126, 1152, 1153, 1154, 1155, 1156, 1157, 1158, 1159, 11650. 1161, 1163, 1164, 1165 and 1166 (having total area 6.55) of Village -Devli Arab, Tehsil Ladpura, District Kota for total sale consideration of 10,43,90,625. The sale consideration has been paid/agreed to paid as under:-

5.8 It was also stated in this agreement that a sum of 2,08,79,000/- has been adjusted in the amounts mentioned in the registered sale deeds and the remaining amount of 7,21,000/- is to be treated as advance for this agreement. Remaining sale consideration to be paid by the sellers to the purchaser is at 8,27,90,625/- and the land equivalent to this amount has to be registered by the seller. Remaining amount of 8,27,90,625 was been decided to paid as below schedule

From careful perusal of aforementioned facts, it is evident that the land admeasuring 6.55 hectares have been agreed to sold by Shri Gopal Lal S/o Shri Purushottam Lal resident of Mahaprabhu Ji Ka Mandir, Kota to M/s S.G. Enterprises through its partners Shri Brijmohan Pareta S/o Shri Roopchand Pareta, Shri Shyam Sunder Goyal S/o Shri Ramnarayan Goyal and Shri Om Prakash Gupta S/o Shri Ram Pratap @ 25 lakh per bigha (i.e. 10,43,90,625) and possession of the same was also handed over to the buyer by the seller in pursuance of the four agreements as discussed above. The purchaser has provided the sale consideration to the seller in cash and through cheques on different dates as specified in the sale agreements. In all the sale agreements, it is clearly written that the possession of the land has been handed over to the purchaser by the seller. The seller has shown capital gain arouse on sale of land admeasuring 6.55 hectares to M/s S.G. Enterprises as under:-

The sale consideration of 2,08,79,000 in F.Y. 2011-12 and 8,35,11,625 (3,00,00,000 + 3,77,00,000+ 1,50,00,000 + 7,21,000) in F.Y. 2013-14 is duly tallied with the sale agreement executed by Shri Gopal Lal in favour of M/s S.G. Enterprises (except the amount of 90,625). This shows that the said land was sold by the assessee in favour of M/s S.G. Enterprises through agreement to sales. Therefore, capital gain liability arises on the assessee on the year of executing agreement to sale which is F.Y. 2011-12 and F.Y. 2013-14. The seller has also shown the transactions in his ITR filed for the A.Y. 2012-13 and 2014-15 disclosing the sale consideration as mentioned in the sale agreements but the assessee has taken the figure of indexed cost of acquisition at a very high figure. As on 01.04.1981, the assessee has taken cost of land admeasuring 1.31 hectares at 3,15,000 (i.e. 2,40,458 per hectare) and after claiming indexation total cost of acquisition has been taken at 24,72,750 in the F.Y. 2011-12 whereas in F.Y. 201314, the assessee has taken cost of acquisition of 5.24 hectares land at 4,42,28,656/-. Regarding the cost of acquisition of the land sold by the assessee, it is very pertinent here to discuss para (iv) at page No-21 to 24 of the assessment order for AY 2012-13 dated 02.12.2019 wherein the cost of acquisition of the land under consideration arrives at Rs. 3916/- per Bigha as on 01.04.1981. Therefore, ld AO noted that it is a fact on record that the AO has taken value of cost of acquisition for 1.31 hectare land sold by the assessee as on 01.04.1981 at Rs.31,328/-. On further perusal of the assessment record for AY 2012-13, it is noticed that the assessee has accepted the view taken by the Assessing Officer as the assessee has filed its declaration and undertaking in Form-1 of the Vivad Se Viswas Scheme and pay due taxes as per the scheme. Since, the issue regarding cost of acquisition of the land attains its finality in favor of revenue, therefore, Considering the principle of consistency and the facts of the case as discussed in the assessment order of the assessee for AY 2012-13, the cost of acquisition for the 5.24 hectares land sold by the assessee during the year under consideration, computed hereunder:-

Cost of acquisition of 1.31 hectare land as on 01.04.1981 =”Rs.31,328/-

Cost of acquisition of 5.24 hectare land as on 01.04.1981

Indexed Cost of acquisition of 5.24 hectare land as on 01.04.2013.

However, as per the ITR filed by the assessee for AY 201415, the assessee has claimed cost of acquisition of 5.24 hectares land at 4,42,28,656. Therefore, assessee claimed cost of acquisition as excessive in its ITR for AY 2014-15 amounting to Rs.4,30,51,976/- (44228656-1176680) was disallowed and added back to the total income of the assessee on account of Long Term Capital Gain for the assessment year under consideration.

5.9 Ld. AO also noted from the computation of income of the assessee for the AY 2014-15, that the assessee has claimed indexed cost of boundary wall at Rs. 14,08,500 in the computation of long term capital gain. During the course of Investigation, statements of Shri Brij Mohan Pareta was recorded on oath u/s 131 of the IT Act 1961 on 18.02.2019 in which he has specifically stated that no boundary wall was constructed on the land purchased through agreement from the assessee. It is evident that no boundary wall or house or farmhouse was constructed on the land sold by the assessee. Further the assessee has also accepted the view taken by the Assessing Officer on the issue of disallowance of boundary wall construction as the assessee has filed its declaration and undertaking in Form-1 of the Vivad Se Viswas Scheme and paid due taxes as per the scheme. Since, the instant issue also attains its finality in favor of revenue, therefore, Considering the principle of consistency and in view of the facts of the case, indexed cost of boundary wall of Rs. 14,08,500/- was added back to the total income of the assessee on account of Long Term Capital gain for the assessment year under consideration.

5.10 Ld. AO also noted from the ITR filed u/s 139(1) dated 29.07.2014, that the assessee has claimed amount of Rs. 3,33,40,000/- as deposited in capital gain account scheme (CGAS) and claimed as deduction u/s 54B of the Act. However, the assessee failed to utilize the amount of Rs.3,33,40,000/- as per the provisions of section 54B of the Act and thereby in the ITR filed for AY 2016-17 wherein the assessee has voluntarily disclosed Rs.3,00,00,000/- in its ITR as the assessee failed to purchase new assets within time limit as prescribed u/s 54 of the Act. Since, the assessee failed to utilize the whole amount of Rs.3,33,40,000/- the balance amount of Rs.33,40,000/- was disallowed as per the provisions of section 54B of the Act in the assessment order passed u/s 143(3) r.w.s.153C of the Act, thus the consequential of breach of provisions of section 54B was discussed and assessed separately in AY 2016-17.

Further, the assessee also claimed Rs.45,34,469/- u/s 54F of the Act in its ITR filed for AY 2014-15. In support of this, vide submission dated 19.03.2023, the assessee filed documentary evidences in respect of construction of the residential house. Therefore, based on assessment passed u/s 143(3) of the Act dated 31.07.2016 and ITR of the assessee, the claim of the assessee u/s 54F of the Act is restricted to the amount of Rs.45,34,469/-. Accordingly the assessment was completed.

6. Feeling dissatisfied with the above order of the assessment the assessee has carried the matter before the ld. CIT(A). Apropos to the grounds so raised before the ld. CIT(A), the relevant finding of the ld. CIT(A) is reiterated here in below:-

“4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-

The brief facts on the issue as noted by the Id. AO are that land was sold by ShriGopalLal in favour of M/s S.G. Enterprises through agreement to sales. Therefore, capital gain liability arises on ShriGopalLal on the year of executing agreement to sale which is F.Y. 201112 and F.Y. 2013-14. The seller has also shown the transactions in his ITR filed for the A.Y. 2012-13 and 2014-15 disclosing the sale consideration as mentioned in the sale agreements but he has taken the figure of indexed cost of acquisition at a very high figure. As on 01.04.1981, ShriGopalLal has taken cost of land admeasuring 1.31 hectares at 3,15,000 (i.e. 2,40,458 per hectare) and after claiming indexation total cost of acquisition has been taken at 24,72,750 in the F.Y. 2011-12 whereas in F. Y. 201314, ShriGopalLal has taken cost of acquisition of 5.24 hectares’ land at 4,42,28,656/- which has been worked out as under:

Cost of land as on 01.04.1981 X index of F.Y. 2013-14/100 =”4,42,28,656

Cost of land as on 01.04.1981 =”44228656″ 100/939 =”4710187

Cost of land admeasuring 1 hectare as on 01.04.1981 4710187/5.24 =”8,98,891.

Thus, as noted by the Id. AO, the assessee has taken two different cost of acquisition in two different financial years to avoid the payment of tax arose on sale of capital asset. If it is assumed that the cost of acquisition taken in F.Y. 2011-12 is correct then cost of land as on 1981 comes at 12.59.999 and indexed cost of acquisition of the same in F.Y. 2013-14 comes at 1,18,31,390. Thus, the seller has adopted excessive indexed cost of acquisition at 3,23,97,266.

Appellant has contended that assessment for AY 2014-15 was selected for scrutiny (PB 119-121), pursuant to the ROI filed at Total Income of Rs. 32,64,680/- on 29.07.2014 (PB 01-13) which included the amount of the Long-Term Capital Gain of Rs.3,78,74,469/- (PB5). The Id. AO has discussed the issue of LTCG particularly in para 2 (PB 120). The AO, who finally passed the order dt.31.07.2016 u/s 143(3) of the Act (PB 119-121) by making additions / disallowances of Rs. 25,200/-and Rs. 8,52,531/-. Notably, no variation has been made in the amount of declared LTCG.

The appellant has contended that the only allegation of the undisclosed income is the alleged excessive claim of Cost of Acquisition (COA) and consequently Indexed Cost of Acquisition (ICOA) as stated above, however, the AO completely failed to point out as to how the seized records had a bearing over the determination of the undisclosed income, if any in as much as no such seized accounts or documents has been referred to by the AO. There is absolutely not a single seized records has been referred to by the AO to derive satisfaction that the alleged excessive claim emanated there from so as to fulfill the condition of showing that the seized records had a bearing on the determination of the total income of the assessee. There is nothing in the satisfaction note showing the satisfaction of the AO that such seized records received by him had a bearing on the determination of Total Income due to undisclosed income of the Assessee (TP) if any, which a condition precedent. There is no categorical finding recorded by AO how and which information in the seized records had a bearing over the assessee income. there is nothing in the satisfaction note recorded by the AO (of TP) that the search party has disclaimed the seized documents and that such documents/information contained therein to the effect and in the sense that the alleged excessive claim of COA and ICOA, coming out therefrom did not belong to or relate to the SP but to other person i.e. TP (the Assessee). Hence, there no valid assumption under section 153C. Except AY 2014-15, the AO maintained a complete silence what to talk of deriving satisfaction as contemplated u/s 153C for A.Y. 2016-17. The DCIT/ACIT, Circle-2, Kota has initiated proceedings u/s 147 for A.Y. 2016-17 by issue of notice u/s 148 on dt. 29.03.2021 (PB156) and pursuant there to, a notice u/s 143(2) has also been issued on 18.06.2021 (PB 157-160).

Thereafter, the Asst. u/s 143/147 has been dropped and completed u/s 153C on 30.03.2023 under block assessment (for AY 2016-17).

Appellant has further contended that thus, relating to the same issue of computation of LTCG on account of sale of the agriculture land, two parallel proceedings were being continued, one through notice u/s 153C which is under dispute & other in normal assessment proceedings for AY 16-17 u/s 148. Consequently, and evidently the AO himself is thus, not very sure as to whether there has been any undisclosed income emanating from the seized records, and the issue of computation of LTCG is part of the normal assessment scheme, which could not be covered under search assessment scheme. The appellant has not stated anything about reopening proceedings u/s 147/148 if any for the year under appeal and there is no such reference in the satisfaction note or assessment order.

It is held by the Hon’ble Delhi High Court in the case of 485 (Delhi) SAKSHAM COMMODITIES Ltd. v. INCOME TAX OFFICER has held as under:-

“37. Having noticed the rival contentions which were addressed, we firstly take note of the evident distinction that exists between Section 153A and Section 153C. They are clearly couched in language which is dissimilar. When we turn our gaze upon Section 153A, it becomes apparent that where a search is initiated or documents and books requisitioned, the AO is mandated to issue notice calling upon the searched person to submit a ROI in respect of each AY falling within the six AYs’ and for the “relevant assessment year”. Upon submission of that ROI, the AO stands empowered statutorily to assess or reassess the total income of six AYs’ immediately preceding the assessment year corresponding to the year of search and for the “relevant assessment year”. The expression “relevant assessment year” has been duly defined by Explanation 1 placed in Section 153A and is explained to include those years which fall beyond the six AYs’ spoken of earlier but not later than ten AYS’ from the end of the AY relevant to the FY in which the search was conducted. 38. As was held in SSP Aviation Ltd v. Deputy Commissioner of Income Tax17, the AO of the searched person while proceeding to transmit the material gathered in the course of the search to the AO of the “other person” is not obliged to form any opinion with respect to escapement of income or for that matter the material likely to have an impact on the total income of the non-searched entity. At the stage of transmission of material, the AO of the searched person is only required to be satisfied that the material or documents unearthed pertain to a person or entity other than the one searched. The relevant extracts of the decision in SSP Aviation Ltd are reproduced herein below:

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51. Ultimately Section 153C is concerned with books, documents or articles seized in the course of a search and which are found to have the potential to impact or have a bearing on an assessment which may be undergoing or which may have been completed. The words “have a bearing on the determination of the total income of such other person” as appearing in Section 153C would necessarily have to be conferred preeminence. Therefore, and unless the AO is satisfied that the material gathered could potentially impact the determination of total income, it would be unjustified in mechanically reopening or assessing all over again all the ten AYs’ that could possibly form part of the block of ten years.

52. The decisions which hold that an assessment is liable to be revised only if incriminating material be found, even if rendered in the context of Section 153A, would clearly govern the question that stands posited even in the context of Section 153C. It would be relevant to recall that the Division Bench in Kabul Chawla had observed that in the absence of any incriminating material, a completed assessment may be reiterated and the abated assessment or reassessment be concluded. The importance of incriminating material was further underlined in Kabul Chawla with the Court observing that completed assessments could be interfered with, only if some incriminating material were unearthed. This aspect came to be reiterated in RRJ Securities when the Court held that it would be impermissible to either reopen or reassess a completed assessment which may not be impacted by the material gathered in the course of the search and which may have no plausible nexus. The aforesaid position also comes to the fore when one reads para 17 of ARN Infrastructure and which annulled an action aimed at reopening assessments for years to which the incriminating document which was found did not relate.

53. Sinhgad Technical Education Society also constitutes a binding precedent in respect of the aforesaid proposition as would be evident from the Supreme Court noticing that the material disclosed pertained only to AY 2004-05 or thereafter and that consequently the Section 153C action initiated for AYs’ 2000-01 to 2003-04 would not sustain. It was this position in law as enunciated in that decision which came to be reiterated by our Court in Index Securities.

54. In any case, AbhisarBuildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs’ to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs’ falling within the block of six AYs’ or for that matter all years forming part of the block of ten AYs’, appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanticautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory compulsion or an inevitable consequence which was advocated by the respondents.

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61. A reading of the aforesaid Satisfaction Notes would establish that jurisdictional AOs’ appear to have proceeded on the premise that the moment incriminating material is unearthed in respect of a particular AY, they would have the jurisdiction and authority to invoke Section 153C in respect of all the assessment years which could otherwise form part of the “relevant assessment year” as defined in Section 153A. In our considered opinion, the aforesaid understanding of Section 153C is clearly erroneous and unsustainable. As explained hereinabove, the discovery of material likely to implicate the assessee and impact the assessment of total income for a particular AY is not intended to set off a chain reaction or have a waterfall effect on all AYs’ which could form part of the “relevant assessment year”. This, more so since none of the Satisfaction Notes record any reasons of how that material is likely to materially influence the computation of income for those AYs’.

62. Hypothetically speaking, it may be possible for the material recovered in the course of a search having the potential or the probability of constituting incriminating material for more than one assessment year. However, even if such a situation were assumed to arise, it would be incumbent upon the AO to duly record reasons in support of such a conclusion. The Satisfaction Notes would thus have to evidence a formation of opinion that the material is likely to be incriminating for more than a singular assessment year and thus warranting the drawl of Section 153C proceedings for years in addition to those to which the material may be directly relatable.

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64. In our considered view, abatement of the six AYs’ or the “relevant assessment year” under Section 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs’ that may form part of the block of ten AYs’. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the material gathered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material recovered is an aspect which would merit consideration in the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to “have a bearing on the determination of the total income”. It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case may be.

………………….

68. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs’ and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments.”

Hon’ble Supreme Court in the case of Commissioner of Income-tax-III, Pune v. Sinhgad Technical Education Society 225 (SC)/[2017] 397 ITR 344 (SC)/(2017) 297 CTR 441 (SC)[29-08-2017] as under:-

80. Notice under section 153C would have to be issued only upon the concurrent satisfaction of both conditions as aforesaid. To this extent, there is, in my considered opinion, a clear and marked distinction between the provisions of Section 153A and 153C. The contention of the revenue that a mandate is cast upon the Assessing Officer of the third party to issue notice under section 153C for all the years comprising the block, mechanically and automatically, is thus rejected.

81. To clarify, it is only where the satisfaction note recorded by the receiving Assessing Officer, ie., the Assessing Officer of the third party reflects a clear finding that the incriminating material received has a bearing on determination of total income of the third party for 6 assessment years immediately preceding the assessment year relevant to the previous year in which search Is conducted or requisition is made, that such notice would have to be issued for all the years.

82. It thus flows from the provision that the receiving assessing officer must apply his mind to the materials received and ascertain precisely the specific year to which the 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 a notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by an assessing officer.

83. The construction of section 153 A and 153 C is consciously different and is seen to apply different yardsticks to an entity searched and a third party, such yardstick being more exacting in the case of the former. The process of assessment is demanding and an assessee, once in receipt of a notice, is bound by the stringent procedure under the Act, till finalisation of the process.

84. In other words, a Damocles sword appears over the head of an assessee with the issuance of every notice which is laid to rest only upon conclusion of the proceedings; The sword cannot be invoked lightly and except if the statutory condition is satisfied. That is to state, an officer has to analyse and compartmentalise the incriminating material year wise, to arrive at a categoric determination as to the year to which the incriminating material relates and issue notices only for those years.

85. Needless to state these are some situations/issue when the spread of information and the nature of the issue itself might need more, and in-depth probing before such year-wise determination is possible. In such cases, the officer would be well within his right to state the nature of the issue and detail the difficulties that present themselves in precise bifurcation at that stage. This would reflect application of mind and, in my considered view, would serve as sufficient compliance with the statutory condition.

……………..

90. Orders shall be passed giving effect to the conclusion in this order. That is to say that those assessments relating to those years were no incriminating material has been noted by the assessing authority shall stand quashed as a result of this order and a consequential order shall be passed to such effect by the authority.”

Further in the judgement of Hon’ble Supreme Court in the case of Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd. [2023] 150 108 (SC)/[2023] 454 ITR 441 (SC)[25-04-2023], in para 1 and 3 the Hon’ble Supreme Court has held as under:-

“1. In this batch of appeals, the assessments in case of each assessee were under section 153-C of the income-tax Act, 1961 (for short, ‘the Act’). As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of the matter, as such, the assessments under section 153-C of the Act are rightly set aside by the High Court. However, Shri N Venkataraman, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Pr. CIT v. AbhisarBuildwell (P.) Ltd. 399 (SC), more particularly, paragraphs 11 and 13, has prayed to observe that the Revenue may be permitted to initiate re-assessment proceedings under section 147/148 of the Act as in the aforesaid decision, the powers of the reassessment of the Revenue even in case of the block assessment under section 153-A of the Act have been saved.

…………….

3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law.”

(emphasis supplied)

It is held by the Hon’ble Delhi High Court in the case of DevTechnofab Ltd. v. Deputy Commissioner of Income-tax 514 (Delhi) [24-05-2024] as under.-

“2. Undisputedly, and as would be evident from a reading of the Satisfaction Note pertaining to the non searched entity, namely the petitioner, the material which is alluded to pertains to Assessment Year [“AY”] 2019-20 only. Action under Section 153C of the Income Tax Act, 1961 [“Act’], however, sought to encompass AYs 2014-15 to 2020-21. Insofar as AYs other than AY 2019-20 are concerned the impugned action would clearly not sustain bearing in mind the judgment rendered by the Court in Saksham Commodities Limited v. Income Tax Officer, Ward 22(1), Delhi &Anr [2024 SCC OnLine Del 2551] and where while explaining the statutory imperatives of incriminating material we had held as follows:

…………………

5. In view of the aforesaid, the writ petition partly succeeds. The impugned action under Section 153C of the Act, pertaining to AYs 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2020-21 are hereby quashed and set aside.

6. However, and insofar as AY 2019-20 is concerned, the same is left untouched. All rights and contentions of respective parties are kept open to be addressed in the ongoing assessment proceedings for AY 2019-20.”

From the ratio of the above judgements, the AO of “other person” has to satisfy whether there was any incriminating seized material qua each assessment year and therefore, if for certain assessment years out of six assessment years, there is no incriminating material, the AO should not issue notice u/s 153C.

Thus there are two conditions for each year which has to be satisfied together, (1) seized material from the search on person other than the assessee in whose case notice u/s 153C is being contemplated, (ii) such seized material should be incriminating i.e. it should have bearing on the determination of total income of the assessee and these elements should be recorded in the satisfaction note.

Incriminating material can be understood as any new or additional fact/evidence which is unearthed during the course of search and seizure action and which suggests that the documents or transactions clained or submitted in any earlier proceedings were not genuine, being only a device/ make belief based on non-existent facts or suppressed/ misrepresented facts, would constitute an incriminating material. Any information which is already recorded in the books of accounts or which is already available in public domain or which is already in the form of a registered document, etc. cannot be treated as incriminating material unearthed during the course of search and seizure action. The scope of the same is all the more important for the purpose of section 153C of the Act as the section requires that the seized material should have bearing on the determination of the total income of the assessee.

The satisfaction note extract in the present case is as under:-

“A search action u/s 132(1) of the Income-tax Act, 1961 was carried out on 06.09.2018 at Oswal Group of Jaipur and residential premises of Shri Surya Singhal located at 278, Dada BadiExtn, Kota on 06.09.2018 was also covered in search action. During the search proceedings carried out at residential premises of Shri Surya Singhal, certain property documents regarding purchase of properties were seized. In these properties papers, a possession letter dated 13.04.2013 executed between ShriGopalLal and M/s S.G. Enterprises through its partners ShriBrijmohanPareta was also seized. This possession letter was executed for sale of land admeasuring 1.92 hectares of Khasra Nos. 1123, 1163, 1164,1165 and 1166 of Village – Devliarab, Tehsil -Ladpura, District – Kota. As per this possession letter, aforementioned land has been sold for total sale consideration of Rs. 3,00,00,000 and the seller has accepted that he has received the entire sale consideration from the buyer. It is also written in this possession letter that the seller has handed over possession of this land to the buyer. This possession letter is duly notarized by the Notary Public.

………………………..

It is also stated in this agreement that a sum of Rs. 2,08, 79,000 has been adjusted in the amounts mentioned in the registered sale deeds and the remaining amount of Rs.7,21,000 is to be treated as advance for this agreement. Remaining sale consideration to be paid by the sellers to the purchaser is at Rs.8,27,90,625 and the land equivalent to this amount has to be registered by the seller. Remaining amount of Rs. 8,27,90,625 has been decided to paid as under

From careful perusal of aforementioned facts, it is evident that the land admeasuring 6.55 hectares have been agreed to sold by ShriGopalLal So ShriPurushottamLal resident of MahaprabhuJiKaMandir, Kota to Mis S.G. Enterprises through its partners ShriBrijmohanPareta S/o ShriRoopchand Pareta, ShriShyam Sunder Goyal S/o ShriRamnarayanGoyal and Shri Om Prakash Gupta S/o Shri Ram Pratap @ 25 lakh per bigha (i.e. Rs. 10,43,90,625) and possession of the same was also handed over to the buyer by the seller in pursuance of the four agreements as discussed above. The purchaser has provided the sale consideration to the seller in cash and through cheques on different dates as specified in the aforementioned sale agreements. In all the sale agreements, it is clearly written that the possession of the land has been handed over to the purchaser by the seller. The seller has shown capital gain arouse on sale of aforementioned land admeasuring 6.55 hectares to M/s S.G. Enterprises as under.

F.Y. 2011-12 (A.Y. 2012-13)

F.Y. 2013-14 (A.Y. 2014-15)

The sale consideration of Rs.2,08,79,000 in F.Y. 2011-12 and Rs.8,35,11,625 (3,00,00,000+ 3,77,00,000+ 1,50,00,000+7,21,000) in F.Y. 2013-14 is duly tallied with the sale agreement executed by ShriGopalLal in favour of M/s S.G. Enterprises (except the amount of Rs.90,625). This shows that the said land was sold by ShriGopalLal in favour of M/s S.G. Enterprises through agreement to sales. Therefore, capital gain liability arises on ShriGopalLal on the year of executing agreement to sale which is F.Y. 2011-12 and F.Y. 2013-14. The seller has also shown the transactions in his ITR filed for the A. Y. 201213 and 2014-15 disclosing the sale consideration as mentioned in the sale agreements but he has taken the figure of indexed cost of acquisition at a very high figure which can be established from the following facts:

As on 01.04.1981, Shri GopalLal has taken cost of land admeasuring 1.31 hectares at Rs.3,15,000 (i.e. Rs.2,40,458 per hectare) and after claiming Indexation total cost of acquisition has been taken at Rs.24,72,750 in the F.Y. 2011-12 whereas in F.Y. 2013-14; ShriGopalLal has taken cost of acquisition of 5.24 hectares land at Rs. 4,42,28,656/- which has been worked out as under.

Cost of land as on 01.04.1981 X Index of F.Y. 2013-14/100 =”4,42,28,656

Cost of land as on 01.04.1981 =”44228656″ 100/939 =”4710187

Cost of land admeasuring 1 hectares as on 01.04.1981 4710187/5.24 =”8,99,891.

Thus, the assessee has taken two different cost of acquisition in two different financial years to avoid the payment of tax arose on sale of capital asset, If it is assumed that the cost of acquisition taken in F.Y. 2011-12 is correct then cost of land as on 1981 comes at Rs. 12,59,999 and Indexed cost of acquisition of the same in F.Y. 2013-14 comes at Rs. 1,18,31,390. Thus, the seller has adopted excessive Indexed cost of acquisition at Rs. 3,23,97,266.

I have perused and analyzed the information and documents available and in view of this the undersigned is satisfied that this is a fit case for taking action u/s 153C of the IT Act, 1961 for AY 2013-14 to AY 2019-20.

The key finding for the year in the satisfaction note is “Therefore, capital gain liability arises on ShriGopalLal on the year of executing agreement to sale which is F.Y. 2011-12 and F. Y. 2013-14. The seller has also shown the transactions in his ITR filed for the A.Y. 2012-13 and 2014-15 disclosing the sale consideration as mentioned in the sale agreements but he has taken the figure of indexed cost of acquisition at a very high figure” and further that “the assessee has taken two different cost of acquisition in two different financial years to avoid the payment of tax arose on sale of capital asset, if it is assumed that the cost of acquisition taken in F.Y. 2011-12 is correct then cost of land as on 1981 comes at Rs. 12,59,999 and Indexed cost of acquisition of the same in FY 2013-14 comes at Rs. 1,18,31,390. Thus, the seller has adopted excessive Indexed cost of acquisition of Rs. 3,23,97,266”,

Thus there is no dispute in the addition made in the assessment order regarding the (i) year of taxation, and (ii) sale consideration. The dispute is regarding the adoption or working of fair market value of the land as on 01.04.1981.

In the present case, the addition has been made on the basis of information already available in the return of income and assessment folders for the assessment already completed and the information available in the registered property deeds. The issue of addition pertains to the valuation as on 01.04.1981 and resultant indexed cost of acquisition which is arrived at on comparison of the data of the already available income tax records of the two years of the appellant. There is no dispute in the present case that the transaction was disclosed and the capital gains were disclosed by the appellant in the income tax return for the year under appeal. There is no addition w.r.t. sale consideration. The regular scrutiny assessment for the year under appeal had already been completed wherein no addition has been made on the issue. Even in the satisfaction note although the reference to seize documents in the form of property deeds etc. however these cannot be considered as incriminating documents in the facts of the case. In the case of Deputy Commissioner of Income-Tax Central Circle-03, Jaipur v. M/s Rigid Conductors (Raj.) Pvt. Ltd. Jaipur in ITA. Nos. 264/JP/2022 it is held by the Hon’ble ITAT that the registered property deed cannot be considered as incriminating material. Further in the satisfaction note the bearing on the determination of total income is not from the seized material but from the information available in the return of income. Thus the satisfaction in the satisfaction note regarding the suggestion or possibility of the suppression or escapement or misrepresentation, if any, of income is not emanating from incriminating seized material from the search on the other party.

In the present case the satisfaction arrived at by the learned AO before initiating the proceedings under section 153C of the Act does not meet the requirements of the law and the same cannot be sustained and has the jurisdiction to issue the notice under section 153C is found to be faulty and thus the notice under section 153C of the Act and the consequent assessment order does not survive.

Regarding the additions made in the assessment order u/s 153C of the Act it is found that the additions have not be made on the basis of seized material from the search and seizure action. Section 153C of the Act reads as under:-

“Assessment of income of any other person.

153C.(1)) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that.-

a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person) and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A

………………..”

Hon’ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3 v. AbhisarBuildwell (P.) Ltd. 141 (SC)/[2023] 454 ITR 212 (SC)[24-04-2023] has held as under.-

“14. In view of the above and for the reasons stated above, it is concluded as under

(emphasis supplied)

On the issue there is similar judgement of Hon’ble Supreme Court in the case of Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd. 108 (SC)/[2023] 454 ITR 441 (SC)[25-04-2023]. The judgement has been carefully considered. In para 1 and 3 the Hon’ble Supreme Court has held as under:-“

1. In this batch of appeals, the assessments in case of each assessee were under section 153-C of the Income-tax Act, 1961 (for short, the Act’). As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from third party. In that view of the matter, as such, the assessments under section 153-C of the Act are rightly set aside by the High Court. However, Shri N Venkataraman, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Pr. CIT v. AbhisarBuildwell (P.) Ltd. 399 (SC), more particularly, paragraphs 11 and 13, has prayed to observe that the Revenue may be permitted to initiate re-assessment proceedings under section 147/148 of the Act as in the aforesaid decision, the powers of the re-assessment of the Revenue even in case of the block assessment under section 153-A of the Act have been saved.

………………………….

3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the reassessment proceedings is concerned, it is observed that it will be open for the Revenue to initiate the re-assessment proceedings in accordance with law and if it is permissible under the law.

(emphasis supplied)

In para 11 of the order in case of Principal Commissioner of Income-tax, Central-3 v. AbhisarBuildwell (P.) Ltd. (supra), the Hon’ble Supreme Court inter-alia has held as under:-

“11. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy.”

The material on record has been considered. The satisfaction note does not refer to incriminating seized material from search on other person which would be having a bearing on the determination of total income of the appellant. The addition made in the assessment order is not based on incriminating seized material from search on other person. The status of assessments before issuance of notice u/s 153C has been discussed in pre-paragraphs. There was no pending/abated assessment on the date search and seizure action as applicable and the time to issue notice u/s 143(2) of the Act had expired already. Accordingly, the judgement of Hon’ble Supreme Court in the case of AbhisarBuildwell (supra) and U. K. Paints (supra) are squarely applicable to the facts of the case. Impugned addition could have been done by the learned assessing officer in re-assessment proceedings by issuance of notice under section 147/148. CBDT (ITJ Section) has issued Instruction No. 1 of 2023 dated 23-08-2023 vide F.No. 279/Misc./M-54/2023-ITJ on the subject “Implementation of the judgment of the Hon’ble Supreme Court in the case of Pr.CIT (Central-3) v/s AbhisarBuildwell Pvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding”. The learned assessing officer is directed to implement the law and ratio of the judgement of AbhisarBuildwell (supra) and the said Instruction No. 1 of 2023 dated 23-08-2023 and section 150 of the Act, in the case of the appellant appropriately as per the facts of the case and as per above findings.

Thus these grounds of appeal are hereby allowed.”

5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-

In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and the order of assessment is thus found to be without jurisdiction. Therefore the additions done by the learned assessing officer in the assessment order are not sustainable on this technical ground. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.”

6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-

In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and the order of assessment is thus found to be without jurisdiction.

Therefore the additions done by the learned assessing officer in the assessment order are not sustainable on this technical ground. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.”

7.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-

In the earlier part of this order, the validity of the notice u/s 153C has not been sustained and the order of assessment is thus found to be without jurisdiction.

Therefore the additions done by the learned assessing officer in the assessment order are not sustainable on this technical ground. In view of this background, the other grounds of appeal on the merits of such addition are rendered only academic and do not warrant detailed adjudication. In view of this discussion, the subject ground of appeal raised by the appellant is treated as disposed off.

8.2 In this ground, the appellant has raised issue in respect of charging of interest u/s 234A, 234B and 234C. In this regard it is stated that charging of interest is mandatory and consequential in nature, therefore the AO is directed to give effect of the same on the income determined vide this appellate order. Accordingly, the ground of appeal raised by the appellant on this issue is disposed off.

9. Ground of Appeal No. 8 is as under:

Ground No. 8: The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.

9.1 The appellant has not added and altered any of the above mentioned ground of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off.

10. In the result, the appeal of the appellant is allowed.”

7. Aggrieved with the above finding of the ld. CIT(A), revenue preferred the present appeal before this tribunal and the assessee has preferred to file the cross objection to the said appeal. Both the parties supported the finding so recorded in the orders of the lower authority as favorable to them.

8. Ld. DR while arguing the grounds raised heavily relied upon the detailed finding recorded in the order of the assessing officer. She also stated that since the cost of acquisition was claimed at higher side and that fact is evidently clear from the records found during the search she stood with the finding recorded in the order of the assessment. As regards the cross objection she submitted that the there is no violation of any timeline. She contended that as a result of search, various incriminating material and documents were found and it is only based there on, the AO made the disallowance of the excessive claim of the Indexed Cost wrongly made by the assessee. She contended that the sale consideration of Rs. 2,08,79,000/- in A.Y. 2012-13 and 8,35,11,625 (3,00,00,000+ 3,77,00,000+ 1,50,00,000+ 7,21,000) in A.Y. 201415 is duly tallied with the sale agreement executed by Shri Gopal Lal in favor of M/s S.G. Enterprises. Accordingly, the capital gain liability arises on the assessee in the year of executing agreement to sale which is A.Y 2012-13 and A.Y 2014-15 and that the seller has also shown the transactions in his ITR filed these years disclosing the declared sale consideration but has taken the figure of Indexed Cost of Acquisition (hereinafter referred to as “ICOA”) at a very high figure as on 01.04.1981. She also argued that the assessee had taken two different costs of acquisition in two different years. Hence, there was an excessive claim of ICOA by Rs. 4,30,51,976/- (Rs. 4,42,28,656 – Rs. 11,76,680) rightly disallowed by the AO. She also supported the further disallowance made by the AO on account of the indexed cost of boundary wall of this Rs. 14,08,500/-. She also contended that the ld. CIT(A) wrongly placed reliance on various decisions including Pr. CIT, Central v. Abhisar Buildwell (P.) Ltd. 141 (SC). In as much as, the AO would assume the jurisdiction to assess/re-assess the total income taking into consideration the incriminating material found during search and other material available with the AO including the ITR.

9. Per Contra, ld. Authorized Representative appearing on behalf of the assessee, apropos to the appeal of the revenue and cross objection of the assessee, he heavily relied upon the written submission so filed which reads as under :-

“Brief General Facts:

1. The assessee Late Shri Gopal Lal Goswami, expired on 04.10.2020, filed his return of income on 29.07.2014 declaring total income of Rs. 32,64,680/- on 29.07.2014 (PB 1-13) which included the amount of the Long-Term Capital Gain of Rs.3,78,74,469/- (PB5).

2. In the first round, the case was selected for scrutiny supposedly, on the issue of examination of LTCG. Notices u/s 143(2) dt.18.09.2015 and thereafter notice u/s 142(1) were issued time to time which were duly replied and assessment was completed vide order dt. 31.07.2016 u/s 143(3) (PB 119-121). The ld. AO has discussed the issue of LTCG particularly in para 2 (PB 120).

3. Further relevant facts as noted by the AO are that a search action u/s 132(1) of the Act was carried out by the Investigation Wing, Jaipur in the case of Oswal Group, Jaipur including the residential premises of Shri Surya Singhal located at 278, Dada Badi Extn, Kota on 06.09.2018. During search operation,a possession letter dated 13.04.2013 w.r.t a sale of land admeasuring 1.92 hectare, for total sale consideration of Rs.3 Cr.(only), was found and seized from the residence of Shri Surya Singhal. Pursuant to the same, post such enquiries were made by issuing summons u/s 131(1A) fromassessee late Gopal Lal and from Shri. Brijmohan Pareta, Partner of M/s S.G. Enterprises, however they did not appear and therefore, a commission u/s 131(1)(d) of the Act was issued to the ADIT (I)-Kota, on 07.02.2019 to examine the transaction, in compliance to which a report along with the copies of statement of these persons were submitted by him vide letter no. 551 dt. 05.03.2019. (PB 17)

4. That, pursuant to the aforesaid Search & Seizure, the office of the Deputy Director of Income Tax (Inv)-II Jaipur (“DDIT” for short), vide his letter No. DDIT(Inv.)-II/JPR/2018-19/131 dated 18.03.2019 sent the seized record to the ACIT, Circle-2, Kota, the then Jurisdictional Assessing Officer (“AO1” for short), based on which, the said earlier Assessing Officer had taken appropriate actions in different being AY 2012-13, which was completed vide Asst. order dt. 02.12.2019 u/s 147/143 (3) (PB128-152). The Asst. Order for AY 201617 was completed vide order dt. 29.11.2018 u/s 143(3) (PB-II161-162), Following and adding that the deduction claims u/s 54B.

5. That, initially the ACIT Circle -2, Kota (“AO1”) was holding the jurisdiction, however thereafter, pursuant to a proposal received from the PCIT (Central), Rajasthan, Jaipur vide his letter No. 4626 dated 24.02.2022 for centralization of Search & Seizure cases associated with “Oswal Soap Group, Jaipur“,the jurisdiction over the assessee, was transferred by the PCIT, Udaipur to the ACIT, Central Circle-2, Jaipur (“AO 2”) vide Order u/s 127 passed on 03.03.2022.(PB- 14-15)

6. That,pursuant to the search, the AO 2 issued impugned notices u/s 153C, all dated 22.03.2022 for A.Y. 2013-14 to 2019-20 (PB34)in the nameof Kamla PrabhaL/H of Shri Gopal Lal,in response to which the Assessee filedobjection letter dated 14.05.2022 (PB35-39), which remained un-responded.

7. That, consequent to the said Search & Seizure and pursuant to the ROI filed u/s 153C for different years, the AO, finally passed the Assessment Orders u/s 144 r/w S. 153C of the Act for AY 2013-14 to 2019-20 all dated 30.03.2023, but made additions in two years only i.e.AY 2014-15 & 2016-17.

8. That the Appeal for AY 14-15 was decided by the Ld. CIT(A), Jaipur-IV vide its order dated 30.11.2024, against which the department is in appeal and the assessee is in Cross Objection.

CO 1& 2 are general and to be considered while deciding other grounds of CO.

Legal Objections:

CO 3: Notice issued u/s 153C – Time Barred

Submission:

1.1 Although the law contained in U/s 153C, nowhere provides any time limit for issuance of notice u/s 153C, but then the law cannot be read as if such notices are without any time frame and hence, no unbridled power can be conferred upon the AO to issue such notice at any time as per his desire.A question therefore, arises, does that mean that unlimited time is available to the AO to take action or AO to pass order at any time as per his sweet will under such provision.

1.2 It is submitted that for taking actions/passing order under the provisions of the Act, a particular time-limit has been given for the commencement and completion of such actions. To take a few examples:

1.3 Even where no limit is prescribed for taking an action under a statutory provision, delay or rather inordinate delay may be an aspect for quashing proceedings by the court. Kindly refer CIT v. Harinagar Sugar Lad, (1989) 176 ITR 289, 291 (Bom), special leave petition dismissed by the Court: (1992) 197 ITR (St.) 1 (SC), applyingChimanram Motilal Pvt. Ltd. CT (1983) 140 ITR 809 (Bom) and Bharat Steel Tubes Ltd. V. State of Haryana, 09) 70 STC 122 (SC).

1.4 Normally there is a time-limit provided for commencement and/or the completion of the proceedings. In such a scenario, it is beyond comprehension that how, in the absence of any time limit to notice provided in Sec 153C, the action of issuing notices, can be permitted even after lapse of an indefinite period. It is wholly impermissible to argue that unlimited time-limit be granted to the AO for taking action under this section. This is for the simple reason that certainty is the hallmark of any proceedings. The sword of taxing authorities cannot be allowed to hang forever, over the head of a taxpayer. If this proposition of the AOs is accepted that will give license to the officers to take action even after lapse of 30, 40 or 50 years. The canons of limitation are ordinarily provided expressly in the Act but in their absence, they are to be impliedly inferred by the Courts by taking into consideration the scheme of the relevant provisions. It is naturally so for the reason that time is the core of every action under law. A right, which has already accrued in favor of a person cannot be unsettled at any time after an indefinite period even in absence of any prescribed time limit because if permitted, would amount to unsettling the settled position between the parties. If the legislature is silent in prescribing a particular time-limit then the action must be taken within a reasonable time only.

2.1 Pertinently, in search cases including issuance of notice u/s 153C, a logical view is that the time limit prescribed u/s 153B to pass the search assessment order u/s 153C/143(3) can be taken as the time limit available for issuance of notice u/s 153C, for the simple reason that the very notice u/s 153C has ultimately to culminate in the assessment order u/s 153C/143(3) of the Act. Hence, this can be the only the logical and reasonable period for issuance of the notice.

2.2 The limitation to complete an assessment u/s 153B, as stood at the relevant point of time, provided 12 Months from the end of the Financial Year in which search is completed or 18 Months from the end of the Financial Year in which the seized books of account or documents or assets (“Seized records” for short) are handed over u/s 153C to the Assessing Officer having jurisdiction over such other person [or the Third Person](AO2)(i.e. ACIT, Circle – 2, Kota, who was the AO prior to the transfer order u/s 127 of the Act) whichever is later.

2.3.1In absence of any specific provision in the statute to that effect, it is beneficial to refer the provisions of sec 132(9A) which reads as under:

“132(9A) Where the authorized officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of subsection (1), the books of account or other documents, or any money, bullion, jewelry or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) seized under that sub-section shall be handed over by the authorized officer to the Assessing Officer having jurisdiction over such person within a period of sixty daysfrom the date on which the last of the authorizations for search was executed and thereupon the powers exercisable by the authorized officer under sub-section (8) or subsection (9) shall be exercisable by such Assessing Officer.”

From a reading of the above provision, it is clear that theauthorized officer is bound to handover the seized records within a period of 60 days to the AO of the Searched Person. A similar analogy and inference are equally applicable in the cases where the AO of the Searched Person having possession of the seized records, after deriving satisfaction is bound to handover the related record to the AO of the Third Person (which is the AO here) but not to sit over the papers for an abnormally long period of time. Accordingly, applying the same period of handing over of record within sixty days in this case the AO of the Searched Person was supposed to have handed over the seized records to the AO (i.e. before 05.09.2018). The Search having taken place in the month of September,2018, it can be safely presumed that the AO of the Searched Person must have handed over the seized records to the AO sometime before 31.03.2019.

On this aspect a useful reference can be made to case of CIT v. Jasjit Singh 612/458 ITR 437 (SC)(DC- 1-6), wherein it was held as under:

“………….9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.

10. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials- of the search party, under section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third partyassessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts.”

The review filed by the department was also dismissed  575 (SC).

Hence, the limitation has to be reckoned accordingly. Consequently, the impugned notices are barred by limitation and deserves to be quashed.

2.4. Similar situation arose in the cases of passing an order u/s 201/206C of the Act where also the statute initially did not prescribe any time limit for initiation of the proceedings and passing an order thereunder hence, a question of limitation arose there also. The following decisions relating to Sec 201 of the Act relating to TDS may be found useful in the present context as well:

2.5. The law is well settled thattheprovisions prescribing time must be strictly interpreted by the Hon’ble Apex Court in K.M Sharma v. ITO [(2002) 254 ITR 772, 777(SC)], holding that:

“Fiscal statute, more particularly a provision such as the present one, regulating period of limitation must receive strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have attained finality under existing law due to bar of limitation, cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. The amendment to sub-section (1) of section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. The amendment made to sub-section (1) of section 150, which intends to lift embargo of period of limitation under section 149 to enable the authorities to reopen assessments not only on the basis of orders passed in proceedings under the Act but also on order of a Court in any proceedings under any law, has to be applied prospectively on or after 1-4-1989 when the said amendment was introduced to sub-section (1). The provision in sub-section (1), therefore, can have only prospective operation to assessments, which have not become final due to expiry of period of limitation prescribed for assessment under section 149.”

Hence, the impugned notice may be held barred by limitation.

CO4: Asst. Order barred by limitation U/s 153B r/w 153C:

1.1 For better appreciation, relevant extract from S. 153Bas it stood at the relevant point of time (i.e) in a case where the search was carried out on/after 01.04.2018, the Second Proviso inserted by the Finance Act 2017, read as under:

“Time limit for completion of assessment under section 153A.

153B. (1)Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,

——–XXX——XXX——XXX—-

Provided further that in the case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year commencing on the 1st day of April, 2018, —

1.2 It is submitted that the assessee made repeated request to the AO2 for supplying some vital informationvide letters dated 16.04.2022 (uploaded on dated 18.04.2024 (PB 40-43), and 01.08.2022 (PB 44-47) (as to when the AO of Third Person (TP) received seized records from the AO of the Searched Person (SP). The AO2, in response, vide letter dated 26.07.2022 stated that:

“As the jurisdiction over the assessee has been assigned to this office (ACIT Central Circle-2, Jaipur) vide PCIT Udaipur order u/s 127 dated 03-03-2022 circulated vide DIN NO. ITBA/COM/F/17/2021-22/1040305411(1) dated 03.03.2022, The ACIT Central Circle-2, Jaipur became AO of the assessee on 03.03.2022. Thus, the date of receipt of seized documents by the AO of the assessee (Ms Kamal Prabha L/h of Gopal Lal) is 03.03.2022.”

1.3 A Careful perusal of the said letter shows that the AO has still not come out with the correct/exact date of transfer/receiving of the seized records from the AO of the Searched Person to the AO of Third Person as per mandate of S.153C and S.153B nor he stated from whom (i.e. the Officer), the seized documents was received by him. What all he stated is that because of transfer of jurisdiction u/s 127 to him on 03.03.2022, the date of receipt of the seized records is 03.03.2022, meaning thereby, it is the date of receipt of record by the new (transferee) AO-2 (now having jurisdiction over the Assessee) from the earlier AO-1. In fact, the seized records was already received by his predecessor i.e. the ACIT, Circle-2, Kota who, has been the AO1, of the Third Person (the Assessee) hitherto. The AO2 did not furnish any evidence showing receipt of the seized record on 03.03.2022. Thus, the AO1 received the seized records, in any case on/ before 03.03.2022. Substituent transfer the jurisdiction from AO1 to AO2 and accordingly shifting of the assessment record along with seized record is an internal process with which the outer word i.e the assessee is not at all concern.

Since, the search was carried out long back on 06.09.2018, the AO of the Searched Person must have sent the seized records relating to the Assessee to the concerned AO of the Assessee within a reasonable period of time.

2.1 Pertinently, the seized accounts/ documents were handed over by the DDIT(I) -II, Jaipur vide his letter No. DDIT(Inv.)-II/JPR/2018-19/131 dated 18.03.2019 to the then AO1 i.e. theDCIT Circle-2, Kota. This is clearly visible from a bare reading of the impugned assessment Order. This fact is also evident from the Satisfaction Notedated nil(PB16-33).The very recording of fact in the satisfaction note by the AO itself has established that what was supplied by the Investigation Wing to the AO1, Kota was seized records. Moreover,the very fact that the AO himself has issued notices u/s.153C for AY-2013-14 to 2018-19 only, strongly support the contention that the seized records were received by the AO in financial year 2018-19.

2.2 Thus, when the seized records have already been sent/handed over to the then JAO on 18.03.2019, the reckoning of the period of limitation u/s 153B shall be either 18 months from the end of FY in which the search took place (i.e. on 30.09.2020) or 12 months from the end of the FY in which the seized records were received (i.e. on 31.03.2020). Hence, the latter date comes to 30.09.2020. Thus,the last date for completing all the subjected assessments was 30.09.2020only. Accordingly, the impugned notices u/s 153C must have been issued prior thereto but, in any case, not later than 30.09.2020, or the impugned assessment order must have been passed not later than 30.09.2020, as against which the said notices have been issued only on 22.03.2022 and the impugned assessment orders were passed on 30.03.2023i.e. much later to the due date, which had already passed. Hence, the impugned notices issued u/s 153C as also the impugned Assessment Orders, is clearly barred by limitation.

2.3 In this regard, the contention of the AO vide letter dated 26.07.2022 (PB-48) whiledisposing of the objections and inPg.5 of Asst. Order that only information belonging to only the AY 2012-13 was shared to the then AO, Kota and no seized record or material has been shared to him, is a purported attempt to misread the facts on record to bypass the specific and mandatory provisions of law in as much as the undisputed facts are that certain property documents regarding purchase of properties were seized, as specifically noted by the AO himself in the satisfaction note recorded u/s 153C of the Act. There apart, at various places including the finding recorded in the assessment order for AY 2012-13, the fact of seizure of possession letter is mentioned. The Respondent AO simply mentioned that what was shared by the DDIT (INV) II, Jaipur vide letter dated 18.03.2019 was only some information,however, contents of the said letter were neither reproduced in the impugned assessment orders nor the same was ever supplied to the Petitioner/Assessee.In any case, it has duly served the very purpose of information the AO/s of the third party, of the facts of the search carried out and the finding of the seized records/information relating to a third party, based on which the AO of the third party is supposed to take action. The very recording of fact in the satisfaction note (PB16-33) itself by the Respondent AO has established that what was supplied by the Investigation Wing to the AO1, Kota was seized records and not mere information. Interestingly and strangely enough, the Respondent AO while rejecting the objections has not categorically stated as to exactly when the AO1, Kota got the seized records and what the seized records consisted of.He merely assumed the date of receipt of the seized records being 03.03.2023, which is the date of transfer of the jurisdiction to him.

2.4 Even the transfer order passed under Sec 127 on 03.03.2023 (PB14-15), also do not speak of handing over of the seized record to the AO/ACIT, Central Circle 2, Jaipur on the date of transfer of jurisdiction as claimed. The order simply speaks of transfer of the jurisdiction. Hence, to take shelter of the transfer order to defend the limitation, is completely irrelevant and is of no help to the AO. Simply because the AO, holding charge presently, got the jurisdiction on 03.03.2023 by itself does not imply the very fact of handing over of the seized record to him.

Thus, in the light of above facts and circumstances and submission made the assessment impugned order barred by limitation.

CO 5: AY 2013-14 to AY 2015-16is beyond block of 6 years u/s 153C-hence asst. forAY 2014-15 – without jurisdiction.

Submission:

1. Surprisingly,the contention/stand of the AO here is highly contradictory. If what is contended (i.e. the AO got the seized record on 03.03.2022), is taken to be legally correct, the necessary consequence/implication shall be that the assessment year 2014-15 (and AY 2015-16) shall be completely beyond its jurisdiction u/s. 153A and u/s 153C, which provides that the AO shall issue notices u/s. 153C and shall pass the order for the last 6 years prior to the search year and for this purpose, first proviso to S.153C considers the date of receiving of the seized records, as the relevant financial year and the related assessment year (“search AY” for short). Accordingly, only 6 years prior to search AY can be reopened for issuing the notices and completing the assessments u/s 153C r/w S.153A. Thus, taking the date of the receipt of the seized records, as contended by the AO, in this case, being 03.03.2022, the search AY is – financial year 2021-22 and the related assessment year being AY 2022-23, the immediately preceding 6 assessment years shall be for and from 2016-17 to 202122. As against which, the AO has issued notices u/s153C for and from assessment years 2013-14 to 2019-20 and also passed the impugned assessment orders accordingly. This way, the assessment years 201314 to 2015-16 being out of block of 6 AY years were completely beyond jurisdiction of the AO u/s. 153A r/w S. 153C.Therefore, alternatively, if the contention of the AO is accepted, the assessment orders framed for AY at 2014-15 deserves to be quashed and set aside.

2. Supporting Case Laws:

2.1 Kindly refer the judgment of Principal Commissioner of Income-Tax, Central- 1 v. Raj Buildworth (P.) Ltd. 601 (SC),(DC 22-23)it was held that:

“Section 153C of the Income-tax Act, 1961 – Search and seizure -Assessment of any other person (Validity of) – Assessment year 200708 – In appellate proceedings, Tribunal recorded a finding that satisfaction for initiation of proceedings under section 153C was recorded by Assessing officer on 02-02-2015 – Tribunal thus opined that Assessing Officer could not have initiated and passed an assessment order under section 153C for relevant assessment year as same was beyond period of six years from end of financial year in which satisfaction note was recorded by Assessing Officer – High Court upheld order passed by Tribunal – Whether, on facts, SLP filed against order of High Court was to be dismissed on ground of delay – Held, yes [Para 2] [In favor of assessee].”

2.2 Pr. CIT (Central-1) v. Ojjus Medicare (P.) Ltd.  160 (Delhi) held as under:

“INCOME TAX: Block period was to be computed from date of receipt by AssessingOfficer of non-searched person of books or documents or assets seized orrequisitioned, where date of handingover of documents was not available, date ofissuance of satisfaction note by Assessing Officer under section 153C would bepertinent for purpose of first proviso to section 153C(1)”

“D. The first proviso to section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six years’ or the ten years’ block is deemed to be the date of receipt of books of account by the jurisdictional Assessing Officer. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the first proviso to section 153C, which significantly shifts the reference point spoken of in section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of account, documents or assets seized by the jurisdictional Assessing Officer of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of section 153C (1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujit Kumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted.”

2.3 This was followed in the case of Dinesh Jindal v. ACIT 746 (Delhi)where, after reproducing para-D, E,F the hon’ble court held as under:

“…………12. Viewed in that light, it is manifest that the AY 2013-2014 would fall beyond the block period of ten years. It becomes pertinent to note that the First Proviso to Section 149(1) compels us to test the validity of initiation of action for reassessment commenced pursuant to a search, based upon it being found that the proceedings would have sustained bearing in mind the timelines prescribed in Sections 149, 153A and 153C, as they existed prior to the commencement of the Finance Act, 2021. This necessarily requires us to advert to the timeframes comprised in both Section 149(1)(b) as well as section 153C as it existed on the statute book prior to 01 April 2021, which undisputedly was the date from when the Finance Act, 2021 came into effect.

13. While it is true that Section 153C and the procedure prescribed therein had ceased to be applicable post 31 March 2021, the First Proviso to Section 149(1) does not appear to suggest that the First Proviso to Section 153C(1) would either become inapplicable or be liable to be ignored. Undisputedly, the First Proviso to Section 153C (1), by virtue of a legal fiction enshrined therein requires one to treat the date of initiation of search, and which otherwise constitutes the commencement point for a search assessment in the case of a nonsearched party, to be construed as the date when the books of account or documents and assets seized or requisitioned are transmitted to the AO of such “other person”. Resultantly, the computation of the six preceding A Ys or the “relevant assessment year” in the case of the non-searched entity has to be reckoned from the time when the material unearthed in the search is handed over to the jurisdictional AO. The import of this legal fiction is no longer res W.P. (C) 13970/2024 Page 7 of 9 integra bearing in mind the judgment of the Supreme Court in CIT v. Jasjit Singh & Ors., 2023 SCC OnLine SC 1265 and the whole line of precedents rendered by our High Court which were noticed in Ojjus Medicare Private Limited. Those decisions have consistently held that in the case of a non-searched entity, it is the date of hand over of material, as opposed to that of the actual search which would constitute the starting point for reckoning the block of six or ten A Ys.

14. However, Section 149(1), as it came to be placed and introduced in the statute book by virtue of the Finance Act, 2021, neither effaces nor removes from contemplation the First Proviso to Section 153C(1). Consequently, in cases where a search is conducted after 31 March 2021, the said Proviso would have to be construed and tested with reference to the date when the AO decides to initiate action against the non-searched entity. While in the case of a search initiated after 31 March 2021 there would be no actual hand over of material to the jurisdictional AO, that does not convince us to revert to section 153A and hold that the block period is liable to be computed from the date of search. That, in our considered opinion, would amount to rewriting section 153C which would clearly be impermissible.”

2.4 Recently again held so inATS TOWNSHIP PVT LTD v. ACIT W.P.(C) 13790/2024 (DEL) decided on 11.12.2024.

3.Even benefit of extended block period of 10 years – not available to AO:

3.1 Firstly, the AO himself has considered the block period of 6 years instead of 10yrs therefore, there is no question of giving the benefit of extended period of 10 years to AO.

3.2 Alternatively, even assuming the same is considered though not conceding, it is submitted and clarified that the benefit of the extended period can’t be given as the impugned notices are barred by limitation in as much as, to take the benefit of the extended time limit, the 4^th proviso to S. 153A (1)(b) of the Act sets out certain additional conditions, which are essentially required to be fulfilled by the AO before a notice u/s 153C r/w 153A is issued for the relevant assessment year/s.

The additional condition as provided in the said 4th Proviso is that the AO has in his possession books, documents or evidence which reveal that income represented in the form of an asset which has escaped assessment.Further, the term “asset” has been defined in Explanation 2 reproduced as hereunder:

“Explanation. —For the purposes of clause (b) of this subsection, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.

(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.”

3.3.1Thus,the subjected amount must be in the nature of income or in other words, the asset found must be represented by some income and the same has escaped the assessment [as required by the 4^th proviso clause (b) to 153A(1)(b)]. However, there is no incomeat all emanating from the seized documents much less escaped or undisclosed income hence, there is no question of representing the same in the form of the asset.

3.3.2Secondly, the legislature meant undisclosed investment made in any asset, by the buyer, whereas, in the present case the assessee is seller, and it is not the case of the AO that seized papers disclosed suppressed/understated sale consideration therefore, subjected transaction of sale and the declared LTCG arising therefromcannot be in the nature of asset as contemplated by law.

3.3.3Thirdly, and otherwise also, this being a receipt of amount as evident from this information contained in the impugned satisfaction note, it is an item of the liability side and not of the asset side.

3.3.4No revelation:Further condition that unless the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income chargeable to tax,was also not met as the Respondent AO completely failed to established that the evidence refer to in the satisfaction note did reveal some income much less the income chargeable to tax.

Thus, the additional conditions specifically provided in the statue, have not been met by the Respondent AO. In that view of the matter and in view of the jurisdictional facts available on record, the benefit of the extended time limit of 10 years was not available to Respondent AO and the impugned notices issued u/s 153C beyond the period of six years deserves to be quashed and set aside.

4.The law is well settled thattheprovisions prescribing time must be strictly interpreted as held by the Hon’ble Apex Court in K.M Sharma v. ITO [(2002) 254 ITR 772, 777(SC)]. Even where no limit is prescribed for taking an Action under a statutory provision, delay or rather inordinate delay may be an aspect the court can consider for quashing proceedings [CIT v. Harinagar Sugar Lad, (1989) 176 ITR 289, 291 (Bom), special leave petition dismissed by the Court: (1992) 197 ITR (St.) 1 (SC), applying Chimanram Motilal Pvt. Ltd. CT (1983) 140 ITR 809 (Bom) and Bharat Steel Tubes Ltd. V. State of Haryana, 09) 70 STC 122 (SC)].

Therefore, impugned assessment order may be declared as null and void.

D-GOA 1 to 4& CO 6: No Incriminating Material- Addition beyond jurisdiction.

Facts: The relevant facts are already stated herein above. The Revenue in its appeal has mainly disputed the relief granted in the GOA-I based on the plea that (the CIT(A) has deleted the addition mainly on the technical ground only without giving any finding on the merits of the addition). Such a finding is absolutely contrary to the facts available on record as would appeared from his finding in Para 4.2 pg. 28 to pg. 46.

The Revenue has also alleged in the GOA-II that the CIT(A) did not appreciate that there was a specific reference to incriminating seized material in the satisfaction note. However, again such an allegation is contrary to the facts available on record as except referring to possession letter there is no reference to any seized material.

The Revenue in GOA- III has made general allegations only that the CIT(A) did not appreciate that the addition was made by the AO, were based on finding or search/ post search proceeding, which allegation is otherwise insufficient.Mere finding recorded in search/ post search, by itself is not sufficient, unless incriminating material is found and seized during the course of the search which alone can be made a basis of the addition, if any required as per the dictum of AbhisharBuildwell(supra).

Submission:

1.1Thelaw u/s 153A r/w S.153C is well settled that any of the assessment/s remaining pending as on the day of the search, shall stand abated meaning thereby, such assessments shall have to be completed afresh comprising of the disclosed income as also the undisclosed income. But in the cases where assessments have already been completed such assessments are required to be reiterated as it is (re-assess). However, such completed assessments, can be interfered with by the AO only on the basis of the incriminating material found during course of the search but not otherwise.

1.2 In the case of CIT v. Kabul Chawla (2015) 281 CTR (Del), the Hon’ble Delhi High Court after detailed analysis, has summarized legal position, and the relevant extracts therefrom are extracted herein below:

“………….(v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in s. 153A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings.

(vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under s. 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the AO.

(vii) Completed assessments can be interfered with by the AO while making the assessment under s. 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.”

Notably, very recently the Hon’ble Apex Court in the case of PCIT v. Abhisar Buildwell (2023) 332 CTR (SC) 385has affirmed the aforesaid decision of Kabul Chawla (supra).

1.2.2 Hon’ble High Court in the case of Jai Steel (India) v. Asstt. CIT (2013) 259 CTR (Raj) 281/ 88 DTR (Raj) 1, has held that:

“18. To consider the rival submissions made at the Bar in the context of the present case and the substantial question of law framed, the scope of ‘assessment and reassessment of total income’ under Section 153A(1)(b) and the first and second proviso have to be considered. Further, for answering the above issues, guidance will have to be sought from Section 132(1) of the Act, as Section 153A of the Act cannot be read in isolation, inasmuch as, the same is triggered only on account of any search/requisition under Sections 132 or 132A of the Act. If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and, found in the course of search, such books of account or other documents have to be taken into consideration while assessing or reassessing the total income under the provisions of Section 153A of the Act. Even in a case where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration. The requirement of assessment or reassessment under the said section has to be read in the context of Sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed.

——xxx——xxx——xxx——xxx——xxx——xxx——

20. The necessary corollary of the above second proviso is that the assessment or reassessment proceedings, which have already been ‘completed’ and assessment orders have been passed determining the assessee’s total income and, such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In such cases, where the assessments already stand completed, the AO can reopen the assessments or reassessments already made without following the provisions of Sections 147, 148 and 151 of the Act and determine the total income of the assessee.”

1.3In the instant case, undisputedly, the assessments of the subjected assessments years already stand completed and were not pending on the day of the search. Some of the assessments were completed under scrutiny u/s 143(3) however, some of them were completed, u/s 143(1) but the time limit to issue notice u/s 143(2) had already expired in those cases on the date of receipt of Seized records i.e. 18.03.2019 and hence such assessment even though made u/s 143(1) stand completed/attained finality. For better appreciation, kindly refer the following chart:

Thus, any variation as compared to the returned income (i.e. addition to the income) in the assessment years i.e. 2014-15 and 2016-17 (which were not pending on the date of receipt of seized records i.e. 18.03.2019), could be made u/s 153A/153C, only and only based on the incriminating material/information u/s 153C of the Act in accordance with the statutory procedure but not otherwise. In other words, all the five assessments were to be merely reiterated/reassessed at the same figure, in absence of any incriminating material.

2.1.1In the instant case there is no undisclosed income at all based on/emanating from the incriminating material. Undisputedly, no incriminating material as such was found in as much as only and only a possession letter dated 13.04.2013 was seized which itself admittedly related to disclosed transaction. The possession letter was w.r.t a sale of 1.92 Hectare, (which a part of total land admeasuring 6.55 hectare), for sale consideration was Rs.3,00,00,000/- (which was part of total sale consideration of Rs. 10.43 Crore).In fact, the entire satisfaction note was based merely on the information derived from the ROI and the asst. orders for the related years and there was nothing new found in any of the sized material relied upon.

The four ikrarnama referred and relied upon by the ld. AO (related to the same transactions as stated in the possession letter), in fact, were supplied by late Gopal Lal Ji during Investigation as clearly stated in the said assessment order for AY2012-13 (PB 129) as also in the satisfaction note also on page 1 & 2 of Satisfaction note (PB16-17). Such material (i.e. possession letter) was not at all a case of incriminating material also in the sense that they did not pertain to/relate to undisclosed transactions. It is not the case of the AO that Assessee sold the land at a much higher figure than the declared one.In any case, the AO has utterly failed to establish so. He did not demonstrate how the seized possession letter reflected an undisclosed income. There is no whisper to this effect in the satisfaction note.Apart from possession letter, nothing was found and seized.

2.1.2.E ven assuming for a moment that the four Ikrarnama referred above were also found and seized during the course of search- obtain during post search inquiry even then, AO did not convey any information relating to escaped or undisclosed income, and hence could not be said to be incriminating material.

2.1.3.T he finding of the Ld. CIT(A) on this aspect is worth nothing and hence is being reproduced hereunder:

“In the present case, the addition has been made on the basis of information already available in the return of income and assessment folders for the assessment already completed and the information available in the registered property deeds. The issue of addition pertains to the valuation as on 01.04.1981 and resultant indexed cost of acquisition which is arrived at on comparison of the data of the already available income tax records of the two years of the appellant. There is no dispute in the present case that the transaction was disclosed and the capital gains were disclosed by the appellant in the income tax return for the year under appeal. There is no addition w.r.t. sale consideration. The regular scrutiny assessment for the year under appeal had already been completed wherein no addition has been made on the issue. Even in the satisfaction note although the reference to seize documents in the form of property deeds etc. however these cannot be considered as incriminating documents in the facts of the case. In the case of Deputy Commissioner of Income- Tax Central Circle-03, Jaipur v. M/s Rigid Conductors (Raj.)Pvt. Ltd. Jaipur in ITA. Nos. 264/JP/2022 it is held by the Hon’ble ITAT that the registered property deed cannot be considered as incriminating material. Further in the satisfaction note the bearing on the determination of total income is not from the seized material but from the information available in the return of income. Thus, the satisfaction in the satisfaction notes regarding the suggestion or possibility of the suppression or escapement or misrepresentation, if any, of income is not emanating from incriminating seized material from the search on the other party.In the present case the satisfaction arrived at by the learned AO before initiating theproceedings under section 153C of the Act does not meet the requirements of the law and the same cannot be sustained and has the jurisdiction to issue the notice under section 153C is found to be faulty and thus the notice under section 153C of the Act and the consequent assessment order does not survive. Regarding the additions made in the assessment order u/s 153C of the Act it is found that the additions have not be made on the basis of seized material from the search and seizure action. Section 153C of the Act reads as under:…….

The material on record has been considered. The satisfaction note does not refer to incriminating seized material from search on other person which would be having a bearing on the determination of total income of the appellant. The addition made in the assessment order is not based on incriminating seized material from search on another person. The status of assessments before issuance of notice u/s 153C has been discussed in pre-paragraphs. There was no pending/abated assessment on the date search and seizure action as applicable and the time to issue notice u/s 143(2) of the Act had expired already. Accordingly, the judgement of Hon’ble Supreme Court in the case of AbhisarBuildwell (supra) and U. K. Paints (supra) are squarely applicable to the facts of the case. Impugned addition could have been done by the learned assessing officer in re-assessment proceedings by issuance of notice under section 147/148. CBDT (ITJ Section) has issued Instruction No. 1 of 2023 dated 23.08.2023 vide F.No. 279/Misc./M-54/2023-ITJ on the subject “Implementation of the judgment of the Hon’ble Supreme Court in the case of Pr.CIT (Central-3) v/s AbhisarBuildwellPvt. Ltd. (Civil Appeal No. 6580 of 2021)-Instruction regarding”……

Thus, these grounds of appeal are hereby allowed.”

2.2.LTCG Admittedly Disclosed:

2.2.1.I t is most pertinent to note that the AO himself, in the very satisfaction note (PB 31-32) has repeatedly admitted that the assessee has declared the amount of LTCG in AY 2012-13 and 2014-15 and he has even shown the figures by way of table in the note which has also been reproduced at page 29 of the Assessment Order. The amount of the sale consideration declared at Rs. 2,08,79,000/- in AY 2012-13 and Rs. 8,35,11,625/- in AY 2014-15 totaling to Rs. 10,43,90,625/- is the same sale consideration which is coming out of the agreement to sale (and the possession letter).

There is a minor variation of Rs. 90,625/-, however, that difference is only between the master agreement to sale showing Rs.10,43,9025/-(reproduced at Pg 24-27 of assessment order) and the 3 separate agreement totaling to Rs.8.27 crores (Rs. 3 Cr.+ 3.77Cr + 1.50 Cr.) and Rs. 7.21 Lakhs which was considered as advance amount (mentioned in master agreement itself), shows a lesser amount when compared with the total amount of sale consideration of Rs.10.43 Cr. But in any case, the four ikrarnama not being seized material and the assessee having already considered the Rs.10,43,9025/- such difference is irrelevant and therefore even the AO did not make any addition of that amount and rightly so.

2.2.2.A reference can be made to the assessment order dt.02.12.2019 for A.Y. 2012-13 (PB 128-152), again, the LTCG arising from the same vary transaction has been disclosed. The AO even recomputed total income at Rs. 1,40,32,239/-against which, the appellant filed appeal before the Ld. CIT Appeal No. CIT(A), Kota/10388/2019-20(PB154-155). Finally, the appellant opted for VSV, 2020(PB-153).

2.2.3.I n A.Y. 2016-17, in the initial return of income filed u/s 139 on 28.07.2016 declaring total income of Rs. 3,43,32,560/-(PB 1-18), the deduction claimed u/s 54B was surrendered back due to lapse of the permissible period whichrelated to the same LTCG transactions.Pertinently the assessment was completed vide order dated 29-11-2018 u/s 143(3) accepting the returned income.(II-PB-161-162) However thereafter, notice u/s 148 dt. 29.03.2021 was also issued (PB 156), and again in response there to, a revised computation of total income, declaring the same amount of income was filed (PB-II 163165). But the same was not preceded further.

It is further submitted and very pertinent to note that the assessment for AY 2014-15 was selected for scrutiny (PB 119-121), pursuant to the ROI filed at Total Income of Rs. 32,64,680/- on 29.07.2014 (PB 01-13) which included the amount of the Long-Term Capital Gain of Rs.3,78,74,469/- (PB5). Supposedly on the issue of examination of LTCG, notices u/s 143(2) dt.18.09.2015 and thereafter notice u/s 142(1) were issued time to time which were duly replied. The ld. AO has discussed the issue of LTCG particularly in para 2 (PB 120). All these were copies of agreement and all these facts showing the amount of the sale, the Cost of Acquisition etc. were well before the AO, who finally passed the order dt.31.07.2016 u/s 143(3) of the Act (PB 119-121)by making additions / disallowances of Rs. 25,200/- and Rs. 8,52,531/-. Notably, no variation has been made in the amount of declared LTCG.

3. Supporting Case Laws:

3.1 Kindly refer the judgment of Ashoka Commercial (2023) 334 CTR (Bom) 757, wherein at Para 19 it is held as under:

“19. Whether respondent has jurisdiction to take proceedings under section 153C of the Act in the case of petitioner in respect of assessment years where assessments proceedings have not abated.

a. Respondent can assume jurisdiction to assess or re-assess income under Section 153A/153C of the Act in cases where assessment proceedings have not abated, if and only if any incriminating material relating to petitioner has been found during the course of proceedings under Section 132 of the Act in the case of the person in whose case proceedings under Section 132 of the Act have been taken (Hubtown Limited). In Abhisar Buildwell Pvt. Ltd. (supra), the Apex Court held that where no incriminating material is found/unearthed during the search, the Assessing Officer cannot assess or re-assess taking into consideration the other materials in respect of unabated/completed assessments.

(d) The question of whether any material found during the course of proceedings under Section 132 of the Act in the case of Hubtown Limited is incriminating or otherwise has to be tested based only on the satisfaction note recorded by the Assessing Officer/s. The contents of the said satisfaction note are the only item/material to be looked at in this regard and respondent cannot seek to augment, supplement or add to materials recorded to support the claim that incriminating material has been found. Further respondent cannot refer to any other documents or material to establish such a claim. We find support in (i) Ananta Landmark Pvt. Ltd. (supra) and (ii) Jainam Investments (supra), where the Courts have held that the question of the Assessing Officer’s jurisdiction to undertake proceedings has to be tested/examined only on the basis of reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to reopen an assessment. These reasons cannot be improved upon and/or supplemented much less substituted by affidavit and/or oral submission;

(f) Accordingly, it is irrefutable that no incriminating material relating to petitioner has been found during proceedings under Section 132 of the Act in the case of Hubtown Limited;

(g) The assessment of petitioner has clearly not abated in terms of the 2nd Proviso to Section 153A (1) of the Act. Although the 1st proviso to Section 153C(1) of the Act says “provided that in case of such other person, the reference to the date of initiation of the search under Section 132 or making of requisition under Section 132A, in the second proviso to subsection (1) of Section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person”, the same cannot be applied in the instant case. This is because:

(I) Therefore, for all the reasons set out hereinabove, since the original assessment in the case of petitioner has not abated, and since no incriminating material has been found relating to petitioner in the course of proceedings under Section 132 of the Act in the case of Hubtown Limited, respondent cannot assume jurisdiction to assess/re-assess petitioner under Section 153C of the Act;”

3.2 In PCIT v. Prominent Real Tech (P.) Ltd. , 271 (Delhi)(DC10-21)),wherein at para 6 it was held as under:

“6. Further, in the present case, the Assessing Officer in the satisfaction note has recorded that the documents found during the search pertained to assessee and therefore it is a fit case for initiation of proceedings undersection 153C of the Act. However, the Assessing Officer failed to record as to how the documents found during search reflected any undisclosed income of the assessee. The Assessing Officer, without even demonstrating/or drawing any nexus of the seized documents with the undisclosed income of the assessee, merely on the ground that the seized documents belong to the assessee-initiated proceedings under section153C of the Act, which is against the settled position of law in several decisions of this Court.”

3.3. Pr.CIT (Central) – 2 v. Index Securities (P.) Ltd. 84 (Delhi) HC(DC24-32).

4.Review not permissible: Thus, now taking up the same issue (on merely finding of the same seized documents being ikranama, possession letter, etc. which does not emanate any undisclosed income at all nor it has been so demonstrated by the AO), amounts to a review by the AO which is not permissible in the proceeding’s u/s 153A/C nor u/s 147 of the Act. This is in addition to the contention that there was no incriminating document as such found.

Thus, applying the settled legal position the AO seriously erred in making additions in the impugned assessment orders for the AY 2014-15.Hence, the impugned addition made deserves to be deleted in full.

5. Common Submission towards GOA 1&2-Borrowed Satisfaction not permissible U/s 153C: Hence, assessment invalid Submission:

5.1. Keeping in mind the above principle propounded as also from language used in sec.153C, the AO must record a specific satisfaction note to the effect that a seized records has a bearing on the determination of the total income of such other person. Deriving of satisfaction to that effect and a specific mention in the satisfaction note, is the condition precedent for a valid assumption of a jurisdiction. However, such condition has not been fulfilled in the present case.Hence, the very initiation of proceedings u/s 153C is void-ab-initio and without jurisdiction.

5.2. The provision of Sec 153C shows a mandatory precondition to be complied with by the AO of the Third Person (“TP”-Assessee here) that he has to derive independent satisfaction of his own but not to borrow the same from the AO of the Searched Person (“SP”) or from anybody else. Moreover, it can’t be a mere suspicion, surmise & conjecture as evident from the language used in Section 153C:

“…if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person”

5.3. However, in the present case what appears from the contents of the satisfaction note is that instead of applying his own mind over the seized records received, the AO of TP (Assessee) appears to have borrowed satisfaction from the AO of the SP in as much as, there is nothing to demonstrate any valid satisfaction if derived by the AO even remotely. The AO did not judiciously apply his mind on the facts and the material before him. All that the AO has done in this case is that, he merely recorded his conclusion based on the satisfaction derived by the AO of the SP. After referring to the assessment records of assessee for different years he made vague allegations, that too in relation to (i.r.t) AY 2014-15 only to the effect that:

“The sale consideration of 2,08,79,000 in F.Y. 2011-12 and 8,35,11,625 (3,00,00,000+ 3,77,00,000+ 1,50,00,000+ 7,21,000) in F.Y. 2013-14 is duly tallied with the sale agreement executed by Shri Gopal Lal in favor of M/s S.G. Enterprises (except the amount of 90,625). This shows that the said land was sold by Shri Gopal Lal in favor of M/s S.G. Enterprises through agreement to sales. Therefore, capital gain liability arises on Shri Gopal Lal on the year of executing agreement to sale which is F.Y. 2011-12 and F.Y. 2013-14. The seller has also shown the transactions in his ITR filed for the A.Y. 2012-13 and 2014-15 disclosing the sale consideration as mentioned in the sale agreements but he has taken the figure of indexed cost of acquisition at a very high figure which can be established from the following facts:

As on 01.04.1981, Shri Gopal Lal has taken cost of land admeasuring 1.31 hectares at 3,15,000 (i.e. 2,40,458 per hectare) and after claiming indexation total cost of acquisition has been taken at 24,72,750 in the F.Y. 2011-12 whereas in F.Y. 2013-14, Shri Gopal Lal has taken cost of acquisition of 5.24 hectares’ land at 4,42,28,656/- which has been worked out as under:

Cost of land as on 01.04.1981 X index of F.Y. 2013-14/100 =”4,42,28,656

Cost of land as on 01.04.1981 =”44228656″ 100/939 =”4710187

Cost of land admeasuring 1 hectare as on 01.04.1981 4710187/5.24 =”8,98,891.

Thus, the assessee has taken two different cost of acquisition in two different financial years to avoid the payment of tax arose on sale of capital asset. If it is assumed that the cost of acquisition taken in F.Y. 2011-12 is correct then cost of land as on 1981 comes at 12,59,999 and indexed cost of acquisition of the same in F.Y. 2013-14 comes at 1,18,31,390. Thus, the seller has adopted excessive indexed cost of acquisition at 3,23,97,266.”

Whereas, the law contemplates that the AO of TP (the AO here) shall also apply his own mind and shall record his independent satisfaction without being influenced by what has been said tutored by the AO of the SP. No doubt he may take support of such satisfaction note.

5.4. In this case, the only allegation of the undisclosed income is the alleged excessive claim of Cost of Acquisition (COA) and consequently Indexed Cost of Acquisition (ICOA) as stated above, however, the AO completely failed to point out as to how the seized records had a bearing over the determination of the undisclosed income, if any in as much as no such seized accounts or documents has been referred to by the AO. What all the AO has referred to is the past assessment record, being the computation of total income etc., more particularly of A.Y. 2012-13 (PB 128-152) from which a comparison has been made with the computation of total income of AY 2014-15 (PB151), with the claimed COA and ICOA and an allegation of excessive claim has been made. The seized records consisted only of the registered documents of the sales transactions which, have already been admittedly recorded in the relevant assessment years and it is not the case of AO that there was a suppression of the Actual sales consideration or that the sale consideration declared in the seized documents was understated. There is absolutely not a single seized records has been referred to by the AO to derive satisfaction that the alleged excessive claim emanated there from so as to fulfill the condition of showing that the seized records had a bearing on the determination of the total income of the assessee.

5.5. There is nothing in the satisfaction note showing the satisfaction of the AO that such seized records received by him had a bearing on the determination of Total Income due to undisclosed income of the Assessee (TP) if any, which a condition precedent. There is no categorical finding recorded by AO how and which information in the seized records had a bearing over the assessee income. On this aspect a useful reference can be made to the caseCanyon Financial Services LTD. V ITO, (HC) Delhi (DC 9-16), as affirmed inITOV Canyon financial 124 (SC) (DC 7-8) holding that:

“Further, satisfaction notes recorded by Assessing Officer of assessee and Assessing Officer of Searched Person were identically worded -No reason was recorded how satisfaction note of Assessing Officer of assessee was a carbon copy of satisfaction note of Assessing Officer of Searched Person – High Court by impugned order held that in above circumstances, proceeding initiated against assessee under section 153C was unjustified – Whether Special Leave Petition filed against impugned order was to be dismissed.”

5.6.On the other hand, there is nothing in the satisfaction note recorded by the AO (of TP) that the search party has disclaimed the seized documents and that such documents/information contained therein to the effect and in the sense that the alleged excessive claim of COA and ICOA, coming out therefrom did not belong to or relate to the SP but to other person i.e. TP (the Assessee). Hence, there no valid assumption under section 153C.

5.7.Kindly refer CIT-tax-III, Pune v. Sinhgad Technical Education Society 14 (Bombay)it was held that:

“If certain items pertain to assessment year 2004-05 or thereafter, then it cannot be assumed that the documents seized or incriminating material giving information are specific and to all assessment years. The Tribunal has found that they were concluded assessments. They could not have been disturbed. The documents in question are neither incriminating ones nor unaccounted transactions of the assessee. They also did not relate to four assessment years. The Tribunal found that it will not be possible to uphold the stand of the revenue that overall approach in matters of concealment by the group assessee and all the discoveries of the search on ‘N’ and his concerns, will have to be taken into account forming the satisfaction. The satisfaction note was very closely examined and the reasons assigned by the Assessing Officer were found to be silent about the assessment year in which specific incriminating information or unaccounted or undisclosed hidden information was discovered or seized by the revenue from the assessee. The general satisfaction as recorded in the note is not enough. [Para 6]”

The said decision stand affirmed by apex court 290 (SC).

5.8.Pertinently, there is absolutely no whisper i.r.t A.Y. 2016-17. If there was some undisclosed income emanated from the seized records found at the place of SP or that information contained therein had a bearing over the determination of the total income of Assessee in other years. In other words, (except AY 2014-15), the AO maintained a complete silence what to talk of deriving satisfaction as contemplated u/s 153C for A.Y. 2016-17.

5.9.Interestingly, the DCIT/ACIT, Circle-2, Kota has initiated proceedings u/s 147 for A.Y. 2016-17 by issue of notice u/s 148 on dt. 29.03.2021 (PB156) and pursuant there to, a notice u/s 143(2) has also been issued on 18.06.2021 (PB 157-160). The reasons recorded for the reopening u/s 147/148 is reproduced here under.

“On perusal of record it is found that in A.Y 2014-15, assessee had deposited Rs.3,33,40,000/- in Capital Gain Account Scheme(CGAS) and claimed deduction under section 54B for Long Term Capital Gain(LTCG) arise due to sale of capital asset. Assessee failed to purchase new assets within time limit prescribed under section 54B and during A.Y.2016-17, declared LTCG of Rs.3,00,00,000/- and paid income tax accordingly whereas LTCG was to be paid on whole amount of Rs. Rs.3,33,40,000/- deposited in CGAS. The assessee has not utilized the balance amount of Rs.33,40,000/- (Rs.3,33,40,000 -Rs.3,00,00,000) as per provision of section 54B.”

Thereafter, the proceeding wereAsst. u/s 143/147 has been dropped and completed u/s 153C on 30.03.2023 under block assessment (for AY 2016-17).

It is evidently clear from a reading of the above reasons that the correct amount of LTCG is Rs.3,33,40,000/- had already been determined in A.Y. 14-15 and this finality has also been acknowledged once again by the above proceeding. Thus, relating to the same issue of computation of LTCG on account of sale of the agriculture land, two parallel proceedings were being continued, one through notice u/s 153C which is under dispute & other in normal assessment proceedings for AY 16-

17 u/s 148. Consequently, and evidently the AO himself is thus, not very sure as to whether there has been any undisclosed income emanating from the seized records. and the issue of computation of LTCG is part of the normal assessment scheme, which could not be covered under search assessment scheme.

Thus, the impugned notice u/s 153C and the impugned assessment orders passed u/s 144 r.w.s 153C dated 30.03.2023 are issued in utter disregard and violation of the law in force, prevailing at the relevant point of time and are void ab initio being completely without jurisdiction. Hence, the same deserve to be quashed.

CO 6.1 (7): Rs. 4,44,60,476/- on account of Rs.4,30,51,976/- as Index Cost of Acquisition and Rs.14,08,500/- w.r.t. Cost of Improvement denied:

Submission:

1. At the outset, the basis for addition made by AO w.r.t. impugned addition is only the computation of Cost of Acquisition adopteddisclosed by assessee being Rs.1,47,193,34/-/Bigha vis-a-vis Rs. 3,916/Bigha by ld. AO. Our submission may kindly be appreciated in this context.

2. No independent application of mind by present AO: It is submitted that the present AO did nothing but placed heavy reliance on the findings recorded by the ld. DCIT, Circle-2, Kota in Assessment order dt.02.12.2019 for AY 2012-13 passed u/s147 r/w 143(3) of the Act. Needless to say, that the AO is a Quasi-Judicial Authority, he must apply his own independent mind and provide reasons instead of borrowing the satisfaction or copying from the orders of the predecessor. The issue of taxability of the LTCG has already attained finality in as much as the appellant filed appeal before the Ld. CIT Appeal No. CIT(A), Kota/10388/2019-20 (PB154-155) against assessment order dt.02.12.2019 for A.Y. 2012-13 (PB 128-152). Finally, the appellant opted for VSV, 2020 (PB153).

3. It is also settled that when a dispute between the parties is stand settled under the DTVSV, 2020 the same cannot be raised/reopened by the revenue under the pretense of search or in any other manner whatsoever. In this regard specific attention is drawn on S. 5(3) of Direct Tax Vivad se Vishwas Act, 2020 which is reproduced hereunder: “(3) Every order passed under sub-section (1), determining the amount payable under this Act, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceeding under the Income-tax Act or under any other law for the time being in force or under any agreement, whether for protection of investment or otherwise, entered into by India with any other country or territory outside India.”

(Held in Satish Kumar Dhingra v. AO 290 (Delhi)).

4. The ld. AO wrongly drawn adverse inference from the disclosures made in Direct Tax Vivad se Vishwas-2020 “DTVSV, 2020”:

4.1 The ld. AO in the impugned assessment order at Para11 pg.32 alleged that the appellant has preferred and got the matter settled under DTVSV, 2020 (PB153). Thus, he inferred that otherwise the appellant has conceded the correctness of addition so made by the AO. Such an interpretation is however absolutely contrary to the specific scheme of DTVSV, 2020 which specifically prohibits the parties to take any adverse inference from opting for DTVSV-2020 for the purposes of settlement and there can’t be an estoppel against the assessee who has opted for such a scheme.

4.2 This was duly clarified by the CBDT Instruction 07/2020 dt.04.03.2020 with subject: “Clarifications on provisions of the Direct Tax Vivad se Vishwas Bill, 2020”. Kindly refer FAQNo. 52 & 55 reproduced hereunder for reference:

“Question No.52 Will the result of this Vivad se Vishwas be applied to same issues pending before AO?

Answer: No, only the issues covered in the, declaration are settled in the, dispute without any prejudice to same issues pending in other cases. It has been clarified that making a declaration under this Act shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a part in appeal or writ or in SLP to contend that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.

———–xxx———–xxx———–xxx———–xxx———–xxx———–xxx–

Question No.55: The appellant has settled the dispute under Vivad se Vishwas in an assessment year. Whether it is open for Revenue to take a stand that the additions have been accepted by the appellant and hence he cannot dispute it in future assessment years?

Answer: -Please refer to question no.52. It has been clarified in Explanation to clause 5 that making a declaration under Vivad se Vishwas shall not amount to conceding the tax position and it shall not be lawful for the income-tax authority or the declarant being a part in appeal or writ or in SLP to contend that the declarant or the income-tax authority, as the case may be, has acquiesced in the decision on the disputed issue by settling the dispute.”

Thus, AO erred by drawing wrong inference which is not permissible in the eyes of law and any conclusion drawn is to be ignored.

Therefore, applying the settled legal position the AO seriously erred in making additions in the impugned assessment orders for the AY 2014-15.Hence, the impugned addition made deserves to be deleted in full.” 6.Lastly, we rely upon the detailed submissions dt. 23.10.2024 which were made before the Ld. CIT(A).

7. We also strongly rely upon this part of the o0rder of CIT(A) staring from 4.2 pg. 28 to pg. 46.

CO 7 (8): Invalid charging interest u/s 234A & 234B:

Submission:

1. That, a Search & Seizure action u/s 132 or Survey u/s 133A of the Income tax Act,1961 was carried out on Oswal Group of Jaipur on 06.09.2018 pursuant to which in the case of assessee also the Assessment was completed u/s 144 r.w. S.153C on dt. 30.03.2023 at total income of Rs. 4,86,02,890/- by making addition of Rs.4,44,60,476/-.

2. That, the age of assessee (Shri Late Gopal Lal Goswami who expired on dt. 04.10.2020) was of 81 Yrs.

3. That, there is a clear errorin the captioned assessment order in as much as while computing total tax liability of Rs. 3,46,66,490/-, interest u/s 234B amounting to Rs. 1,72,74,400/- was also charged upon assessee. However, no such interest was legally payable by the assessee; on bare reading of the relevant provisions, being S. 207 and 208 of the Act.

4. It is submitted that Sec. 207 & 208 are very specific and categorical and provides exception in a case having these facts. The provisions are reproduced here under:

“S-207. Liability for payment of advance tax. —

(1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assesse which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as “current income”.

(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—

S-208. Conditions of liability to pay advance tax. —

Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is ten thousand rupees or more.”

5. That,admittedly, it is a case of Super Senior Citizen Individual and that the assessee was not deriving income chargeable under the head “Profits and gains of business or profession” during the relevant previous year.

Since this assessee has fulfilled both the conditions mentioned in the above provisions, and there is no contrary material brought on record in the Assessment Order and hence while calculating the interest u/s 234B, was not at all payable by this assessee.

6. For the case law on merit,reliance is placed on Jayantilal D. Ray v. Deputy Commissioner of Income-tax 2022] 194 ITD 713 (Ahmedabad-Trib.):

“6. We have heard the rival contentions and perused the material available on record. It is the claim of the assessee that in the year under consideration, the assessee did not have any income chargeable under the head” profits and gains of business and profession” and further he is a senior citizen of more than 60 years old and hence squarely covered by the provisions of section 207 of the Act. Section 207 of the Act is reproduced below for ready reference.

“207. (1) Tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 (both inclusive), in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as “current income”.

(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who—

On a reading of section 207 of the Act, it is seen that it speaks of liability to pay advance tax. As per sub section (1), advance tax has to be paid on the total income of the current year in accordance with the provisions of sections 208 to 219 of the Act. However, sub section (2) of section 207 which has been inserted by Finance Act, 2012 w.e.f. 14-2012 carves out an exception by stating that sub section (1) would not be applicable to a resident individual assessee who does not have any income chargeable under the head profits and gains of business and profession and if he has attained the age of 60 years or more at any time during the relevant previous year. As per copy of income tax return submitted before us, the date of birth of the assessee is 30-61934 and thus, during the previous year relevant to the assessment year under dispute, the assessee is clearly above the age of 60 years. Further, a perusal of the income tax return submitted before us during the year under consideration shows the assessee had no income which is chargeable under the head “profits and gains” of business and profession. On a perusal of the order of the ld. CIT(A), we see that he has not brought on record any cogent material to demonstrate that the assessee is earning income from business or profession and is not drawing salary from these concerns on which TDS has been deducted u/s. 192 of the Act. The ld. CIT(A) has primarily relied on the understanding that since the assessee himself is a managing director of the company in which he is having control, he is not entitled to earn salary from the said company and the income so earned from the company bears the character ” business and professional income”. However, in view of the fact that the assessee is a senior citizen above 60 years of age, has been consistently filing return declaring income earned as Salary income from these concerns, tax has been deducted at source u/s 192 of the Act on the payments made to the assessee and that the Ld. CIT(Appeals) has not brought any material on record to exhibit that the assessee has not earned salary income, we are of the view that the assessee has satisfied conditions of section 207 of the Act and is not liable to pay advance tax. In the result, we hold that ld. CIT(A) has erred in confirming the charging of interest u/s. 234B and section 234C for non-compliance of advance tax provisions.

7. In the result, the appeal of the assessee is allowed.”

Thus, there is a legal error of law incurred. In other words, the fact that there was no income from business and the assessee was a senior citizen individual (Aged 81 yrs). Therefore, such levy is contrary to the provisions of law and hence may kindly be quashed here itself.

7. It is further submitted that in this very year, the AO had charged interest u/s 234B of the Act vide order passed u/s 154 r/w 143(3) dt.10.08.2021 against which, the assessee filed appeal. Pertinently the ld. CIT(A)-4, Jaipur vide its order dated 28.12.2022 (PB122-125) in the appeal against order u/s 154 has quashed the levy of the interest u/s 234B allowing the appeal of the assessee in the following words: “5.1 I have perused the computation of income filed by the appellant and find that the appellant during the year has income from house property and capital gains and has no business income. The payment of advance tax is governed by Section 207 of the Income Tax Act, 1961. The relevant portion is reproduced herein as under:

….207 [(1) Tax shall be payable in advance during any financial year, in accordance with the provisions of section 208 to 219 (both inclusive), in respect of the total Income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year, such income being hereafter in this Chapter referred to as “current income”]

[(2) The provisions of sub-section (1) shall not apply to an individual resident in India, who

5.2 The order of the AO is not a speaking order and does not give any basis of rejecting the claim of the appellant. In view of the specific provisions, no advance tax was payable by the appellant. On the facts and in the circumstances of the case, the interest charged u/s 234B of the Act is directed to be deleted. Appellant’s appeal in Ground of Appeal No. 1 stands allowed.

6. In the result, the appeal of the appellant is allowed.”

Unfortunately, however, the present AO has again repeated the levy of the interest u/s 234B. Our submissions are same that the assessee was not liable to make payment of Advance Tax hence, there can’t be any question of levy of interest u/s 234C. Even the AO had thereafter given the appeal effect to said CIT(A) order by allowing the relief of interest so granted (PB126-127).

Thus, the issue is directly and squarely covered in the assessee’s own case as stated above and levy of interest deserves to be quashed in toto.

However, the Ld. CIT(A) wrongly held charging of interest as mandatory and consequential, in para 8.2 page 64 without applying his mind.

The above submissions have been made based on the instructions and the information provided of/by the client.”

10. The ld. AR of the assessee filed on a detailed paper book in support of the contention so raised in the written submission and the index of the document submitted are as under:-

11. The ld. AR of the assessee vehemently argued that the considering the decision of the Apex Court in the case of Abhisar Buildcon (supra) the ld. CIT(A) rightly quashed the order of the assessment and the addition made therein. He further contended that it was an admitted case of completed and unabated assessment. He submitted that the assessment for AY 2014-15 was selected for scrutiny (PB 119-121), pursuant to the ROI filed at Total Income of Rs. 32,64,680/- on 29.07.2014 (PB 01-13) which included the amount of the Long-Term Capital Gain of Rs.3,78,74,469/- (PB5). Supposedly on the issue of examination of LTCG, notices u/s 143(2) and 142(1) of the Act were issued time to time which were duly replied. Our attention was drawn to the copy of the assessment order dated 02.12.2019 for AY 12-13 placed at pages 128 to 152 of ABP. It is notice that the Ld. AO has discussed the issue of LTCG particularly in para 2 (PB 120). All the copies of agreements and all these facts showing the amount of the sale, the Cost of Acquisition etc. were well before the AO, in AY 2014-15 who finally passed the assessment order dt.31.07.2016 u/s 143(3) of the Act by making additions / disallowances of Rs. 25,200/- and Rs. 8,52,531/-. Notably, no variation has been made in the amount of declared LTCG. He drew our attention towards a copy of the said assessment order placed at pages 119 to 121 of APB. He vehemently submitted that it was not at all a case of finding any incriminating material at all even remotely in as much as firstly what was found was only a possession letter dated 13.04.2013 a copy of which is placed in assessee’s paper book relating to sale of 1.92 hectare land for sale consideration of Rs. 3 cr.(out of the total sale consideration of 10.43 crore towards the sale of total land of 6.55 hectare).The four Ikraar Namas which are relied upon by the AO were in fact supplied by the assessee during the post-search investigation as clearly stated in the assessment order passed under scrutiny AY 2013 dated 02.12.2019, copy of which is placed at assessee’s paper book page 128 to 152 and in particular paper book page 129 was relevant. Such facts are also mentioned in the satisfaction note page 1 and 2 (copy placed at ABP 16-17). Hence, whether it was a case of seized possession letter or the four Ikraarnama, they all are related to the disclosed transaction. The entire transaction of sale was considered by the assessee in assessment year 12-13 and 14-15 wherein the total sale consideration of Rs. 10.43 crore was considered and the resultant capital gain was declared in both the years. It is submitted that the AO himself has repeatedly admitted in the satisfaction note itself that the assessee had already declared the amount of LTCG in these two years (Rs. 2,08,79,000/- in AY 12-13 and Rs. 8,35,11,625/- in AY 14-15 totally to Rs. 10.43 crs.). He submitted that it was a case of review of the same information which was already available and no new materials much less incriminating material could be found nor was so relied upon by the authorities and therefore, no addition was at all permitted in a completed unabated assessment. He also submitted that it was nothing but a case of borrowed satisfaction in as much as the satisfaction note prepared by the AO of the respondent assessee, was lacking the statutory requirement of recording independent satisfaction that the seized material had a bearing over the determination of the total income in as much as there was no incriminating material found which could have had a bearing overdetermination of the total income already assessed. The AO was supposed to have derived an independent satisfaction whereas in this case it appears that the present AO, Jaipur has merely copied the contents of the findings recorded in the assessment order for AY 2012-13 which was already passed. He submitted that the only allegation was of excessive claim of cost of acquisition and the indexed cost of acquisition by making a comparison between the assessment record of two years. However, the AO completely failed to point out how this was incriminating material showing undisclosed income and it was not a case of the suppressed sale consideration. There was nothing found during search which could show a suppression of the sale consideration or some bogus claim made by the assessee towards cost of acquisition. The seized record merely consisted of the registered documents which cannot be said to be incriminating material. For this he placed reliance on Page 25, Para 5.5,Canyon financial (supra) as affirmed by the Apex Court. To support his contention, he placed a strong reliance on the decisions in the case of Abhisar Buildwell (P.) Ltd. (supra) which affirmed CIT (Central) v. Kabul Chawla 300/380 ITR 573 (Delhi) and Ashok Commercial Enterprises v. Assistant Commissioner of Income Taxation 144/459 ITR 100 (Bombay)/ Ashok Commercial Enterprises v. Assistant Commissioner of Income Taxation 144/459 ITR 100 (Bombay), Prominent Real Tech (P.) Ltd. (supra, Index Securities (supra), UK Twins (supra), CIT v. Sinhgad Technical Education Society 225 (SC). He finally prayed that the ld. CIT(A) was fully justified in deleting the entire addition made of Rs. 4,44,60,476/- hence the Revenue’s appeal be dismissed.

12. We have heard both the parties, perused the materials available on record and gone through the orders of the lower authority. First we deal with the appeal of the revenue wherein the revenue contended that the Id.CIT(A) has erred in deleting all the additions made by A.O on technical ground only without giving any finding on the merits of additions and taken a view that notice issued in the case of the assessee u/s 153C of the Act as invalid without appreciating that there is specific reference to incriminating seized material in the satisfaction note recorded by A.O for issue of notice u/s 153C of the Act and thereby the relied upon material were recovered on account of search and is supported by the findings of search/post search proceedings. Thus, we note that there are three grounds by which revenue challenge that the Id. CIT(A) should have considered the merits of the dispute before directing to delete the addition considering the technical ground of the assessee suggest that it challenges the validity of the proceeding u/s. 153C of the Act. Therefore, we considered to decide these three grounds together. So, while going on the issue it would be appropriate to note the contention of the Satisfaction note recorded in this case, which reads as follows from the paper book page 16 and 17 of the paper book filed;

“A search action u/s 132(1) of the Income-tax Act, 1961 was carried out on 06.09.2018 at Oswal Group of Jaipur and residential premises of Shri Surya Singhal located at 278, Dada BadiExtn, Kota on 06.09.2018 was also covered in search action. During the search proceedings carried out at residential premises of Shri Surya Singhal, certain property documents regarding purchase of properties were seized. In these properties papers, a possession letter dated 13.04.2013 executed between Shri Gopal Lal and M/s S.G. Enterprises through its partners Shri Brijmohan Pareta was also seized. This possession letter was executed for sale of land admeasuring 1.92 hectares of Khasra Nos. 1123, 1163, 1164,1165 and 1166 of Village – Devliarab, Tehsil -Ladpura, District – Kota. As per this possession letter, aforementioned land has been sold for total sale consideration of Rs. 3,00,00,000 and the seller has accepted that he has received the entire sale consideration from the buyer. It is also written in this possession letter that the seller has handed over possession of this land to the buyer. This possession letter is duly notarized by the Notary Public.

……………………

………………….

It is also stated in this agreement that a sum of Rs.2,08,79,000 has been adjusted in the amounts mentioned in the registered sale deeds and the remaining amount of Rs.7,21,000 is to be treated as advance for this agreement. Remaining sale consideration to be paid by the sellers to the purchaser is at Rs.8,27,90,625 and the land equivalent to this amount has to be registered by the seller. Remaining amount of Rs.8,27,90,625 has been decided to paid as under:

1. Rs.3,00,00,000 till 26.05.2012 (i.e. value of land admeasuring 12 Bigha)

2. 1,50,00,000 till 26.12.2012

3. Remaining amount till 26.05.2013

4. It is also agreed by both the parties that if the seller has failed to make payments as discussed above within the stipulated time, then the time limit for payments may be increased for maximum 4 months and the seller would pay interest on the remaining at 1.25% monthly interest rate

From careful perusal of aforementioned facts, it is evident that the land admeasuring 6.55 hectares have been agreed to sold by Shri Gopal Lal S/o Shri Purushottam Lal resident of Mahaprabhu Ji Ka Mandir, Kota to M/s S.G. Enterprises through its partners Shri Brijmohan Pareta S/o Shri Roop chandPareta, Shri Shyam Sunder Goyal S/o Shri Ramnarayan Goyal and Shri Om Prakash Gupta S/o Shri Ram Pratap @ 25 lakh per bigha (i.e. Rs.10,43,90,625) and possession of the same was also handed over to the buyer by the seller in pursuance of the four agreements as discussed above. The purchaser has provided the sale consideration to the seller in cash and through cheques on different dates as specified in the aforementioned sale agreements. In all the sale agreements, it is clearly written that the possession of the land has been handed over to the purchaser by the seller. The seller has shown capital gain arouse on sale of aforementioned land admeasuring 6.55 hectares to M/s S.G. Enterprises as under:

F.Y. 2011-12 (A.Y. 2012-13)

F.Y. 2013-14 (A.Y. 2014-15)

The sale consideration of Rs.2,08,79,000 in F.Y. 2011-12 and Rs.8,35,11,625 (3,00,00,000 + 3,77,00,000 + 1,50,00,000 + 7,21,000) in F.Y. 2013-14 is duly tallied with the sale agreement executed by Shri Gopal Lal in favour of M/s S.G. Enterprises (except the amount of Rs.90,625). This shows that the said land was sold by Shri Gopal Lal in favour of M/s S.G. Enterprises through agreement to sales. Therefore, capital gain liability arises on Shri Gopal Lal on the year of executing agreement to sale which is F.Y. 2011-12 and F.Y. 2013-14. The seller has also shown the transactions in his ITR filed for the A.Y. 2012-13 and 2014-15 disclosing the sale consideration as mentioned in the sale agreements but he has taken the figure of indexed cost of acquisition at a very high figure which can be established from the following facts:

As on 01.04.1981, Shri Gopal Lal has taken cost of land admeasuring 1.31 hectares at Rs.3,15,000 (i.e. Rs.2,40,458 per hectare) and after claiming Indexation total cost of acquisition has been taken at Rs.24,72,750 in the F.Y. 2011-12 whereas in F.Y. 2013-14; Shri Gopal Lal has taken cost of acquisition of 5.24 hectares land at Rs.4,42,28,656/- which has been worked out as under:

Cost of land as on 01.04.1981 X Index of F.Y. 2013-14/100 =”4,42,28,656

Cost of land as on 01.04.1981 =”44228656″ 100/939 =”4710187

Cost of land admeasuring 1 hectares as on 01.04.1981 4710187/5.24 =”8,99,891.

Thus, the assessee has taken two different cost of acquisition in two different financial years to avoid the payment of tax arose on sale of capital asset, If it is assumed that the cost of acquisition taken in F.Y. 2011-12 is correct then cost of land as on 1981 comes at Rs.12,59,999 and Indexed cost of acquisition of the same in F.Y. 2013-14 comes at Rs.1,18,31,390. Thus, the seller has adopted excessive Indexed cost of acquisition at Rs.3,23,97,266.

I have perused and analyzed the information and documents available and in view of this the undersigned is satisfied that this is a fit case for taking action u/s 153C of the IT Act, 1961 for AY 2013-14 to AY 201920.”

As is evident from the above satisfaction note that the issue that has been observed and noted is already disclosed and offered in the ITR filed. Record reveals that there apart, four Ikrarnama were relied upon, however were related to the same transaction of sale of land. The contention of the ld. AR was that the same was supplied by the appellant during post search investigation and were not seized while the search. These facts, were not controverted by the ld. DR. We find that these facts are narrated in the assessment order for AY 2012-13 (PB-129). It is not disputed that the entire transaction of sale consideration of Rs. 10.43 crore was disclosed in the return of income filed for AY 2012-13 and AY 2014-15 and the capital gain liability arising thereon was duly disclosed therein. These crucial facts are stated in the satisfaction note itself and even the ld. CIT DR admitted the same. It was not the case of the revenue that based on the seized material, the appellant was found to have declared lesser amount of sale consideration than declared in the agreements and in the return of income. Thus, once admittedly no undisclosed income was emanating from the seized documents, the same could not be termed as incriminating material. In the case of Dy CIT v. Rigid Conductors (Raj) (P.) Ltd. [IT Appeal No. 264/JP/2022, dated 24-5-2023] it is held by the co-ordinate bench of ITAT Jaipur, that the registered property deed cannot be considered as incriminating material. It is noted that the only dispute raised was that the appellant has claimed a very high amount of indexed cost of acquisition based on the fair market value as on 01.04.1981 this year, as compared to AY 2012-13. Before us ld. AO through ld. DR failed to establish that how such information was coming out of the seized material, so as to be termed as undisclosed income. [apart from being a matter of difference of opinion only to be given by the experts] The contentions of the ld. CIT DR as regards the assessment for AY 2012-13, firstly, are not relevant as that year is not before us. However, in any case, there also she admitted that the transaction was fully disclosed in the return of income and some variation was made by the AO against which first appeal was filed and filed which was settled through VSVS. These facts in no manner helps the revenue in finding a fault in the decision of the ld. CIT(A) against which the revenue is an appeal. It is evident that it was nothing but a case of review of the information which are already disclosed, considered and available on the record of the AO, much prior to the date of the search. Hence, there was nothing in the nature of incriminating material was found. Thus, the information upon which the addition was made is nothing but the accounted and assessed transaction and thereby consequent upon search the completed transaction or that of the assessment cannot be subjected to review without finding any incriminating document. Having noted that basic facts and considering the legal decision the ld. CIT(A) has correctly directed to delete the addition.

Having noted similar facts as referred in the decision of the Apex Court while dealing with the case of Abhisar Buildwell (P.) Ltd. (supra) wherein the Highest Court observed that ;

“14. In view of the above and for the reasons stated above, it is concluded as under:

(emphasis supplied)

12.1 We also note that Hon’ble Delhi High Cout while dealing with the case of Kabul Chawla (supra), held that ;

“……….(v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ‘assess’ in s. 153A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ‘reassess’ to completed assessment proceedings.

(vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under s. 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the AO.

(vii) Completed assessments can be interfered with by the AO while making the assessment under s. 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.”

12.2 Having noted that the detailed finding on the facts of the case that the material upon which the addition made were recorded transaction and the assessment was also made while verifying those deeds or documents as record. While holding so the ld. CIT(A) also referred the decision of the co-ordinate bench of ITAT Jaipur bench in the case of Rigid Conductors (Raj) (P.) Ltd. (supra) wherein the bench has held that registered property deeds cannot be considered as incriminating material. Before us revenue could not establish that the document referred to herein this case are incriminating in nature and the assessee has not disclosed those transactions in their regular returned filed. In the light of the facts which has not disputed by the revenue and binding judicial decisions of the Apex Court, in our considered view we do not find any infirmity in the finding of ld. CIT(A) in accepting the plea of the Assessee that there is no incriminating document which was seized in the course of search relating to the addition sought to be made on account of the capital gain so arising on account of sale of the land partly this year, is already accepted and reflected in the return of income filed by the assessee in the relevant assessment years (AY 201213 & 2014-15) and even the assessment of these stood completed. Therefore, the jurisdictional requirement of invoking the provision of section 153A r.w.s. 153C of the Act was not satisfied in this case and therefore, we upheld the finding of the ld. CIT(A) based on the reasoned stated herein above and considering the binding decisions of various High Courts and final findings of the Apex Court on the decision cited here in above, we see no reason to interfere with the order passed by the learned CIT(A). Based on these observations ground no. 1 to 3 are dismissed. Ground no. 4 general in nature and does not require our finding.

13. Now coming to the cross objections filed by the assessee, we note that ground no 1 & 2 of the CO are general in nature and don’t require any specific adjudication. Whereas objection no. 3, 4 relates to the merits of the disputed addition & 5 another technical objection raised. Since the additions made were directed to deleted concurring with the findings of the ld. CIT(A), these grounds raised by the assessee in CO become academic.

In the result, the appeal of the revenue is dismissed and the Cross objection of the assessee is disposed off in terms of the observation made herein above.