ITO v. Arun Kumar Kapoor - Taxpublishers.in

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The Tax Publishers2012 TaxPub(DT) 0473 (Asr-Trib) : (2011) 140 TTJ 0249 INCOME TAX ACT, 1961 --Reassessment--ValidityBasis--Search was conducted under section 132 in company No. 1 where certain incriminating documents relating to assessee and company No. 2 were seized. Assessing officer issued notice under section 148. Assessee argued that reassessment proceedings iniiated by assessing officer under section 148 were illegal and void-ab-initio as the order ought to have been passed under section 153C. Assessing officer argued that search documents were ground in company No. 1 pertained to company No. 2 and not to the assessee and action under section 153C if any, could only be taken in case of company No. 1 and not in the case of assessee. *Held:* The contention of assessing officer was factually incorrect and contrary to available records of seized documents specifically mentioned in assessment order. The provision of section 153C were applicable which supersedes the applicability of provisions of sections 147 and 148. Therefore, the notice issued under section 148 was illegal and void-ab-initio as procedure laid down under section 153C had not been followed. The contention of assessing officer is contrary to the facts narrated in the assessment records. From paras 2.1, 3.1.1(a) and (b) and 3.1.3 of the assessment order, it is crystal clear that incriminating documents relating to the assessee were found during the course of search. Paras 2.1, 3.1.1(a) and (b) and 3.1.3 read as under : '2.1 On the basis of evidence found during the course of search and assessment proceedings, the cost price of each share of M/s P.R. Infrastructure Ltd. was determined at Rs. 2,041 as against the transfer cost price at face value of Rs. 10 by the directors of that company. In the report, it was elaborated that M/s P.R. Infrastructure Ltd. had transferred the shareholding of the directors along with management of the company to M/s Today Home & Infrastructure (P) Ltd. for a total consideration of Rs. 12.25 crores. 3.1.1 During the course of search and seizure conducted on M/s Today Homes & Manufacturing (P) Ltd. certain documents were seized and it is found that: (a) Receipt dt. 3-8-2005 issued and signed by Sh. Arun Kumar Kapoor director of M/s P.R. Infrastructure Ltd. shown that they have received Rs. 51 lacs by cheque and Rs. 7 lacs in cash from M/s Today Homes & Infrastructure (P) Ltd. as part-payment on account of sale consideration of land at Rs. 12.25 crores. (b) As per undertaking/affidavit signed by Sh. Arun Kapoor director of M/s P.R. Infrastructure Ltd. on 14-8-2005, it was further found that M/s P.R. Infrastructure Ltd. has received further sum of Rs. 42 lacs from M/s Today Homes & Infrastructure (P) Ltd. towards the part-payment of sale consideration of Rs. 12.25 crores. Thus, till 14-8-2005, Sh. Arun Kapoor had received Rs. 1 crore in cheque and in cash as part-payment of total sale consideration of land at Rs. 12.25 crores. 3.1.3 Sh. Arun Kapoor had transferred 10,000 shares of M/s P.R. Infrastructure Ltd. owned by him at face value of Rs. 10 whereas market value of each share was determined at Rs. 2,041. Assessee has not shown any capital gain on account of transfer of shares in his return of income for assessment. As such income to the tune of Rs. 2,02,10,000 (20,41,00,000 sale priceÃ¢â‚¬â€1,00,000 cost price) has thus escaped assessment for the assessment year 2006-07.' [Para 7.1] The provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. The documents were seized during the search under section 132 of the Act and the same were sent to the assessee's assessing officer the learned Commissioner (Appeals) has correctly observed that only the provision in which any assessment could be made against the assessee in the Income Tax Act was s. 153C read write section 153A of the Act. It is also apparent from the record that the officer at Delhi has mentioned in his letter that the necessary action may be taken as per law under section 153C/148 of the Act. Hence, notice issued under section 148 of the Act and proceedings under section 147 of the Act by the assessing officer are illegal and void ab initio. In view of the provisions of section 153C of the Act, section 147/148 stands ousted. In the instant case, the procedure laid down under section 153C has not been followed by the assessing officer and, therefore, assessment has become invalid. [Para 8] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0473 (Asr-Trib) : (2011) 140 TTJ 0249

INCOME TAX ACT, 1961

--Reassessment--ValidityBasis--Search was conducted under section 132 in company No. 1 where certain incriminating documents relating to assessee and company No. 2 were seized. Assessing officer issued notice under section 148. Assessee argued that reassessment proceedings iniiated by assessing officer under section 148 were illegal and void-ab-initio as the order ought to have been passed under section 153C. Assessing officer argued that search documents were ground in company No. 1 pertained to company No. 2 and not to the assessee and action under section 153C if any, could only be taken in case of company No. 1 and not in the case of assessee. Held: The contention of assessing officer was factually incorrect and contrary to available records of seized documents specifically mentioned in assessment order. The provision of section 153C were applicable which supersedes the applicability of provisions of sections 147 and 148. Therefore, the notice issued under section 148 was illegal and void-ab-initio as procedure laid down under section 153C had not been followed.

The contention of assessing officer is contrary to the facts narrated in the assessment records. From paras 2.1, 3.1.1(a) and (b) and 3.1.3 of the assessment order, it is crystal clear that incriminating documents relating to the assessee were found during the course of search. Paras 2.1, 3.1.1(a) and (b) and 3.1.3 read as under : '2.1 On the basis of evidence found during the course of search and assessment proceedings, the cost price of each share of M/s P.R. Infrastructure Ltd. was determined at Rs. 2,041 as against the transfer cost price at face value of Rs. 10 by the directors of that company. In the report, it was elaborated that M/s P.R. Infrastructure Ltd. had transferred the shareholding of the directors along with management of the company to M/s Today Home & Infrastructure (P) Ltd. for a total consideration of Rs. 12.25 crores. 3.1.1 During the course of search and seizure conducted on M/s Today Homes & Manufacturing (P) Ltd. certain documents were seized and it is found that: (a) Receipt dt. 3-8-2005 issued and signed by Sh. Arun Kumar Kapoor director of M/s P.R. Infrastructure Ltd. shown that they have received Rs. 51 lacs by cheque and Rs. 7 lacs in cash from M/s Today Homes & Infrastructure (P) Ltd. as part-payment on account of sale consideration of land at Rs. 12.25 crores. (b) As per undertaking/affidavit signed by Sh. Arun Kapoor director of M/s P.R. Infrastructure Ltd. on 14-8-2005, it was further found that M/s P.R. Infrastructure Ltd. has received further sum of Rs. 42 lacs from M/s Today Homes & Infrastructure (P) Ltd. towards the part-payment of sale consideration of Rs. 12.25 crores. Thus, till 14-8-2005, Sh. Arun Kapoor had received Rs. 1 crore in cheque and in cash as part-payment of total sale consideration of land at Rs. 12.25 crores. 3.1.3 Sh. Arun Kapoor had transferred 10,000 shares of M/s P.R. Infrastructure Ltd. owned by him at face value of Rs. 10 whereas market value of each share was determined at Rs. 2,041. Assessee has not shown any capital gain on account of transfer of shares in his return of income for assessment. As such income to the tune of Rs. 2,02,10,000 (20,41,00,000 sale priceÃ¢â‚¬â€1,00,000 cost price) has thus escaped assessment for the assessment year 2006-07.' [Para 7.1] The provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. The documents were seized during the search under section 132 of the Act and the same were sent to the assessee's assessing officer the learned Commissioner (Appeals) has correctly observed that only the provision in which any assessment could be made against the assessee in the Income Tax Act was s. 153C read write section 153A of the Act. It is also apparent from the record that the officer at Delhi has mentioned in his letter that the necessary action may be taken as per law under section 153C/148 of the Act. Hence, notice issued under section 148 of the Act and proceedings under section 147 of the Act by the assessing officer are illegal and void ab initio. In view of the provisions of section 153C of the Act, section 147/148 stands ousted. In the instant case, the procedure laid down under section 153C has not been followed by the assessing officer and, therefore, assessment has become invalid. [Para 8]