ITAT quashes Addition Made by AO on account of Capital Gain on ground of Wrongful Initiation of Proceedings u/s 148 of Income Tax Act [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) quashed the addition made by the Assessing Officer (AO) on account of capital gain on the ground of wrongful initiation of proceedings under section 148 of the Income Tax Act,1961. 

Ickon Projects, the appellant assessee was firm and purchased a piece of land measuring 52152 sq. ft. known as “Minerva Mills Property, Bangalore, from National Textile Corporation Ltd. for a consideration of Rs.8,90,00,000/- and the assessee entered into an agreement with Sobha Developers Ltd. for the sale of the property for a consideration of Rs.10,05,00,000/-. 

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition of Rs.1,15,00,000/- on account of capital gain against the assessee. 

V. Chandrashekar, the counsel for the assessee contended that whenever incriminating documents found in a search under Section 132 of the Income Tax Act belong/relate to a person other than the searched person, the assessing officer of the searched person needed to record satisfaction that such incriminating documents belong to a person other than the searched person to proceed against such other person under Section 153C of the Income Tax Act. 

Subramanian, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the addition was as per the law and liable to be sustained. 

The Bench observed that the wrong initiation of proceeding by issuing notice under Section 148 of the Income Tax Act culminating into the order of addition under Section 147 of the Income Tax Act was, therefore, found to be without any jurisdiction. 

The two-member bench comprising Madhumita Roy (Judicial) and Chandra Poojari (Accountant) quashed the addition made by the assessing officer against the assessee on account of capital gain. 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates