ACIT-2(2)(1), MMUMBAI V. M/S. JICS LOGISTIC LIMITED , MUMBAI

MA 193/MUM/2024

AI Insights

The case involves multiple Miscellaneous Applications (MAs) filed by the Revenue seeking recall/rectification of previous Tribunal orders concerning the valuation of assets during the assessment years 2011-12 to 2018-19 for M/s Jics Logistics Ltd. The Tribunal had initially directed that the matter be referred to the Departmental Valuation Officer for a proper valuation, which the Revenue argued was not feasible as there was no such officer for business rights and goodwill valuations. The Tribunal acknowledged this and allowed the Revenue's appeal, directing that the matter be referred to an expert in financial valuation, which could include any impaneled financial expert of the Department.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 41620 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-10-2024
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 16-08-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 02-08-2024
• Other Referred Cases: Jansampark advertising and Marketing Pvt. Ltd.
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESHWARI MENON
• Assessee Lawyers: SATYAPRAKASH SINGH
• Keywords: Valuation report
• Section: 148; 191

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) MA No. 194/MUM/2024 (Arising out of ITA No. 1760/MUM/2023) Assessment Year: 2011-12 & MA No. 202/MUM/2024 (Arising out ITA No. 1779/MUM/2023) Assessment Year: 2012-13 & MA No. 193, 192/MUM/2024 (Arising out ITA Nos. 1761 & 1762/MUM/2023) Assessment Year: 2013-14 to 2014-15 & MA Nos. 191 & 190/MUM/2024) (Arising out of ITA Nos. 1780 & 1781/MUM/2023 Assessment Year: 2016-17 & 2017-18 & MA No. 189/MUM/2024 (Arising out of ITA No. 1764/MUM/2023) Assessment Year: 2018-19 ACIT-2(2)(1), Room No. 545, 5th floor, Aayakar Bhavan, Mumbai-400020. Vs. M/s Jics Logistic Ltd., 403, 4th floor, Classic Pentagon, Andheri (E), Mumbai-400069. PAN No. AACCJ 2178 F Appellant Respondent Assessee by : Mr. Satyaprakash Singh Revenue by : Ms. Rajeshwari Menon, Sr. DR Date of Hearing : 16/08/2024 Date of pronouncement : 16/10/2024 PER OM PRAKASH KANT, AM By way of the captioned Miscellaneous Applications, the Revenue is seeking to recall/rectification of the order of the Tribunal dated 29.11.2023 passed in ITA Nos. 1763, 1780 & 1781 & 12, 2012-13, 2013-14 to 2015 respectively. 2. The Tribunal in para 8 and 8.1 of the impugned order has held as under: “8. We have heard rival submission of the parties and perused the relevant mater proprietary concern of one of the director of company namely i.e. M/s Jics Laboratories, made by the valuer on DCF method, is based on the various projections of future earning by the management of company itself. The Assessing Officer altered or revised those projections and computed his own valuation. The Ld. CIT(A) has rejected the revision of valuation done by the Assessing Officer mainly for the reason that he was not authorized to valuation and matter should have been referred to the Departmental Valuation Officer. We are of the opinion that duty of the Ld. CIT(A) does not end merely by saying that the Assessing Officer should have carried out said exercise of referring the valuation to the Departmental Valuation Officer whereas, he himself should have referred the matter to the Department valuation officer as held by the Hon’ble High Court in the case of Jansampark advertising and Marketin (supra). The relevant para “ 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reve cash deposits of equal amounts in the respective accounts preceding MA Nos. 189 to 194 and 202/M/2024 ORDER PER OM PRAKASH KANT, AM By way of the captioned Miscellaneous Applications, the Revenue is seeking to recall/rectification of the order of the Tribunal dated 29.11.2023 passed in ITA Nos. 1760 & 1764/MUM/2023 for assessment year 14 to 2015-16, 2016-17 & 2017 The Tribunal in para 8 and 8.1 of the impugned order has held We have heard rival submission of the parties and perused the relevant material on record. It is undisputed that the valuation of the proprietary concern of one of the director of company namely i.e. M/s Jics Laboratories, made by the valuer on DCF method, is based on the various projections of future earning by the management of company itself. The Assessing Officer altered or revised those projections and computed his own valuation. The Ld. CIT(A) has rejected the revision of valuation done by the Assessing Officer mainly for the reason that he was not authorized to carry out such revision not being expert of valuation and matter should have been referred to the Departmental Valuation Officer. We are of the opinion that duty of the Ld. CIT(A) does not end merely by saying that the Assessing Officer should have carried out said exercise of referring the valuation to the Departmental Valuation Officer whereas, he himself should have referred the matter to the Department valuation officer as held by the Hon’ble High Court in the Jansampark advertising and Marketing p Ltd Pvt. Ltd. . The relevant para of decision is reproduced as under: 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding M/s Jics Logistics Ltd. 2 MA Nos. 189 to 194 and 202/M/2024 By way of the captioned Miscellaneous Applications, the Revenue is seeking to recall/rectification of the order of the 1760, 1779, 1761 to for assessment year 2011- 17 & 2017-18 & 2018-19 The Tribunal in para 8 and 8.1 of the impugned order has held We have heard rival submission of the parties and perused the ial on record. It is undisputed that the valuation of the proprietary concern of one of the director of company namely i.e. M/s Jics Laboratories, made by the valuer on DCF method, is based on the various projections of future earning by the management of the assessee company itself. The Assessing Officer altered or revised those projections and computed his own valuation. The Ld. CIT(A) has rejected the revision of valuation done by the Assessing Officer mainly for the reason that he carry out such revision not being expert of valuation and matter should have been referred to the Departmental Valuation Officer. We are of the opinion that duty of the Ld. CIT(A) does not end merely by saying that the Assessing Officer should have carried out said exercise of referring the valuation to the Departmental Valuation Officer whereas, he himself should have referred the matter to the Department valuation officer as held by the Hon’ble High Court in the g p Ltd Pvt. Ltd. of decision is reproduced as under: 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the al a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 at the stage of appeals, if deemed proper by way of making or causing to be made a \"further inquiry\" in exercise of the power under Section 250(4) impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld. 8.1 Before us, it has also not been explained that how much amount has been shown b the computation of the capital gain on sale of his proprietary concern and thus it is not clear how the proprietor of JICS Laboratories has reported market value of his business. In the facts and circ we feel it appropriate to restore the matter back to the file of the Assessing Officer for carrying out valuation from an expert department valuer in the field of financial valuation of companies and thereafter decide the issue in ac of the Revenue is accordingly allowed for statistical purposes. 3. Before us, the Ld. Departmental Representative (DR) submitted that the ITAT has directed in above paragraph to refer the matter for valuation to the Departmental Valuation Officer whereas in the Income Valuation Officer in existence for valuing such business rights and goodwill and therefore, the Tribunal should modify its order and the matter might be referred 4. We have heard rival submission of the parties on the issued in dispute and perused the relevant material on record. In our opinion, the ITAT has mentioned for referring the matter expert in the field of the financial valuation of the companies which does not mean the Departmental valuer designated for valuation of the properties. Accordingly, in our opinion any other impanel financial expert of the Department is included in the word expert Departmental valuer. MA Nos. 189 to 194 and 202/M/2024 the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a \"further inquiry\" in exercise of the power Section 250(4). This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld.” Before us, it has also not been explained that how much amount has been shown by the proprietor in return of income for the purpose of the computation of the capital gain on sale of his proprietary concern and thus it is not clear how the proprietor of JICS Laboratories has reported market value of his business. In the facts and circumstances of the case, we feel it appropriate to restore the matter back to the file of the Assessing Officer for carrying out valuation from an expert department valuer in the field of financial valuation of companies and thereafter decide the issue in accordance with law. The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purposes. Before us, the Ld. Departmental Representative (DR) submitted that the ITAT has directed in above paragraph to refer the matter for valuation to the Departmental Valuation Officer whereas in the Income-tax Department there is no Departmental cer in existence for valuing such business rights and goodwill and therefore, the Tribunal should modify its order and the referred impaneled Chartered Accountant. We have heard rival submission of the parties on the issued in nd perused the relevant material on record. In our opinion, the ITAT has mentioned for referring the matter expert in the field of the financial valuation of the companies which does not mean the Departmental valuer designated for valuation of operties. Accordingly, in our opinion any other impanel financial expert of the Department is included in the word expert Departmental valuer. M/s Jics Logistics Ltd. 3 MA Nos. 189 to 194 and 202/M/2024 the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a \"further inquiry\" in exercise of the power . This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), Before us, it has also not been explained that how much amount y the proprietor in return of income for the purpose of the computation of the capital gain on sale of his proprietary concern and thus it is not clear how the proprietor of JICS Laboratories has reported umstances of the case, we feel it appropriate to restore the matter back to the file of the Assessing Officer for carrying out valuation from an expert department valuer in the field of financial valuation of companies and thereafter cordance with law. The ground No. 1 of the appeal of the Revenue is accordingly allowed for statistical purposes.” Before us, the Ld. Departmental Representative (DR) submitted that the ITAT has directed in above paragraph to refer the matter for valuation to the Departmental Valuation Officer tax Department there is no Departmental cer in existence for valuing such business rights and goodwill and therefore, the Tribunal should modify its order and the impaneled Chartered Accountant. We have heard rival submission of the parties on the issued in nd perused the relevant material on record. In our opinion, the ITAT has mentioned for referring the matter to an expert in the field of the financial valuation of the companies which does not mean the Departmental valuer designated for valuation of operties. Accordingly, in our opinion any other impaneled financial expert of the Department is included in the word expert 4.1 In para 9.6 of the under: “9.6 We have heard rival submission of dispute and perused the relevant material on record. On perusal of the facts it is evident that assessee has received the assets and liability in its books of accounts on the value which was recorded in the books of accounts of the erstwhile partnership firm which has got converted into the assessee company. This conversion happened on 01.09.2010, whereas, the assessee has revalued the assets of the erstwhile partnership firm received only on the first day of the next assessment year i.e. 01.04.2011. Thus, it is evident the erstwhile partners have been compensated only at the book value of the assets and liability. In such circumstances, we do not find any justifiable reasons for revaluing the assets of the erstwhile partnership f assessment years on the basis of a valuation report from a registered valuer. We find in the Ground No. 1 we have held that the Ld. CIT(A) was supposed to refer to the matter to the Departmental Valuation Officer for valuatio the erstwhile partnership firm has also not been determined by Departmental valuation officer and therefore, following our finding in ground No. 1, we feel it appropriate to restore this issue back to of the Ld. Assessing Officer for taking appropriate action for referring the matter to the Departmental Valuation Officer and decide the issue in dispute in accordance with law. The ground No. 2 of the appeal of the Revenue is accordingly allowed 4.2 Before us, the Ld. counsel for the assessee submitted that the Tribunal has restored the matter to the Departmental Valuation Officer without any assigning any reasons of the Tribunal should be rec decided the issue after considering the submission of the assessee and a reasoned order has been Tribunal does not have power to review its own order and accordingly, the plea of the a ground of the assessee raised in the Miscellaneous Application to this extent is rejected. MA Nos. 189 to 194 and 202/M/2024 In para 9.6 of the impugned order, the Tribunal has held as We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. On perusal of the facts it is evident that assessee has received the assets and liability in its books of accounts on the value which was recorded in the books of the erstwhile partnership firm which has got converted into the assessee company. This conversion happened on 01.09.2010, whereas, the assessee has revalued the assets of the erstwhile partnership firm received only on the first day of the next assessment year i.e. 01.04.2011. Thus, it is evident the erstwhile partners have been compensated only at the book value of the assets and liability. In such circumstances, we do not find any justifiable reasons for revaluing the assets of the erstwhile partnership firm that too in the subsequent assessment years on the basis of a valuation report from a registered valuer. We find in the Ground No. 1 we have held that the Ld. CIT(A) was supposed to refer to the matter to the Departmental Valuation Officer for valuation of the assets. Since the revaluation of the assets of the erstwhile partnership firm has also not been determined by Departmental valuation officer and therefore, following our finding in ground No. 1, we feel it appropriate to restore this issue back to of the Ld. Assessing Officer for taking appropriate action for referring the matter to the Departmental Valuation Officer and decide the issue in dispute in accordance with law. The ground No. 2 of the appeal of the Revenue is accordingly allowed for statistical purposes.” Before us, the Ld. counsel for the assessee submitted that the Tribunal has restored the matter to the Departmental Valuation Officer without any assigning any reasons and therefore, the order of the Tribunal should be recalled. In our opinion, the Tribunal has decided the issue after considering the submission of the assessee reasoned order has been passed as reproduced above. The Tribunal does not have power to review its own order and accordingly, the plea of the assessee cannot be entertained. The ground of the assessee raised in the Miscellaneous Application to this extent is rejected. M/s Jics Logistics Ltd. 4 MA Nos. 189 to 194 and 202/M/2024 order, the Tribunal has held as the parties on the issue in dispute and perused the relevant material on record. On perusal of the facts it is evident that assessee has received the assets and liability in its books of accounts on the value which was recorded in the books of the erstwhile partnership firm which has got converted into the assessee company. This conversion happened on 01.09.2010, whereas, the assessee has revalued the assets of the erstwhile partnership firm received only on the first day of the next assessment year i.e. 01.04.2011. Thus, it is evident the erstwhile partners have been compensated only at the book value of the assets and liability. In such circumstances, we do not find any justifiable reasons for revaluing irm that too in the subsequent assessment years on the basis of a valuation report from a registered valuer. We find in the Ground No. 1 we have held that the Ld. CIT(A) was supposed to refer to the matter to the Departmental Valuation n of the assets. Since the revaluation of the assets of the erstwhile partnership firm has also not been determined by Departmental valuation officer and therefore, following our finding in ground No. 1, we feel it appropriate to restore this issue back to the file of the Ld. Assessing Officer for taking appropriate action for referring the matter to the Departmental Valuation Officer and decide the issue in dispute in accordance with law. The ground No. 2 of the appeal of the Before us, the Ld. counsel for the assessee submitted that the Tribunal has restored the matter to the Departmental Valuation and therefore, the order . In our opinion, the Tribunal has decided the issue after considering the submission of the assessee passed as reproduced above. The Tribunal does not have power to review its own order and ssessee cannot be entertained. The ground of the assessee raised in the Miscellaneous Application to 5. In the result, the Miscellaneous Applications of the assessee are partly allowed as discussed above. Order pronounced in the Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 16/10/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// MA Nos. 189 to 194 and 202/M/2024 In the result, the Miscellaneous Applications of the assessee are partly allowed as discussed above. Order pronounced in the open Court on 16/10/2024. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Jics Logistics Ltd. 5 MA Nos. 189 to 194 and 202/M/2024 In the result, the Miscellaneous Applications of the assessee /10/2024. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "