Appeal Details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 1416 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
8 year(s) 10 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-05-2020
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
D
Assessment Year
2001-2002
Appeal Filed On
09-05-2012
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , $ , ( BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER ./ ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 /ASSESSMENT YEAR: 2001-02 SHRI K. SRIKANTH, C/O. SHRI S.SRIDHAR, ADVOCATE NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI-600 020. V . THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(4), CHENNAI. [PAN: AAFPS 6375 K ] ( * /APPELLANT) ( +,* /RESPONDENT) ./ ITA NO.1324/CHNY/2012 /ASSESSMENT YEAR: 2001-02 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(4), CHENNAI. V . SHRI K. SRIKANTH, C/O. SHRI S.SRIDHAR, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI-600 020. [PAN: AAFPS 6375 K] ( * /APPELLANT) ( +,* /RESPONDENT) ASSESSEE BY : MR. S.SRIDHAR, ADV. DEPARTMENT BY : DR. M.SRINIVASA RAO, CIT . /DATE OF HEARING : 29.01.2020 . /DATE OF PRONOUNCEMENT : 19.05.2020 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 2 -: THESE FOUR APPEALS FILED BY ASSESSEE AS WELL REVEN UE ARE ALL FOR ASSESSMENT YEAR 2001-02 AND ARE TAKEN UP TOGETHER A S COMMON ISSUES ARE INVOLVED IN THESE FOUR APPEALS AND HENCE THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER. THE APPEAL IN ITA NO. 1015/CHNY/2012 IS AN ASSESSEES APPEAL WHILE APPEAL IN ITA NO. 1324/CHNY/2012 IS REVENUES APPEAL, AND THESE CROSS APPEALS ARE BOTH FOR AY: 2001-02 AGAINST APPELLATE ORDER DATED 27.03 .2012 PASSED BY LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)-III, CH ENNAI (HEREINAFTER CALLED THE CIT(A)) , THE APPELLATE PROCEEDINGS BE FORE LEARNED CIT(A) HAS ARISEN FROM AN ASSESSMENT ORDER DATED 31.12.2008 PA SSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) READ WITH SECTION 147 OF THE 1961 ACT. . THE APPEAL IN ITA N O. 307/CHNY/2010 IS FILED BY ASSESSEE AGAINST AN REVISIONARY ORDER DATE D 22.01.2010 PASSED BY LEARNED COMMISSIONER OF INCOME-TAX, CHENNAI-I, CHEN NAI U/S 263 OF THE INCOME-TAX ACT,1961 FOR AY: 2001-02 HOLDING THAT RE -ASSESSMENT FRAMED BY LEARNED ASSESSING OFFICER U/S 143(3) READ WITH S ECTION 147 OF THE 1961 ACT , VIDE REASSESSMENT ORDER DATED 31.12.2008 IS E RRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE FOR REASONS STATED THEREIN IN THE REVISIONARY ORDER. THE APPEAL IN ITA NO. 1016/CHNY/ 2012 IS FILED BY ASSESSEE FOR AY: 2001-02 WHICH HAS ARISEN FROM APPE LLATE ORDER DATED 27.03.2012 PASSED BY LEARNED CIT(A) , WHICH APPEAL HAS ARISEN BEFORE LEARNED CIT(A) FROM CONSEQUENTIAL ASSESSMENT ORDER DATED 08.11.2010 PASSED BY AO U/S 143(3) READ WITH SECTION 263 OF TH E 1961 ACT. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 3 -: 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE AS WE LL REVENUE IN MEMO OF AFORESAID APPEALS FILED WITH INCOME-TAX APPELLAT E TRIBUNAL, CHENNAI (HEREINAFTER CALLED THE TRIBUNAL) WITH RESPECT TO ALL THESE FOUR APPEALS FOR AY: 2001-02 , READ AS UNDER:- A) GROUNDS IN ITA NO.1015/CHNY/2012 FOR AY: 2001-02 (ASSESSEES APPEAL) 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) III, CHENNAI - 600 034 DATED 27.03.2012 IN I.T.A.NO.420/08-09/A.III FO R THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN T HE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE RE-ASS ESSMENT FRAMED FOR THE ABOVE MENTIONED ASSESSMENT YEAR WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RE-ASSESSMENT UNDER CONSIDERATION WAS PASSED OUT OF TIME, INVALID, PASS ED WITHOUT JURISDICTION AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS ABSOLUTELY NO 'REASON TO BELIEVE' ON THE ESCAPEMENT OF INCOME IN THE RECORDI NG OF REASONS WHILE ASSUMING JURISDICTION U/S 147 OF THE ACT AND CONSEQUENTLY OU GHT TO HAVE APPRECIATED THAT THE CONSEQUENTIAL FRAMING OF THE RE-ASSESSMENT WAS WRONG, INCORRECT, UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 5. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARA 5 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REAS ONS AND JUSTIFICATION. 6. THE CIT (APPEALS) ERRED IN SUSTAINING THE RECOMP UTATION OF LONG TERM CAPITAL GAINS ARISING OR ACCRUING AS A RESULT OF SALE OF SH ARES IN SO FAR AS THE EXCLUSION OF THE GARNISHEE PAYMENT FROM THE COST OF ACQUISITION/ COST OF IMPROVEMENT/EXPENSES INCURRED IN RELATION TO TRANSFER WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 7. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RECOMPUTATION OF LONG TERM CAPITAL GAINS ARISING OR ACCRUING AS A RESULT OF SA LE OF SHARES IN SO FAR AS THE EXCLUSION OF THE GARNISHEE PAYMENT FROM THE COST OF ACQUISITION/COST OF IMPROVEMENT/EXPENSES INCURRED IN RELATION TO TRANSF ER WAS WRONG, INCORRECT, UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW, 8. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE DISCHARGE OF ENCUMBRANCE/LIEN WAS ERRONEOUSLY INCLUDED AS PART OF SALE CONSIDERAT ION AND OUGHT TO HAVE APPRECIATED THAT IN THE LIGHT OF THE DECISION OF TH E JURISDICTIONAL HIGH COURT REFERRED TO, SUCH EXCLUSION IN THE COMPUTATION OF L ONG TERM CAPITAL GAINS WAS SUSTAINABLE IN LAW. 9. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARAS 7.3 & 7.3.1 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 4 -: 10. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE SCOPE OF SECTION 48 OF THE ACT WAS NOT CONSIDERED WHILE ERRONEOUSLY SUSTAINING THE EXCLUSION OF THE GARNISHEE PAYMENT TO INDIAN BANK IN THE COMPUTATION OF LONG T ERM CAPITAL GAINS AND FURTHER OUGHT TO HAVE APPRECIATED THAT THE EVIDENCE PLACED ON RECORD CLEARLY DEMONSTRATED THE FACT OF ENCUMBRANCE AS WELL AS THE FACT OF SUCH PAYMENTS DIRECTLY MADE TO M/S INDIAN BANK. 11. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE THEORY OF DIVERSION BY OVERRIDING TITLE EVEN THOUGH BROUGHT TO HIS NOTICE AS WELL AS IN THE ASSESSMENT PROCEEDINGS, NON CONSIDERATION OF THE SAID LEGAL TH EORY TO THE FACTS OF THE CASE WOULD VITIATE THEIR ACTION IN RE-COMPUTING LONG TER M CAPITAL GAINS. 12. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND ANY ORD ER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS NULLITY IN LAW. 13. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RECOMPUTATION OF LONG TERM CAPITAL GAINS IN ANY EVENT WAS WRONG, INCORRECT, UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 14. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS/ARGUMENTS AT THE TIME OF HEARING. B) GROUNDS IN ITA NO.1324/CHNY/2012 FOR AY: 2001-02 (REVENUES APPEAL) THE ORDER OF THE LEARNED CIT(APPEALS) IS CONTRARY TO LAW AND FACTS OF THE CASE. 1. THE LEARNED CIT(APPEALS) ERRED IN DELETING THE NON COMPETE FEE OF RS.7.5 CRORES TREATED AS SALE CONSIDERATION RECEIVED IN RESPECT OF SALE OF SHARES BY THE ASSESSING OFFICER; 2.1 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH E FACT THAT THE ASSESSEE DID NOT SHOW ANY EVIDENCE OTHER THAN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF KRISH SRIKANTH SPORTS ENTERTAINMENT P LTD., AND THE RE WAS NO SPECIFIC CLAUSE IN THE AGREEMENT REGARDING THE NATURE OF ACTIVITIES CARRIE D OUT BY THE ASSESSEE AND THE ACTIVITIES WHICH THE ASSESSEE WAS REFRAINED FROM CA RRYING OUT IN FUTURE; 2.2 IT IS SUBMITTED THAT THE ASSESSEE HAD BEEN A PPOINTED AS DIRECTOR IN THE PENTA MEDIA GROUP OF COMPANIES (TARACHANTINI FINANC IAL SERVICES, ABN SERVICES P LTD., FORESEE FINANCIAL & CONSULTANCY P LTD. ) TO WHICH THE SHARES OF KSSEPL WERE SOLD BY THE ASSESSEE; 2.3 THE CIT(APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE INVESTMENT MADE BY PENTA MEDIA GROUP IN KSSEL WAS STATED TO BE RS.45 CRORES AND IT WAS A JOINT VENTURE INITIALLY PROMOTED BY THE ASSESSEE AN D THE PROPOSAL WAS TO BUILD A SPORTS COMPLEX AS ANNEXE TO MAYAJAAL AND MAYAJAAL C OMPLEX WAS PROMOTED FOR INDOOR ENTERTAINMENT AND THE SPORTS COMPLEX WAS PRO POSED AS OUTDOOR ENTERTAINMENT AS ON 31.03.2005; 2.4 IT IS SUBMITTED THAT THE FACTUAL POSITION AS ON 31.03.2005 PROVES THAT AS AGREED BETWEEN THE PARTIES, THE ASSESSEE WAS NOT RE FRAINED FROM CARRYING OUT ANY ACTIVITY SINCE HE WAS APPOINTED AS ONE OF THE DIREC TORS OF THE SAID COMPANY TO CARRY OUT THE PROPOSAL OF SPORTS COMPLEX AT MAYAJAA L AND ENTERED INTO A JOINT VENTURE AGREEMENT WITH PENTA MEDIA, WHICH CLEARLY S HOWS THAT THE ASSESSEE WITHIN A PERIOD OF SIX YEARS ENGAGED IN THE BUSINES S ACTIVITY; ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 5 -: 2.5 THE CIT(APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE IMPUGNED AMOUNT WAS ONLY PART OF SALE CONSIDERATION RECEIVED IN THE FORM OF NON-COMPETE FEE LIABLE FOR LONG CAPITAL GAINS. 2.6 IT IS SUBMITTED THAT THE NON COMPETE FEE WAS ONLY A NOMENCLATURE TO AVOID TAX AS HELD IN THE APEX COURT'S DECISION IN THE CAS E OF S.A. BUILDERES REPORTED IN 288 ITR 1. 2.7 IT IS SUBMITTED THAT THE DECISION RELIED UPON B Y THE CIT(A) IN THE CASE OF M/S GUFFIC CHEM PVT. LTD VS CIT (332 ITR 602) CANNOT BE APPLIED TO THE FACTS OF THE CASE SINCE THE ISSUE IS NOT WHETHER TO TREAT THE NO N COMPETE FEE AS CAPITAL OR REVENUE RECEIPT. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD.CIT(A) MAY BE SET A SIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. C) GROUNDS IN ITA NO.307/CHNY/2010 FOR AY: 2001-02( ASSESSEES APPEA) 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX, CH ENNAI-I, CHENNAI - 600 034 DATED 22.1.2010 IN C.NO.218(36)/CIT-L/263/2009-10 F OR THE ABOVE ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN THE CIRCUMST ANCES OF THE CASE. 2. THE CIT ERRED IN PASSING THE ORDER U/S 263 OF TH E ACT IN DIRECTING THE ASSESSING OFFICER TO RE-EXAMINE THE COMPUTATION OF LONG TERM CAPITAL GAINS AS WELL AS TO RE- EXAMINE THE ELIGIBILITY OF THE DEDUCTION U/S 54F OF THE ACT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT FAILED TO APPRECIATE THAT THE JURISDICTI ON ASSUMED U/S 263 OF THE ACT ON THE FACTS OF THE CASE WAS WRONG, INCORRECT, UNJUSTI FIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 4. THE CIT FAILED TO APPRECIATE THAT HENCE THE ORDE R UNDER CONSIDERATION WAS PASSED OUT OF TIME, INVALID, PASSED WITHOUT JURISDI CTION AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 5. THE CIT FAILED TO APPRECIATE THAT IN ANY EVENT T HE FINDINGS ON THE ADOPTION OF SALE CONSIDERATION IN THE COMPUTATION OF LONG TERM CAPITAL GAINS WERE WRONG, INCORRECT, UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINAB LE BOTH ON FACTS AND IN LAW. 6. THE CIT FAILED TO APPRECIATE THAT IN THIS REGARD THE REPLY DATED 5.11.2009 WAS NOT TAKEN INTO CONSIDERATION IN PROPER PERSPECTIVE INASMUCH AS NON REALIZATION OF THE AMOUNT OF RS.3 CRORES ON THE FACTS OF THE CASE OUGHT TO HAVE BEEN TAKEN NOTE OF AND FURTHER OUGHT NOT TO HAVE BEEN TINKERED WITH IN THE ASSUMPTION OF JURISDICTION OF REVISIONAL POWERS IN THE PASSING OF THE IMPUGNED ORDER. 7. THE CIT FAILED TO APPRECIATE THAT THE FINDINGS R ECORDED IN THIS REGARD IN PARA 3 OF THE IMPUGNED ORDER WERE WRONG, INCORRECT, UNJUST IFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 8. THE CIT FAILED TO APPRECIATE THAT THE DOCTRINE O F MERGER ON THE FACTS OF THE CASE WAS TOTALLY BRUSHED ASIDE AND HENCE THE ORDER UNDER CONSIDERATION WAS ERRONEOUS AND INVALID. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 6 -: 9. THE CIT FAILED TO APPRECIATE THAT IN THE PROCESS OF DIRECTING THE ASSESSING OFFICER TO ADOPT THE SALE CONSIDERATION AT RS.15 CR ORES IN THE COMPUTATION OF LONG TERM CAPITAL GAINS, THE PRINCIPLES OF 'DIVERSION OF INCOME BY OVERRIDING TITLE' WAS TOTALLY BRUSHED ASIDE AND OVERLOOKED IN GIVING SUCH DIRECTION IN THE IMPUGNED ORDER. 10. THE CIT FAILED TO APPRECIATE THAT THE DIRECTION TO EXAMINE THE CORRECTNESS OF THE CLAIM OF DEDUCTION U/S 54F OF THE ACT IN THE CO MPUTATION OF LONG TERM CAPITAL GAINS WAS WRONG, INCORRECT, UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 11. THE CIT FAILED TO APPRECIATE THAT THE DEDUCTION U/S 54F OF THE ACT IN THE COMPUTATION OF LONG TERM CAPITAL GAINS WAS CORRECT AND PROPER AND FURTHER FAILED TO APPRECIATE THAT THE SAID CLAIM WAS CORRECTLY ACC EPTED IN THE SCRUTINY ASSESSMENT. 12. THE CIT FAILED TO APPRECIATE THAT IN ANY EVENT THE RE-ASSESSMENT ORDER DATED 31.12.2008 WAS SUBJECTED TO THE EXTRA ORDINARY JURI SDICTION OF THE MADRAS HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTION OF INDI A AND THE WRIT PETITION FILED TO CHALLENGE THE REOPENING PROCEEDINGS ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE IS STILL PENDING FOR DECISION. 13. THE CIT FAILED TO APPRECIATE THAT IN THE LIGHT OF THE ABOVE FACT AND IN THE LIGHT OF THE INTERIM ORDER(S) PASSED BY THE HON'BLE HIGH COURT IN W.P.NO.49683/2006, THE ORDER OF REVISION UNDER CONSIDERATION WAS BAD I N LAW. 14. THE CIT FAILED TO APPRECIATE THAT THERE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS NULLITY IN LAW, 15. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS/ARGUMENTS AT THE TIME OF HEARING. D) GROUNDS IN ITA NO.1016/CHNY/2012 FOR AY: 2001-02 (ASSESSEES APPEAL) 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) III, CHENNAI - 600 034 DATED 27.03.2012 IN I.T.A.NO.283/10-11/A.III FO R THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN T HE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE ORDER GIVING EFFECT TO THE REVISION ORDER PASSED BY THE CIT FOR RE-COMPUTING THE LONG T ERM CAPITAL GAINS ARISING OR ACCRUING AS A RESULT OF TRANSFER OF SHARES WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE DETERMINATION OF SALE CONSIDERATION AT RS.15 CRORES AS AGAINST THE DETERM INATION OF SALE CONSIDERATION AS RS.12 CRORES IN THE COMPUTATION OF LONG TERM CAP ITAL GAINS WAS WRONG, INCORRECT, UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINAB LE BOTH ON FACTS AND IN LAW. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOT DISPUTED THE FACT OF NON RECEIPT OF RS.3 CRORES FROM THE TRANSACTION UNDER S CRUTINY, INCLUSION OF THE SAID AMOUNT AS PART OF THE SALE CONSIDERATION IN THE REC OMPUTATION OF LONG TERM ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 7 -: CAPITAL GAINS WAS WRONG, INCORRECT, UNJUSTIFIED, ER RONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE ORDER OF REVISION PASSED BY THE CIT U/S 263 OF THE ACT HAS NOT BECOME FINAL AND OUG HT TO HAVE APPRECIATED THAT THE FURTHER APPEAL AGAINST THE SAID REVISION ORDER IS PENDING BEFORE THE ITAT, CHENNAI BENCH FOR DECISION. 6. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOT CROSS VERIFIED WITH THE PURCHASERS, INCLUSION OF THE SAID AMOUNT OF RS.3 CR ORES AS PART OF THE SALE CONSIDERATION IN THE RECOMPUTATION OF LONG TERM CAP ITAL GAINS WAS ERRONEOUS AND INVALID. 7. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARA 5 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REAS ONS AND JUSTIFICATION. 8. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE APPEAL PROCEEDINGS BEING LEGALLY CONSIDERED AS CONTINUATION OF ASSESSMENT PROCEEDING S, THE NON CONSIDERATION OF THE CORRECT FACTS IN THE SAID APPELLATE PROCEEDINGS WOULD VITIATE HIS ACTION IN SUSTAINING THE ADOPTION OF SALE CONSIDERATION AS RS . 15 CRORES AS AGAINST RS.12 CRORES IN THE RECOMPUTATION OF LONG TERM CAPITAL GA INS. 9. THE CIT (APPEALS) ERRED IN SUSTAINING THE LEVY O F INTEREST CHARGED U/S 234A, 234B AND 234C OF THE ACT IN THE COMPUTATION OF TAXA BLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 10. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND ANY ORD ER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS NULLITY IN LAW. 11. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS/ARGUMENTS AT THE TIME OF HEARING. 3. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE FO UR APPEALS , THESE APPEALS WERE HEARD TOGETHER AND ARE NOW DISPOSED OF F BY THIS COMMON ORDER. 4. FIRST WE WILL TAKE UP CROSS-APPEALS FILED BY ASS ESSEE AND REVENUE IN ITA NO.1015/CHNY/2012 & IN ITA NO.1324/CHNY/2012, BOTH FOR AY: 2001-02. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF MODELLING, CRICKET COMMENTARY, JOURNALI SM AND CONSULTING & BPCL DEALERSHIP. THE ASSESSEE FILED HIS RETURN OF INCOME WITH REVENUE FOR IMPUGNED AY: 2001-02 ON 28.03.2002 , DECLARING AN I NCOME OF RS. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 8 -: 20,42,510/- . THE SAID RETURN OF INCOME WAS PROCESS ED BY REVENUE U/S.143(1) OF THE 1961 ACT AND ADMITTEDLY NO SCRUTI NY ASSESSMENT U/S 143(3) OF THE 1961 ACT WAS ORIGINALLY FRAMED BY REV ENUE. THE AO OBSERVED FROM ENCLOSURES OF THE RETURN OF IN COME FILED BY ASSESSEE WITH REVENUE THAT ASSESSEE HAS SOLD SHARES HELD IN HIS NAME, MINOR CHILDREN AND WIFE, DURING THE IMPUGNED YEAR U NDER CONSIDERATION. IT IS STATED THAT THE AMOUNTS TRANSACTED AS RESTRICTED COVENANTS ARISES ON THE COURSE OF SALE OF SHARES AND HENCE THE SAME CAN NOT BE CLAIMED TO BE INDEPENDENT OF THE TRANSACTION TO BE ALLOWED AS AN EXEMPTED INCOME UNDER THE PROVISIONS OF THE 1961 ACT OR CAPITAL RE CEIPT NOT CHARGEABLE TO TAX. THE AO OBSERVED THAT THE ASSESSEE HAS NOT OFF ERED RS. 4.25 CRS. FROM THE SALE PROCEEDS OF THE SHARES CLAIMED IT TO BE PAYMENT TOWARDS OVERRIDING GARNISHEE ATTACHMENT ON THE SHARES BY IN DIAN BANK . THE AO OBSERVED THAT IT IS NOT AN ENCUMBRANCE ATTACHED TO THE SHARES. THE AO OBSERVED THAT THE ASSESSEE HAS SOLD HIS SHA RES AS WELL SHARES OF HIS MINOR CHILDRENS AND WIFES SHARES IN KRIS SRIK KANTH SPORTS ENTERTAINMENT PRIVATE LTD. TO PENTAMEDIA GROUP CONC ERNS. THE GIST OF AGREEMENT AND THE AMOUNT RECEIVED BY ASSESSEE ARE R EPRODUCED AS UNDER: AGREEMENT 1. AS PER THE AGREEMENT, THE ASSESSE E ENTERED INTO AN AGREEMENT WITH M/S. FORSEE FINANCIAL AND CONSULTANCY SERVICES PRIVATE LIM ITED, NO.1, RAMAKRISHNA STREET, 7TH FLOOR, T.NAGAR, CHENNAI-17. THE PURC HASER PROPOSE TO PURCHASE 1/3RD OF ISSUED, SUBSCRIBED AND PAID UP SHARES IN KRIS SRIKK ANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, (FORMERLY KNOWN AS A.A. INTERNATI ONAL PRIVATE LIMITED) FROM THE VARIOUS SHAREHOLDERS IN THEIR NAME. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 9 -: THE COMPANY WAS PROMOTED BY THE ASSESSEE WHO HAD NE CESSARY EXPERTISE AND CONTACTS RELATING TO THE SAID BUSINESS AND THE BUSINESS,OF T HE COMPANY WAS WHOLLY PROMOTED AND DEVELOPED BY THE ASSESSEE. AS PER THE AGREEMENT, THE ASSESSEE SHALL NOT CARRY ON EITHER BY HIMSELF OR IN ASSOCIATION WITH ANY OTHER PERSON OR PERSONS OR ASSOCIATE OR IN VOLVE DIRECTLY OR INDIRECTLY WITH ANY OTHER COMPANY, FIRM OR PERSON IN A BUSINESS SIMILAR TO TH AT CARRIED ON BY M/S. KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, FOR A PERIOD O F 6 YEARS. IN CONSIDERATION OF THE ABOVE AGREEMENT, THE PURCHA SER HAS PAID A SUM OF RS.2.5 CRORE (RUPEES TWO CRORES AND FIFTY LAKHS ONLY). AGREEMENT 2. THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S. TARACHANTHINI SERVICES PRIVATE LIMITED, NO. 15, MAIN ROAD, MAHALI NGAPURAM, CHENNAI-600 034. THE PURCHASER PROPOSE TO PURCHASE 1/3RD OF ISSUED, SUBSC RIBED AND PAID UP SHARES IN KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, (FOR MERLY KNOWN AS A.A.INTERNATIONAL PRIVATE LIMITED) FROM THE VARIOUS SHAREHOLDERS IN THEIR NAME. THE COMPANY WAS PROMOTED BY THE ASSESSEE WHO HAD NE CESSARY EXPERTISE AND CONTACTS RELATING TO THE SAID BUSINESS AND THE BUSINESS OF T HE COMPANY WAS WHOLLY PROMOTED AND DEVELOPED BY THE ASSESSEE. AS PER THE AGREEMENT, THE ASSESSEE SHALL NOT CARRY ON EITHER BY HIMSELF OR IN ASSOCIATION WITH ANY OTHER PERSON OR PERSONS OR ASSOCIATE OR IN VOLVE DIRECTLY OR INDIRECTLY WITH ANY OTHER COMPANY, FIRM OR PERSON IN A BUSINESS SIMILAR TO TH AT CARRIED ON BY M/S. KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, FOR A PERIOD O F 6 YEARS. IN CONSIDERATION OF THE ABOVE AGREEMENT, THE PURCHA SER HAS PAID A SUM OF RS.2.5 CRORE (RUPEES TWO CRORES AND FIFTY LAKHS ONLY). AGREEMENT 3. THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S. ABN FINANCIAL SERVICES PRIVATE LIMITED, NO. 13, RANI ANNADURAI ST REET, RAJA ANNAMALAIPURAM, CHENNAI-600 028. THE PURCHASER PROPOSE TO PURCHASE 1/3RD OF ISSUED, SUBSCRIBED AND PAID UP SHARES IN KRIS SRIKKANTH SPORTS ENTERTAINMENT PRI VATE LIMITED, (FORMERLY KNOWN AS A.A.INTERNATIONAL PRIVATE LIMITED) FROM THE VARIOUS SHAREHOLDERS IN THEIR NAME. THE COMPANY WAS PROMOTED BY THE ASSESSEE WHO HAD NE CESSARY EXPERTISE AND CONTACTS RELATING TO THE SAID BUSINESS AND THE BUSINESS OF T HE COMPANY WAS WHOLLY PROMOTED AND DEVELOPED BY THE ASSESSEE. AS PER THE AGREEMENT, THE ASSESSEE SHALL NOT CARRY ON EITHER BY HIMSELF OR IN ASSOCIATION WITH ANY OTHER PERSON OR PERSONS OR ASSOCIATE OR IN VOLVE DIRECTLY OR INDIRECTLY WITH ANY OTHER COMPANY, FIRM OR PERSON IN A BUSINESS SIMILAR TO TH AT CARRIED ON BY M/S. KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, FOR A PERIOD O F 6 YEARS. IN CONSIDERATION OF THE ABOVE AGREEMENT, THE PURCHA SER HAS PAID A SUM OF RS.2.5 CRORE (RUPEES TWO CRORES AND FIFTY LAKHS ONLY). AGREEMENT 4. THE AGREEMENT WAS ENTERED INTO MINOR. ANIRUDAA SRIKKANTH, SON OF KRISHNAMMACHARI SRIKKANTH, AGED 14 YEARS REPRESENTE D BY MOTHER AND NATURAL GUARDIAN MRS.VIDYAA SRIKANTH AND WITH M/S. TARACHANTHINI SERV ICES PRIVATE LIMITED, NO. 15, MAIN ROAD, MAHALINGAPURAM, CHENNAI-600 034. IT WAS AGREED TO TRANSFER 1,25,000/- SHARES TO TARA CHANTHINI FOR CONSIDERATION OF RS.2.5 CRORES. (RUPEES TWO CRORES AND FIFTY LAKHS ONLY). AGREEMENT 5. (I) THE AGREEMENT ENTERED INTO BY MINOR . ADITYAA SRIKKANTH SON OF SRIKKANTH (II) MINOR ANIRUDAA SRIKKANTH, SON OF KRISHNAMMACHAR I SRIKKANTH, AGED 14 YEARS REPRESENTED GUARDIAN MRS.VIDYAA SRIKANTH, ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 10 -: (III) SRI. KRISHNAMMACHARI SRIKKANTH SON OF C.R. KRI SHNAMMACHARI, THE ASSESSEE, (IV) SMT. VIDYAA SRIKKANTH, WIFE OF K KRISHNAMMACHAR I SRIKKANTH, THE SHAREHOLDERS OF KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, (FOR MERLY KNOWN AS A.A.INTERNATIONAL PRIVATE LIMITED). AND M/S. ABN FINANCIAL SERVICES PRIVATE LIMITED, NO. 13, RANI ANNADURAI STREET, RAJA ANNAMALAIPURAM, CHENNAI-600 028. IN CONSIDERATION FOR THE SHARES PROPOSED TO BE TRAN SFERRED, ABN AGREED TO PAY A SUM OF RS.2.5 CRORES (RUPEES TWO CRORES AND FIFTY LAKHS ON LY) TOWARDS THE CONSIDERATION FOR THE PURCHASE OF 1,25,000 SHARES HELD BY THE SHAREHOLDER S OF KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED. AGREEMENT 6 . THIS AGREEMENT WAS ENTERED INTO BY MINOR.ADITYAA SRIKKANTH SON OF KRISHNAMMACHARI SRIKKANTH, AGED ABOUT 17 YEARS REPR ESENTED BY FATHER AND NATURAL GUARDIAN KRISHNAMMACHARI SRIKKANTH. AND M/S. FORSEE FINANCIAL AND CONSULTANCY SEVICES PRIVATE LIMITED, NO.1, RAMAKRISHNA STREET, 7TH FLOOR, T.NAGAR, CHENNAI-600 017. M/S. FORSEE AGREES TO PAY A SUM OF RS.2.5 CRORES (RUP EES TWO CRORES AND FIFTY LAKHS ONLY) TOWARDS THE CONSIDERATION FOR THE PURCHASE OF 1,25,000 SHARES OF KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, (FORMERLY KNOW N AS A.A. INTERNATIONAL PRIVATE LIMITED. THE AO OBSERVED THAT THE ASSESSEE HAS RECEIVED A SU M OF RS. 12 CRS. FOR TRANSFER OF THE SHARES AND DETAILS OF PAYMENTS RECE IVED BY THE ASSESSEE THROUGH BANKING CHANNEL AND THE DETAILS OF PAYMENTS AS FURNISHED BY ASSESSEE WAS RE-PRODUCED BY AO IN ITS ASSESSMENT OR DER, AS UNDER: DATE BANK AMOUNT 21.09.2000 UTI BANK 10000000 23.09.2000 UTI BANK 10000000 08.01.2001 UTI BANK 20000000 08.01.2001 UTI BANK 5000000 08.01.2001 UTI BANK 5000000 08.01.2001 UTI BANK 10000000 06.02.2001 UTI BANK 10000000 22.02.2001 UTI BANK 10000000 01.03.2001 UTI BANK 3500000 16.03.2001 UTI BANK 1500000 22.03.2001 UTI BANK TOTAL UP TO YEAR ENDING 31.03.2001 (A) 95000000 11.04.2001 UTI BANK 2500000 16.04.2001 UTI BANK 5000000 17.04.2001 UTI BANK 5000000 20.04.2001 UTI BANK 2500000 27.04.2001 UTI BANK 2500000 30.04.2001 UTI BANK 2500000 11.05.2001 UTI BANK 5000000 ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 11 -: TOTAL UP TO YEAR ENDING 31 .03.2001 (B) 25000000 TOTAL RECEIPTS FOR THE TRANSFERE OF SHARE (A) + (B) 120 000000 THE AO OBSERVED THAT THE TOTAL SALE CONSIDERATION I S SHOWN AT RS. 15 CRS. AND OUT OF WHICH THE ASSESSEE HAS CLAIMED EXEMPTION OF RS. 7.5 CRS UNDER THE RESTRICTIVE COVENANT AS THE ASSESSEE WAS NOT AL LOWED TO COMPETE WITH THE COMPANY TO WHICH THE SHARES HAVE BEEN SOLD. FU RTHER, THE AO OBSERVED THAT THE ASSESSEE HAS REDUCED A SUM OF RS. 4.25 CRS. WHEREIN, THE ASSESSEE HAD CLAIMED THAT HE HAS NOT RECEIVED T HE SAID SUM OWING TO OVERRIDING GARNISHEE ATTACHMENT ON THE SHARES BY TH E INDIAN BANK. THE AO OBSERVED THAT THE ASSESSEE HAS IN FACT RECEIVED RS. 12 CRS. ON VARIOUS DATES AND THE SAID SUM OF RS. 4.25 CRORES WERE PAID TO THE INDIAN BANK FOR SETTLEMENT OF HIS DUES. THE AO OBSERVED THAT THESE CLAIMS OF THE ASSESSEE WERE FOUND TO BE NOT CORRECT AND HENCE IN VIEW OF THE AO THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT HENCE CONCLUDED ASSESSMENT WERE REOPENED BY ISSUANCE OF NOTICE U/S. 148 OF THE 1961 ACT, DATED 30.03.2006 BY AO ISSUED TO THE ASSESSEE , WHI CH WAS DULY SERVED ON ASSESSEE BY AO ON 02 ND APRIL 2006. IT IS PERTINENT TO MENTION HERE THAT THE AFORESAID NOTICE U/S 148 WAS ISSUED BY AO WITHI N 4 YEARS FROM THE END OF THE ASSESSMENT YEAR AND HENCE PROVISO TO SECTION 147 OF THE 1961 ACT IS NOT APPLICABLE . THE ASSESSEE FILED WRIT PETITI ON BEFORE HONBLE MADRAS HIGH COURT CHALLENGING THE ISSUE OF NOTICE U/S 148 OF THE 1961 ACT WHEREIN HONBLE MADRAS HIGH COURT VIDE ORDER DATED 14.12.20 07 DIRECTED THE ASSESSEE TO FILE RETURN OF INCOME AND THE DEPARTMEN T WAS PERMITTED TO PROCEED WITH ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE ASSESSEE FILED HIS RETURN OF INCOME ON 08.02.2008 IN ACCORDANCE WITH T HE DIRECTIONS OF HONBLE HIGH COURT. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 12 -: THE ASSESSEE DURING THE COURSE OF REASSESSMENT PROC EEDINGS OBJECTED TO RE-OPENING OF THE CONCLUDED ASSESSMENT ON JURISDICT IONAL GROUND, WHEREIN, IT WAS CLAIMED THAT THE FORMATION OF OPINION LATER TO THE ISSUANCE OF INTIMATION U/S.143(1)(A) TANTAMOUNT TO CHANGE OF OP INION AND HENCE ONLY ON FRESH FACTS COMING TO THE KNOWLEDGE OF THE AO, T HE ASSESSMENT CAN BE RE-OPENED. SECONDLY, IT WAS SUBMITTED BY ASSESSEE BEFORE AO THAT THE AO SHOULD HAVE TAKEN UP THE CASE FOR SCRUTINY ASSESSME NT BY ISSUANCE OF NOTICE U/S.143(2) OF THE ACT AND NOTICE WAS ISSUED U/S.148 AFTER EXPIRY OF THE TIME AS PROVIDED U/S.143(2) OF THE ACT AND THUS THE DEPARTMENT CANNOT COME THROUGH THE BACK DOOR BY ISSUING NOTICE U/S 148 OF THE 1961 ACT AS THE TIME LIMIT FOR FRAMING OF SCRUTINY ASSES SMENT U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT HAS ALREADY EXP IRED. THE ASSESSEE ALSO SUBMITTED THAT THE REASON RECORDED BY AO FOR R E-OPENING OF THE ASSESSMENT BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT DO NOT DISCLOSE THAT THE AO HAD ANY REASON TO BELIEVE THAT ANY INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE ASSESSEE ALSO SUBMITTED BEFORE AO THAT THERE WAS NO INDICATION AS TO ON WHAT INFOR MATION OR ON WHAT MATERIAL THE AO HAD REASONS TO BELIEVE THAT THE CLA IM OF THE ASSESSEE WAS INCORRECT. THE AO DISMISSED THE CONTENTIONS OF THE ASSESSEE ON JURISDICTIONAL GROUND AND UPHELD THE RE-OPENING OF THE ASSESSMENT AS IN T HE OPINION OF THE AO NO SCRUTINY ASSESSMENT WAS FRAMED BY REVENUE AGAINS T ASSESSEE U/S.143(3) OF THE ACT AND ONLY INTIMATION WAS ISSUE D U/S.143(1)(A) OF THE ACT. IT WAS OBSERVED BY AO THAT FROM 01.04.1989, T HE PROVISIONS OF ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 13 -: SEC.147 HAS UNDERGONE CHANGE AND INTIMATION U/S.143 (1) IS NOT AN ASSESSMENT. THE AO RELIED UPON DECISION OF HONBLE SUPREME COURT IN THE CASE OF DELHI DEVELOPMENT AUTHORITY. IT WAS OBSERVE D BY THE AO THAT NO ASSESSMENT WAS ORIGINALLY FRAMED BY AO U/S 143(3) O F THE 1961 ACT AND HENCE NO OPINION WAS FORMED BY AO ON THE RETURN OF INCOME ORIGINALLY FILED BY ASSESSEE, WHILE PROCESSING RETURN OF INCOM E U/S.143(1)(A), THERE CANNOT BE ANY CHANGE OF OPINION WHEN PROVISIONS OF SECTION 147 ARE INVOKED. THE AO REJECTED CONTENTIONS OF THE ASSESS EE THAT ONCE NOTICE U/S 143(2) IS NOT ISSUED AND TIME LIMIT TO ISSUE NOTICE U/S 143(2) HAS EXPIRED, THEN NO NOTICE U/S 148 COULD HAVE BEEN ISSUED. THE AO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RA JESH JHAVERI STOCK BROKERS LIMITED REPORTED IN [2007] 291 ITR 500 (SC) . THE AO OBSERVED THAT W.E.F. 01.04.1989, THE SCHEME OF RE-OPENING OF THE CONCLUDED ASSESSMENT HAS UNDERGONE CHANGE AND EVEN IF NOTICE U/S 143(2) IS NOT ISSUED , AND NO ASSESSMENT WAS FRAMED U/S.143(3), T HEN ALSO AO CAN PROCEED TO INITIATE RE-ASSESSMENT PROCEEDINGS U/S.1 47 & 148 OF THE ACT AND THE ONLY CONDITION IS THAT THE AO SHOULD HAVE R EASONS TO BELIEVE THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE AO RELIED UPON DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF BAWA ABHAI SINGH V. DCIT REPORTED IN 107 TAXMAN 129( DELHI HC) AND ALSO DECISION OF HONBLE PATNA-TRIBUNAL IN THE CASE OF DCIT V. NARENDRA MOHA N BAJRI . THE AO OBSERVED THAT THERE HAS TO BE REASONS TO BELIEVE TH AT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT BUT SUFFICIENCY OF THE REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED CANNOT BE I NVESTIGATED BY THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 14 -: COURTS. FURTHER, IT WAS OBSERVED BY AO THAT AT THE TIME OF ISSUANCE OF NOTICE , IT IS NOT NECESSARY FOR AO TO COME TO CONC LUSIVE FINDING THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND W HAT IS REQUIRED IS A PRIMA FACIE BELIEF OF THE AO THAT INCOME OF THE ASS ESSEE HAS ESCAPED ASSESSMENT BASED ON MATERIAL BEFORE THE AO. THUS, A S PER AO AT THIS STAGE OF REOPENING OF THE CONCLUDED ASSESSMENT, SUF FICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED. TH US, CHALLENGE AS RAISED BY ASSESSEE ON LEGAL JURISDICTIONAL GROUND AS TO LE GALITY AND VALIDITY OF ISSUANCE OF NOTICE U/S 148 OF THE 1961 ACT WAS REPE LLED BY THE AO. ON MERITS OF THE CASE, THE AO OBSERVED THAT ASSESS EE HAS RECEIVED A SUM OF RS. 7.5 CRS. ALLEGEDLY TO COMPENSATE LOSS OF THE ASSES SEE AS HE WAS ASKED NOT TO COMPETE WITH COMPANY TO WHOM THE SHARE S OF THE ASSESSEE AND HIS MINOR CHILDRENS WERE SOLD . BUT AO WAS NOT SATISFIED WITH CLAUSES IN THE AGREEMENT FILED BY ASSESSEE AS THERE WAS NO SPECIFIC CLAUSE IN AGREEMENTS AS TO WHAT ASSESSEE WAS DOING EARLIER AN D ALSO THAT IT IS NOT INDICATED AS TO WHAT ARE THE PRESENT ACTIVITIES OF THE COMPANY WHICH PURCHASED THE SHARES. THE AO ALSO OBSERVED THAT MER E MADE TO BELIEVE AGREEMENTS WERE ENTERED INTO BY ASSESSEE WITH PENTA MEDIA GROUP CONCERNS TO ENABLE RECIPIENT OF THE MONEY TO AVOID TAX ON THE SAME AND THERE WAS NO SPECIFIC RESTRICTION ON ASSESSEE TO DO PROFESSIONAL ACTIVITY PARALLEL WITH THE COMPANY. AS PER AO, THIS AGREEMEN T WAS ENTERED INTO WITHOUT ANY BASIS TO ENABLE THE ASSESSEE ONLY TO RE DUCE THE TAX LIABILITY. THE AO ALSO OBSERVED THAT THE ASSESSEE IS WORKING A S DIRECTOR IN THE SAME ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 15 -: COMPANY AND IT WAS NOT CLEAR TO THE AO AS TO ACTIVI TIES UNDERTAKEN BY THE SAID COMPANY. THE AO ALSO OBSERVED THAT THERE WAS N O CONDITION AS TO PENALTY TO BE LEVIED IN CASE TERMS AND CONDITIONS O F THE AGREEMENT ARE VIOLATED . THUS, AS PER AO THESE AGREEMENTS ARE SH AM AGREEMENTS WHICH ARE NOT ENFORCEABLE AT LAW AND ENTIRE CONSIDERATIO N RECEIVED BY ASSESSEE AND HIS MINOR CHILD WERE HELD TO BE CHARGEABLE TO T AX AS CAPITAL GAINS ON SALE OF SHARES WHICH AS PER AO WAS CAMAFLOUGED AS N ON-COMPETE FEE. THUS, THE AO REJECTED THE CONTENTIONS OF THE ASSESS EE AND INCOME OF THE ASSESSEE WAS ASSESSED AS CAPITAL GAINS. THE SECOND ISSUE WAS WITH RESPECT TO RECEIPT OF RS. 4.25 CRS. WHICH WAS CLAIMED BY ASSESSEE TO HAVE BEEN PAID TO THE INDIAN BANK FOR CLEARING BANK DUES. THE AO OBSERVED FROM THE DETAILS FURNIS HED BY ASSESSEE THAT THE AMOUNT HAS NOT GONE DIRECTLY TO THE INDIAN BANK AND AMOUNT WAS RECEIVED BY ASSESSEE AND THEREAFTER IT WAS UTILIZED BY ASSESSEE FOR PAYING TO THE BANKER TO DISCHARGE HIS LIABILITY AND HENC E THE SAME CANNOT BE CALLED AS DIVERSION OF INCOME BY OVERRIDING TITLE. THE AO OBSERVED THAT EVEN IF AMOUNT IS PAID DIRECTLY TO THE BANKER BUT S TILL SAID CONSIDERATION IS TO BE ASSESSED TO TAX AS CAPITAL GAINS. THUS, THE A O OBSERVED THAT THESE RECEIPTS BY ASSESSEE FROM THE COMPANY CANNOT BE SAI D TO BE DIVERTED BY OVERRIDING TITLE. IT WAS OBSERVED BY AO THAT THERE WERE SOME DUES PAYABLE TO BANK BY ONE COMPANY NAMELY ADITYA LEAT HER EXPORTS PRIVATE LIMITED IN WHICH THE ASSESSEE IS DIRECTOR AND THE BANK HAS ATTACHED HIS SHARES OF OTHER COMPANIES ALSO. THE AO OBSERVED THA T THESE DUES ARE WITH ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 16 -: REFERENCE TO OTHER COMPANIES AND NOT IN INDIVIDUAL CAPACITY OF THE ASSESSEE AND HENCE THERE IS NO OVERRIDING TITLE UND ER WHICH THE ASSESSEE HAS NOT RECEIVED THE MONEY. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS EXCLUDED A SUM OF RS. 3 CRS. ON THE GROUND THAT THE SAID AMOUNT HAS NOT BEEN REC EIVED. THE AO OBSERVED THAT THIS AMOUNT WAS CONSIDERED BY ASSESSE IN HIS RETURN OF INCOME FILED U/S 139(1) AND THIS AMOUNT WAS DUE TO THE ASSESSEE AS ON 31.03.2001 AND HENCE THE ENTIRE AMOUNT IS TO BE CON SIDERED FOR COMPUTATION OF CAPITAL GAINS. BUT WHILE COMPUTING C APITAL GAINS AND TAX PAYABLE BY ASSESSEE THEREON , THE AO TOOK THE FIGUR E OF RS. 12 CORES FOR COMPUTING CAPITAL GAINS ON SALE OF SHARES INSTEAD O F AN AMOUNT OF RS. 15 CRORES WHICH WAS TOTAL CONSIDERATION AS PER AGREEME NTS ENTERED INTO WITH PENTAMEDIA GROUP OF CONCERNS. THE AFORESAID ASSES SMENT WAS FRAMED BY AO VIDE ASSESSMENT ORDER DATED 31.12.2008 PASSED U/ S 143(3) READ WITH SECTION 147 OF THE 1961 ACT. 5. AGGRIEVED BY AN ASSESSMENT FRAMED BY THE AO U/S 143(3) READ WITH SECTION 147 OF THE 1961 ACT, THE ASSESSEE FILED FIR ST APPEAL BEFORE LD.CIT(A) RAISING BOTH JURISDICTIONAL ISSUE CHALLEN GING LEGALITY OF REOPENING OF THE CONCLUDED ASSESSMENT BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT AS WELL RAISING CHALLENGE ON MERITS OF THE ADDITIONS MADE BY THE AO. THE LEARNED CIT(A) WAS , INTER-ALIA, PLEASED TO DISMISS OBJECTIONS RAISED BY ASSESSEE ON JURISDICTIONAL GROUND AS TO L EGALITY AND VALIDITY OF REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF TH E 1961 ACT BY HOLDING ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 17 -: THAT RE-OPENING OF THE CONCLUDED ASSESSMENT BY INVO KING PROVISIONS OF SECTION 147 OF THE 1961 ACT WAS VALIDLY INITIATED BY AO U/S 147 OF THE 1961 ACT , BY HOLDING AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE SUBMISSIONS OF THE LD.AR. I HAVE ALSO GONE THROUGH THE DECISIONS AND THE CIRCUL AR RELIED ON BY THE AO AND AR. IN THIS CASE THE RETURN HAD ONLY BEEN PROCESSED U/S.143(1) OF THE ACT AND NO ASSESSMENT ORDER U/S.143(3) WAS PASSED. HENCE, THE FACT OF THE PRESENT CASE IS DIFFERENT FROM THE CASE OF KELVINATOR OF INDIA LTD (SUPRA) WHERE A REGULAR ORDE R OF ASSESSMENT HAD BEEN PASSED U/S.143(3) ON 17.11.1989 BEFORE ISSUE OF NOTICE U/S.14 8 ON 20.04.1990. INTIMATION U/S.143(1) IS NOT AN ASSESSMENT. IN SIMILAR CIRCUMSTA NCES, THE HON'BLE SUPREME COURT IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKERS PV T. LTD 291 ITR 500(SC) HELD THAT PROCEEDINGS INITIATED U/S.147 ARE VALID. AS INTIMATI ON U/S.143(1)(A) IS NOT 'ASSESSMENT, THERE IS NO QUESTION OF TREATING REASSESSMENT IN SU CH A CASE AS BASED ON CHANGE OF OPINION. SINCE NO DECISION HAD BEEN TAKEN AT THE FIRST INSTA NCE, THERE IS NO QUESTION OF REVIEWING IT BASED ON CHANGE OF OPINION. FURTHER, IN THE CASE OF SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297(SC), THE HON'BLE SUPREME COURT HAS HELD THA T RE-ASSESSMENT PROCEEDINGS ARE FOR THE BENEFIT OF REVENUE AND ARE AIMED AT GATHERING T HE ESCAPED INCOME. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF MADRAS GYMKHANA CLUB V. D CIT, 328 ITR 348 (MAD) HAS HELD THE REOPENING TO BE VALID UNDER SIMILAR CIRCUMSTANCES. IN VIEW OF THE ABOVE FACTUAL POSITION AND AUTHORITATIVE PRECEDENTS, I AM OF THE CONSIDERED OP INION THAT THE REOPENING HAS BEEN VALIDLY INITIATED. THE GROUND IS ACCORDINGLY DISMIS SED. ON MERITS OF THE ISSUE IN APPEAL, THE LD.CIT(A) ACC EPTED CONTENTIONS OF THE ASSESSEE THAT RS. 7.5 CRS. WAS RECEIVED BY ASSESSEE TOWARDS NON- COMPETE FEE WHICH IS A CAPITAL RECEIPT AND IS EXEMP T FROM TAX , BY HOLDING AS UNDER: 6.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF TH E CASE AND THE SUBMISSIONS OF THE LD.AR. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED ON BY T HE LD.AR. I HAVE ALSO PERUSED THE AGREEMENTS FOR SALE OF SHARES, NON-COMPETE AGREEMEN TS AND OTHER DETAILS. THE APPELLANT WAS THE PROMOTER OF THE COMPANY I.E. KRIS SRIKANTH SPORTS ENTERTAINMENT PVT. LTD (KSEPL). THIS COMPANY WAS TAKEN OVER BY THREE COMPANIES OF P ENTAMEDIA GROUP BY PURCHASING THE SHARES OF KSEPL. AN AGREEMENT WAS ENTERED INTO BETW EEN APPELLANT AND THE PURCHASERS OF SHARES WHEREBY SRI K. SRIKANTH (THE APPELLANT) WAS NOT TO ENGAGE HIMSELF IN ANY COMPETITIVE ACTIVITY SIMILAR TO THAT CARRIED ON BY KSEPL FOR A PERIOD OF 6 YEARS. A SUM OF RS.7.5 CRORES WAS PAID BY THE THREE BUYER COMPANIES , AS CONSIDERATION FOR THE ABOVE RESTRICTIVE COVENANT. THE APPELLANT HAS CLAIMED THE COMPENSATION AS A CAPITA! RECEIPT EXEMPT FROM TAXATION. THERE IS NO DISPUTE REGARDING THE FACT THAT THE APPELLANT AND THE BUYERS ARE UNRELATED PARTIES. HENCE, THE TRANSACTIO N ENTERED AT ARM'S LENGTH CANNOT BE QUESTIONED. THE AGREEMENTS ENTERED INTO BETWEEN THE APPELLANT AND THE BUYERS ARE VERY CLEAR REGARDING THE PURPOSES FOR WHICH PAYMENTS WER E MADE TO THE APPELLANT. THE RELEVANT CLAUSE IN THE AGREEMENT IS REPRODUCED FOR REFERENCE AND CLARITY. 'WHEREAS THE PARTY OF THE FIRST PART HAS ASSURED TH E PARTY OF THE SECOND PART THAT CONSEQUENT ON THE PURCHASE OF 1/3 OF THE ISSUED AND SUBSCRIBED SHARE CAPITAL OF THE COMPANY BY THE PARTY OF THE SECOND PART, THE PA RTY OF THE FIRST PART SHALL NOT CARRY ON EITHER BY HIMSELF OR IN ASSOCIATION WITH A NY OTHER PERSON OR PERSONS OR ASSOCIATE OR INVOLVE DIRECTLY OR INDIRECTLY WITH AN Y OTHER COMPANY, FIRM OR PERSON IN ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 18 -: A BUSINESS SIMILAR TO THAT CARRIED ON BY M/S. KRIS S IIKKANTH SPORTS ENTERTAINMENT P.LTD., FOR A PERIOD OF 6 YEARS...... THAT IN CONSIDERATION OF THE PAYMENT BY THE PARTY O F THE SECOND PART TO THE PARTY OF THE FIRST PART OF THE SUM HEREIN STATED IN THE MANN ER HEREIN CONTAINED AND OF MUTUAL COVENANTS OF THE PARTIES, THE PARTY OF THE F IRST PART HEREBY CONFIRMS AND COVENANTS WITH THE PARTY OF THE SECOND PART THAT HE SHALL NOT FOR A PERIOD OF SIX YEARS FROM THE DATE HEREOF CARRY ON ANY BUSINESS SI MILAR TO THAT CARRIED ON BY M/S.KRIS SRIKKANTH SPORTS ENTERTAINMENT P LTD. EITHE R BY HIMSELF OR IN ASSOCIATION WITH ANY OTHER PERSON OR PERSONS NOR SHALL HE INVOL VED, OR ASSOCIATE HIMSELF AS PROPRIETOR, PARTNER, DIRECTOR, CONSULTANT OR ADVISO R TO ANY COMPANY, FIRM OR OTHER PERSON CARRYING ON OR INVOLVED IN A SIMILAR BUSINES S. THAT IN CONSIDERATION OF THE ABOVE SAID COVENANT BY THE PARTY OF THE FIRST PART, THE PARTY OF THE SECOND PART SHALL PAY TO THE PARTY OF THE FIRST PART A SUM OF RS.2,50,00,000/- (RUPEES TWO CRORSS AND FIFTY LAKHS ONLY) THE RESTRICTIVE COVENANT OF THE PARTY OF THE FIRST PART AS HEREIN CONTAINED SHALL ENSURE FOR A PERIOD OF 6 YEARS FROM THE DATE HEREOF AND SHALL CEASE ON THE EXPIRY OF THE SAID PERIOD...' 6.2.1 IT IS CLEAR FROM THE READING OF THE ABOVE C LAUSES THAT THE COMPENSATION FOR RESTRICTIVE NON-COMPETE COVENANT IS A CAPIT AL RECEIPT AS THE INCOME EARNING APPARATUS HAS BEEN TAKEN AWAY FROM THE APPELLANT FO R A PERIOD OF 6 YEARS. IT IS TO COMPENSATE THE LOSS OF INCOME FROM SPORTS MEDIA ACT IVITIES FOR 6 YEARS THAT THE APPELLANT HAD RECEIVED THE IMPUGNED SUM. THE HON'BLE SUPREME COURT IN THE CASE OF GILLANDERS ARBUTHNOT & CO. LTD V. CIT, 53 ITR 2 83 (SC) HAS HELD THAT COMPENSATION PAID FOR AGREEING TO REFRAIN FROM CARRYING ON COMPE TITIVE BUSINESS IN THE COMMODITIES; IN RESPECT OF WHICH THE AGENCY WAS TERMINATED, OR FOR THE LOSS OF GOODWILL WOULD, PRIMA FACIE, BE OF THE NATURE OF CAPITAL RECEIPT. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GUFFIC CHAM P.LTD V. CT, 332 ITR 602 (SC) ALSO S UPPORTS THE CASE OF THE APPELLANT. NON-COMPETE FEE WAS MADE SPECIFICALLY TAXABLE BY IN SERTION OF CLAUSE (VA) IN SECTION 28 BY FINANCE ACT, 2002 EFFECTIVE FROM 1.4.2003. PRIOR TO AMENDMENT, IT WAS HELD TO BE NOT TAXABLE WHERE THE NON-COMPETE FEE RELATED TO A BUSI NESS AS A WHOLE, AS FOR EXAMPLE DECIDED IN CIT V. RAI BAHADUR JAIRAM VALJI [1959] 35 ITR 148 (SC). IN SUCH CASES, IT WOULD BE A CAPITAL RECEIPT. IN A CASE, WHERE THERE WAS AN AGREEMENT FOR TRANSFER OF TRADE MARK BY THE ASSESSES COMPANY TO RANBAXY, A PHARMACEUTICA L COMPANY WITH THE ASSESSEE FOREGOING THE RIGHT TO CARRY ON DIRECTLY OR INDIREC TLY THE BUSINESS HITHERTO CARRIED ON BY IT AND THE DURATION OF THE AGREEMENT WAS TWENTY YEARS, IT WAS HELD THAT IT COULD NOT BE TREATED AS INCOME OF A REVENUE NATURE, AND, THEREFO RE, THE SUPREME COURT HELD IT TO BE A CAPITAL RECEIPT IN GUFFIC CHEM. P. LTD V. CIT [2011 ] 332 ITR 502 REVERSING THE DECISION OF THE KARNATAKA HIGH COURT TO THE CONTRARY IN CIVIL A PPEAL NO. 2522 DATED 29.10.2009. IN THE SAME COMMON JUDGMENT, IT ALSO DEALT WITH YEAR A NOTHER CASE IN CIT V. MANDALAY INVESTMENT P. LTD, 332 ITR 602 (SC). WHEREIN IT WAS DECIDED THAT THE AMOUNT RECEIVED FOR SIMILAR CIRCUMSTANCES PRIOR TO THE AMENDMENT COULD NOT BE TAXED UPHOLDING THE DECISION OF THE DELHI HIGH COURT IN I.T.A.NO.728 OF 2009 DATED 29.7.2009 TO THIS EFFECT. THE FACTS OF THE APPELLANT ARE COVERED BY THE ABOVE DECISIONS. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITIONS, THE ADDITION IS DELETED AND THE GROUND I S ALLOWED. SO FAR AS THE CONTENTIONS OF THE ASSESSEE THAT RS. 4.25 CRS. RECEIVED BY THE ASSESSEE FROM THE SALE PROCEEDS OF SHARES IS TO BE APPROPRIATED IN DISCHARGE OF LIABILITY THROUGH INDIAN BANK WHICH WA S STATED TO BE DIVERSION BY OVERRIDING TITLE AND HENCE THE SAME CA NNOT BE BROUGHT TO TAX ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 19 -: AS CONTENDED BY THE APPELLANT , WAS REPELLED BY LD .CIT(A) BY HOLDING AS UNDER: 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ID.AR. I HAVE ALSO GONE THROUGH THE DECISION RELIED ON BY TH E LD.AR. I HAVE ALSO CAREFULLY PERUSED THE AFFIDAVIT FILED BY INDIAN BANK, ORDER OF DRT IN OA NO.1642/1998 AND 1399/1998 DATED 23.2.2001 AND OTHER DETAILS SUBMITTED BY THE APPELL ANT. FROM THE FACTS ON RECORD, IT IS CLEAR THAT THE APPELLANT WAS A GUARANTOR IN RESPECT OF TH E LOAN GRANTED BY INDIAN BANK TO ADITYA LEATHER EXPORTS P. LTD. (ALE). THE BORROWER WAS UNA BLE TO PAY THE DUES TO THE BANK ON ACCOUNT OF HUGE LOSSES. THE BANK HAS A RIGHT TO PR OCEED AGAINST THE GUARANTORS IF THE BORROWER DOES NOT PAY THE LOAN. IN THE INSTANT CAS E, THE BANK ON LEARNING THAT THE GUARANTOR (APPELLANT) WAS PROPOSING TO SELL HIS SECU RITIES WITHOUT SETTLING THE DUES OF THE BANK, HAD FILED AN APPLICATION BEFORE DEBT RECOVERY TRIBUNAL AT CHENNAI TO GRANT INTERIM INJUNCTION RESTRAINING THE BUYER FROM MAKING PAYMEN T TO THE APPELLANT TOWARDS THE SALE OF SHARES AND TO DIRECT THE BUYER TO PAY THE AMOUNT DI RECTLY TO THE BANK TOWARDS THE LOAN OUTSTANDING. SUBSEQUENTLY, THE BANK ENTERED INTO A N OUT OF COURT SETTLEMENT WHEREBY A SUM OF RS. 4.25 CORES FROM SALE PROCEEDS WAS TO BE PAID TO THE BANK. THE APPELLANT HAS CLAIMED THAT THE ABOVE AMOUNT OF RS.4.25 CRORES SHOULD BE ALLOWED AS DEDUCTION IN COMPUTING THE CAPITAL GAIN SINCE IT WA S AN AMOUNT PAID FOR REMOVING THE ENCUMBRANCE ON THE SALE OF SHARES. I AM UNABLE TO A GREE WITH THE CONTENTIONS OF THE APPELLANT. IN THIS CASE, THE APPELLANT AS A GUARANT OR OF THE LOAN WAS LEGALLY BOUND TO REPAY THE LOAN TAKEN BY THE BORROWER IN CASE BORROWER WAS UNABLE TO PAY BACK THE AMOUNT. WHEN THE GUARANTOR (APPELLANT) WANTED TO SELL THE SHARES OF KSEPL OWNED BY HIM, THE BANK HAD FILED AN APPLICATION BEFORE DRT ONLY TO HAVE A RIGH T TO RECEIVE THE AMOUNT REALIZED BY WAY OF SALE SO AS TO SETTLE ITS DUES. IN MY CONSIDERED OPINION, IT WILL ONLY BE AN APPLICATION OF INCOME AND NOT DIVERSION OF INCOME BY OVERRIDING CH ARGE. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. SITALDAS TIRATH DAS, 41 ITR 367 (SC) IS RELEVANT. IT HELD THAT THE TRUE TEST FOR THE APPLICATION OF THE RULE OF DIVERSION OF INCOME BY OVERRIDING CHARGE IS WHETHER THE AMOUNT SOUGHT TO BE DEDUCTED, IN TRU TH, NEVER REACHED THE ASSESSES AS HIS INCOME. OBLIGATIONS, NO DOUBT, ARE THERE IN EVERY CA SE, BUT IT IS THE NATURE OF OBLIGATION THAT IS THE DECISIVE FACT. THERE IS DIFFERENCE BETW EEN AN AMOUNT WHICH A PERSON IS OBLIGED TO APPLY OUT OF HIS INCOME AND AN AMOUNT WHICH BY T HE NATURE OF OBLIGATION CANNOT BE SAID TO BE PART OF INCOME OF THE ASSESSEE, WHERE BY OBLI GATION THE INCOME IS DIVERTED BEFORE IT REACHES THE ASSESSEE, IT IS DEDUCTIBLE; BUT WHERE T HE AMOUNT IS REQUIRED TO BE APPLIED TO DISCHARGE AN OBLIGATION AFTER SUCH INCOME REACHES T HE ASSESSES, THE SAME CONSEQUENCE, IN LAW, DOES NOT FOLLOW. IT IS THE FIRST KIND OF PAYME NT WHICH CAN TRULY BE EXCUSED AND NOT THE SECOND. THE SECOND PAYMENT IS MERELY AN OBLIGATION TO PAY ANOTHER PERSON OF ONE'S INCOME, WHICH HAS BEEN RECEIVED AND SINCE APPLIED. THE PRESENT CASE IS A CLEAR INSTANCE OF APPLICATION OF MONEY. 7.3.1 FURTHER, THE CLAIM OF THE APPELLANT THAT T HERE WERE ENCUMBRANCES IN THE PROPERTY TO BE SOLD AND THEREFORE THE AMOUNT PAID WAS TOWARDS C LEARING THESE ENCUMBRANCES, IN MY OPINION, CANNOT BE ACCEPTED. THIS WAS NOT THE CAS E OF ANY ENCUMBRANCE CREATED ON THE PROPERTY SOLD, THE SALE OF WHICH WILL NECESSARILY PRESUPPOSE CLEARING OF THOSE ENCUMBRANCES. IN FACT, IN THIS CASE THERE WAS NO SPECIFIC ENCUMBRANCE: ON THE SAID SHARES. EVEN, WHEN THERE ARE SPECIFIC ENCUMBRANCES LIKE THAT OF A LOAN THAT HAS BEEN OBTAINED ON THE SAID SHARES, THE CLEARANCES OF THE LOAN BY WAY OF SALE OF SHARES WOULD ONLY BE AN APPLICATION OF INCOME THAT IS RECE IVED BY WAY OF SALE OF SHARE AND CANNOT BE IN ANY WAY SAID TO BE AN EXPENDITURE INCURRED TO WARDS SALE OR IMPROVEMENT IN THE COST OF THE ASSET. THE DECISION RELIED UPON BY THE LD. AR IN THE CASE OF BRADFORD TRADING CO. PVT. LTD. (261 ITR 222), IN MY OPINION, IS NOT APPLICABL E TO THE FACTS OF THIS CASE SINCE THE DECISION RELATED TO CLEARANCE OF SPECIFIC ENCUMBRAN CES ON THE ASSETS SOLD. A SUIT WAS FILED BY ONE OF THE SHAREHOLDERS WHEN THE ASSESSEE COMPAN Y TRANSFERRED A BUILDING BELONGING TO IT. THE HONBLE COURT HELD PAYMENT OF ` 2 LAKHS OVER AND ABOVE RETURN OF SHARE CAPITAL WAS DEDUCTIBLE. THE FACTS OF THE PRESENT CASE ARE TOTA LLY DIFFERENT. INDIAN BANK WAS NEITHER A SHAREHOLDER OF KSEPL NOR IT HAD ANY INTEREST IN KSE PL. FURTHER, THE APPLICATION FILED BY THE BANK BEFORE DRT CLEARLY SHOWS THAT WHAT IS SOUGHT I S ONLY CLEARANCE OF DUES OF THE BANK AND NOT ANY RESTRAIN ON SALE OF THE SHARES. IN FAC T, THE BANK COULD NOT HAVE RESTRAINED THE SALE OF SHARES AS LONG AS ITS INTEREST WAS PROTECTE D. THEREFORE, IN MY CONSIDERED OPINION, ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 20 -: THE AMOUNT PAID TO INDIAN BANK TOWARDS SETTLEMENT O F ITS DUES IS ONLY AN APPLICATION OF INCOME. HENCE, THE AO HAS RIGHTLY MADE THE ADDITION WHICH IS UPHELD. ACCORDINGLY, THIS GROUND IS DISMISSED. 6. BEFORE WE PROCEED FURTHER, IT IS TO BE STATED TH AT THIS ORDER IS BEING PRONOUNCED BEYOND 90 DAYS FROM THE DATE OF HEARING. THE HEARING OF THE APPEALS WERE CONCLUDED ON 29 TH JANUARY 2020. THERE WERE EXTRAORDINARY SITUATION PREVAILING IN THE COUNTRY OWING TO COVID1 9 DISEASE WHEREIN GOVERNMENT OF INDIA ANNOUNCED FIRST NATIONAL LOCKDO WN EFFECTIVE FROM 25 TH MARCH 2020. THERE ARE FURTHER LOCKDOWNS ANNOUNCED F ROM TIME TO TIME BY GOI THEREAFTER. THE FOURTH LOCKDOWN IS ANNOUNCED ON 17 TH MAY 2020 BY GOI WHICH WILL BE EFFECTIVE FROM 18 TH MAY 2020 TILL 31 ST MAY 2020. THE STATE GOVERNMENTS ARE ALSO ANNOUNCING THEIR FURTHER STRINGENT CONDITIONS FOR IMPLEMENTING THESE LOCKDOWN IN THEIR RESPECTIVE STATES. THESE LOCKDOWNS HAVE CRIPPLED THE NORMAL FUNCTIONING OF T HE COUNTRY. THE ORDER IS TO BE PRONOUNCED WITHIN 90 DAYS FROM THE DATE O F CONCLUSION OF HEARING AND THIS ORDER IS PRONOUNCED , MUCH AFTER THE EXPIR Y OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. RULE 34(5) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 WILL COME INTO PLAY. CO-ORDIN ATE DIVISION BENCH OF ITAT, MUMBAI IN DCIT V. JSW LIMITED IN ITA NO. 6264 /MUM/2018 VIDE ORDERS DATED 14 TH MAY 2020 HAS DEALT WITH THE DELAY IN PRONOUNCEMENT OF THE ORDERS BY TRIBUNAL IN THESE EXTRAORDINARY PERIO D, BY HOLDING AS UNDER: 7. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUS T DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THESE AP PEALS WAS CONCLUDED ON 7TH JANUARY 2020, THIS ORDER THEREON IS BEING PRONO UNCED TODAY ON 14TH DAY OF MAY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FAC T THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963, WHICH DEA LS WITH ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 21 -: PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) T HE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWING MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY U PON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMED IATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A D ATE FOR PRONOUNCEMENT (C) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIV EN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONO UNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING O F THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRONOUNCEMENT OF THE ORDER, AN D SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY B EYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 8. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPE AL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE D ATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT TO NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WA S INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHERE IN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED THAT WE, THEREFORE, DIRE CT THE PRESIDENT OF THE APPELLATE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDEL INES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF A NIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SUI TABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY A LL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE (EMPHASIS, BY UNDERLININ G, SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE AUTHORITIES UNDER THE INCOME-TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT. IN THE RULED SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRES SION ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE THE O RDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSI NG OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAO RDINARY CIRCUMSTANCES. 9. LET US IN THIS LIGHT REVERT TO THE PREVAILING SI TUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA T OOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PRE VENT THE SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED F ROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWID E LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTR A GOVERNMENT, AND ON ACCOUNT OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBA I BEING GRAVE, THERE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 22 -: WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWN S ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY , THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HI STORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.202 0, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN THE PE RIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN TH E JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISE S SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN. H ONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESI DES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED T HAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MA RCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDE D ACCORDINGLY, AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORD ER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TI LL 15TH JUNE 2020. IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA B UT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19 TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD BE CO NSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE ) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DIC TIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLL ED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE G OVERNMENT OF INDIA AND THE COVID-19 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER U NDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGH T OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORC E CAN BE ANYTHING BUT AN ORDINARY PERIOD. 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE O F THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDIN G THE IMPORTANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHI CH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHIL E INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NO T BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL OR DER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSI GNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRU PTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBT EDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HON BLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATIO N HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 20 20, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIMEBOUND BY THIS ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 23 -: COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MA RCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDE D ACCORDINGLY. THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE JURIS DICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS P ERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHIC H THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VI EW, EVEN WITHOUT THE WORDS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALY SIS OF THE LEGAL POSITION, THE PERIOD DURING WHICHLOCKOUT WAS IN FORCE IS TO E XCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF THE APPELLA TE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90-DAY TIME-LIMIT FO R PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE ANY, BAR O N THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BEC AUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS C ONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO B E CARRIED OUT ON THE FACTS OF THIS CASE. WE HAVE ALSO OBSERVED THAT HONBLE SUPREME COURT HA S PASSED AN ORDER WHEREBY IN EXERCISE OF ITS POWERS UNDER ARTICLE 141 /142 OF CONSTITUTION OF INDIA HAS EXTENDED LIMITATION PERIOD IN SUO MOTU CA SE , EFFECTIVE FROM 15 TH MARCH 2020 BY HOLDING AS UNDER: TO OBVIATE SUCH DIFFICULTIES AND TO ENSURE THAT LAWYERS/LITIGANTS DO NOT HAVE TO COME PHYSICALLY TO FILE SUCH PROCEEDINGS IN RESPECTIVE COURTS/TRIBUNALS ACR OSS THE COUNTRY INCLUDING THIS COURT, IT IS HEREBY ORDE RED THAT A PERIOD OF LIMITATION IN ALL SUCH PROCEEDINGS , IRRESPECTIVE OF THE LIMITATION PRESCRIBED UNDER THE GENERAL LAW OR SPECIAL LAWS WHETHER CONDONABLE OR N OT SHALL STAND EXTENDED W.E.F. 15TH MARCH 2020 TILL FU RTHER ORDER/S TO BE PASSED BY THIS COURT IN PRESENT PROCEEDINGS.' THE STATE OF TAMIL NADU IS ALSO HIT BY COVID19 DISE ASE AS COULD BE SEEN FROM THE DATA OF POSITIVE CASES EMERGING IN STATE O F TAMIL NADU. THUS, EVEN IF WE EXCLUDE PERIOD OF FIRST NATIONAL LOCKDOW N FROM 25.03.2020 TO 19.04.2020, WHEN OFFICES WERE NOT ALLOWED TO BE PH YSICALLY OPENED , THE PERIOD WITH IN WHICH THIS ORDER IS NOW PRONOUNCED I S WITHIN 90 DAYS. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 24 -: 7. BOTH ASSESSEE AND REVENUE ARE AGGRIEVED BY APPE LLATE ORDER DATED 27.03.2012 PASSED BY LEARNED CIT(A) WHO HAVE COME I N APPEAL BEFORE THE TRIBUNAL AND WE SHALL TAKE UP THE CONTENTIONS OF TH E ASSESSEE AS WELL REVENUE AFTER DISCUSSING FACTUAL BACK GROUND OF APP EAL FILED BY ASSESSEE IN ITA NO.307/CHNY/2010 AND ITA NO.1016/CHNY/2012 , FOR AY: 2001-02. 8. NOW WE TAKE UP APPEAL FILED BY ASSESSEE IN ITA N O.307/CHNY/2010 FOR AY: 2001-02. THE LEARNED COMMISSIONER OF INCOME-TA X ON PERUSAL OF THE RECORD OBSERVED THAT AO HAS STATED IN ITS ASSESSMEN T ORDER DATED 31.12.2008 THAT ENTIRE SALE CONSIDERATION OF RS. 15 CRORES SHOULD BE CONSIDERED IN THE COMPUTATION OF CAPITAL GAINS AND HE HAS STATED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE HAS EXCLUDED A S UM OF RS. 3 CRORES STATING THAT AMOUNT WAS NOT RECEIVED AND THE ASSESS EE IN HIS RETURN OF INCOME FILED U/S 139(1) CONSIDERED TOTAL CONSIDERAT ION OF RS. 15 CRORES FOR CAPITAL GAINS AND AS ON 31.03.2001 , THE AMOUNT WAS DUE TO THE ASSESSEE AND HENCE THE ENTIRE AMOUNT OF RS. 15 CRORES IS TO BE CONSIDERED FOR COMPUTATION OF INCOME FROM CAPITAL GAIN. THE LEARNE D CIT OBSERVED THAT HOWEVER , WHILE COMPUTING SALE VALUE OF EACH SHARE, THE AO HAS ADOPTED GROSS SALE CONSIDERATION OF RS. 12 CRORES AND DIVID ED THE SAME BY 375000 SHARES SOLD BY THE ASSESSEE AND HIS MINOR SONS. THU S, HE HAS ERRONEOUSLY ARRIVED AT SALE PRICE OF EACH SHARE OF RS. 320 INST EAD OF RS. 400 PER SHARE( RS. 15 CRORES/375000 SHARES), WHICH LED TO INVOCATI ON OF REVISIONARY POWERS U/S 263 BY LEARNED CIT. THE SECOND ISSUE ON WHICH LEARNED CIT INVOKED REVISIONARY POWERS U/S 263 WAS WITH RESPECT TO THE DEDUCTION ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 25 -: ALLOWED BY AO U/S 54F OF THE 1961 ACT . THE LEARNED CIT OBSERVED THAT IN COMPUTATION OF INCOME FILED BY ASSESSEE WITH REVISE D RETURN OF INCOME , THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE 1 961 ACT TO THE TUNE OF RS. 35,62,189/- WHILE THE AO HAS ALLOWED DEDUCTION U/S 54F OF THE 1961 ACT TO THE TUNE OF RS. 43,69,613/-. IT WAS ALSO OBS ERVED BY LEARNED CIT THAT AO HAS FAILED TO GET FACTS OF THE INVESTMENT A ND WHETHER THE ASSESSEE CLAIM IS IN ACCORDANCE WITH SECTION 54F OF THE 1961 ACT READ WITH THE PROVISO. THE AFORESAID REASONS LED TO THE INVOCATIO N OF REVISIONARY POWERS BY LEARNED CIT U/S 263 OF THE 1961 ACT BY CONSIDERI NG THAT ASSESSMENT ORDER DATED 31.12.2008 PASSED BY AO U/S 143(3) READ WITH SECTION 147 OF THE 1961 ACT WAS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE, WHICH LED TO ISSUANCE OF NOTICE DATED 13.1 0.2009 ISSUED BY LEARNED CIT U/S 263 OF THE 1961 ACT. THE ASSESSEE I N RESPONSE TO NOTICE DATED 13.10.2019 ISSUED BY LEARNED CIT U/S 263 OF T HE 1961 ACT SUBMITTED IN ITS REPLY VIDE LETTER DATED 05.11.200 9 THAT THE ASSESSEE HAS NOT REALIZED THE SALE CONSIDERATION OF RS. 3 CRS. AND HENCE THE NET REALIZATION HAS BEEN CORRECTLY TAKEN IN THE WORKING S OF THE ASSESSMENT ORDER PASSED BY AO. IT WAS SUBMITTED THAT WHEN RET URN OF INCOME WAS ORIGINALLY FILED U/S.139(1) OF THE 1961 ACT , THE ASSESSEE HAS ASSUMED THE POSSIBILITY OF REALIZING RS. 3 CRS. EVENTUALLY BUT WHEN REVISED RETURN OF INCOME WAS FILED , IT WAS CERTAIN THAT SAID SUM HAD BECOME IRREVOCABLE AND BAD. THUS, THE ASSESSE SUBMITTED THAT THE AO HA S CORRECTLY TAKEN NET CONSIDERATION OF RS. 12 CRORES INSTEAD OF RS. 15 CR ORES. THE LD.CIT REJECTED CONTENTIONS OF THE ASSESSEE AND OBSERVED T HAT THE AO HAD ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 26 -: ALREADY REJECTED CONTENTION OF THE ASSESSEE THAT TH E SALE CONSIDERATION IS TO BE TAKEN AS ONLY RS. 12 CRORES INSTEAD OF RS. 15 CRORES , WHILE FRAMING ASSESSMENT ORDER DATED 31.12.2008. THUS, LEARNED CI T OBSERVED THAT THE AO HAD REJECTED THE CONTENTION OF THE ASSESSEE THAT SALE CONSIDERATION BE ADOPTED AT RS. 12 CRORES ON ACCOUNT OF BAD DEBTS BE ING RS. 3 CRORES AND IT IS ONLY BY MISTAKE THE AO ADOPTED SALE CONSIDERATIO N OF RS. 12 CRORES INSTEAD OF RS. 15 CRORES WHICH IS PURELY A MISTAKE ON THE PART OF THE AO AND WAS BLATANTLY ERRONEOUS SO FAR AS PREJUDICIAL T O THE INTEREST OF THE REVENUE AND THEREFORE DIRECTIONS WERE ISSUED BY LEA RNED CIT TO COMPUTE VALUE OF EACH SHARE BY TAKING TOTAL SALE CONSIDERAT ION OF RS. 15 CRORES AND DIVIDING THE SAME BY 375000 SHARES WHICH GIVES VALU E OF RS. 400 PER SHARE . SIMILARLY FOR CLAIMING DEDUCTION U/S.54F , THE ASSESSEE SUBMITTED THAT DEDUCTION WAS RIGHTLY ALLOWED BY AO AND THERE IS NO ERROR IN ASSESSMENT ORDER PASSED BY AO. THE LEARNED CIT REJE CTED CONTENTIONS OF THE ASSESSEE AS IN VIEW OF LEARNED CIT, THE ASSESSE E HAS CLAIMED LOWER DEDUCTION OF RS. 35,62,189 U/S 54F IN REVISED RETUR N OF INCOME AS ACTUAL INVESTMENT MADE IN HOUSE PROPERTY AS ALSO THAT THE AO HAS NOT VERIFY AS TO WHETHER CONDITIONS AS PRESCRIBED U/S 54F WERE FU LFILLED BY THE ASSESSEE OR NOT. THUS, LEARNED CIT VIDE REVISIONARY ORDER D ATED 22.01.2010 PASSED U/S.263 OF THE 1961 ACT HELD THAT ASSESSMENT ORDER DATED 31.12.2008 PASSED BY AO AS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSEE BEING AGGRIEVED BY REVISIONA RY ORDER DATED 22.01.2010 PASSED BY LEARNED CIT U/S 263 OF THE 196 1 ACT HAS FILED AN APPEAL WITH TRIBUNAL IN ITA NO. 307/CHNY/2010 FOR A Y: 2001-02. ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 27 -: FURTHER, VIDE APPEAL IN ITA NO.1016/CHNY/2012 FOR A Y: 2001-02, THE ASSESSEE HAS CHALLENGED CONSEQUENTIAL ASSESSMENT OR DER DATED 08.11.2010 PASSED BY AO U/S.143(3) R.W.S.263 WHICH ASSESSMENT ORDER WAS CONSEQUENTIAL TO REVISIONARY ORDER DATED 22.01. 2010 PASSED BY LEARNED CIT U/S 263 OF THE 1961 ACT , VIDE ASSESSME NT ORDER DATED 08.11.2010 , WHEREIN SALE CONSIDERATION FOR SALE OF SHARES WAS TAKEN TO BE RS. 15 CRORES AS AGAINST RS. 12 CRORES WHICH WAS EA RLIER ERRONEOUSLY ADOPTED BY AO WHILE FARMING ASSESSMENT U/S 143(3) R EAD WITH SECTION 147 OF THE 1961 ACT BUT , HOWEVER, AO WHILE FRAMING ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 263 OF THE 1961 ACT, A LLOWED DEDUCTION U/S.54F TO THE TUNE OF RS. 43,69,613/- . THUS, THE SECOND GROUND FOR INVOCATION OF SECTION 263 OF THE 1961 ACT BY LEARN ED CIT WAS HELD BY AO TO BE IN FAVOUR OF ASSESSEE WHILE FRAMING CONSEQUEN TIAL ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 263 OF THE 1961 ACT. THE CLAIM OF THE ASSESSEE THAT HE HAS NOT RECEIVED RS. 3 CRS. AND HE NCE SAME SHOULD BE EXCLUDED FROM SALE CONSIDERATION WAS REJECTED BY AO WHILE PASSING CONSEQUENTIAL ORDER U/S 143(3) READ WITH SECTION 26 3 OF THE 1961 ACT AND HENCE THIS DIFFERENTIAL AMOUNT OF RS 3 CRS. WAS ALS O BROUGHT TO TAX BY THE AO. THE ASSESSEE BEING AGGRIEVED BY AN ASSESSMENT ORDER DATED 08.11.2010 PASSED BY AO U/S 143(3) READ WITH SECTIO N 263 OF THE 1961 ACT FILED FIRST APPEAL WITH LD.CIT(A) WHO REJECTED CONTENTIONS OF THE ASSESSEE AND ADOPTED GROSS SALE CONSIDERATION OF RS . 15 CRS. FOR COMPUTING CAPITAL GAINS AND GROUND OF THE APPEAL R AISED BY ASSESSEE TO ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 28 -: THAT EFFECT WERE DISMISSED BY LD.CIT(A) , VIDE APPE LLATE ORDER DATED 27.03.2012 BY HOLDING AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS OF THE LD.AR. I HAVE ALSO GONE THROUGH THE ORDER PASSED U /S.143(3) R.W.S.147 DATED 31.12,2008 AND THE ORDER OF CIT U/S 263 DATED 22.1. 2010. THE AO, IN THE ORDER PASSED U/S.143 R.W.S.147 DATED 31.12.2008, HAS STAT ED THAT THE ENTIRE SALE CONSIDERATION OF RS.15 CRORES SHOULD BE CONSIDERED IN THE COMPUTATION OF CAPITAL GAINS. HE HAS STATED AS UNDER: 'THE ASSESSEE HAS EXCLUDED A SUM OF RS.3 CRORES STA TING THAT THE AMOUNT HAS NOT BEEN RECEIVED. IN FACT, THE ASSESSEE IN THE RETURN OF INCOME FILED U/S.139(1) HAS CONSIDERED FOR CAPITAL GAIN. AS ON 3 1.03.2001, THE AMOUNT IS DUE TO THE ASSESSEE. HENCE, THE ENTIRE AMOUNT HA S BEEN CONSIDERED FOR CAPITAL GAIN.' HOWEVER, WHILE COMPUTING THE SALE VALUE OF EACH SHA RE HE HAS ADOPTED THE TOTAL SALE CONSIDERATION AT RS.12 CRORES ONLY. THE CIT-L , CHENNAI IN HIS ORDER U/S 263 DATED 22.1.2010 HAS DISCUSSED THE FACTS NARRATED AB OVE AND HAS HELD THAT IT WAS MISTAKE ON THE PART OF AO WHICH WAS BLATANTLY ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE BASIS OF HIS OWN DECISIO N IN PRINCIPLE THAT THE SALE CONSIDERATION WAS RS.15 CRORES. THE AO, IN THE O RDER U/S 143(3) R.W.S.263, HAS CONSIDERED THE SUBMISSION OF THE ASSESSEE AND HE LD THAT THE AO HAS WRONGLY COMPUTED THE VALUE OF SHARES BY TAKING THE TOTAL CO NSIDERATION AT RS.12 CRORES INSTEAD OF RS.15 CRORES. IT IS CLEAR FROM THE AGR EEMENT OF SALE ENTERED INTO BY THE APPELLANT AND HIS FAMILY MEMBERS WITH THREE CON CERNS OF THE PENTAMEDIA GROUP THAT THE SALE CONSIDERATION WAS RS.15 CRORES. THE AGREEMENTS WERE MADE ON 27.11.2000. THE PREVIOUS YEAR R ELEVANT TO THE SUBJECT ASSESSMENT YEAR ENDED ON 31.3.2001 I.E., ONLY AFTER FOUR MONTHS FROM THE DATE OF AGREEMENT. THE APPELLANT HAS NOT BROUGHT ON REC ORD ANY EVIDENCE OR COMPELLING CIRCUMSTANCE WHICH MADE HIM REDUCE THE S ALE CONSIDERATION BY RS.3 CRORES. THEREFORE, THE AO HAS RIGHTLY TAKEN RS.15 C RORES AS THE TOTAL SALE CONSIDERATION. THE APPELLANT HAD A RIGHT TO RECEI VE RS.15 CRORES AS PER THE AGREEMENT DATED 27.11.2000. THE AGREEMENT ITSELF SP EAKS THAT 'BOTH PARTIES, HOWEVER AGREED THAT THEIR SHARE HOLDERS WILL HAVE A LIEN OVER THE SAID SHARES TILL SUCH TIME AS THE PAYMENTS ARE REALIZED.... THE PART IES HERETO AGREE THAT ANY DISPUTE, DIFFERENCE OR CLAIM ARISING FROM OUT OF TH IS AGREEMENT INCLUDING ANY DIFFERENCE IN ANY OPINION REGARDING INTERPRETATION OF THE TERMS OF THIS AGREEMENT OR THE NON-PAYMENT OF SALE CONSIDERATION SHALL BE R EFERRED TO AN ARBITRATION CONSISTING OF A SOLE ARBITRATOR TO BE NAMED AND APP OINTED BY THE SHAREHOLDER...' NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE TOTAL CONSIDERATION WAS DISPUTED OR WAS NOT DUE AS AT THE END OF THE YEAR. UNDER THE INCOME-TAX ACT, LIABILITY TO PAY INCOME TAX ARISES ON THE ACCRUAL O F THE INCOME. THE APPELLANT ACQUIRED THE RIGHT TO RECEIVE RS.15 CRORES ON ENTER ING INTO THE AGREEMENT ON 27.11.2000 AND, THEREFORE, THE INCOME HAS ACCRUED D URING THE YEAR. HENCE, THE AO HAS RIGHTLY MADE THE ADDITION. THE GROUND IS AC CORDINGLY DISMISSED. THE ASSESSEE BEING AGGRIEVED BY CONSEQUENTIAL ASSES SMENT ORDER DATED 08.11.2010 PASSED U/S 143(3) READ WITH SECTION 263 OF THE 1961 ACT ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 29 -: AGAINST WHICH APPEAL STOOD DISMISSED BY LEARNED CIT (A), HAS FILED AN APPEAL BEFORE THE TRIBUNAL WHICH IS LISTED IN ITA N O. 1016/CHNY/2012 FOR AY: 2001-02. 9. COMING BACK, AS WE COULD SEE THAT ALL THE ISSUES IN THESE FOUR APPEALS REVOLVES AROUND TAXABILITY OF GAINS ARISING FROM SA LE OF SHARE OF THE COMPANY KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVAT E LIMITED HELD BY ASSESSEE AND HIS MINOR SONS , TO THREE ENTITIES BEL ONGING TO PENTAMEDIA GROUP OF CONCERNS AND THE ALLEGED CLAIM OF THE ASS ESSEE THAT IT ENTERED INTO NON-COMPETE AGREEMENT WITH THESE PURCHASING EN TITIES AND AN AMOUNT OF RS. 7.50 CRORES WAS RECEIVED TOWARDS NON -COMPETE FEE BY ASSESSEE FOR NOT COMPETING WITH THESE ENTITIES FOR A PERIOD OF SIX YEARS AND THE SAME COULD NOT BE BROUGHT TO TAX FOR IMPUGN ED AY:2001-02 AS AMENDMENT IN SECTION 28 OF THE 1961 ACT WHEREIN CLA USE (VA) WAS INSERTED BY FINANCE ACT, 2002 W.E.F. 01.04.2003. F URTHER THERE IS A CLAIM OF THE ASSESSEE THAT INCOME TO THE TUNE OF RS. 4.25 CRORES BEING ALLEGEDLY DIVERTED BY OVERRIDING TITLE TO INDIAN BANK OWING TO BANK LOAN AVAILED BY A COMPANY NAMELY ADITYA LEATHER EXPORTS PRIVATE LI MITED IN WHICH THE ASSESSEE WAS DIRECTOR AND ALSO GUARANTOR FOR THE SA ID LOAN WHICH CLAIM OF DEDUCTION WAS REPELLED BY REVENUE. FURTHER, THE ASS ESSEE IS ALSO CLAIMING THAT ASSESSEE ONLY RECEIVED RS. 12 CRORES UNDER TH E AGREEMENT AS AGAINST STATED CONSIDERATION OF RS. 15 CRORES AND AN AMOUNT OF RS. 3 CRORES WAS NEVER REALIZED BY THE ASSESSEE AND HENCE SAME COULD NOT BE BROUGHT TO TAX. THUS, AS COULD BE SEEN ALL ISSUES ARE INTEGRA TED AND INTERWOVEN AND ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 30 -: REVOLVES AROUND AGREEMENTS ENTERED INTO BY ASSESSEE WITH RESPECT TO SALE OF SHARES HELD BY HIM AND HIS MINOR CHILDREN IN THE COMPANY CALLED KRIS SRIKKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WIT H COMPANIES BELONGING TO PENTAMEDIA GROUP CONCERNS AND SIMULTANEOUS NON C OMPETE AGREEMENTS ENTERED INTO BY ASSESSEE WITH THESE ENTI TIES, THUS ALL THESE APPEALS WERE HEARD TOGETHER AND ARE ADJUDICATED BY THIS COMMON ORDER. 10. THE LD.COUNSEL FOR THE ASSESSEE OPENED ARGUMENT S BEFORE THE BENCH WITH RESPECT TO ITA NO. 1015/CHNY/2012 WHICH IS AN ASSESSEES APPEAL AND SUBMITTED THAT GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE SEPARATE ADJUDICATION. THE LD.CIT-DR DID NOT RAISE ANY OBJECTION TO DISMISSAL OF GROUND NO. 1 RAISED BY ASSESSEE IN ITS APPEAL IN ITA NO. 1015/ CHNY/2012 FOR AY: 2001-02 FILED WITH TRIBUNAL. AFTE R HEARING CONTENTIONS OF THE BOTH THE PARTIES AND PERUSING MATERIAL ON RE CORD , GROUND NO.1 RAISED BY ASSESSEE IN ITS APPEAL FILED WITH TRIBUNA L STANDS DISMISSED AS BEING GENERAL IN NATURE WHICH IN OUR CONSIDERED VIE W DOES NOT REQUIRES SEPARATE ADJUDICATION. WE ORDER ACCORDINGLY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN AFORESAID ASSESSEES APPEAL IN ITA NO. 1015/ CHNY/2012 FOR AY : 2001-02, GROUND NOS.2-5 CONCERNS WITH CHALLENGE TO RE-OPENING OF T HE CONCLUDED ASSESSMENT BY AO BY INVOKING PROVISIONS OF SEC.147 R.W.S.148 OF THE ACT. IT WAS SUBMITTED BY LD.COUNSEL FOR THE ASSESSEE THA T ORIGINAL RETURN OF INCOME WAS FILED BY ASSESSEE WITH REVENUE ON 28.03. 2002 ALONG WITH ENCLOSURES. THE LEARNED COUNSEL FOR THE ASSESSEE DR EW OUR ATTENTION TO ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 31 -: ACKNOWLEDGEMENT OF RETURN OF INCOME ALONG WITH ENCL OSURES WHICH IS STATED TO HAVE BEEN FILED BY ASSESSEE WITH REVENUE, WHICH ARE PLACED ON RECORD AT PG.NO.1-17/PAPER BOOK. IT WAS SUBMITTED THAT THE RETURN OF INCOME WAS PROCESSED BY AO U/S.143(1) OF THE ACT , VIDE INTIMATION DATED 26.03.2003 , WHEREIN AN AMOUNT OF REFUND OF RS. 94,24,254/- WAS FOUND TO BE PAYABLE TO THE ASSESSEE. THE SAID INTIMATION ISSUED BY AO U/S 143(1) OF THE 1961 ACT IS PLACED AT PAPER BOOK AT P AGE NO.18. IT WAS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT THE RETURN OF INCOME WAS MANUALLY PROCESSED U/S 143(1) OF THE 1961 ACT AS IT WAS FOR A PERIOD PRIOR TO WHEN E-PROCESSING OF RETURN OF INCOME WAS STARTE D BY REVENUE. IT WAS FURTHER SUBMITTED BY LD.COUNSEL FOR THE ASSESSEE TH AT REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT WAS DO NE BY AO WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR AS N OTICE U/S.148 OF THE 1961 ACT DATED 30.03.2006 WAS ISSUED BY AO TO THE ASSESSEE WHICH NOTICE WAS ISSUED WITHIN FOUR YEARS FROM THE END OF ASSESSMENT . THE SAID NOTICE ISSUED BY THE AO U/S 148 OF THE 1961 ACT TO THE ASSESSEE IS PLACED IN PAPER BOOK AT PAGE NO.19. IT WAS FURTHER SUBMIT TED BY LEARNED COUNSEL FOR THE ASSESSEE THAT IN RESPONSE TO AFORESAID NOTI CE ISSUED BY AO U/S 148 OF THE 1961 ACT, THE ASSESSEE FILED LETTER ON 12.06 .2006 WITH AO OBJECTING TO REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT. THE SAID LETTER FILED BY ASSESSEE WITH AO ON 12.06.2006 IS PLACED IN PAPER BOOK AT PAGE 20. THE AO ISSUED LETTER DATED 10.08.2 006 ASKING ASSESSEE ABOUT OBJECTIONS TO CHARGEABILITY TO TAX OF RS. 7.5 0 CRORES CLAIMED BY ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 32 -: ASSESSEE TO BE CONSIDERATION FOR RESTRICTIVE COVENA NTS, WHICH IS PLACED IN PAPER BOOK AT PAGE 21. IT WAS ALSO SUBMITTED BY LEA RNED COUNSEL FOR THE ASSESSEE THAT OBJECTIONS TO REOPENING OF THE CONCLU DED ASSESSMENT BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT AND ALSO CHARGEABILITY TO TAX OF RS. 7.50 CRORES ON MERITS HAVING BEEN REC EIVED AS NON COMPETE FEE WHICH AS PER ASSESSEE IS CAPITAL RECEIPT NOT EX IGIBLE TO TAX WERE FILED ON 20.09.2006, WHICH ARE PLACED IN PAGE NO. 22/PAPE R BOOK. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE AO ISSUED FRESH NOTICE DATED 18.10.2006 ASKING ASSESSE TO FILE RELE VANT ORDER OF GARNISHEE ATTACHMENT AND OTHER MATERIAL W.R.T. CLAIM MADE BY ASSESSEE FOR EXCLUDING RS. 4.25 CRORES BEING PAID TO INDIAN BANK . THE SAID NOTICE DATED 18.10.2016 IS PLACED IN PAPER BOOK/PAGE 23. IT WAS SUBMITTED BY LEARNED COUNSEL FOR ASSESSEE THAT THE ASSESSEE OBJECTED TO REOPENING OF THE CONCLUDED ASSESSMENT U/S 147, VIDE LETTER DATED 04. 11.2006, ON THE GROUNDS THAT THE ASSESSEE HAS MADE ALL DISCLOSURES IN ORIGINAL RETURN OF INCOME FILED BEFORE REVENUE BEFORE REGULAR ASSESSME NT WAS COMPLETED, WHICH REPLY DATED 04.11.2006 IS PLACED IN PAPER BOO KS AT PAGE 24. THE AO ISSUED TWO FURTHER LETTERS SHOW-CAUSING ASSESSEE AS TO WHY AN AMOUNT OF RS. 7.50 CRORES RECEIVED AS CONSIDERATION FOR RESTR ICTIVE COVENANTS BE NOT TREATED AS INCOME CHARGEABLE TO TAX , THE SAID NOTI CES ARE PLACED IN PAPER BOOK/PAGE 25 AND 26. IT WAS SUBMITTED BY LEARNED CO UNSEL FOR THE ASSESSEE THAT THE ASSESSEE FILED LETTER DATED 20.12 .2016 WITH AO SUBMITTING THAT THE RETURN OF INCOME FILED U/S 139 MAY BE TREATED AS RETURN OF INCOME FILED IN PURSUANCE TO NOTICE U/S 148 OF THE 1961 ACT , ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 33 -: SUBJECT TO PERMITTING ASSESSEE TO FILE A REVISED RE TURN OF INCOME BEFORE THE ASSESSMENT IS COMPLETED AND AFTER KNOWING THE REASO NS FOR REOPENING OF THE CONCLUDED ASSESSMENT WHICH LED TO ISSUANCE OF N OTICE U/S 148 OF THE 1961 ACT . THE ASESSEES COUNSEL CLAIMED THAT THE A SSESSEE ALSO ASKED AO VIDE LETTER DATED 20.12.2006 TO FURNISH REASONS FOR REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT. THE S AID LETTER DATED 20.12.2006 IS FILED IN PAPER BOOK AT PAGE 27. IT WA S SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE FILED W RIT PETITION BEFORE HONBLE MADRAS HIGH COURT AND THE HONBLE MADRAS HI GH COURT WAS PLEASED TO STAY PROCEEDINGS U/S.147 OF THE ACT INVO KED BY REVENUE FOR A PERIOD OF TWO WEEKS BY ORDER IN MP NO.1/2006 IN WP NO.49683/2006, VIDE INTERIM ORDERS DATED 21.12.2006 . IT WAS SUBMITTE D BY LEARNED COUNSEL FOR THE ASSESSEE THAT THEREAFTER, VIDE INTERIM ORDE R DATED 08.01.2007, THE INTERIM ORDER EARLIER GRANTED BY HONBLE MADRAS HIG H COURT WAS FURTHER EXTENDED. THEREAFTER VIDE ORDER DATED 14.12.2007, THE HONBLE MADRAS HIGH COURT WAS PLEASED TO OBSERVE AS UNDER: 2. WHAT IS CHALLENGED IN THE WRIT PETITION IS THE NOTICE ISSUED UNDER SECTION 147 OF THE INCOME-TAX ACT,1961 . THE PETITI ONER HAS ALREADY FILED A LETTER DATED 20.12.2006 STATING THAT THE RETURN FIL ED UNDER SECTION 139 OF THE ACT MAY ITSELF BY TREATED AS ONE FILED UNDER SE CTION 148 OF THE ACT FOR THE PRESENT. 3. THEREFORE, SUFFICE IS TO PERMIT THE PETITIONER T O CONFIRM WHETHER THE RETURN FILED UNDER SECTION 139 OF THE ACT IS THE RE TURN PROPOSED TO BE SUBMITTED TO THE IMPUGNED NOTICE OR THE PETITIONER PROPOSED TO SUBMIT A FRESH RETURN WITHIN A PERIOD OF EIGHT WEEKS FROM TO DAY. ON COMPLETION OF EIGHT WEEKS, THE RESPONDENTS ARE PERMITTED TO PROCE ED WITH THE ASSESSMENT PROCEEDINGS. HOWEVER, THE FINAL DECISION SHALL BE GIVEN EFFECT TO SUBJECT TO THE RESULT IN THE ABOVE WRIT PETITION . ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 34 -: THE AFORESAID ORDER DATED 14.12.2007 PASSED BY HON BLE MADRAS HIGH COURT IS PLACED IN PAPER BOOK/PAGE 32-33. THE LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE EXERCISED ITS RIGHT CONFERRED BY HONBLE MADRAS HIGH COURT AND SUBMITTED FRESH RETUR N OF INCOME WITH REVENUE WITHOUT PREJUDICE TO HIS RIGHTS IN THE ABOV E WRIT PETITION , VIDE LETTER DATED 07.02.2008, WHEREIN, GROSS TOTAL INCOM E WAS DECLARED TO THE TUNE OF RS. 20,42,510/- AND INCOME CLAIMED TO BE AN EXEMPT INCO ME WAS TO THE TUNE OF RS.12,41,65,190/- , AS AGAINST EARLI ER CLAIMED EXEMPT INCOME TO THE TUNE OF RS. 11,98,48,643/-. THE LEAR NED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SAID RETURN OF INCOME FILED ON 08 TH FEBRUARY 2008 IS PLACED IN PAPER BOOK AT PAGE NO.35 TO 57, ALONG WITH ENCLOSURES FILED BY ASSESSEE WITH AO. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT REASONS FOR REOPENING OF THE CONCLUDED ASSESSMENT U /S 147 OF THE 1961 ACT WERE FURNISHED BY AO VIDE LETTER DATED 26.12.20 08 , WHICH IS PLACED IN PAPER BOOK-VOL.III AT PAGE 5 . IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT OBJECTIONS WERE FILED BY ASSESSEE ON 30.12.2008 TO REOPENING OF THE CONCLUDED ASSESSMENT WITH AO WHICH ARE PLACED IN PAGE NUMBER 6-8/PAPER BOOK-VOL.III . IT WAS BROUGHT TO T HE NOTICE OF THE BENCH THAT HONBLE MADRAS HIGH COURT HAS DISMISSED THE WR IT PETITION FILED BY ASSESSEE IN W.P.NO. 49683 OF 2006 AND M.P.NO.1 OF 2 006 VIDE ORDERS DATED 23.01.2019 , WITH FOLLOWING OBSERVATIONS: 4. THIS APART, THE FINAL ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER WAS TAKEN BY WAY OF AN APPEAL TO THE APPELLATE AUTH ORITY AND THEREAFTER, ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 35 -: TO THE INCOME TAX APPELLATE TRIBUNAL AND THE SAID A PPEAL IS NOW PENDING ADJUDICATION. 5. UNDER THESE CIRCUMSTANCES, ALL THE GROUNDS RAISE D IN THE PRESENT WRIT PETITION AS WELL AS THE ADDITIONAL GROUNDS , IF ANY SHALL BE RAISED BEFORE THE APPELLATE TRIBUNAL BY THE WRIT PETITIONER BY PRODUC ING DOCUMENTS OR OTHER MATERIALS. 6. WITH THE ABOVE LIBERTY, THE WRIT PETITION STANDS DISMISSED . HOWEVER, THERE SHALL BE NO ORDER AS TO COSTS. CONSEQUENTLY, CONNECTED MISCELLANEOUS PETITION IS ALSO DISMISSED. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO FRAMED REASSESSMENT U/S.143(3) R.W.S.147 , VIDE ORDERS D ATED 31.12.2008. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE T HAT THE COMPANY WHOSE SHARES WERE TRANSFERRED WAS ENGAGED IN COACHI NG OF CRICKET. IT WAS ALSO EXPLAINED BY THE LD.COUNSEL FOR THE ASSESSEE T HAT THE TOTAL SALE CONSIDERATION AS STATED IN THE AGREEMENTS WAS TO T HE TUNE OF RS.15 CRS. , OUT OF WHICH CONSIDERATION FOR RESTRICTED COVENANT WAS TO THE TUNE OF RS. 7.5 CRS. IT WAS ALSO SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT RS. 4.25 CRS. WAS PAID BY ASSESSEE TO INDIAN BANK TO CLEAR BANK LIABILITIES AS THERE WAS AN OVERRIDING GARNISHEE ATTACHMENT. I T WAS ALSO SUBMITTED THAT ASSESSEE ONLY RECEIVED RS.12 CRS. OUT OF RS. 1 5 CRS. STATED TO BE TOTAL AGREED AMOUNT PAYABLE BY THREE ENTITIES OF PENTAMED IA GROUP OF CONCERNS WITH RESPECT TO TRANSFER OF SHARES AND TOW ARDS RESTRICTIVE COVENANTS AND AN BALANCE AMOUNT OF RS. 3 CRS. WAS NEVER RECEIVED BY ASSESSEE. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT NOTICE WAS ISSUED BY AO U/S.148 OF THE 1961 ACT ON 30.03.2006 WHICH WAS SERVED ON THE ASSESSEE ON 02.04.2006. IT WAS S UBMITTED THAT AT THAT ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 36 -: TIME OLD PROVISIONS OF SEC.143(1)(A) OF THE 1961 AC T WERE PREVALENT AND NO ADJUSTMENT COULD HAVE BEEN MADE IN 2002. THERE WAS A FAILURE ON THE PART OF THE AO TO ISSUE NOTICE U/S.143(2) OF THE 19 61 ACT WITHIN STIPULATED TIME PRESCRIBED UNDER LAW AND THERE WAS NO FRESH IN CRIMINATING TANGIBLE MATERIAL AVAILABLE WITH AO TO REOPEN CONCLUDED ASSE SSMENT BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT AND HENCE NO REOPENING OF THE CONCLUDED ASSESSMENT COULD HAVE BEEN MADE BY AO WIT HIN PROVISIONS OF SECTION 147/148 OF THE 1961 ACT. IT WAS SUBMITTED THAT EVEN TO REOPEN CONCLUDED ASSESSMENT WITHIN FOUR YEARS FROM END OF ASSESSMENT YEAR, THE AO SHOULD HAVE IN HIS POSSESSION TANGIBLE INCRIMINA TING MATERIAL WHICH LED TO FORMATION OF BELIEF THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT NECESSITATING INVOCATION OF PROVISIONS O F SECTION 147 OF THE 1961 ACT. OUR ATTENTION WAS DRAWN TO APPELLATE ORDE R DATED 27.03.2012 PASSED BY LD.CIT(A) AND IT WAS SUBMITTED THAT THERE WAS NO FRESH TANGIBLE INCRIMINATING MATERIAL AVAILABLE BEFORE THE AO TO R EOPEN THE CONCLUDED ASSESSMENT WITHIN 4 YEARS. IT WAS SUBMITTED THAT REASONS RECORDED BY AO FOR REOPENING OF THE CONCLUDED ASSESSMENT ARE SI LENT AND OUR ATTENTION WAS DRAWN TO PAGE NO.5 OF THE PAPER BOOK VOLUME III , WHEREIN, REASONS FOR REOPENING OF THE CONCLUDED ASSESSMENT WERE RECO RDED. IT WAS SUBMITTED THAT DISPUTE IS WITH RESPECT TO NON-COMPE TE FEE WHICH WAS TREATED BY AO AS PART OF SALE CONSIDERATION OF SHAR ES AND ACCORDINGLY BROUGHT TO TAX. THE RELIANCE WAS PLACED BY LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF GUFFIC CHEM PRIVATE LIMITED V. CIT REPORTED IN (2011) 332 ITR 602(SC) . THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 37 -: LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON DECISI ON OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ORIENT CRAFT LTD., REPO RTED IN (2013)354 ITR 536(DEL.) AND SUBMITTED THAT REOPENING OF CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT WAS BAD IN LAW. THE SAID DECISION I S PLACED IN PAPER BOOK/VOLUME II AT PAGE 5-13. THE ASSESSEE ALSO REL IED UPON DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF TANMAC IND IA V. DCIT , REPORTED IN (2017)78 TAXMANN.COM 155(MAD.). IT WAS SUBMITTE D BY LEARNED COUNSEL FOR THE ASSESSEE THAT THERE SHOULD BE REASO NS TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND T HAT THERE SHOULD BE FRESH TANGIBLE INCRIMINATING MATERIAL AVAILABLE WIT H THE AO BEFORE REOPENING OF THE CONCLUDED ASSESSMENT BY INVOKING P ROVISIONS OF SECTION 147 OF THE 1961 ACT. IT WAS SUBMITTED BY LEARNED C OUNSEL FOR THE ASSESSEE THAT EXPLANTION-2 TO SEC.147 CREATES A DEE MING FICTION AS TO ESCAPEMENT OF INCOME WHEREIN , INTER-ALIA, IT PROV IDES THAT IN CASE RETURN OF INCOME IS FILED BUT NO ASSESSMENT IS FRAMED, THE N IN THAT CASE IF THE ASSESSEE HAS UNDERSTATED ITS INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION , RELIEF OR ALLOWANCE, THEN IT IS DEEMED THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT . THE ASSESSEES CO UNSEL SUBMITTED THAT THERE WAS NO FRESH TANGIBLE MATERIAL BEFORE THE AO TO REOPEN THE CONCLUDED ASSESSMENT. THE ASSESSEES COUNSEL SUBMIT TED THAT TIME LIMIT FOR INVOKING PROVISIONS OF SECTION 143(2) OF THE 19 61 ACT FOR FRAMING SCRUTINY ASSESSMENT U/S 143(3) AGAINST ORIGINAL RET URN OF INCOME FILED BY ASSESSEE, HAS EXPIRED AND NOW TIME LIMIT CANNOT BE EXTENDED BY ADOPTING INDIRECT ROUTE BY INVOKING PROVISIONS OF SECTION 14 7 OF THE 1961 ACT, ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 38 -: RELYING ON DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFT(CITED SUPRA). THE ASSESSEE ALSO RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF TENZING MATCH WORK S V. THE DCIT IN TCA NO. 702 OF 2009, VIDE JUDGMENT DATED 11.07.2019. TH E ASSESSEE RELIED UPON DECISION IN THE CASE OF JAYARAM PAPER MILLS LI MITED V. CIT REPORTED IN (2010) 321 ITR 56(MAD.). IT WAS SUBMITTED BY LEARN ED COUNSEL FOR THE ASSESSEE THAT THERE WAS LACK OF FRESH INFORMATION B EFORE THE AO AS ALSO THERE WAS LACK OF APPLICATION OF MIND BY THE AO. O UR ATTENTION WAS DRAWN TO PAGE NUMBER 18/PAPER BOOK-1 WHEREIN INTIMATION D ATED 26.03.2003 ISSUED BY AO U/S 143(1) OF THE 1961 ACT FOR AY: 200 1-02 IS PLACED , WHEREIN THE AO HAS UNDERTAKEN A MANUAL PROCESSING OF RETURN OF INCOME. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSE E THAT REFUND OF RS. 94,24,254/- WAS GRANTED BY DEPARTMENT WHILE PROCESS ING RETURN OF INCOME U/S 143(1) OF THE 1961 ACT. IT WAS SUBMITTED BY LEA RNED COUNSEL FOR THE ASSESSEE THAT THERE WAS CLEARLY AN APPLICATION OF M IND BY AO WHILE GRANTING REFUND TO THE ASSESSEE. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT NOTICE U/S.143(2) WAS NOT ISSUED TO THE ASSESSEE BY AO AGAINST ORIGINAL RETURN OF INCOME FILED BY ASSESSEE AND CLEARLY THERE IS A CHANGE OF OPINION BY THE AO , AS THE AO CHANGED HIS OPINION BY INVOKING PROVISIONS OF SEC.147 OF THE ACT. THE LD.COUNSEL FO R THE ASSESSEE SUBMITTED THAT AO MADE ROVING ENQUIRIES TO FORTIFY HIS ASSUMPTION OF JURISDICTION THAT HE HAS REASONS TO BELIEF THAT INC OME HAS ESCAPED ASSESSMENT. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT ORIGINAL RETURN OF INCOME WAS FILED BY ASSESSEE IN TIME. IT WAS SUBMITTED ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 39 -: BY LEARNED COUNSEL FOR THE ASSESSEE THAT AO ASKED F OR COPIES OF AGREEMENT TO REOPEN CONCLUDED ASSESSMENT WHICH CLEARLY LEADS TO ONE AND ONLY ONE CONCLUSION THAT THE AO MADE ROVING ENQUIRIES TO REO PEN CONCLUDED ASSESSMENT , WHICH IS NOT PERMISSIBLE. OUR ATTENTIO N WAS ALSO DRAWN TO PAGE NO.3 OF THE PAPER BOOK VOLUME III, WHEREIN, TH E ASSESSEE HAS CLAIMED SOME EXPENSES IN CONNECTION WITH THE SALE O F THE SHARES. THE TOTAL SALE CONSIDERATION AS PER AGREEMENT WAS RS.1 5 CRS. , OUT OF WHICH RS. 3 CRS. WERE NEVER RECEIVED BY THE ASSESSEE. OUR ATTENTION WAS ALSO DRAWN TO PAGE NO.2 OF THE PAPER BOOK VOLUME III, WH EREIN, RECONCILIATION BETWEEN ORIGINAL RETURN AND REVISED RETURN OF INCOM E FILED WITH REVENUE, IS PLACED. IT WAS SUBMITTED THAT THE RETURN OF INC OME U/S 148 WAS FILED IN FEBRUARY, 2008 AND ASSESSMENT WAS COMPLETED ON 31.1 2.2008. IT WAS SUBMITTED THAT NO FRESH TANGIBLE INCRIMINATING EVID ENCES WERE AVAILABLE WITH AO AND THE RE-OPENING OF CONCLUDED ASSESSMENT WAS DONE WRONGLY WHEREIN ROVING ENQUIRIES WERE MADE BY THE AO TO JUS TIFY REOPENING OF CONCLUDED ASSESSMENT BY INVOKING PROVISIONS OF SECT ION 147 AND THERE WAS CLEARLY A CHANGE OF OPINION BY THE AO . IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT ORIGINAL RETURN OF IN COME WAS PROCESSED U/S.143(1) OF THE 1961 ACT AND MANUAL PROCESSING OF RETURN OF INCOME WAS DONE BY THE AO AND THERE WAS AN APPLICATION OF MIND BY THE AO WHILE INITIALLY PROCESSING RETURN OF INCOME U/S 143(1) OF THE 1961 ACT. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON BLE HIGH MADRAS COURT IN CIT V. S&S POWER SWITCHGEAR LIMITED (2018)92 TAX MANN.COM 429 (MADRAS). IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 40 -: ASSESSEE PARTICIPATED IN PROCEEDINGS TO PROTECT IT S INTEREST AND IT WAS SUBMITTED THE PROVISIONS OF SECTION 292BB OF THE 19 61 ACT WILL NOT COME TO RESCUE OF THE DEPARTMENT. IT WAS SUBMITTED BY L EARNED COUNSEL FOR THE ASSESSEE THAT REASONS RECORDED FOR REOPENING OF THE CONCLUDED ASSESSMENT WERE FURNISHED BY AO TO ASSESSEE ON 26. 12.2008 AND OBJECTIONS WERE FILED BY ASSESSEE ON 30.12.2008 . I T WAS SUBMITTED THAT ASSESSMENT WAS FRAMED BY AO U/S.143(3) READ WITH SE CTION 147 OF THE 1961 ACT, ON 31.12.2008. IT WAS SUBMITTED THAT IT IS NOT KNOWN TO ASSESSEE AS TO WHEN THE ASSESSEE ASKED AO TO FURNIS H REASONS FOR REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF TH E 1961 ACT . IT WAS SUBMITTED THAT REVISED RETURN OF INCOME WAS FILED B Y ASSESSEE ON 08.02.2008. ON MERITS OF THE CASE, IT WAS SUBMITTED BY LEARNED COUNSEL OF THE ASSESSEE THAT GROUND NOS.12-14 ARE GENERAL IN NATURE, WHICH NEED TO BE DISMISSED AS BEING GENERAL IN NATURE. THE LEARNED CIT-DR DID NOT RAISE ANY OBJECTIONS TO THE DISMISSAL OF GROUND NO. 12-14 RAI SED BY ASSESSEE IN ITS APPEAL FILED WITH TRIBUNAL, BEING GENERAL IN NATUR E. AFTER HEARING BOTH THE PARTIES, GROUND NO. 12 -14 RAISED BY ASSESSEE IN IT S APPEAL FILED WITH TRIBUNAL ARE DISMISSED AS BEING GENERAL IN NATURE. WE ORDER ACCORDINGLY. IT WAS SUBMITTED THAT GROUND NOS.6-11 RAISED BY ASS ESSEE IN ITS APPEAL FILED WITH TRIBUNAL DEALS WITH MERITS OF THE ISSUE IN APPEAL. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT PAYMENTS WERE MADE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 41 -: TO INDIAN BANK TO THE TUNE OF RS. 4.25 CRS. TO SETTLE LOAN AND LIEN WAS CREATED ON THE SHARES OF KRIS SRIKANTH SPORTS ENTE RTAINMENT PRIVATE LIMITED FOR A LOAN TAKEN BY ADITYA LEATHER EXPORT S PRIVATE LTD.. IT WAS SUBMITTED THAT ASSESSEE WAS GUARANTOR FOR LOAN TAKE N BY ADITYA LEATHER EXPORTS PRIVATE LIMITED AND THERE WAS A LIEN ON TH E SHARES OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED. OU R ATTENTION WAS DRAWN TO PARA NOS. 7-7.2 OF THE APPELLATE ORDER PASSED BY LEARNED CIT(A) AND IT WAS SUBMITTED THAT LEARNED CIT(A) HELD THAT IT IS A PPLICATION OF INCOME AND NOT DIVERSION OF INCOME BY OVERRIDING TITLE. IT W AS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THESE EXPENSES WERE I NCURRED IN CONNECTION WITH THE TRANSFER OF SHARES. THE LEARNED COUNSEL FO R THE ASSESSEE RELIED UPON DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. BRADFORD TRADING CO. PVT. LTD., REPORTED IN (2003) 261 ITR 2 22(MAD. HC). IT WAS SUBMITTED THAT THERE WAS AN IMPEDIMENT TO TRANSFER OF SHARES OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED AND THE ASSESSEE PAID AN AMOUNT OF RS. 4.25 CRORES TO REMOVE THAT IMPEDIMENT AND HENCE, IT IS A DIVERSION OF INCOME BY OVERRIDING TITLE. THE LEARN ED COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF HONBLE SUPREME CO URT IN THE CASE OF DCIT V. T.JAYACHANDRAN REPORTED IN (2018) 406 ITR 1 (SC) AND SUBMITTED THAT ONLY REAL INCOME OF THE ASSESSEE CAN BE BROUGH T TO TAX AND THIS AMOUNT OF RS. 4.25 CRS. HAS TO BE TREATED AS AN EXPENDITURE U/S.4 8(1) OF THE 1961 ACT AND IS NOT TAXABLE AND IT WAS SUBMITTE D THAT IT WAS RIGHTLY EXCLUDED BY ASSESSEE WHILE COMPUTING INCOME OF THE ASSESSEE. IT WAS ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 42 -: SUBMITTED THAT THE AO DID NOT CONSIDER SUBMISSIONS OF THE ASSESSEE WHILE DECIDING WHETHER RS. 4.25 CRS. WAS EXPENSES U/S.48(1) OF THE 1961 ACT . OUR ATTENTION WAS DRAWN BY LEARNED COUNSEL FOR THE ASSESSEE TO THE ORDER PASSED BY LEARNED DEBT RECOVERY TRIBUNAL IN O.A. NO . 1642/1998 & O.A. NO. 1399/1998 , DATED 23.02.2001, WHICH IS PLACED I N PAPER BOOK AT PAGE NO.125-132. IT WAS ALSO EXPLAINED BY LEARNED COUNSE L FOR THE ASSESSEE THAT AN AMOUNT OF RS. 4.25 CRORES NEVER REACHED ASS ESSEE AND HENCE THE SAME CANNOT BE BROUGHT TO TAX. THE LD.CIT-DR IN REBUTTAL SUBMITTED THAT THE ASSES SEES CONCLUDED ASSESSMENT WAS REOPENED BY INVOCATION OF PROVISIONS OF SECTION 147/148 OF THE 1961 ACT. IT WAS SUBMITTED BY LEARNED CIT-D R THAT RETURN OF INCOME WAS ORIGINALLY FILED ON 28.03.2002 WHICH WAS BEYOND THE DUE DATE PRESCRIBED FOR FILING OF RETURN OF INCOME U/S.139(1 ) OF THE ACT AS DUE DATE FOR FILING OF RETURN OF INCOME WAS 31.07.2001 AND H ENCE RETURN OF INCOME WAS FILED BELATEDLY BEYOND THE TIME PRESCRIBED U/S 139(1) OF THE 1961 ACT. IT WAS SUBMITTED THAT RETURN OF INCOME WAS INITIALL Y PROCESSED U/S.143(1) OF THE 1961 ACT. IT WAS SUBMITTED BY LEARNED CIT- DR THAT ENCLOSURES WERE CLAIMED TO HAVE BEEN FILED ALONG WITH RETURN O F INCOME AND IT WAS SUBMITTED THAT FORM NO.30 WAS FILED ALONG WITH RETU RN OF INCOME AND THE ASSESSEE SOUGHT REFUND FROM DEPARTMENT FOR WHICH FO RM NUMBER 30 WAS ENCLOSED WITH RETURN OF INCOME. IT WAS SUBMITTED T HAT RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF THE 1961 ACT. OUR ATTENTION WAS DRAWN BY LEARNED CIT-DR TO LIST OF ENCLOSURES WHICH ARE CLAIMED TO HAVE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 43 -: BEEN FILED BY ASSESSEE ALONG WITH RETURN OF INCOME WHICH ARE AT PAGE NO.4-17 OF THE PAPER BOOK. IT WAS SUBMITTED THAT AT PAGE NUMBER 4 IS THE LIST OF ENCLOSURES WHICH WERE CLAIMED TO HAVE BEEN FILED BY ASSESSEE ALONG WITH RETURN OF INCOME. OUR ATTENTION WAS DRAWN TO PAGE NO.5-7 OF THE PAPER BOOK AND IT WAS SUBMITTED THAT THIS IS THE S TATEMENT OF INCOME OF THE ASSESSEE . IT WAS SUBMITTED BY LEARNED CIT-DR THAT PAGE NO.15 IS NOT SIGNED BY THE ASSESSEE NOR PAGE NO.15 IS REFE RRED TO IN THE LIST OF DOCUMENTS ATTACHED WITH RETURN OF INCOME . IT WAS S UBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THE EXEMPT INCOME ALONG WITH RETURN OF INCOME AND THE AO DID NOT HAD DETAILS OF EXEMPT INCOME AVAILABLE WITH IT AS CLAIMED TO HAVE BEEN FILED ALO NG WITH RETURN OF INCOME FILED BY ASSESSEE WITH THE REVENUE. IT WAS ALSO SUB MITTED BY LEARNED CIT- DR THAT IN THIS DOCUMENT AT S.NO. 15 OF THE PAPER B OOK THERE IS A MENTION ABOUT GARNISHEE ATTACHMENT BY INDIAN BANK , AND I F THIS DOCUMENT AT S.NO. 15/PB IS EXCLUDED WHICH IS A SUSPECT DOCUMENT , THE AO DID NOT HAD ANY INFORMATION ABOUT INDIAN BANK OVERRIDING GARN ISHEE ATTACHMENT. IT WAS SUBMITTED BY LEARNED CIT-DR THAT ORIGINALLY ASS ESSMENT WAS FRAMED U/S 143(1)(A) OF THE 1961 ACT. THUS, IN NUTSHELL IT WAS SUBMITTED BY LEARNED CIT-DR THAT THIS DOCUMENT NUMBER 15 IS A DU BIOUS/SUSPECT DOCUMENT WHICH IS PLANTED BY THE ASSESSEE SUBSEQUEN TLY AND THE AO HAD RIGHTLY INVOKED PROVISIONS OF SECTION 147 OF THE 19 61 ACT. THE ASSESSMENT WAS ORIGINALLY NOT FRAMED U/S 143(3) OF THE 1961 AC T BUT RETURN OF INCOME WAS PROCESSED U/S 143(1)(A) OF THE 1961 ACT AND THE AO DID NOT HAD ANY EVIDENCE OF TWO CLAIMS OF EXEMPTION MADE BY ASSESSE E IN THE RETURN OF ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 44 -: INCOME. THE NOTICE U/S 143(2) OF THE 1961 ACT WAS N OT ORIGINALLY ISSUED AND RETURN OF INCOME WAS MANUALLY PROCESSED BY INVO KING PROVISIONS OF SECTION 143(1) OF THE 1961 ACT . IT WAS SUBMITTED T HAT DEPARTMENT HAS ALL THE RIGHT TO INVOKE PROVISIONS OF SECTION 147 OF TH E 1961 ACT. THE LEARNED CIT-DR RELIED UPON DECISION OF HONBLE DELH I HIGH COURT IN THE CASE OF CIT V. ORIENT CRAFT LIMITED (2013) 354 ITR 536(DEL HC) AND ALSO DECISION OF HONBLE SUPREME COURT IN THE CASE OF AC IT V. RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITED (2007) 291 ITR 500(SC ). IT WAS SUBMITTED BY LEARNED CIT-DR THAT THE AO WAS REQUIRED TO RECOR D REASONS FOR REOPENING OF THE CONCLUDED ASSESSMENT WHICH WERE DU LY RECORDED BY AO. IT WAS SUBMITTED BY LEARNED CIT-DR THAT AO WAS HAVI NG REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED IN COME. IT WAS SUBMITTED BY LEARNED CIT-DR THAT THE AO WAS HAVING COGENT MATERIAL TO COME TO BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IT WAS SUBMITTED BY LEARNED CIT-DR THAT MERELY BECAUSE NOTICE U/S SEC.143(2) OF THE 1961 ACT WAS NOT ISSUED AND REGUL AR SCRUTINY ASSESSMENT WAS NOT FRAMED WILL NOT PRECLUDE AO FRO M PROCEEDING U/S.147/148 OF THE 1961 ACT. IT WAS SUBMITTED BY L EARNED CIT-DR THAT RETURN OF INCOME WAS FILED BY ASSESSEE ON 28.03.200 2 AND TIME LIMIT FOR ISSUING NOTICE U/S 143(2) WAS 12 MONTHS FROM THE EN D OF THE MONTH IN WHICH RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE LEARNED CIT-DR RELIED UPON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF CIT V. KELVINATOR OF INDIA LTD.(2010) 320 ITR 561(SC), AND SUBMITTED THAT RIGORS OF SEC.147 WAS RIGHTLY APPLIED BY THE AO. I T WAS SUBMITTED BY ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 45 -: LEARNED CIT-DR THAT THERE WERE TANGIBLE MATERIAL BE FORE THE AO TO COME TO CONCLUSION THAT THE INCOME OF THE ASSESSEE HAS E SCAPED ASSESSMENT AND THE REASONS FOR REOPENING OF CONCLUDED ASSESSM ENT WERE HAVING LIVE LINK WITH T FORMATION OF BELIEF THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE LEARNED CIT-DR RELIED UPON DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JAVERI STOCK BR OKERS PRIVATE LIMITED(SUPRA) . IT WAS SUBMITTED BY LEARNED CIT-DR THAT IN THE CASE OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ORIENT CRAFT LIMITED(SUPRA), ONLY TANGIBLE MATERIAL IS REQUIRED AND IT IS NOT NECESSARY THAT THERE SHOULD BE A FRESH MATERIAL FOR ASSUMING JURISDICTION U/S.147 OF THE ACT. OUR ATTENTION WAS DRAWN TO PARA 18 OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKERS PRIVATE LIMITED(SUPRA) AND IT WAS SUBMITTED BY LEARNED CIT- DR THAT FAILURE TO TAKE STEPS U/S 143(2) WILL NOT MAKE AO REMEDILESS U/S 14 7/148 OF THE 1961 ACT. THE LEARNED CIT-DR RELIED UPON DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT V. P.V.S.BEEDIES PRIVATE LIMITED R EPORTED IN (1999) 237 ITR 13(SC) AND IT WAS SUBMITTED THAT EVEN OBJECTION S RAISED BY INTERNAL AUDIT PARTY COULD BE BASIS FOR REOPENING OF THE A SSESSMENT U/S 147/148 OF THE 1961 ACT. IT WAS SUBMITTED BY LEARNED CIT -DR THAT THE ASSESSEE HAS NOT FURNISHED FULL AND TRUE PARTICULARS IN THE RETURN OF INCOME FILED BY THE ASSESSEE. OUR ATTENTION WAS DRAWN BY LEARNED C IT-DR TO PAGE NO.15 VOLUME-1 OF THE PAPER BOOK AND IT WAS SUBMITTED THA T THE ASSESSEE HAS NOT FURNISHED FULL AND TRUE PARTICULARS BEFORE THE AO. THE LEARNED CIT-DR ALSO RELIED UPON DECISION OF HONBLE SUPREME COURT IN THE CASE OF GIRILAL & ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 46 -: CO. V. ITO, REPORTED IN (2016) 387 ITR 122(SC). IT WAS SUBMITTED BY LEARNED CIT-DR THAT THE ASSESSEE HAS FURNISHED INFO RMATION ONLY AFTER HONBLE HIGH COURT ALLOWED PROCEEDINGS U/S 147 OF THE 1961 ACT TO GO AHEAD. OUR ATTENTION WAS DRAWN BY LEARNED CIT-DR T O PAGE NO.32 OF THE PAPER BOOK, WHEREIN, DECISION OF HONBLE MADRAS HIG H COURT IS PLACED. OUR ATTENTION WAS ALSO DRAWN TO PAGE NO.27 OF THE P APER BOOK WHEREIN, ASSESSEE HAS ASKED FOR REASONS RECORDED FOR ISSUAN CE OF NOTICE U/S.148 OF THE ACT , VIDE COMMUNICATION DATED 20.12.2006. IT WAS SUBMITTED THAT FRESH RETURN OF INCOME WAS FILED BY ASSESSEE U/S.14 8 OF THE ACT , ON 08.02.2008. OUR ATTENTION WAS DRAWN TO PAGE NO.35 OF THE PAPER BOOK, WHEREIN, REVISED RETURN OF INCOME U/S.148 IS PLACED , FILED ON 08.02.2008. IT WAS SUBMITTED THAT IN ORIGINAL RETURN OF INCOME, EXEMPTIONS WERE CLAIMED BY ASSESSEE TO THE TUNE OF RS. 11.98 CRS. , WHILE IN THE REVISED RETURN OF INCOME, EXEMPTIONS WERE CLAIMED TO THE TU NE OF RS.12.41 CRS. OUR ATTENTION WAS DRAWN TO PAGE NO.36 OF THE PAPER BOOK, WHEREIN, DETAILS OF EXEMPT INCOME AS CLAIMED BY THE ASSESSEE IN THE NOTES TO THE RETURN OF INCOME FILED ON 08.02.2008 ARE PLACED. I T WAS SUBMITTED THAT THIS INFORMATION WAS NOT PLACED BEFORE THE AO WHEN ORIGINAL RETURN OF INCOME WAS FILED, AND THE AO HAD RIGHTLY BROUGHT TO TAX INCOME CLAIMED AS EXEMPT ON THE GROUNDS OF RESTRICTIVE COVENANTS AND ALSO ON ACCOUNT OF GARNISHEE PAYMENTS TO THE BANK. OUR ATTENTION WAS DRAWN TO PAGE NO.4 OF THE REASSESSMENT ORDER PASSED BY THE AO. IT WAS SUBMITTED THAT TOTAL CONSIDERATION IN THE AGREEMENT WAS RS. 15 CRS. WHILE IT IS CLAIMED BY THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 47 -: ASSESSEE THAT THEY HAD ONLY RECEIVED RS. 12 CRS. I T WAS SUBMITTED THAT ASSESSEE RECEIVED RS. 4.25 CRS. AND THEN PAID TO I NDIAN BANK TO CLEAR THE LOAN TAKEN BY ADITYA LEATHER EXPORTS PRIVATE LIMIT ED AND THERE WAS NO OVERRIDING GARNISHEE ATTACHMENT WHICH WAS RIGHTLY REJECTED BY THE AO . THE LD.CIT-DR RELIED UPON DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITE D(SUPRA) AND SUBMITTED THAT THERE WAS NO FORMATION OF OPINION WHILE PROCES SING OF RETURN OF INCOME U/S.143(1) OF THE ACT AND HENCE THERE IS NO CHANGE OF OPINION MERELY BECAUSE NOTICE U/S.143(2) OF THE 1961 ACT WA S NOT ISSUED TO THE ASSESSEE WHILE PROCESSING ORIGINAL RETURN OF INCOME , WHICH CANNOT PRECLUDE AO TO REOPEN ASSESSMENT U/S.147 OF THE ACT . OUR ATTENTION WAS DRAWN BY LEARNED CIT-DR TO PAGE NO.5 OF THE PAPER B OOK/VOL.III, WHERE THE REASONS FOR REOPENING OF THE CONCLUDED ASSESSME NT WERE RECORDED. IT WAS SUBMITTED THAT ORIGINAL RETURN OF INCOME WAS F ILED AND THEREAFTER REVISED RETURN OF INCOME WAS FILED , WHICH IS DIFFE RENT FROM THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. OUR ATTENT ION WAS DRAWN TO PAGE NO.2 OF THE PAPER BOOK-III WHEREIN RECONCILIATION S TATEMENT RECONCILING BOTH THE RETURN OF INCOME(S) ARE FILED. IT WAS SUB MITTED THAT THE ASSESSEE WAS ONLY HOLDING 125 EQUITY SHARES IN THE COMPANY N AMELY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED, WHILE MAJORI TY OF SHARES ARE HELD BY OTHER SHAREHOLDERS WHICH MAINLY CONSISTED OF MINOR CHILDREN OF THE ASSESSEE WHOSE INCOME WERE CLUBBED WITH THE INCOME OF THE ASSESSEE AS PER PROVISIONS OF THE 1961 ACT. OUR ATTENTION WAS DRAWN TO PAGE NO.42 OF THE PAPER BOOK AND PAGE NO.104 OF THE PAPER BOOK. OUR ATTENTION WAS ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 48 -: DRAWN BY LEARNED CIT-DR TO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PRIVATE LI MITED (SUPRA) , PARA NO.18. OUR ATTENTION WAS ALSO DRAWN TO EXPLANAT ION-1 TO SEC.147 AND EXPLANATION 1(B) TO SEC.147 OF THE 1961 ACT. IT WA S SUBMITTED THAT IF THE INCOME IS ASSESSED U/S.143(1)(A) , THEN EXPLANATION 2(C) TO SECTION 147 WILL COME INTO PLAY AND ONLY TANGIBLE MATERIAL IS R EQUIRED TO REOPEN THE CONCLUDED ASSESSMENT AND THERE IS NO REQUIREMENT OF HAVING FRESH MATERIAL TO REOPEN CONCLUDED ASSESSMENT. IT WAS SUB MITTED THAT IF AUDIT OBJECTIONS IS BASED ON FACTUAL ERRORS, THEN IT CAN BE A VALID GROUND FOR REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF TH E 1961 ACT. RELIANCE WAS PLACED BY LEARNED CIT-DR ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT V. P.V.S. BEEDIES PVT. LTD.(1999) 2 37 ITR 13(SC). THUS, LEARNED CIT-DR WOULD CONTEND THAT FACTUAL ERROR WAS BROUGHT TO THE NOTICE OF THE AO AND HENCE REOPENING OF THE CONCLUDED ASSE SSMENT BY INVOKING PROVISIONS OF SECTION 147 IS JUSTIFIED , BY RELYI NG ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITED(SUPRA) ,PARA 18 AND IT WAS SUBMITTED BY LEA RNED CIT-DR THAT EVEN IN THE CASES COVERED U/S.143(1) WHEREIN NO ASSESSM ENT IS FRAMED UNDER SEC.143(3) OF THE 1961 ACT , IF INGREDIENT OF SECTI ON 147 ARE FULFILLED, REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF TH E 1961 ACT IS JUSTIFIED. IT WAS SUBMITTED THAT UNDER ASSESSMENT OF INCOME/EXCESSIVE LOSS DEDUCTION/RELIEF CAN LEAD TO INVOCATION OF SEC .147 OF THE ACT. THE LEARNED CIT-DR SUBMITTED THAT THERE HAS TO BE LIVE LINK TO FORM A BELIEF THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WHICH WOULD JUSTIFY ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 49 -: REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 OF TH E 1961 ACT . IT WAS SUBMITTED THAT ANY MATERIAL WHICH WOULD LEAD TO FOR MING OF A BELIEF THAT INCOME OF THE ASSESSEE IS UNDER-ASSESSED OR EXCESSI VE LOSS WAS CLAIMED OR EXCESSIVE DEDUCTION/RELIEF WAS CLAIMED BY TAX-PAYE R WOULD BE SUFFICIENT TO INVOKE PROVISIONS OF SECTION 147 OF THE 1961 ACT. OUR ATTENTION WAS DRAWN BY LEARNED CIT-DR TO PARA NO.16 & 17 OF THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKERS PRIVATE LIMITED (SUPRA) AND IT WAS SUBMITTED THAT IN THE INSTANT CA SE PROVISO TO SECTION 147 IS NOT APPLICABLE AS NO SCRUTINY ASSESSMENT WAS FRAMED U/S 143(3) OF THE 1961 ACT. IT WAS SUBMITTED THAT INTIMATION U/S .143(1) IS NOT ASSESSMENT AND THE ONLY REQUIREMENT IS THAT REASONS ARE TO BE RECORDED FOR REOPENING OF THE CONCLUDED ASSESSMENT AND THEN SEC.147 CAN BE INVOKED. IT WAS SUBMITTED BY LEARNED CIT-DR THAT F ACTUAL ERROR CAN BE POINTED OUT BY ANYBODY AND IF THERE IS A LIVE LINK WITH INCOME ESCAPING ASSESSMENT AND REASONS TO BELIEVE, SECTION 147 CAN BE INVOKED. RELIANCE WAS PLACED BY LEARNED CIT-DR ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT V. P.V.S.BEEDIES PRIVATE LIMITED(SU PRA). THE RELIANCE WAS ALSO PLACED BY LEARNED CIT-DR ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF GIRILAL & CO., V. ITO REPORTED IN (2 016) 387 ITR 122(SC) AND ALSO UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF SMT. A. SRIDEVI V. ITO REPORTED IN (2018)409 ITR 502(MAD. H C) . THE LEARNED CIT-DR WOULD ALSO RELY ON DECISION OF HONBLE MADRA S HIGH COURT IN THE CASE OF JAYARAM PAPER MILLS LIMITED V. CIT REPORTED IN (2010) 321 ITR 56(MAD.) . IT WAS SUBMITTED BY LEARNED CIT-DR THAT GARNISHEE PAYMENTS ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 50 -: TO INDIAN BANK IS NOT CONNECTED WITH EARNING OF C APITAL GAINS AND DISCLOSURE MADE BY ASSESSEE WAS NOT TRUE AND CORREC T. THE LD.CIT-DR RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COU RT IN THE CASE OF CIT V. IDEAL GARDEN COMPLEX PRIVATE LIMITED REPORTED IN (2 012) 340 ITR 609(MAD.) AND ALSO DECISION OF HONBLE SUPREME COUR T IN THE CASE OF HONDA SIEL POWER PRODUCTS LIMITED V. DCIT REPORTED ON (2012) 340 ITR 64(SC). THE LEARNED CIT-DR WOULD ALSO RELY ON DECIS ION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUJA FOUNDAITON V. ITO IN WP NO.2866/2018, VIDE ORDER DATED 15.02.2019. THE LD. CIT-DR ALSO RELIED UPON DECISION OF THE HONBLE DELHI HIGH COURT IN TH E CASE OF CONSOLIDATED PHOTO AND FINVEST V. ACIT REPORTED IN (2006) 281 IT R 394(DELHI) THE LEARNED CIT-DR SUMMARIZED HIS CONTENTION AS TO VALI DITY OF REOPENING OF THE CONCLUDED ASSESSMENT, AS UNDER: A.THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL BEFOR E AO, WHEREIN THE AO COULD COME TO KNOW WHETHER THE ASSESSEE HAS RECEIVED NON- COMPETE FEES OR GARNISHEE PAYMENTS WERE MADE BY TH E ASSESSEE. THEREFORE, HE RELIED UPON THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PRIVATE LI MITED(SUPRA) AND CALCUTTA DISCOUNT COMPANY LIMITED V. ITO REPORTED I N (1961) 41 ITR 191(SC) AND SUBMITTED THAT KEY INGREDIENTS FOR INV OKING PROVISIONS OF SEC.147 ARE FULFILLED IN THE INSTANT CASE AND HE NCE REOPENING OF THE CONCLUDED ASSESSMENT BE UPHELD . ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 51 -: B. IT WAS ALSO SUBMITTED BY LEARNED CIT-DR THAT TH E MATERIAL WITH AO WAS SUFFICIENT TO REOPEN THE CONCLUDED ASSESSMEN T U/S 147 OF THE 1961 ACT . THE LEARNED CIT-DR RELIED UPON DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. ORIENT CRAFT LIMITED REPORTED IN (2013) 354 ITR 536(DEL. HC) AND SUBMITTED THAT T HERE IS A REQUIREMENT OF HAVING TANGIBLE MATERIAL TO COME TO CONCLUSION THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND T HERE IS NO REQUIREMENT OF HAVING FRESH MATERIAL TO REOPEN THE CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT. HE ALSO RELIED UPON DECISION(S) OF HONBLE MADRAS HIGH COURT IN THE CASE OF MRS. A. SRIDEVI(SUPRA) AND ALSO IN THE CASE OF JAYARAM PAPER MILLS PVT. LT D.(SUPRA) AND SUBMITTED THAT IF THE ASSESSEE HAS MADE CLAIM WHICH IS NOT SUPPORTED BY MATERIAL , THEN AO CAN MAKE RE-ASSESSM ENT. THE LEARNED CIT-DR WOULD SUBMIT THAT DECISION(S) OF HON BLE MADRAS HIGH COURT IN THE CASES OF TANMAC INDIA V. DCIT REP ORTED IN (2017)78 TAXMANN.COM 155(MAD. HC) AND ALSO DECISION IN THE CASE OF TENZING MATCH WORKS V. DCIT IN TCA NO. 702/2009 BE NOT TAKEN INTO CONSIDERATION. THE LEARNED CIT-DR WOULD SUBMIT THAT ORIGINAL RETUR N OF INCOME WAS FILED BY ASSESSEE ON 28 TH MARCH, 2002. THE LEARNED CIT-DR SUBMITTED THAT RETURN OF INCOME WAS ORIGINALLY PROCESSED U/S.143(1 ) OF THE ACT ON 26 TH MARCH 2003 AND REOPENING OF THE CONCLUDED ASSESSMEN T WAS DONE U/S 147 OF THE 1961 ACT, VIDE NOTICE DATED 30.03.2006 ISSUE D U/S 148 OF THE 1961 ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 52 -: ACT. OUR ATTENTION WAS DRAWN TO PAGE NOS.19 & 20 OF THE PAPER BOOK VOLUME-1, WHEREIN THE AFORESAID NOTICE IS PLACED. T HE LEARNED CIT-DR WOULD ALSO DRAW OUR ATTENTION TO VARIOUS ORDERS PAS SED BY HONBLE MADRAS HIGH COURT IN WRIT PETITION FILE BY ASSESSEE CHALLE NGING REOPENING OF THE CONCLUDED ASSESSMENT. WE HAVE ALREADY REFERRED TO T HESE ORDERS IN THE PRECEDING PARAS OF THIS ORDER AND FOR SAKE OF BREV ITY THEY ARE NOT REPEATED. IT IS CLAIMED BY LEARNED CIT-DR THAT IN T HE RETURN FILED IN PURSUANCE TO NOTICE ISSUED U/S 148 OF THE 1961 ACT, THE ASSESSEE IS CLAIMING HIGHER EXEMPTION THAN WHAT WAS CLAIMED BY IT EARLIER IN THE ORIGINAL RETURN OF INCOME FILED WITH THE REVENUE. I T WAS SUBMITTED THAT PROCEEDINGS U/S 147/148 ARE FOR THE BENEFIT OF REVE NUE AND THE ASSESSEE CANNOT NOW CHALLENGE REOPENING OF THE ASSESSMENT U/ S 148 OF THE 1961 ACT. IT WAS SUBMITTED THAT THE ASSESSEE IS INDULGIN G IN APPROBATION AND REPROBATION AT THE SAME TIME WHICH IS NOT PERMISSI BLE. IT WAS SUBMITTED BY LEARNED CIT-DR THAT THE ASSESSEE CAN CLAIM DEDUC TION FOR NON RECOVERY OF DUES OF RS. 3 CRS. IN SUBSEQUENT YEARS BUT THE ASSESSEE CANNOT CHALLENGE THE PROCEEDINGS U/S.148 OF THE ACT. THE LD.CIT-DR SUBMITTED ON THE MERITS OF THE ISSUE THAT THE ASSESSEE HAS CL AIMED GARNISHEE DEDUCTION ON ACCOUNT OF PAYMENTS MADE TO INDIAN BA NK . OUR ATTENTION WAS DRAWN TO RE-ASSESSMENT ORDER PASSED BY THE AO A ND IT WAS SUBMITTED THAT THE ASSESSEE INFACT RECEIVED THE AMOUNT AND TH EN IT WAS PAID TO THE BANKER NAMELY INDIAN BANK , HENCE THERE IS NO DIV ERSION OF INCOME BY OVERRIDING TITLE. OUR ATTENTION WAS ALSO DRAWN TO THE APPELLATE ORDER ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 53 -: PASSED BY LD. CIT(A). IT WAS SUBMITTED BY LEARNED CIT-DR THAT THE SHARES WERE NOT PLEDGED WITH INDIAN BANK BUT SINC E INDIAN BANK CAME TO KNOW ABOUT THE SALES OF SHARES BY ASSESSEE TO PE NTAMEDIA GROUP OF CONCERNS THROUGH MEDIA REPORTS AND HENCE THE SAID INDIAN BANK STEPPED IN TO PROTECT ITS INTEREST. IT WAS SUBMITTED THAT T HERE WAS NO OVERRIDING TITLE OVER THE SHARES AS THE SHARES WERE NEVER PLED GED WITH THE BANK AND OVERRIDING TITLE IS WHERE THE PROPERTY IS ENCUMBERE D. IT WAS SUBMITTED THAT THE ASSESSEE NAMELY MR. K. SRIKANTH WAS ONLY GUARAN TOR FOR CERTAIN LOANS AVAILED BY ADITYA LEATHER EXPORTS PRIVATE LIMITED AND TO RECOVER THEIR MONEY FROM THE SAID ADITYA LEATHER EXPORTS PRIVATE LIMITED, THE BANK NAMELY INDIAN BANK ISSUED GARNISHEE NOTICE AND TH E ASSESSEE WAS MERELY GUARANTOR AND THE SHARES WERE NEVER IN THE P ICTURE WHEN THE ASSESSEE STOOD GUARANTOR. IT WAS SUBMITTED BY LEARN ED CIT-DR THAT IT WAS A LIABILITY OF THE ASSESSEE TO REPAY THE LOANS AVAI LED BY THE SAID ADITYA LEATHER EXPORTS PRIVATE LIMITED AS THE ASSESSEE WA S GUARANTOR , AND SINCE THE ASSESSEE WAS SELLING THE SHARES OF KRIS SRIKNA NTH SPORTS ENTERTAINMENT PRIVATE LIMITED, THE ASSESSEE ENTER ED INTO DEAL WITH INDIAN BANK TO SETTLE THE BANK LOAN, FOR WHICH TH E ASSESSEE PAID RS. 4.25 CRORES TO BANK. . THE LEARNED CIT-DR SUBMITTED THA T THIS SETTLEMENT WILL NOT IMPINGE UPON THE SALE CONSIDERATION AS THE SHAR ES WERE NOT CARRYING ANY OBLIGATION TO BE DISCHARGED. IT WAS SUBMITTED T HAT GARNISHEE HAS COME AT A LATER DATE ONLY WHEN INDIAN BANK CAME T O KNOW THAT THE ASSESSEE IS SELLING HIS SHARES. IT WAS SUBMITTED BY LEARNED CIT-DR THAT THE TITLE OF THE SHARE WAS PERFECT WITH MR. K SRIKANTH( ASSESSEE) AND/OR MINOR ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 54 -: SONS. OUR ATTENTION WAS DRAWN BY LEARNED CIT-DR TO HONBLE DRT ORDER OF 2001 WHICH IS PLACED IN PAGE NO.125-132 OF THE P APER BOOK AND WAS SUBMITTED THAT COMPROMISE PETITION WAS FILED AND SH ARES WERE NOT IMPUGNED BY ANY OF THE PROCEEDINGS . IT WAS SUBMITT ED THAT THE MONEY WAS RECEIVED BY THE ASSESSEE AND THEN DISCHARGED TO THE BANK. IT WAS SUBMITTED THAT MEMO OF COMPROMISE WAS ENTERED INTO WITH INDIAN BANK, WHICH WAS SETTLED OUT OF COURT, AND THERE WAS NO OR DER OF COURT OF GARNISHEE AND IT WAS SETTLEMENT OUT OF COURT ENTERE D INTO BY ASSESSEE WITH THE INDIAN BANK. IT WAS SUBMITTED BY LEARNED CIT- DR THAT THERE IS NO GARNISHEE ORDER OF COURT BUT RATHER IT WAS ONLY A T HREAT OF GARNISHEE . AT THIS STAGE LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD LETTER IN FILE NO. 2/5/2016-RECOVERY , ISSUED BY GOVERNMENT OF IND IA , MINISTRY OF FINANCE, DEPARTMENT OF FINANCIAL SERVICES AND CONTE NDED THAT ALL PROPERTIES OF GUARANTOR IS SUBJECT TO CHARGE AND TH E DRT CAN ORDER FOR ATTACHMENT AND SALE OF SUCH PROPERTY U/S 19(12) TO (18) OF THE RDDB & FI ACT 1993 AND PRAYERS WERE MADE TO ALLOW DEDUCTION ( THE SAID LETTER IS PLACED IN FILE) . THE LD. CIT- DR DREW OUR ATTENTI ON TO PARA NO.7.3 OF THE APPELLATE ORDER PASSED BY LD.CIT(A) AND SUBMITTED T HAT THERE WERE NO ENCUMBRANCE ON SALE OF SHARES. IT WAS SUBMITTED TH AT LEARNED CIT(A) HAS CLEARLY HELD THAT DECISION OF HONBLE MADRAS HIGH C OURT IN THE CASE OF CIT V. BRADFORD TRADING CO. PRIVATE LIMITED, REPORTED I N 261 ITR 222 SHALL NOT BE APPLICABLE AS FACTS IN THAT CASE WERE DIFFERENT. IT WAS SUBMITTED THAT GARNISHEE APPLICATION WAS TO RECOVER THE AMOUNT DUE TO THE BANK AND RATHER IT IS APPLICATION OF INCOME AND NOT DIVERSI ON OF INCOME BY ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 55 -: OVERRIDING TITLE. THE LEARNED CIT-DR RELIED UPON D ECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. SITALDAS TIRAT HDAS REPORTED IN (1961)41 ITR 367(SC) AND SUBMITTED THAT THERE WERE NO DIVERSION OF INCOME BY OVERRIDING TITLE RATHER IT WAS ONLY APPLI CATION OF INCOME. THE LEARNED CIT-DR WOULD ALSO DRAW OUR ATTENTION TO PRO VISIONS OF SECTION 48(1) OF THE 1961 ACT AND SUBMITTED THAT DEDUCTION FROM CAPITAL GAINS CAN ONLY BE ALLOWED WHEN THE AMOUNT IS INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES. IT WAS SUBMI TTED BY LEARNED CIT-DR THAT THE DECISION OF HONBLE MADRAS HIGH COURT IN T HE CASE OF BRADFORD TRADING COMPANY PRIVATE LIMITED(SUPRA) IS DIFFEREN T AND NOT APPLICABLE TO THE FACTS OF THE CASE IN THE INSTANT CASE. IT WAS S UBMITTED THAT APPROBATION AND REPROBATION IS NOT ALLOWED AS IN THE ORIGINAL R ETURN OF INCOME FILED WITH THE DEPARTMENT , THE ASSESSEE HAS DECLARED SALE CON SIDERATION TO THE TUNE OF RS. 15 CRORES WHILE IT WAS CLAIMED AT RS. 12 CRO RES IN THE RETURN OF INCOME PURSUANT TO ORDERS PASSED BY HONBLE MADRAS HIGH COURT IN WRIT PROCEEDINGS. IT WAS SUBMITTED THAT SALE CONSIDERATI ON WAS NOT CONSIDERED AT RS. 15 CRORES BY THE AO BUT WAS CONSIDERED AT RS . 12 CRORES AND HENCE LEARNED CIT HAD RIGHTLY INVOKED PROCEEDINGS U/S 263 OF THE 1961 ACT AND BROUGHT TO TAX REMAINING RS. 3 CRORES. THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE NO.1 & 35 OF THE PAPER BOOK, WHICH IS THE ACKNOWLEDGEMENT OF THE ORIGINAL RETURN OF INCOME FILED BY ASSESSEE AS WELL REVISED RETURN OF INCOME FILED BY ASSESSEE U/S 147 OF THE 1961 ACT, IN PURSUANCE TO ORDERS OF HONBLE MADRAS HIGH ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 56 -: COURT. IT WAS SUBMITTED THAT IN ORIGINAL RETURN OF INCOME , EXEMPTION CLAIMED WAS RS. 11.94 CRS. , WHILE IN THE REVISED RETURN OF INCOME , THE EXEMPTION CLAIMED WAS RS. 12.41 CRORES AND THE DIFF ERENCE WAS ON ACCOUNT OF DIVIDEND INCOME RECEIVED WHICH WAS IN AN Y CASE EXEMPT FROM TAX AND THERE WAS NO INCOME TAX IMPACT OWING TO SUC H DIFFERENTIAL . OUR ATTENTION WAS DRAWN TO PAGE 36 OF THE PAPER BOOK AN D IT WAS SUBMITTED THAT DIVIDEND INCOME OF RS. 66,65,190/- WAS RECEIVE D BY SON OF THE ASSESSEE NAMELY MR. ADITYAA SRIKANTH. IT WAS SUBMI TTED THAT THERE IS NO DIFFERENCE IN THE INCOME TAX LIABILITY OWING TO SUC H DIFFERENTIAL IN THE EXEMPT INCOME OWING TO DIVIDEND INCOME RECEIVED BY MINOR SON OF THE ASSESSEE. THE ASSESSEE RELIED UPON DECISION IN THE CASE OF CIT V. ORIENT CRAFT LIMITED (2013) 354 ITR 536(DEL. HC) AND ALSO DECISION IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITED(SUP RA) AND IT WAS SUBMITTED THAT THE INFORMATION WAS RECEIVED FROM RE VENUE AUDIT WHICH IS FRESH MATERIAL . IT WAS SUBMITTED THAT REVENUE MIS SED TO FRAME SCRUTINY ASSESSMENT U/S 143(2) READ WITH SECTION 143(3) OF T HE 1961 ACT AND REASONS TO BELIEVE WHICH FORMED BASIS OF INVOKING P ROVISIONS OF SECTION 147 FOR REOPENING OF THE CONCLUDED ASSESSMENT WERE BASED ON OLD MATERIAL AND ONCE NO NOTICE U/S 143(2) OF THE 1961 ACT WAS ISSUED AT THAT TIME FOR FRAMING SCRUTINY ASSESSMENT, THE REVENUE H AS MISSED THE BUS AND NOW IT CANNOT RELY ON STALE MATERIAL TO GET EXT ENDED LIMITATION PERIOD BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 A CT. IT WAS SUBMITTED THAT THE ASSESSEE MADE FULL AND TRUE DISCLOSURE IN THE RETURN OF INCOME ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 57 -: FILED WITH DEPARTMENT ORIGINALLY. IT WAS SUBMITTED THAT REVENUE CAN NO DOUBT INVOKE PROVISIONS OF SECTION 147 OF THE 1961 ACT , IF THERE ARE FACTUAL ERRORS IN DISCLOSURES AS HELD BY HONBLE SU PREME COURT IN THE CASE OF PVS BEEDIES(SUPRA) AND IN THAT CASE REOPENING W AS DONE AFTER FOUR YEARS BASED ON AUDIT OBJECTIONS AND REVENUE IS EMPO WERED TO SEE THAT THERE IS TRUE AND FULL DISCLOSURE. THE ASSESSEES C OUNSEL ALSO SUBMITTED THAT REVENUE IS EMPOWERED TO REOPEN CONCLUDED ASSE SSMENT AFTER FOUR YEARS BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT AND TO SEE THAT THERE IS TRUE AND FULL DISCLOSURE AS HELD IN T HE CASE OF GIRILAL AND COMPANY (SUPRA) . THE ASSESSEES COUNSEL ALSO TRIE D TO DISTINGUISH THE CASE LAWS RELIED UPON BY LEARNED CIT-DR TO CONTEND THAT REOPENING OF THE ASSESSMENT WAS NOT DONE PROPERLY WITHIN THE PROVISI ONS OF SECTION 147 OF THE 1961 ACT AND IT WAS SUBMITTED THAT THERE WAS NO TRIGGERING POINT FOR INVOKING PROVISIONS OF SECTION 147/148 OF THE 1961 ACT IN THE INSTANT CASE. IT WAS SUBMITTED THAT THREE SEPARATE AGREEMENTS WER E ENTERED INTO BY ASSESSEE FOR SALE OF SHARES AND THREE AGREEMENTS F OR NON-COMPETE FEES. IT WAS SUBMITTED THAT THERE WAS A DIVERSION OF INCO ME BY OVERRIDING TITLE RELYING ON REAL INCOME THEORY . THE LEARNED COUNSE L FOR THE ASSESSEE RELIED UPON DECISION OF HONBLE SUPREME COURT IN TH E CASE OF CIT V. SITALDAS TIRATHDAS REPORTED IN (1961) 41 ITR 0367(S C) AND DECISION OF HONBLE SUPREME COURT IN THE CASE OF DCIT V. T. JAY ACHANDRAN (2018) 406 ITR 1 (SC) . IT WAS SUBMITTED BY LEARNED COUNSEL FO R THE ASSESSEE THAT ONLY REAL INCOME CAN BE BROUGHT TO TAX. IT WAS SUB MITTED THAT THE SALE WAS MADE UNDER COMPELLING CIRCUMSTANCES AND IT WAS COURT MONITORED ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 58 -: SALE OF SHARE AND HENCE PAYMENT OF RS. 4.25 CRORES TO INDIAN BANK IS AN EXPENSE IN CONNECTION WITH TRANSFER OF SHARES AND W AS RIGHTLY CLAIMED BY ASSESSEE. THE PRAYERS WERE MADE BY LEARNED COUNSEL FOR THE ASSESSEE TO QUASH THE ASSESSMENT. IT WAS SUBMITTED THAT CONTRA CT OF MINOR WAS ENTERED INTO THROUGH THE ASSESSEE WHO IS NATURAL GU ARDIAN OF THE MINOR SONS BEING FATHER AND INCOME IS TO BE CLUBBED FOR T AX PURPOSES. ON BEING ASKED BY THE BENCH, THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT MINOR MONEY BEING SALE CONSIDERATION OF SHARES WERE DIVERTED TOWARDS PAYMENT OF LOAN DUE FROM ADITYA LEATHER EXPORTS PR IVATE LIMITED WITHOUT ANY ORDERS OF THE COURT FOR USING MINORS MONEY FOR PAYMENT OF AFORESAID DUES TO INDIAN BANK. ON BEING CONFRONTED, THE LEARN ED COUNSEL FOR ASSESSEE ADMITTED THAT PAGE 15 OF THE PAPER BOOK IS AN UNSIGNED PAGE WHICH IS CLAIMED TO BE ATTACHED TO RETURN OF INCOME , WHILE REST OF THE ENCLOSURES WERE SIGNED, THUS STRENGTHENING DOUBT ON THE CLAIM OF THE ASSESSEE THAT SAID DOCUMENT WAS AT ALL ATTACHED WIT H THE RETURN OF INCOME ORIGINALLY FILED BY ASSESSEE. THE ASSESSEE WAS ALSO PRESENT DURING THE COURSE OF HEARING BEFORE THE BENCH ON 17.10.2019. T HE LD.CIT-DR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF R.N. GOSAI A V. YASHPAL DHIR, JUDGMENT DATED 23.10.1992 AND DECISIO N OF HONBLE MADRAS HIGH COURT IN THE CASE OF G. KUMAR V. SAMUTHIRADEVI , VIDE JUDGMENT DATED 19.12.2012. THE LD.CIT-DR SUBMITTED THAT IN THE CASE OF SHARE AGREEMENT, THERE ARE NO CONSEQUENCES PROVIDED FOR M AKING DEFAULT IN PAYMENT OF SALE CONSIDERATION OF SHARES. THE LEAR NED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO BASIS FOR VALUATION OF S HARES AND OF COMPETE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 59 -: FEES IS THERE AND IT WAS A NEGOTIATED PRICE BETWEEN THE BUYER AND SELLER. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSE E THAT IT IS ONLY BECAUSE OF MR. K. SRIKANTH, THE ASSESSEE WHO WAS A RENOWNED CRICKET PLAYER IN INDIAN TEAM THAT NON COMPETE FEES WAS PAI D BY THE PENTAMEDIA GROUP CONCERNS. THE LD.CIT-DR SUBMITTED AT THIS IS POINT OF TIME THAT IT IS MERELY A TAX AVOIDANCE SCHEME AND NON-COMPETE F EES IS NOTHING BUT SALE CONSIDERATION OF SHARES AND THE AO HAD RIGHTLY INCLUDED THE SAME AS INCOME OF THE ASSESSEE WHILE COMPUTING CAPITAL GAIN S . THE LD.CIT-DR REFERRED TO PARA NO.6.1 OF THE APPELLATE ORDER PAS SED BY LD.CIT(A) AND SUBMITTED THAT LEARNED CIT(A) ALLOWED RELIEF TO THE ASSESSEE. IT WAS SUBMITTED THAT NEITHER LD.CIT(A) NOR THE ASSESSEE H AS FURNISHED ANY REPLY TO ISSUES RAISED BY THE AO. IT WAS SUBMITTED THAT T HERE IS NO SPECIFIC CLARIFICATION AS TO WHAT THE ASSESSEE WAS DOING EAR LIER AND WHAT ASSESSEE WAS DOING LATER AND THIS IS MERELY AN AGREEMENT TO AVOID TAX AND ASSESSEE IS CONTINUING AS DIRECTOR IN THE NEW COMPANY. IT W AS BROUGHT TO NOTICE BY LEARNED CIT-DR THAT NON COMPETE FEE WAS BROUGHT TO TAX BY PROVISIONS OF SECTION 28(VA) READ WITH SECTION 2(24)(XII) OF THE 1961 ACT BY FINANCE ACT, 2002 W.E.F. 01.04.2003 AND SUBMITTED THAT PRIO R TO THAT REASONABLENESS IS TO BE SEEN FOR WHICH QUANTUM IS T O BE FOUND OUT AND BASIS OF COMPUTING NON-COMPETE FEE IS TO BE SEEN. THE LEARNED CIT-DR RELIED UPON DECISION OF HONBLE MADRAS HIGH COURT I N THE CASE OF CIT V. CHEMECH LABORATORIES LIMITED, DATED 23.12.2016.11. 2016. THE LEARNED CIT-DR WOULD ALSO RELY ON THE DECISION IN FOLLOWING CASE LAWS: ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 60 -: A) CIT V. MEDIWORLD PUBLICATIONS PRIVATE LIMITED B) MRS. HAMI ASPI BALSARA V. ACIT C) RAMESH D. TAINWALA V. ITO ( TS-594-ITAT-2011(MUM.) IT WAS SUBMITTED BY LEARNED CIT-DR THAT IF CONSIDER ATION IS PAID TO THE SHAREHOLDERS THEN CAPITAL GAINS ARE TO BE COMPUTED AND BROUGHT TO TAX AND NOT NON-COMPETE FEE AS CONTENDED BY ASSESSEE. IT WAS SUBMITTED BY LEARNED CIT-DR THAT IF ONLY BUSINESS IS SNATCHED A WAY, THEN NON-COMPETE FEE WILL COME INTO PICTURE OTHERWISE IT IS BUSINESS RECEIPT WHICH IS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE . THE LD.CIT-DR SUBMITTED THAT THE ASSESSEE IS CONTINUED WITH THE COMPANY EVE N AFTER TRANSFER OF SHARES AS DIRECTOR AND HENCE THERE IS NO QUESTION O F NON COMPETE FEE BEING CLAIMED AS AN EXEMPT INCOME BY THE ASSESSEE A ND ENTIRE CONSIDERATION OF RS. 15 CRORES IS TO BE BROUGHT TO TAX AS PER PROVISIONS OF THE 1961 ACT. THE LEARNED CIT DR RELIED UPON DECISI ON OF HONBLE AAR IN THE CASE OF H M PUBLISHERS HOLDINGS LIMITED IN AAR NO. 1238 OF 2012. THE LD.AR SUBMITTED THAT REASONING OF LD.CIT(A) IS SOUND AND NEEDS TO BE CONFIRMED AND NO SUBSTANCE IN THE ARGUMENTS OF REVE NUE AND THE DECISIONS RELIED UPON BY REVENUE ARE ALL AFTER THE INSERTION OF SEC.28(VA) BY FINANCE ACT, 2002 W.E.F. 01.04.2003 WHILE PRESEN TLY WE ARE CONCERNED WITH AY: 2001-02 AND THE AMENDMENT BROUGHT IN BY FI NANCE ACT, 2002 BY INTRODUCING SECTION 28(VA) ARE PROSPECTIVE IN NATUR E. THE LEARNED COUNSEL RELIED UPON DECISION OF TRIBUNAL IN THE CASE OF R. K. SWAMY V. ACIT ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 61 -: REPORTED IN (2004) 88 ITD 185(CHENNAI-TRIB.) AND DE CISION IN THE CASE OF G.RAVEENDRAN V. CIT REPORTED IN (2015)375 ITR 326( MAD. HC) AND IT WAS SUBMITTED THAT THERE WAS NO NEED TO INTERFERE WITH THE ORDERS OF THE LD.CIT(A) SO FAR AS DEPARTMENT APPEAL IS CONCERNED AND PRAYERS WERE MADE TO DISMISS THE APPEAL FILED BY REVENUE. IT WA S SUBMITTED THAT THERE IS A SEPARATE CONTRACT BETWEEN UNRELATED PARTIES FO R NON COMPETE FEE. IT WAS SUBMITTED THAT THE WISDOM OF BUSINESSMEN SHOULD PREVAIL AS IT IS A CONTRACTUAL TRANSACTION BETWEEN UNRELATED PARTIES W HICH IS AT ARMS LENGTH PRICE. IT WAS SUBMITTED THAT SHAREHOLDERS WHO TRANS FERRED SHARES ARE MINOR AND ASSESSEE IS A SEPARATE PERSON UNDER THE 1961 ACT ALBEIT FATHER OF THE MINOR SONS. THE LEARNED CIT-DR RELIED ON THE GROUNDS OF APPEAL AND IT WAS SUBMITTED THAT NON-COMPETE FEES IS IN CONTEX T OF SALE OF SHARE AND IT WAS SUBMITTED THAT IT IS IMMATERIAL WHETHER ASS ESSEE SOLD SHARES OR MINORS SON SHARES WERE SOLD , THESE SHARES ARE TO B E TREATED AS ASSESSEES SHARE AND THE ASSESSEE SOLD THE SHARES OF MINOR CH ILDREN . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE YEAR ENDED 31.03.2001 , THE ASSESSEE AND MINOR CHILDREN RECEIVED RS. 9.50 C RORES WHILE RS. 2.5 CRORES WAS RECEIVED IN YEAR ENDED 31.03.2002. THUS, IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT ONLY RS. 12 C RORES WAS RECEIVED WHILE RS.3 CRORES WAS NEVER RECEIVED AND HENCE THE SAME CANNOT BE BROUGHT TO TAX AS ONLY REAL INCOME CAN BE BROUGHT T O TAX. OUR ATTENTION WAS DRAWN TO PAGE 53 OF THE PAPER BOOK , WHEREIN S UNDRY DEBTORS AS AT 31.03.2001 WERE TO THE TUNE OF RS. 5.51 CRORES. ON BEING ASKED AND DIRECTED TO PRODUCE THE BOUNCED CHEQUE OF RS. 300 L ACS , THE LEARNED ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 62 -: COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E DOES NOT HAVE BOUNCED CHEQUE OF RS. 300 LACS AND THE SAME CANNOT BE PRODUCED.THUS, THE LEARNED COUNSEL FOR THE ASSESSEE EXPRESSED INAB ILITY TO PRODUCE THE BOUNCED CHEQUE OF RS. 300 LACS. IT WAS ALSO SUBMIT TED THAT NO PROCEEDINGS FOR RECOVERY OF SAID RS. 300 LACS WAS I NITIATED BY ASSESSEE/MINOR SONS AGAINST PENTAMEDIA GROUP CONCER NS FOR BOUNCING OF CHEQUE. IT IS ALSO SUBMITTED THAT 99% SHARES IN KR IS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WERE HELD BY HIS MIN OR SONS. IT WAS ALSO EXPLAINED THAT AS ON 31.03.2002, SUNDRY DEBTORS INC LUDED SAID SUM OF RS.3 CRORES . THE ASSESSEE HAS FILED BALANCE SHEET AS ON 31.03.2002 WHEREIN SUNDRY DEBTORS TO THE TUNE OF RS. 300.66 LA CS ARE REFLECTED AND ASSESSEE IS CLAIMING SAID AMOUNT OF RS. 3 CRS. IS STILL RECEIVABLES AS ON 31.03.2002. IT WAS SUBMITTED THAT AO HAS RECOGNIZED THAT RS 3 CRS. WAS NOT RECEIVED BY THE ASSESSEE AND AO TOOK A VIEW WHI CH IS A PLAUSIBLE VIEW AND LD.CIT CANNOT SUBSTITUTE ITS VIEW WITH ITS OPI NION BY INVOKING PROVISIONS OF SECTION.263 OF THE 1961 ACT, WHICH IS NOT PERMISSIBLE. THE LD.AR RELIED UPON THE DECISION OF A.R. REAL ESTATE DEVELOPERS PVT. LTD. V. ITO IN ITA NO.804/CHNY/2019 , DATED 18.09.2019 FOR AY: 2014-15. THE LD.DR SUBMITTED THAT AN AMOUNT OF RS. 5.5 CRS. WAS RECEIVABLE BY ASSESSEE AS ON 31.03.2001 AND AN AMOUNT OF RS. 3.00 CRORES W AS RECEIVABLE AS ON 31.03.2002. IT WAS SUBMITTED BY LEARNED CIT-DR THA T THIS AMOUNT OF RS. 300 LACS WAS DUE TO ASSESSEE AS PER ITS BALAN CE SHEET AS GOOD MONEY ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 63 -: AND HENCE THE ENTIRE AMOUNT OF RS. 15 CRORES INCLUD ING AN OUTSTANDING AMOUNT OF RS. 3 CRORES IS CHARGEABLE TO TAX. IT WAS SUBMITTED THAT IT WAS AOS MISTAKE THAT HE TOOK TOTAL CONSIDERATION AT RS. 12 CRS. AS CHARGEABLE TO TAX INSTEAD OF RS 15 CRS. WHICH WAS RECTIFIED BY LEARNED CIT BY INVOK ING PROVISIONS OF SECTION 263 OF THE 1961 ACT. IT WAS S UBMITTED BY LEARNED CIT-DR THAT THE ASSESSEE HAS ACCOUNTED FOR HIS INCO ME ON ACCRUAL BASIS AND IT WAS SUBMITTED THAT INVOCATION OF PROVISIONS OF SECTION 263 IS VALID. THE LEARNED CIT-DR SUBMITTED THAT THE ASSESSEE HAS NOT SUBMITTED THAT THERE IS ANY ERROR ON THE BASIS OF ACCOUNTING FOLLO WED BY THE ASSESSEE VIZ. CASH OR MERCANTILE. SO FAR AS REGARDS COMPUTATION O F DEDUCTION U/S 54F OF THE 1961 ACT , THE LEARNED CIT-DR SUBMITTED THAT LE ARNED CIT INVOKED PROVISIONS OF SECTION 263 OF THE 1961 ACT AND DIREC TED AO TO VERIFY THE CLAIM OF THE ASSESSEE U/S.54F OF THE ACT . THE LEA RNED CIT-DR SUBMITTED THAT THE AO VERIFIED AND ALLOWED THE CLAIM OF DEDUC TION U/S 54 F TO THE TUNE OF RS.43 LAKHS , INSTEAD OF RS. 35 LAKHS, EV EN WHILE FRAMING ASSESSMENT U/S.143(3) R.W.S.263 OF THE ACT. THE CA SE OF THE ASSESSEE WAS RE-FIXED FOR CLARIFICATION TO FIND OUT AS TO TH E BASIS / QUANTIFICATION OF VALUATION OF SHARES AND AS TO WHETHER ANY VALUATION REPORT AT THE BEHEST OF THE CONTRACTING PARTIES, WAS PREPARED TO VALUE SHARES. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AND IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT IT WAS A CONTRACTUAL AGREEMENT BE TWEEN THE PARTIES TO VALUE THE SHARES AND NO VALUATION REPORT WAS PREPAR ED NOR ANY BASIS FOR VALUATION OF SHARES IS AVAILABLE WITH THE ASSESSEE, RATHER IT IS SUBMITTED ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 64 -: THAT IT WAS A NEGOTIATED PRICE ENTERED INTO BETWEEN TWO PARTIES TO THE CONTRACT. THE ASSESSEES COUNSEL ALSO RELIED UPON D ECISION OF CHENNAI- TRIBUNAL IN THE CASE OF EMPEE HOLDINGS LIMITED V. D CIT IN ITA NO. 1503/CHNY/2014 FOR AY: 2005-06, DATED 07.11.2019 TO WHICH BOTH OF US WERE PART OF THE DIVISION BENCH WHO PRONOUNCED THE SAID ORDER. IT WAS ALSO SUBMITTED THAT IN AY: 2001-02 WITH WHICH WE AR E CONCERNED, SECTION 50C AND 43CA OF THE 1961 ACT WERE NOT IN STATUTE A ND HENCE ACTUAL SALE CONSIDERATION ENTERED INTO BETWEEN TWO CONTRACTING PARTIES VOLUNTARILY CANNOT BE SUBSTITUTED BY INVOKING DEEMING FICTION O F THE SAID SECTIONS . THE LEARNED CIT-DR SUBMITTED THAT ASSESSEE HAS HIMS ELF ADMITTED THAT THERE WAS NO QUANTIFICATION/VALUATION REPORT FOR VA LUING THE SHARES AND HENCE THE ENTIRE AMOUNT OF RS. 15 CRORES BE TREATED AS CONSIDERATION FOR SALE OF SHARES. IT WAS ALSO SUBMITTED THAT SO FAR A S REOPENING OF THE CONCLUDED ASSESSMENT U/S 147 IS CONCERNED , IT WILL NOT MAKE ANY DIFFERENCE BETWEEN MANUAL PROCESSING OF RETURN OF I NCOME AND ELECTRONIC PROCESSING OF RETURN. 11. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD INCLUDING CASE LAWS CITED BY BOTH THE RIVAL PARTIES AND IMPUGNED ORDER OF THE AUTHORITIES BELOW. WE HAVE OBSERVED TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MODELLING, CRICKET COMME NTARY , JOURNALISM, CONSULTING AND BPCL DEALERSHIP. IT IS AN ADMITTED F ACT THAT THE ASSESSEE IS AN RENOWNED CRICKETER OF INTERNATIONAL FAME AND WAS AT ONE POINT OF TIME PART OF INDIAN/NATIONAL CRICKET TEAM AND LATER ALSO ROSE TO BECOME CAPTAIN ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 65 -: OF INDIAN CRICKET TEAM. IT IS ALSO ADMITTED FACT TH AT LATER ON AFTER RETIRING FROM CRICKET TEAM, THE ASSESSEE TURN TO CRICKET CO MMENTARY AND OTHER ACTIVITIES ASSOCIATED WITH SPORT OF CRICKET. THUS, UNDISPUTEDLY THE ASSESSEE IS A KNOWN NAME THE FIELD OF SPORTS OF CRICKET. IT IS ALSO AN ADMITTED FACT THAT IN INDIA , SPORT OF CRICKET IS ONE OF THE FRO NTLINE SPORTING ACTIVITY AND LARGE NUMBER OF PEOPLE ARE KEENLY INTERESTED IN THE SPORT OF CRICKET. WITH THIS BACKGROUND NOW , WE WILL PROCEED TO ADJUDICATE ALL THESE FOUR APPEALS. THE ASSESSEE ORIGINALLY FILED ITS RETURN OF INCOME U/S 139 ON 28 TH MARCH 2002 FOR IMPUGNED AY: 2001-01. THE SAID RETURN OF I NCOME WAS NOT FILED WITHIN THE PRESCRIBED TIME U/S 139(1) OF THE 1961 A CT BUT WAS ADMITTEDLY FILED BELATEDLY , ALBEIT WITHIN TIME PRESCRIBED U/ S 139(4) OF THE 1961 ACT. THE INCOME DECLARED BY ASSESSEE UNDER THE SAID RETU RN OF INCOME WAS TO THE TUNE OF RS. 20,42,507/- . THE EXEMPT INCOME CLA IMED IN THE SAID RETURN OF INCOME ORIGINALLY FILED BY THE ASSESSEE U /S 139 OF THE ACT WAS TO THE TUNE OF RS. 11,98,48,643/- AS PER ACKNOWLEDGEME NT OF RETURN OF INCOME PLACED IN PAPER BOOK AT PAGE 1, WHEREIN THE COLUMN OF EXEMPT INCOME , THE AFORESAID AMOUNT OF RS. 11,98,48,643/- IS DULY FILED IN AT COLUMN 24(PAGE 1/PB). THE ASSESSEE ALSO FILED A CLA IM FOR REFUND OF AN AMOUNT OF RS. 85,20,565/- WHICH WAS FILED ALONG WIT H RETURN OF INCOME IN FORM NO. 30,PLACED AT PAGE 3 OF THE PAPER BOOK. ALO NG WITH THIS RETURN OF INCOME FILED BY ASSESSEE, IT HAS CLAIMED TO HAVE FI LED A COVERING LETTER WHICH SPECIFY THE LIST OF ENCLOSURES TO RETURN OF I NCOME. THE SAID COVERING LETTER DID NOT SPECIFY ABOUT THE ENCLOSURE AS TO DE TAILS OF EXEMPT INCOME BEING FURNISHED , BUT HOWEVER IT IS NOW CLAIMED BY ASSESSEE THAT DETAILS OF ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 66 -: THE AFORESAID EXEMPT INCOME CLAIMED BY HIM WERE FIL ED , WHICH IS STATED TO BE PLACED AT PAGE 15 OF THE PAPER BOOK WHICH ON OUR PERUSAL WE FOUND THAT IT IS AN UNSIGNED ENCLOSURE. THE REVENUE ON IT S PART IS AVERRING THAT THIS DOCUMENT STATED TO BE PLACED AT PAGE 15/PAPER BOOK IS A SUSPECT DOCUMENT WHICH IS PLANTED BY THE ASSESSEE AND WAS N OT PART OF THE RETURN OF INCOME ORIGINALLY FILED BY ASSESSEE. WE WILL SEE AT LATER POINT OF TIME IN THIS ORDER AS TO THE VALIDITY OF RELIANCE ON THIS D OCUMENT AND WHETHER THE DISCLOSURE OF EXEMPT INCOME EVEN IF IT WAS MADE BY ASSESSEE WAS SUFFICIENT ON THE PART OF THE ASSESSEE TO DISCHARG E PRIMARY ONUS CAST ON IT TO MAKE TRUE AND FULL DISCLOSURE TO COME OUT OF CLU TCHES OF SECTION 147/148 OF THE 1961 ACT . THE RETURN OF INCOME WAS ADMITTEDLY ORIGINALLY PROCESSED BY REVENUE U/S 143(1) OF THE 1961 ACT AND INTIMATION DATED 26.03.2003 WAS ISSUED TO ASSESSEE BY AO U/S 143(1) OF THE 1961 ACT COMPUTING REFUND OF RS. 94,24,254/- BEING MADE PAYA BLE TO THE ASSESSEE. THIS PROCESSING OF RETURN OF INCOME WAS DONE MANUAL LY PRIOR TO INTRODUCTION OF E-PROCESSING OF RETURN OF INCOME BY DEPARTMENT. IF WE REFER TO SECTION 143(1) OF THE 1961 ACT AS IT WAS E XISTING IN THE STATUTE AT THAT POINT OF TIME , IT IS CLEAR THAT THE SCOPE OF SECTION 143(1) IS VERY RESTRICTIVE AND IS LIMITED TO CORRECTING ANY ARITHM ETICAL ERRORS OR TO AN INCORRECT CLAIM APPARENT FROM ANY INFORMATION IN TH E RETURN OF INCOME FILED BY ASSESSEE . THE PROVISION OF SECTION 143(1) OF TH E 1961 ACT AS WERE APPLICABLE AT THAT POINT OF TIME WHEN RETURN OF INC OME WAS PROCESSED ON 26.03.2003 ARE REPRODUCED BELOW: ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 67 -: ASSESSMENT. 143. [(1) WHERE A RETURN HAS BEEN MADE UNDER SECTIO N 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, (I) IF ANY TAX OR INTEREST IS FOUND DUE ON THE BA SIS OF SUCH RETURN, AFTER ADJUSTMENT OF ANY TAX DEDUCTED AT SOURCE, ANY ADVANCE TAX PAID, ANY TAX PAID ON SELF-ASSESSMENT AND ANY AMOUN T PAID OTHERWISE BY WAY OF TAX OR INTEREST, THEN, WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (2) , AN INTIMATION SHALL BE SENT TO THE ASSESSEE SPECIFYING THE SUM SO PAYABLE, AND SUCH IN TIMATION SHALL BE DEEMED TO BE A NOTICE OF DEMAND ISSUED UNDER SE CTION 156 AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDIN GLY; AND (II) IF ANY REFUND IS DUE ON THE BASIS OF SUCH RE TURN, IT SHALL BE GRANTED TO THE ASSESSEE AND AN INTIMATION TO THIS E FFECT SHALL BE SENT TO THE ASSESSEE : PROVIDED THAT EXCEPT AS OTHERWISE PROVIDED IN THIS SUB-SECTION, THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER THIS SUB-SECTION WHERE EITHER NO SUM IS PAYAB LE BY THE ASSESSEE OR NO REFUND IS DUE TO HIM : PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB- SECTION SHALL BE SENT AFTER THE EXPIRY OF [ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS MADE :] [PROVIDED ALSO THAT WHERE THE RETURN MADE IS IN RE SPECT OF THE INCOME FIRST ASSESSABLE IN THE ASSESSMENT YEAR COMM ENCING ON THE 1ST DAY OF APRIL, 1999, SUCH INTIMATION MAY BE SENT AT ANY TIME UP TO THE 31ST DAY OF MARCH, 2002.] THUS, THE AO CANNOT GO INTO MERITS OF THE CLAIM MAD E BY ASSESSEE AND SUCH CORRECTIONS ARE LIMITED TO CORRECTING ANY ARIT HMETICAL ERRORS AND TO CORRECTING INCORRECT CLAIMS APPARENT FROM ANY INFOR MATION IN THE RETURN. THUS, EVEN IF THE RETURN OF INCOME WAS PROCESSED MA NUALLY IN THE INSTANT CASE, THE AO HAD A RESTRICTIVE POWERS TO CORRECTING ONLY ARITHMETICAL ERRORS IN THE RETURN OF INCOME AND TO AN INCORRECT CLAIM W HICH IS APPARENT FROM ANY INFORMATION IN THE RETURN OF INCOME AND IT CANN OT BE EQUATED WITH SCRUTINY ASSESSMENT FRAMED U/S 143(3) READ WITH SEC TION 143(2) OF THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 68 -: 1961 ACT. IT IS AN ADMITTED POSITION THAT IN THE IN STANT CASE, NO SCRUTINY ASSESSMENT WAS FRAMED BY AO ORIGINALLY U/S 143(3) O F THE 1961 ACT. IT IS ALSO AN ADMITTED POSITION THAT REOPENING OF THE CON CLUDED ASSESSMENT IN THE INSTANT CASE BY AO BY INVOKING PROVISIONS OF SE CTION 147 OF THE 1961 ACT WAS DONE IN THE INSTANT CASE BY REVENUE WITHIN FOUR YEARS FROM THE END OF ASSESSMENT YEAR VIZ. NOTICE OF REOPENING OF THE CONCLUDED ASSESSMENT WAS ISSUED ON 30.03.2006 WHILE WE ARE PR ESENTLY SEIZED OF AY: 2001-02. IT IS ALSO ADMITTED POSITION THAT THE RETURN OF INCOME WAS NOT ORIGINALLY SECURITIZED BY REVENUE U/S 143(2) READ WITH SECTION 143(3) AND MERELY PROCESSING OF RETURN OF INCOME WAS DONE WITH IN PROVISIONS OF SECTION 143(1) OF THE 1961 ACT , WHICH CANNOT BE EQ UATED WITH SCRUTINY ASSESSMENT U/S 143(3) READ WITH SECTION 143(2) OF T HE 1961 ACT. THE RATIO OF DECISION OF HONBLE SUPREME COURT IN THE C ASE OF RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITED(SUPRA) SHALL BE CLEAR LY APPLICABLE AND THE REVENUE CAN VALIDLY REOPEN THE CONCLUDED ASSESSMENT BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT . IN THE INSTANT CASE RETURN OF INCOME WAS NOT ORIGINALLY SCRUTINISED U/S 143(2) RE AD WITH SECTION 143(3) AND REOPENING OF THE CONCLUDED ASSESSMENT WAS DONE WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT, CLEARLY PROVISO TO SECTION 147 IS NOT APPLICABLE AND REOPENING OF THE CONCLUDED ASSESSMEN T CAN BE DONE WITHIN A PERIOD OF FOUR YEARS FROM THE END OF ASSESSMENT Y EAR BY INVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT . MOREOVE R, FIRST OF ALL THE DISCLOSURE AS IS CONTEMPLATED TO HAVE BEEN MADE BY THE ASSESSEE IN THE INSTANT CASE HAS BEEN DOUBTED BY REVENUE TO BE SUSP ECT AND IT IS CLAIMED ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 69 -: BY REVENUE THAT DOCUMENT AT PAGE 15 OF THE PAPER BO OK IS A PLANTED DOCUMENT WHICH IS PLANTED AFTER WORDS AND THIS DOC UMENT WAS NEVER PART OF THE RETURN OF INCOME ORIGINALLY FILED BY ASSESSE E WITH REVENUE U/S 139(4) OF THE 1961 ACT ON 28.03.2002. IT IS ALSO CL AIMED BY REVENUE THAT THIS DOCUMENT WAS ALSO NOT SPECIFIED AS ONE OF THE ENCLOSED DOCUMENT IN THE LIST OF DOCUMENTS ENCLOSED WITH RETURN OF INCOM E . IT IS ALSO CLAIMED BY REVENUE THAT THIS IS THE ONLY DOCUMENT WHICH IS NOT SIGNED BY ASSESSEE , WHILE REST OF THE OTHER DOCUMENTS AS WERE MADE PART OF THE RETURN OF INCOME AS ENCLOSURES WERE SIGNED BY ASSESSEE. NOW L ET US SEE THE CONTENT OF THIS DOCUMENT WHICH IS PLACED AT PAPER BOOK/PAGE 15 WHICH IS CLAIMED BY REVENUE TO BE A PLANTED DOCUMENT, AND WHILE GOIN G THROUGH THE AFORESAID DOCUMENT , IT IS OBSERVED THAT FOLLOWING DISCLOSURE WAS MADE BY ASSESSEE, AS UNDER: K.SRIKANTH ASSESSMENT YEAR 2001-02 ANNEXURE TO STATEMENT OF INCOME A, INCOME CLAIMED TO BE EXEMPT AND NOT INCLUDED IN TOTAL INCOME CONSIDERATION FOR RESTRICTIVE COVENANT RS. 7.50 CRO RES. B. RESIDUARY SALE PROCEEDS OF SHARES AFTER MANDATOR Y DIVERSION OF RS. 4.25 CRORES BY INDIAN BANK OVERRIDING GARNISHEE ATTACHMENT-RS. 3.25 CRORES. K.SRIKANTH ASSESSMENT YEAR 2001-02 INCOME CLAIMED TO BE EXEMPT RS. A. RESTRICTIVE COVENANT 75,000,000 B. INDIAN BANK OVERRIDING GARNISHEE ATTACHMENT 42,500,000 ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 70 -: C. DIVIDEND : MINOR ADITYAA 2,348,643 --------------- 119,848,643 --------------- PERUSAL OF THE ABOVE DISCLOSURE AS WAS ALLEGEDLY CL AIMED TO HAVE BEEN MADE BY ASSESSEE WHICH IS ALBEIT DISPUTED BY REVENU E TO BE PLANTED/SUSPECT DOCUMENT, IT CLEARLY APPEARS THAT T HESE ARE BALD DISCLOSURES MADE BY ASSESSEE AND IT CANNOT BE SAID THAT THE ASSESSEE HAS MADE TRUE AND COMPLETE DISCLOSURE OF THE PRIMARY FA CTS AND IN OUR VIEW CLEARLY PRIMARY ONUS CAST ON THE ASSESSEE IS NOT DI SCHARGED. RELIANCE IS MADE TO DECISION OF HONBLE SUPREME COURT IN THE CA SE OF NEW DELHI TELEVISION LIMITED V. DCIT REPORTED IN (2020) 116 T AXMANN.COM 151(SC). THE ABOVE DISCLOSURE DO NOT GIVE COMPLETE DISCLOSUR E OF THE LOANS AVAILED BY A COMPANY NAMED ADITYA LEATHER EXPORTS PRIVATE LIMITED FROM INDIAN BANK WHICH WAS IN DEFAULT BY SAID COMPANY . THE A BOVE DISCLOSURE ALSO DID NOT DISCLOSE THAT THE ASSESSEE WAS A DIRECTOR O F THE SAID COMPANY NAMELY ADITYA LEATHER EXPORTS PRIVATE LIMITED AND ALSO STOOD GUARANTOR OF THE LOAN AVAILED BY SAID COMPANY ADITYA LEATHER EXPORTS PRIVATE LIMITED . IT ALSO DID NOT DISCLOSE THAT THE SHARE S OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WERE NOT SUBJECT MAT TER OF CHARGE WITH INDIAN BANK. IT ALSO DID NOT MENTION THAT IT IS U NDER MEMO OF COMPROMISE THAT THE SAID AMOUNT OF RS. 4.25 CRORES WAS PAID BY THE ASSESSEE TO INDIAN BANK IN SETTLEMENT OF THE AFOR ESAID DEFAULTED LOAN BY ADITYA LEATHER EXPORTS PRIVATE LIMITED AND THE PA YMENTS WERE NEVER MADE UNDER DIRECTION OF ANY COURT ORDERS BUT WERE M ADE UNDER A ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 71 -: COMPROMISE ARRANGEMENT ENTERED INTO BY ASSESSEE VOL UNTARILY WITH THE SAID INDIAN BANK . THE AFORESAID DISCLOSURE ALSO DID NOT MENTION ABOUT THE AGREEMENTS MADE SIMULTANEOUSLY BY ASSESSEE AND HIS MINOR SONS ( THROUGH ASSESSEE) FOR TRANSFER OF ENTIRE SHAREHOLDI NG OF SAID COMPANY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED FOR AN AGGREGATE VALUE OF RS. 7.50 CRORES ( WHEREIN MAJORITY SHAREHOLDING TO THE TUNE OF 99% WAS HELD BY MINOR SONS OF THE ASSESSEE), AND THAT ALSO ASSESSEE ENTERED INTO NON COMPETE AGREEMENT WITH THE BUYERS NAMELY PENTAM EDIA GROUP OF CONCERNS , OF THE ENTIRE SHAREHOLDING OF SAID COMPA NY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED AGREEING NOT TO COMPETE FOR A PERIOD OF SIX YEARS WITH THE SAID COMPANY KRIS SRI KANTH SPORTS ENTERTAINMENT PRIVATE LIMITED FOR A NON COMPETE FE E OF RS. 7.50 CRORES. THIS DISCLOSURE ALSO DID NOT SPECIFY THAT MINOR SON S OF THE ASSESSEE WHO WERE HOLDING 99% OF SHAREHOLDING OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WERE NEVER GUARANTOR OF LOAN AVAIL ED BY SAID ADITYA LEATHER EXPORTS PRIVATE LIMITED FROM INDIAN BANK NOR THEY WERE DIRECTORS OF ADITYA LEATHER EXPORTS PRIVATE LIMITED AND HE BEING NATURAL GUARDIAN OF MINOR SONS WERE UNDER DUTY UNDER LAW RE LATING TO MINORS AND GUARDIANSHIP AS ARE APPLICABLE IN INDIA TO PROTECT INTEREST OF MINOR SONS WHO INFACT WERE HOLDER OF SHARE CAPITAL OF KRIS SR IKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WHICH WAS A SUBJECT MATTER OF TRANSFER . THE ASSESSEE AS PER LAWS APPLICABLE TO MINOR AND G UARDIANSHIP IN INDIA COULD NOT HAVE DIVERTED SALE PROCEED OF SHARES HELD BY MINOR SONS TO REPAY INDIAN BANK FOR LOAN OF RS. 4.25 CRORES AVAIL ED BY ADITYA LEATHER ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 72 -: EXPORTS PRIVATE LIMITED , TO THE PREJUDICE OF MINO RS INTEREST WITHOUT PERMISSION OF COURTS AS PER LAWS APPLICABLE TO MINO RS AND GUARDIANSHIP IN INDIA. IT WAS A BLATANT ILLEGAL ACT AND INCOME-TAX ACT, 1961 ACT CANNOT BE READ IN VACCUM DEHORS OTHER PREVAILING LAWS IN INDI A. THE ASSESSEE IF SO DESIRE COULD HAVE ALWAYS CONTENDED THAT PROCEEDS OF NON COMPETE FEE RECEIVED BY HIM WAS UTILIZED FOR PAYMENT OF DUES TO INDIAN BANK BUT TO CLAIM THAT THE ASSESSEE APPROPRIATED PROCEEDS OF SA LE OF SHARES OF MINOR SONS FOR THE PURPOSES OF PAYMENT TO INDIAN BANK WHI LE UTILIZING NON COMPETE FEE RECEIVED BY HIM , WHICH HE IS CLAIMING AS AN EXEMPT INCOME , FOR OTHER PURPOSES IS A PERVERSITY WHICH CANNOT BE ACCEPTED. THE ASSESSEE HAS NOT COME TO COURT WITH CLEAN HANDS AND COURTS C ANNOT BE PARTY TO SUCH AN ACT OF THE ASSESSEE. FURTHER, THE ASSESSEE IS CLAIMING THAT HE HAS NOT RECEIVED RS. 3 CRORES OUT OF TOTAL CONSIDERATIO N OF RS. 15 CRORES. THE SAID CONSIDERATION OF RS. 15 CRORES IS BIFURCATED I NTO SALE OF SHARES OF KRIS SHRIKANT SPORTS ENTERTAINMENT PRIVATE LIMITED TO THE TUNE OF RS. 7.50 CRORES WHILE REST OF RS. 7.50 CRORES IS CLAIMED TOW ARDS NON COMPETE FEE. THE ASSESSEE DID NOT PRODUCED BOUNCED CHEQUE OF RS. 3 CRORES DESPITE BEING DIRECTED BY COURT AND SECONDLY , THE ASSESSEE IS CLAIMING THAT RS. 3 CRORES WHICH IS NOT RECEIVED SHALL BE ATTRIBUTED TO WARDS SALE OF SHARES OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED AND NOT TOWARDS NON COMPETE FEE, WHICH IS CLAIMED AS AN EXEMPT INCOME. IT IS AGAIN A PERVERSE CLAIM AS THE ASSESSE HAS DULY TRANSFERRED ENTIRE SH AREHOLDING OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED TO THE BUYERS PENTAMEDIA GROUP OF CONCERNS AND LATER NO LEGAL SUIT WAS FILED FOR NON PAYMENT OF ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 73 -: ALLEGED PART SALE PROCEEDS OF SHARES OF KRIS SRIKA NTH SPORTS ENTERTAINMENT PRIVATE LIMITED . THE MAJORITY OF SHARES OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED TO THE TUNE OF 99% WERE HELD BY MINOR SONS OF THE ASSESSEE AND THE ASSESSEE IS NATURAL GU ARDIAN OF THE MINOR SONS WAS DUTY BOUND TO PROTECT THE INTEREST OF MINO R AS PER LAW PREVAILING IN INDIA AS TO MINORS AND GUARDIANSHIP. REFERENCE I S DRAWN TO PROVISIONS OF THE HINDU MINORITY AND GUARDIANSHIP ACT, 1956 ES PECIALLY TO PROVISIONS OF SECTION 8. THE ASSESSEE HAS CLAIMED THAT RS. 12 CRORES IN ALL WAS RECEIVED AS AGAINST TOTAL CONSIDERATION IN BOTH THE AGREEMENTS OF RS. 15 CRORES, OUT OF WHICH RS. 7.50 CRORES BEING FOR SAL E OF SHARES AND RS. 7.50 CRORES BEING TOWARDS NON COMPETE FEE. THUS, THE PR OCEEDS OF SALE OF SHARES SHALL BE DEEMED TO HAVE BEEN FULLY RECEIVED TO THE TUNE OF RS. 7.50 CRORES FIRSTLY BEING BELONGING TO MINOR AND SECOND LY THE ENTIRE SHAREHOLDING STOOD TRANSFERRED TO THE BUYERS. IT IS AGAIN A PERVERSITY TO CLAIM THAT SALE PROCEEDS OF SHARES OF KRIS SRIKANT H SPORTS ENTERTAINMENT PRIVATE LIMITED HELD BY MINOR SONS UNDER A SIMULT ANEOUS AGREEMENTS MADE FOR SALE OF SHARES AS WELL NON COMPETE FEE, WA S NOT RECEIVED BUT THE ENTIRE NON COMPETE FEE WAS RECEIVED WHICH IS CLAIME D AS AN EXEMPT INCOME. IT IS CLEARLY VISIBLE THAT AN ATTEMPT IS MA DE BY ASSESSEE TO EVADE TAXES. THUS, WE REJECT THE CLAIM OF THE ASSESSEE AN D HOLD THAT ENTIRE SALE PROCEEDS OF SALE OF SHARES BY MINOR SONS OF THE ASS ESSEE OF THE COMPANY NAMELY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED TO PENTAMEDIA GROUP OF CONCERNS TO THE TUNE OF RS. 7.5 0 CRORES WAS RECEIVED BY ASSESSEE WHICH SHALL BE BROUGHT TO TAX UNDER THE PROVISIONS OF THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 74 -: 1961 ACT INCLUDING PROVISIONS OF SECTION 60-64 OF T HE 1961 ACT. FURTHER, WE HOLD THAT NON RECEIPT OF RS. 3 CRORES ( OUT OF T OTAL NON COMPETE FEE OF RS. 7.50 CRORES) AS WAS THE CLAIM SET UP BY ASSESSE E WAS TOWARDS NON COMPETE FEE PAYABLE BY PENTAMEDIA GROUP OF CONCERNS TO ASSESSEE FOR NOT COMPETING WITH THEM FOR A PERIOD OF SIX YEARS . FURTHER, WE ALSO HOLD THAT PROCEEDS OF NON COMPETE FEE OF RS. 4.50 CREORE S ACTUALLY RECEIVED BY ASSESSEE WAS UTILIZED BY ASSESSEE TO PAY INDIAN BA NK AN AMOUNT OF RS. 4.25 CRORES TOWARDS DEFAULTED LOAN AVAILED BY ADIT YA LEATHER EXPORTS PRIVATE LIMITED OF WHICH ASSESSEE WAS DIRECTOR AS WELL GUARANTOR . AS WE WILL ALSO SEE IN THE LATER PART OF THIS ORDER THAT CLAIM OF EXEMPTION/DEDUCTION MADE FOR PAYMENT OF RS. 4.25 CR ORES TO INDIAN BANK BY DIVERSION BY OVER-RIDING TITLE WAS A WRONG CLAIM MADE BY ASSESSEE EVEN ON MERITS AND HE WAS NOT ENTITLED FOR DEDUCTIO N / EXEMPTION OF SAID INCOME EVEN WITHIN THE PROVISIONS OF THE 1961 ACT. THUS, WE HOLD THAT THE PRIMARY FACTS WERE NOT COMPLETELY , CORRECTLY AND TRULY DISCLOSED BY ASSESSEE IN THE RETURN OF INCOME ORIGINALLY FILED B Y ASSESSEE WITH REVENUE AND THERE IS CLEARLY AN ATTEMPT TO EVADE TAXES, EV EN IF WE ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE DISCLOSURE OF EXEMPT INCOME WAS MADE BY ASSESSEE IN THE RETURN OF INCOME ORIGINALLY FILED WITH REVENUE, AS IS PLACED IN PAPER BOOK /PAGE 15 ( ALTHOUGH IT IS A SUSPECT DISCLOSURE AS REVENUE IS ALLEGING THAT THIS DOCUMENT IS PLANTED B Y ASSESSEE BEFORE ITAT AND THIS DOCUMENT WAS NEVER FILED BY ASSESSEE ALONG WITH ORIGINAL RETURN OF INCOME FILED BY ASSESSEE WITH REVENUE). THUS, WE HOLD THAT THE REVENUE HAS RIGHTLY INVOKED PROVISIONS OF SECTION 1 47 OF THE 1961 ACT AND ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 75 -: WE UPHOLD REOPENING OF THE CONCLUDED ASSESSMENT WIT HIN FOUR YEARS FROM THE END OF THE ASSESSMENT AS WAS MADE BY REVENUE I N THE INSTANT CASE AND MORE-SO EVEN SCRUTINY ASSESSMENT WAS NOT FRAMED BY REVENUE INITIALLY U/S 143(3) OF THE 1961 ACT AND RETURN WAS MERELY PROCESSED U/S 143(1) OF THE 1961 ACT. THUS, WE REJECT THE CONTENT IONS OF THE ASSESSEE AND UPHOLD THE REOPENING OF THE CONCLUDED ASSESSMEN T BY REVENUE U/S 147 OF THE 1961 ACT. WHILE UPHOLDING REOPENING OF T HE CONCLUDED ASSESSMENT U/S 147 IN THE INSTANT CASE, WE NOTE THA T THERE WAS TANGIBLE MATERIAL BEFORE THE AO TO REOPEN THE CONCLUDED ASSE SSMENT AS THE ASSESSEE IS CLAIMING HUGE EXEMPTION OF INCOME BY MA KING INCOMPLETE, UNTRUE AND WRONG CLAIM BEFORE THE AO AND SCRUTINY A SSESSMENT HAVING NOT BEEN MADE EARLIER BY REVENUE BY INVOKING PROVISIONS OF SECTION 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT WHILE ORIG INALLY PROCESSING RETURN OF INCOME , AND REOPENING OF THE CONCLUDED A SSESSMENT U/S 147 OF THE 1961 ACT IS SOUGHT TO BE DONE WITHIN FOUR YEARS FROM THE END OF ASSESSMENT , THE REVENUE IS WITHIN ITS RIGHT TO RE OPEN THE CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT. THE RATIO OF DE CISION OF HONBLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK B ROKERS PRIVATE LIMITED(SUPRA) SHALL BE CLEARLY APPLICABLE AS PROCE SSING OF RETURN OF INCOME U/S 143(1) CANNOT BE EQUATED TO SCRUTINY ASSESSMENT U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT. IT IS ALSO LAI D DOWN BY HONBLE SUPREME COURT IN THE CASE OF P.V.S. BEEDIES(SUPRA) THAT REOPENING OF CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT CAN BE MADE BY AO BASED ON FACTUAL ERRORS POINTED OUT BY AUDIT TEAM OF DEPA RTMENT. HENCE, IN THE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 76 -: INSTANT CASE, WE HOLD THAT THE REVENUE WAS WITHIN I TS RIGHT TO REOPEN THE CONCLUDED ASSESSMENT U/S 147 OF THE 1961 ACT AND WE UPHOLD THE REOPENING OF THE CONCLUDED ASSESSMENT BY REVENUE IN THE INSTANT CASE. WE ORDER ACCORDINGLY. NOW , COMING TO MERITS OF THE ISSUES BEFORE US. WE HAVE OBSERVED THAT THE ASSESSEE ALONG WITH HIS MINOR SONS HAS ENTERED INTO SALE OF ENTIRE SHAREHOLDING OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WITH PENTAMEDIA GROUP OF CONCERNS. IT IS OBSERVED THAT A LMOST ENTIRE SHAREHOLDING TO THE TUNE OF 99% WAS HELD BY MINOR S ONS OF THE ASSESSEE AND ASSESSEE MERELY HELD 125 SHARES OF THE SAID COM PANY. THE CLUBBING PROVISIONS AS ARE CONTAINED IN SECTION 60 TO 64 OF THE 1961 ACT ARE ATTRACTED AND INCOME OF THE MINOR SONS ARE TO BE CL UBBED WITH THE INCOME OF THE ASSESSEE. THE PERUSAL OF THESE AGREEMENTS WI LL REVEAL THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT OF SALE OF SHAR ES TO THE TUNE OF RS. 7.50 CRORES BY VIRTUE OF WHICH ENTIRE SHAREHOLDING IN THE SAID COMPANY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WILL STAND TRANSFERRED TO PENTAMEDIA GROUP OF CONCERNS. SIMULTANEOUSLY, TH ERE WERE AGREEMENTS ENTERED INTO BY ASSESSEE WITH SAID PENTAMEDIA GROUP CONCERNS FOR NON COMPETE BY ASSESSEE WITH THE SAID COMPANY NAMELY K RIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED FOR A PERIOD OF SIX YEARS FOR TOTAL CONSIDERATION OF RS. 7.50 CRORES . THE SAID COMPAN Y NAMELY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED IS ENGAGED IN PROVIDING CRICKET COACHING THROUGH ELECTRONIC MEDIA. THE SAID AGREEME NTS ARE CLAIMED TO BE ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 77 -: ENTERED INTO BASED ON NEGOTIATED PRICE BETWEEN TWO INDEPENDENT PARTIES. IT IS ALSO A MATTER OF FACT THAT THE ASSESSEE IS A RENOWNED CRICKETER WHO WAS PART OF INDIAN/NATIONAL CRICKET TEAM AT ONE POI NT OF TIME AND ALSO WAS CAPTAIN OF INDIAN CRICKET TEAM. IT IS ALSO FACT THA T THE ASSESSEE RESORTED TO CRICKET COMMENTARY AND OTHER ACTIVITIES ASSOCIATED WITH SPORT OF CRICKET AFTER RETIRING FROM CRICKET TEAM . THE ASSESSEE UND OUBTEDLY ENJOYS REPUTATION AND BRAND VALUE IN SPORTING ACTIVITIES M ORE SPECIFICALLY IN CRICKET. THE NAME OF THE ASSESSEE IS ALSO PART OF T HE NAME OF THE COMPANY NAMELY KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WHOSE SHARES ARE TRANSFERRED . THE ASSESSEE HAS AGR EED NOT TO COMPETE WITH THE SAID COMPANY KRIS SRIKANTH SPORTS ENTERTA INMENT PRIVATE LIMITED FOR A PERIOD OF SIX YEARS FOR A TOTAL CONSIDERATION OF RS. 7.50 CRORES . THE SAID COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDIN G CRICKET COACHING THROUGH ELECTRONIC MEDIA. THE PERIOD OF SIX YEARS F OR NOT COMPETING WITH THE SAID COMPANY KRIS SRIKANTH SPORTS ENTERTAINMEN T PRIVATE LIMITED BY ASSESSEE VIDE NON COMPETE AGREEMENT IS BY NO MEANS A SMALL PERIOD. THE REVENUE HAS MERELY REJECTED NON COMPETE FEE CHARGED BY THE ASSESSEE AND NO COGENT REASONS ARE PROVIDED . THE REVENUE HA S ALSO NOT BROUGHT ON RECORD COGENT REASONS FOR DISCARDING THE VALUATI ON OF SHARES OF RS. 7.50 CRORES FOR SALE OF ENTIRE SHAREHOLDING OF KRIS SRI KANTH SPORTS ENTERTAINMENT PRIVATE LIMITED. THE ASSESSEE HAS DI SCHARGED ITS PRIMARY ONUS AND NOW IT WAS FOR REVENUE TO HAVE REBUTTED TH E SAID PRIMARY ONUS BY BRINGING ON RECORD COGENT MATERIAL TO DISLODGE T HE CLAIM OF THE ASSESSEE. FOR THE RELEVANT YEAR UNDER CONSIDERATION , THERE WERE NO ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 78 -: SPECIFIC PROVISION/SECTION IN THE 1961 ACT BROUGHT TO OUR NOTICE BY REVENUE WHICH DEBARRED NEGOTIATED PRICE FOR THE VAL UATION OF SHARE OR WHICH CREATED A DEEMING FICTION FOR VALUING SHARES. THUS, WE ACCEPT THE VALUATION OF SHARES AND NON COMPETE FEE CHARGED BY ASSESSEE, BASED ON NEGOTIATED AGREEMENT AS WE DONOT FIND THEM TO BE UN CONSCIONABLY OR PATENTLY WRONG REQUIRING INTERFERENCE IN THE BUSINE SS DEAL ENTERED INTO BY AND BETWEEN WILLING PARTIES , AS THERE IS NO MATERI AL BROUGHT ON RECORD TO TAKE A CONTRARY VIEW. NOW, COMING TO SALE CONSIDERA TION OF RS. 7.50 CRORES FOR SALE OF SHARES OF KRIS SRIKANTH SPORTS ENTERTA INMENT PRIVATE LIMITED, WE HAVE OBSERVED THAT MAJORITY OF SHARES EXCEEDING 99% WERE HELD BY MINOR SONS . IT IS THE ASSESSEE WHO WAS NATURAL GUA RDIAN FOR HIS MINOR SONS OF THE ASSESSEE AND THE ASSESSEE EXECUTED AG REEMENT FOR SALE OF SHARES ON BEHALF OF HIS MINOR SONS.THE ASSESSEE BEI NG NATURAL GUARDIAN WAS DUTY BOUND TO PROTECT THE INTEREST OF MINOR SON S. THERE ARE MINORITY AND GUARDIANSHIP LAWS PREVALENT IN INDIA WHICH PROT ECTS THE INTEREST OF MINORS AND THE GUARDIANS ARE DUTY BOUND TO PROTECT INTEREST OF MINORS AND IF THE PROCEEDS BELONG TO MINOR ARE TO BE DIVERTED OR MINOR ARE TO BE DIVESTED OF THEIR ASSETS THEN PERMISSION OF COURT I S REQUIRED. ATTENTION IS DRAWN TO THE HINDU MINORITY AND GUARDIANSHIP ACT, 1 956 ESPECIALLY TO PROVISIONS OF SECTION 8 OF THE SAID ACT. THE PURPO SE AND INTENT OF THESE LAWS AND INDULGENCE BY COURTS AS PROVIDED UNDER LAW IS TO PROTECT THE INTEREST AND WELFARE OF MINOR WHICH IS PARAMOUNT. T HE ASSESSEE BEING NATURAL GUARDIAN WAS DUTY BOUND TO PROTECT THE INTE REST OF HIS MINOR SONS. THE SHARES HELD BY MINOR SONS IN KRIS SRIKANTH SPO RTS ENTERTAINMENT ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 79 -: PRIVATE LIMITED WERE DIVESTED FOR A TOTAL CONSIDER ATION OF RS. 7.50 CRORES . THE SHARES IN KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED TO THE TUNE OF 99% WERE HELD BY MINOR SONS OF THE ASSESSEE . THE SHARES OF THE MINOR STOOD TRANSFERRED TO PENTAMEDIA GROUP CONCERN S AND MINORS WERE DIVESTED OF THEIR SHAREHOLDING IN KRIS SRIKANTH SP ORTS ENTERTAINMENT PRIVATE LIMITED. THERE ARE SIMULTANEOUS AGREEMENT FOR SALE OF SHARES AS WELL FOR NON COMPETE WHICH WERE SIMULTANEOUSLY ENT ERED BY THE ASSESSEE ON HIS BEHALF AS WELL ON BEHALF OF THE MINOR, OF WH ICH TOTAL VALUE WAS RS. 15 CRORES OUT OF WHICH RS. 12 CRORES STOOD REALISED .THUS, IT IS TO BE HELD THAT THE ENTIRE CONSIDERATION OF RS. 7.50 CRORES TO WARDS SALE OF SHARES OF MINOR IN KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVAT E LIMITED STOOD REALIZED AND TO BE BROUGHT TO TAX WITHIN PROVISIONS OF THE 1961 ACT INCLUDING PROVISIONS OF SECTION 60-64 OF THE 1961 A CT. IT IS ADMITTED FACT THAT NO PERMISSION OF COURT FOR SELLING/DIVESTING O F SHARES OF MINOR IS BROUGHT ON RECORD. UNDER THESE CIRCUMSTANCES, WE AR E OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS DUTY BOUND TO PROTECT TH E INTEREST OF THE MINOR SONS. THUS, WE HOLD THAT SALE CONSIDERATION OF RS. 7.50 CRORES TOWARDS SALE OF SHARES STOOD FULLY REALIZED AND IT IS REQUIRED T O BE BROUGHT TO TAX BY INVOKING PROVISIONS OF THE 1961 ACT INCLUDING CLUBB ING PROVISIONS AS ARE CONTAINED IN SECTION 61 TO 64 OF THE 1961 ACT. SO F AR AS CONSIDERATION OF RS. 7.50 CRORES TOWARDS NON COMPETE FEE IS CONCERNE D WHICH IS FOR NON COMPETING BY ASSESSEE WITH KRIS SRIKANTH SPORTS EN TERTAINMENT PRIVATE LIMITED , WE ARE OF THE CONSIDERED VIEW THAT THE S AID AMOUNT IS NOT CHARGEABLE TO TAX AS IN THE IMPUGNED AY: 2001-02, T HE SAID AMOUNT WAS ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 80 -: NOT CHARGEABLE TO TAX AS AMENDMENT IN SECTION 28 WH EREIN CLAUSE (VA) WAS INSERTED BY FINANCE ACT, 2002 W.E.F. 01.04.2003 AND PRIOR TO THAT , IT COULD NOT BE BROUGHT TO TAX AS IT WAS HELD TO BE CA PITAL RECEIPT. THE RATIO OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF GUFFIC CHEM PRIVATE LIMITED(CITED SUPRA) IS APPLICABLE, AS WE ARE PRES ENTLY DEALING WITH AY: 2001-02 WHICH IS PRIOR TO AFORESAID AMENDMENT MADE BY FINANCE ACT, 2002 WHICH IS APPLICABLE FROM 01.04.2003. THUS,AN AMOUNT OF RS. 7.50 CRORES WHICH WAS PURPORTEDLY TOWARDS NON COMPETE FE E IS NOT CHARGEABLE TO TAX WITHIN PROVISIONS OF THE 1961 ACT AS WERE AP PLICABLE FOR AY: 2001- 02. UNDER THESE CIRCUMSTANCES ONCE IT IS HELD THAT RS. 7.50 CRORES WHICH WAS TOWARDS NON COMPETE FEE IS EXEMPT FROM TAX IN T HE INSTANT CASE , IT WILL NOT MATTER AS TO HOW THIS IS APPLIED BY ASSESS EE AS THE INCOME AT SOURCE IS HELD TO BE EXEMPT FROM TAX. THUS, EVEN IF AN AMOUNT OF RS. 3 CRORE IS NOT RECEIVED , IT WILL NOT MATTER AS THE I NCOME AT SOURCE OF RS. 7.50 CRORES TOWARDS NON COMPETE FEE IS HELD TO BE E XEMPT FROM INCOME- TAX AND AT THE SAME TIME EVEN IF RS. 4.25 CRORES IS PAID TO INDIAN BANK TO CLEAR THE LOAN OF ADITYA LEATHER EXPORTS PRIVATE L IMITED, THEN ALSO IT IS AN APPLICATION OF EXEMPT INCOME WHICH WILL NOT HAVE BE ARING ON THE TAXABILITY OF ASSESSEES INCOME. HOWEVER FOR SAKE OF COMPLETEN ESS, IT IS HELD THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS 4.25 CRORES T O INDIAN BANK UNDER A MEMO OF COMPROMISE WITH SAID BANK AND THERE WAS NO GARNISHEE ATTACHMENT OF THE BANK ON SAID SHARES. THE SHARES O F KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WERE NEVER SUBJECT M ATTER OF CHARGE WITH INDIAN BANK. THE SHARES WERE HELD BY MINOR SONS OF THE ASSESSEE IN KRIS ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 81 -: SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED AND MINOR SONS WERE NOT THE GUARANTOR OF THE SAID LOAN AVAILED BY ADITYA L EATHER EXPORTS PRIVATE LIMITED FROM INDIAN BANK WHICH STOOD DEFAULTED. T HE MINOR SONS OF THE ASSESSEE ALSO COULD NOT BE MADE TO PAY FOR THE DEFA ULT OF THE SAID ADITYA LEATHER EXPORTS PRIVATE LIMITED OF WHICH THE ASSESS EE WAS DIRECTOR/GUARANTOR NOT THE MINOR SONS. THE ASSESS EE WAS THE DIRECTOR OF THE SAID COMPANY NAMELY ADITYA LEATHER EXPORTS PRI VATE LIMITED AS WELL GUARANTOR OF THE SAID LOAN , BUT THE ASSESSEE HAD N O RIGHT TO TRANSFER THE PROCEEDS OF SALE OF SHARES HELD BY HIS MINOR SONS I N KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED TO INDIAN BANK , EXC EPT WITH PERMISSION OF COURTS. NO SUCH PERMISSION WAS OBTAINED BY ASSESSEE . THE SAID ACT OF CLAIMING DEDUCTION FOR AMOUNT PAID TO INDIAN BANK O UT OF SALE PROCEED OF SHARES HELD BY MINOR SONS IS CLEARLY AN ACT OF PERV ERSITY/ILLEGALITY AS WELL AN ATTEMPT MADE TO EVADE TAXES. THE ASSESSEE ALSO S IMULTANEOUSLY RECEIVED NON COMPETE FEE TO THE TUNE OF RS. 4.50 CR ORES OUT OF TOTAL AGREED NON COMPETE FEE OF RS. 7.50 CRORES AND THE S AID PROCEED SHALL BE DEEMED TO HAVE BEEN APPLIED FOR PAYMENT TO INDIAN B ANK. THE SAID AMOUNT OF RS. 4.50 CRORES IS ALREADY HELD BY US TO BE EXEMPT FROM TAX AND IT WILL NOT MATTER EVEN IF THE SAID SUM WAS PAID TO DISCHARGE TO LOAN OF INDIAN BANK . FURTHER, THERE WAS NO CHARGE HELD BY INDIAN BANK ON SHARES OF KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMI TED. IN ANY CASE AS DISCUSSED ABOVE, THE SHARES WERE HELD BY MINOR SONS OF THE ASSESSEE. THE MINOR SONS OF THE ASSESSEE WERE NEITHER DIRECTOR OF ADITYA LEATHER EXPORTS PRIVATE LIMITED NOR GUARANTORS FOR THE SAID LOAN GRANTED BY INDIAN ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 82 -: BANK TO ADITYA LEATHER EXPORTS PRIVATE LIMITED. THE ASSESSEE BEING NATURAL GUARDIAN OF MINOR SON HAS NO RIGHT TO USE S ALE PROCEEDS BELONGING TO MINOR SONS TO DISCHARGE INDIAN BANK LOAN WITHOUT PERMISSION OF THE COURT AND THEN TURN BACK AND SAY THAT THE SAID AMOU NT PAID TO INDIAN BANK IS TO BE ALLOWED DEDUCTION ON THE GROUND OF DI VERSION OF OVERRIDING TITTLE, WHICH WILL LEAD TO TRAVERSITY OF JUSTICE AN D ILLEGALITY. THE ASSESSEE HAS NOT COME TO COURT WITH CLEAN HAND AND WE CANNOT BE PARTY TO SUCH ILLEGAL AND PERVERSE ACT OF THE ASSESSEE. THUS, WE HOLD THAT THE SAID AMOUNT OF RS. 4.25 CRORES WAS PAID BY ASSESSEE OUT OF NON COMPETE FEE RECEIVED BY ASSESSEE AND FURTHER IT IS MERE APPLIC ATION OF INCOME AND THERE IS NO DIVERSION BY OVERRIDING TITLE AS THE SH ARES WERE NEVER PART OF THE CHARGE IN FAVOUR OF INDIAN BANK. THE SAID AMOUN T OF RS. 4.25 CRORES WAS PAID BY ASSESSEE TO INDIAN BANK TO SETTLE DEFAU LTED LOAN OBLIGATION OF ADITYA LEATHER EXPORTS PRIVATE LIMITED. FURTHER, T HE ASSESSEE HAS ENTERED INTO SIMULTANEOUS AGREEMENT FOR SALE OF SHARES AS W ELL FOR NON COMPETE FEE AND INDIAN BANK WAS ALSO IN A POSITION TO EXERC ISE RESTRAINT OVER NON COMPETE FEE WHICH BELONGED TO ASSESSEE AND EVEN IND IAN BANK COULD NOT HAVE EXERCISED ANY EXTENDED LIEN OVER SHAREHOLDING OF MINOR SONS IN KRIS SRIKANTH SPORTS ENTERTAINMENT PRIVATE LIMITED WITH OUT PERMISSION OF COURT KEEPING IN VIEW LAWS PREVAILING IN INDIA RELE VANT TO MINOR AND GUARDIANSHIP . NO SUCH PERMISSION WAS EVER TAKEN FR OM COURTS BY INDIAN BANK OR BY ASSESSEE UNDER THE LAWS APPLICABLE TO MI NOR AND GUARDIANSHIP AND HENCE EXTENDED LIEN IF AT ALL IT IS AVAILABLE WAS OVER NON COMPETE FEE WHICH IN ANY CASE IS HELD TO BE AN EXEMPT INCOME. T HUS, THE ASSESSEE WILL ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 83 -: NOT GET ANY DEDUCTION FROM TAXABLE INCOME OF AMOUNT PAID TO INDIAN BANK TO DISCHARGE LIABILITY OF ADITYA LEATHER EXPORTS P RIVATE LIMITED OF THE MISCONCEIVED CANNOT BE PART OF SCHEME OF ILLEGITIM ATE TAX EVASION UNDERTAKEN BY ASSESSEE. FURTHER , WE ALSO HOLD THAT PAYMENTS MADE TO INDIAN BANK BY ASSESSEE TO THE TUNE OF RS. 4.25 CRO RES WAS MERELY AN APPLICATION OF INCOME. REFERENCE IS DRAWN TO DECISI ON OF THIRD MEMBER OF ITAT , MUMBAI IN CASE OF PERFECT THREAD MILLS LIMIT ED V. DCIT REPORTED IN (2020) 181 ITD 1( MUM-TRIB.)(TM). WE ORDER ACCORDIN GLY. THUS, WE SUMMARIZE AND CONCLUDE OUR DECISION AS UND ER: A) WE UPHOLD REOPENING OF CONCLUDED ASSESSMENT BY AO I NVOKING PROVISIONS OF SECTION 147 OF THE 1961 ACT. B) WE HOLD THAT SALE CONSIDERATION OF RS. 7.50 CRORES WAS DULY RECEIVED FOR SALE OF SHARES OF KRIS SRIKANTH SPORT S ENTERTAINMENT PRIVATE LIMITED WHICH IS TO BE BROUGHT TO TAX UNDE R PROVISIONS OF 1961 ACT INCLUDING SECTION 60-64 OF THE 1961 ACT. C) WE HOLD THAT NON COMPETE FEE OF RS. 7.50 CRORES WAS EXEMPT FROM TAX BEING CAPITAL RECEIPT. D) WE HOLD THAT PAYMENT OF RS. 4.25 CRORES WAS MADE BY ASSESSEE TO INDIAN BANK TO SETTLE LOAN AVAILED BY ADITYA LEATHER EXPORTS PRIVATE LIMITED WHICH WAS IN DEFAULT , OUT OF NON COMPETE FEE EARNED BY ASSESSEE WHICH WE HAVE ALREADY HELD TO BE EXEMPT ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 84 -: FROM TAX AND NOW IT IS ACADEMIC WHETHER THERE WAS A NY DIVERSION OF INCOME BY OVERRIDING TITLE OR NOT. IN ANY CASE F OR COMPLETENESS, WE HOLD THAT THE ASSESSEE WAS NOT ENT ITLED FOR DEDUCTION BY WAY OF DIVERSION BY OVERRIDING TITLE A S THERE WAS NO CHARGE HELD BY INDIAN BANK AND THERE WAS MERELY A COMPROMISE ENTERED INTO BY ASSESSEE WITH INDIAN BANK VOLUNTARI LY TO PAY DEFAULTED LOANS AVAILED BY SAID ADITYA LEATHER EXP ORTS PRIVATE LIMITED . THUS, THE PAYMENT TO INDIAN BANK WAS MER ELY AN APPLICATION OF INCOME AND THAT TOO OF AN EXEMPT INC OME. E) THE QUESTION OF TAXABILITY OF RS. 3 CRORES WHICH WA S NOT RECEIVED BY ASSESSEE IS AGAIN AN ACADEMIC QUESTION AS WE HAV E ALREADY HELD THAT THIS NON RECEIPT OF RS. 3 CRORES WAS ON A CCOUNT OF NON COMPETE FEE WHICH IS HELD TO BE EXEMPT INCOME. 12. IN THE RESULT, ALL THE FOUR APPEALS ADJUDICATED BY US IN THIS ORDER ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THE 19 TH MAY , 2020 IN CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( $ ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 19 TH MAY, 2020. TLN ITA NO.307/CHNY/2010 & ITA NOS.1015 & 1016/CHNY/2012 & ITA NO.1324/CHNY/2012 :- 85 -: . +$2 32 /COPY TO: 1. * /APPELLANT 4. 4 /CIT 2. +,* /RESPONDENT 5. 2 + /DR 3. 4 ( ) /CIT(A) 6. /GF
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