Assistant Commissioner of INcome TAx Circle-5(1)(1), Bangalore V. M/s Reindeer Software Solutions Pvt Ltd , Bangalore

ITA 1354/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7020 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-09-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 14-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Valuation report; Capital Gains
• Section: 143(3); 195; 192

Judgement Text

ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1354/BANG/2017 ASSESSMENT YEAR: 2013-14 ACIT CIRCLE- 5(1)(1) BANGALORE VS. M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD. NO.48, 1 ST FLOOR DVG ROAD BASAVANAGUDI BANGALORE-560 004 PAN NO : AAFCR0892K APPELLANT RESPONDENT APPELLANT BY : SHRI SUNIL KUMAR SINGH, D.R. RESPONDENT BY : SHRI PADAM CHAND KHINCHA, A.R. DATE OF HEARING : 08.09.2020 DATE OF PRONOUNCEMENT : 09.09.2020 O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER: THIS APPEAL AT THE INSTANCE OF REVENUE IS DIRECTED AGAINST CIT(A) ORDER DATED 02.03.2017. THE RELEVANT ASSESSMENT YE AR IS 2013-14. THE GROUNDS RAISED READ AS FOLLOWS: 1. THE ORDER OF THE CIT(A)-5, BANGALORE, IS OPPOSED TO THE LAW AND NOT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. WHETHER THE CIT(A) IS JUSTIFIED IN GRANTING RELIEF OF RS.152,31,66,000/- IN VIEW OF THE CONCEALMENT OF MA TERIAL FACTS RELEVANT FOR BOTH DISCLOSURE AS PER INCOME-TA X ACT AND THE ACCOUNTING STANDARDS AS WELL AS DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. 3. THE LEARNED CIT(A) HAS NOT APPRECIATED THE INFIRMIT Y BROUGHT OUT BY A.O. IN THE BALANCE SHEET, AUDITED FINANCIAL STATEMENTS AND SUBMISSIONS MADE BY ASSESSEE DURING SCRUTINY ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 2 OF 11 PROCEEDINGS. THE A.O. HAD CLEARLY ESTABLISHED THAT THE AUDITED BALANCE SHEET WAS NOT IN COHERENCE WITH ANY OF THE LATER SUBMISSION MADE BY THE ASSESSEE. IN VIEW OF THE ABOVE LD. CIT(A) HAS NOT COMPLETELY APPRECIATED THE FACTS OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. DURING THE ASSESSMENT YEAR 2013-14, ASSESSEE WAS ENGAGED IN TH E BUSINESS OF SOFTWARE DEVELOPMENT AND PROVIDING SERVICE AND SALE S OF PRODUCTS THROUGH END TO END BUSINESS TRANSACTION. THE ASSES SEE COMPANY CONDUCTED ITS BUSINESS OPERATION THROUGH A WEBSITE WITH THE DOMAIN NAME WWW.URBANTOUCH.COM AND UNDER THE BRAND NAME URBAN TOUCH. 3. FOR THE ASSESSMENT YEAR 2013-14, THE RETURN OF I NCOME WAS FILED BY THE ASSESSEE ON 28.9.2013, DECLARING A LOS S OF RS.10,79,43,952/-. THE RETURN OF INCOME WAS SELECT ED FOR SCRUTINY AND ASSESSMENT ORDER U/S 143(3) OF THE INCOME-TAX A CT,1961 ['THE ACT' FOR SHORT] WAS COMPLETED ON 31.03.2016 MAKING AN ADDITION OF RS.152,31,66,000/- AS UNDISCLOSED INCOME ON SALE OF URBAN TOUCH UNDER THE HEAD CAPITAL GAINS. THE GIST OF ASSESS MENT ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT,1961 ['THE ACT' FO R SHORT] ARE AS FOLLOWS: I. THE A.O. RELIED UPON THE VARIOUS NEW REPORTS WHERE IT WAS MENTIONED THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF USD 30 MILLION AS PROCEEDS FOR SALE OF UR BAN TOUCH. II. THE A.O. CONTENDED THAT THE INCOME FROM SALE OF SHA RES HAS NOT BEEN DISCLOSED IN THE RETURN OF INCOME FILE D BY THE ASSESSEE. III. THE A.O. CONTENDED THAT THE ASSESSEE WRONGLY CLAIME D AN AMOUNT OF INR 300,000 WAS RECEIVED ON THE SALE O F DOMAIN. ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 3 OF 11 IV. THE A.O. CONTENDED THAT THE ASSESSEE HAS CONCEALED MATERIAL FACTS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 3.1 THE RELEVANT FINDING OF THE A.O. IN MAKING THE ADDITION OF RS.152,31,66,000/- READS AS FOLLOWS: 11. AS PER THE NEWS REPORTED BY ECONOMIC TIMES (REPRODUCED EARLIER), THE CONSIDERATION HAS BEEN RE CEIVED IN BOTH CASH AS WELL AS IN STOCK. THOUGH THE SHARE PU RCHASE AGREEMENTS PRODUCED ARE UNSIGNED, THE BENEFIT OF DO UBT IS GRANTED TO THE ASSESSEE AND CREDIT FOR THE SAID STO CK IS CONSIDERED AS THE SALE CONSIDERATION RECEIVED BY TH E RESPECTIVE SHAREHOLDERS. THE AMOUNT RECEIVED BY TH E TWO SHAREHOLDERS, TIGER GLOBAL AND ACCEL INDIA AS WELL AS THE OTHER THREE SMALL SHARE HOLDERS IS RS.12,23,34,000/-. THE TOTAL CONSIDERATION REPORTED TO HAVE BEEN RECE IVED BY THE ASSESSEE IS 30 MILLION USD WHICH WORKS OUT T O RS.164.55 CRORES @ RS.54.85 PER USD. THE RECEIPT I N THE FORM OF STOCK WHEN REDUCED FROM THIS, THE BALANCE WOULD CONSTITUTE THE CASH COMPONENT OF THE SALE. THIS WORKS OUT TO RS.1,52,31,66,000/-. THE ASSESSMENT IS CONSIDERED BASED ON THE MATERIAL AVAILABLE ON RECORDS BY BRINGING TO TAX OF RS.152,3 1,66,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER CAPITAL GAINS. 4. AGGRIEVED BY THE ASSESSMENT ORDER PASSED U/S 143 (3) OF THE ACT, ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) ALLOWED THE APPEAL AND DELETED THE ADDIT ION MADE BY THE A.O. THE RELEVANT FINDING OF THE CIT(A) READS AS U NDER: 6. I HAVE CONSIDERED THE ABOVE WRITTEN SUBMI SSIONS FILED BY THE APPELLANT AND ALSO GONE THROUGH THE ASSESSMENT ORDE R PASSED BY THE ASSESSING OFFICER. THE ASSESSMENT IN THE INSTANT CA SE WAS PASSED BASED ON A NEWS ARTICLE DATED 26 TH AUGUST 2012, THAT THE APPELLANT HAS RECEIVED AN AMOUNT OF USD 30 MILLION AS PROCEED S FOR SALE OF URBANTOUCH.COM . THE COMPANY CONDUCTED ITS BUSINESS OPERATIONS THROUGH A WEBSITE WITH THE DOMAIN NAME OF WWW.URBANTOUCH.COM AND UNDER THE BRAND NAME 'URBAN TOUCH'. THE APPELLA NT COMPANY RECEIVED FUNDING IN TWO ROUNDS IN THE FORM OF COMPU LSORILY CONVERTIBLE PREFERENCE SHARES ('COPS') AND EQUITY S HARES TOTALING ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 4 OF 11 TO INR 203,492,330 DURING FY 2010-11 AND FY 2011-12 .0N AUGUST 9, 2012, THE SHARES OF THE COMPANY WERE TRANSFERRED BY ITS SHAREHOLDERS I.E., TIGER GLOBAL, ACCEL INDIA, MR. SACHIN BANSAL, MR. BINNY BANSAL AND MR. MUKESH BANSAL TO GOLD SQUARE SALES INDIA PR IVATE LIMITED, ANOTHER COMPANY INCORPORATED IN INDIA ENGAGED IN A SIMILAR LINE OF BUSINESS. 6.1 DURING THE APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT NEITHER THE APPELLANT NOR THE INVESTORS HAVE R ECEIVED THE SAID AMOUNT OF. USD 30 MILLION. THE AMOUNT HAS BEEN REPO RTED IN THE NEWS ARTICLES RELIED UPON BY THE ASSESSING OFFICER WITHOUT CARRYING OUT ADEQUATE DUE DILIGENCE AND WITHOUT BEING RATIFI ED BY THE APPELLANT OR THE INVESTORS. FURTHER SUBMITTED THAT WHILE NEWS ARTICLES MAY PROVIDE INFORMATION TO THE GENERAL PUBLIC AT LA RGE, THE SAME CANNOT AT ANY COST BE RELIED UPON FOR THE PURPOSES OF DETERMINING THE TAXABLE INCOME OR THE TAX TO BE PAID BY AN ASSE SSEE. THE APPELLANT PLACED RELIANCE ON THE JUDGEMENT OF THE H ON'BLE SUPREME COURT OF INDIA IN THE CASE OF LAXMI RAJ SHETTY ANR VS. STATE OF TAMIL NADU [1988 AIR 1274], WHICH HELD AS FOLLOWS: .'JUDICIAL NOTICE CANNOT BE TAKEN OF THE FACTS STAT ED IN A NEWS ITEM BEING IN THE NATURE OF HEARSAY SECONDARY EVIDE NCE, UNLESS PROVED BY EVIDENCE ALIUNDE. A REPORT IN A NEWSPAPER IS ONLY HEARSAY EVIDENCE. A NEWSPAPER IS NOT ONE OF THE DOC UMENTS REFERRED TO IN S. 78(2) OF THE EVIDENCE ACT, BY WHI CH AN ALLEGATION OF FACT CAN BE PROVED. THE PRESUMPTION OF GENUINENE SS ATTACHED UNDER S. 81 OF THE EVIDENCE ACT TO A NEWSPAPER REPO RT CANNOT BE TREATED AS PROOF OF FACTS REPORTED THEREIN. IT IS N OW WELL-SETTLED THAT A STATEMENT OF FACT CONTAINED IN A NEWSPAPER I S MERELY HEARSAY AND, THEREFORE, INADMISSIBLE -IN EVIDENCE I N THE ABSENCE OF THE MAKER OF THE STATEMENT APPEALING IN COURT AN D DEPOSING TO HAVE PERCEIVED THE FACT REPORTED.' THE AFOREMENTIONED PRINCIPLE HAS ALSO BEEN UPHELD I N THE FOLLOWING CASES: STATE OF HARYANA AND OTHERS VS CH. BHAJAN LAL AND A NOTHER SHRI (AIR 1993 SC 1348); S.P SHENBAGAMOORTHY VS DR. CLIENNA REDDY, THE GOVER NOR (1994) 2 MLJ 23; AND RATAN LAL SONI VS THE STATE OF RAJASTHAN AND ORS.(1 994 (1) WLC 679). ADDITIONALLY THE APPELLANT COMPANY HAS SUBMITTED LE TTER WRITTEN TO THE EDITOR OF ECONOMIC TIMES, AND STATED THAT THE ARTIC LE PER SE DID NOT SPEAK ABOUT ANY AMOUNT BEING RECEIVED BY THE APPELL ANT AND ONLY SPEAKS OF CONSIDERATION RECEIVED BY THE SHAREHOLDER S. GIVEN THE SAME, NO SPECIFIC ACTION WAS TAKEN BY THE APPELLANT OR ANY OF ITS ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 5 OF 11 DIRECTORS AT THE TIME THE NEWS ARTICLE WAS PUBLISHE D. FURTHER SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD SOLD ITS DOMAIN FOR AN AMOUNT OF RS.300,000/-. THE AR'S ARGUMENTS ARE REVOLVED AROUND THE FACT THAT BASED ON CERTAIN NEWS ARTICLES DATED AUGUST 2012, THE ASSESSING OFFICER HAD INFERR ED THAT THE APPELLANT HAD RECEIVED AN AMOUNT OF USD 30 MILLION AS PROCEEDS FOR SALE OF 'URBANTOUCH.COM. 6.2 NOW THE QUESTION WILL ARISE AS TO WHETHER THE NEWS PAPER ARTICLES PUBLISHED ARE RELIED UPON AS ADMISSIBLE EV IDENCES IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE OR ANY MATERI AL GATHERED BY THE ASSESSING OFFICER WHILE CONCLUDING THE ASSESSME NT. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICE R HAS &OUGHT OUT THE FACTS AND DEFECTS IN THE AUDITOR'S FINANCIALS A ND GIVEN A FINDING THAT THE AR WAS NOT ABLE TO FURNISH ANY RECORDS OR DOCUMENTS IN SUPPORT OF HIS SUBMISSION NOR HE WAS NOT ABLE TO ES TABLISH THE CREDIBILITY OF HIS FINANCIALS SUBMITTED BEFORE HIM AND THEREFORE THE ASSESSING OFFICER HAD TO CONSIDER THE INFORMATION R EPORTED IN THE PUBLIC DOMAIN AS MORE AUTHENTIC. FURTHER SEEN FROM THE EXTRACT OF THE INFORMATION GIVEN BY THE ECONORNICTIMES, INDIATIMES.COM DATED 28/08/2012 THAT FASHION AND YOU HAS ACQUIRED ONLINE FASHION AND BEAUTY RETAILER URBAN TOUCH AND FASHION AND YOU PAI D USD 30 MILLION (RS.167. CRORES) IN CASH AND STOCK FOR ACQU ISITION, SAID A PERSON WITH DIRECT KNOWLEDGE OF THE TRANSACTION. HO WEVER, THE, ASSESSING OFFICER HAS NEITHER ENQUIRED INTO NOR ASCERTAINED FROM THE NEWS PAPER THE VERACITY OF THE INFORMATION GIVEN BY THEM, HE HAS SIMPLY RELIED ON SUCH NEWS PAPER ITEM STATING THAT IN VIEW OF THE CONCEALMENT OF MATERIAL FACTS RELEVANT FOR BOTH DISCLOSURE AS P ER IT ACT AND THE ACCOUNTING STANDARDS AS WELL AS DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE UNDERSIGNED HAS NO OTHER BUT TO CON SIDER THE INFORMATION REPORTED IN THE PUBLIC DOMAIN AS MORE A UTHENTIC. IN VIEW OF THE FACTS AS DISCUSSED ABOVE AND ALSO THE J UDGEMENT RENDERED BY THE HON'BLE SUPREME COURT OF INDIA IN T HE CASE OF LAXMI RAJ SHETTY AND ANR VS. STATE OF TAMIL NADU TH AT IT IS NOW WELL-SETTLED THAT A STATEMENT OF FACT CONTAINED IN A NEWSPAPER IS MERELY HEARSAY AND, THEREFORE, INADMISSIBLE IN EVID ENCE IN THE ABSENCE OF THE MAKER OF THE STATEMENT APPEARING IN COURT AND DEPOSING TO HAVE PERCEIVED THE FACT REPORTED, I AM OF THE VIEW THAT THE ACTION OF THE ASSESSING OFFICER IN CONCLUDING T HAT THE APPELLANT HAS RECEIVED USD 30 MILLION (RS.167 CRORES) IN CASH BASED ON THE NEWS REPORT WITHOUT VERIFYING THE VERACITY IS NOT J USTIFIED, THEREFORE, THE GROUNDS OF APPEAL ARE HEREBY ALLOWED. ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 6 OF 11 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. D.R. RELIED O N THE GROUNDS RAISED. THE LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES AND RELIED O N THE FINDINGS OF THE CIT(A). THE A.R. HAS ALSO FILED A PAPER BOOK I NTER-ALIA ENCLOSING THEREIN, AUDIT FINANCIAL STATEMENT FOR A.Y. 2013-14 , WRITTEN SUBMISSION AND ANNEXURE FILED BEFORE THE A.O. AND C IT(A), ETC. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. THE ASSESSEE WAS INCORPORATED IN BANGALORE AS A PRI VATE LIMITED COMPANY DURING FY 2010-11 WITH A PAID UP SHARE CAPI TAL OF INR 1,00,000/-. SUBSEQUENTLY, THE ASSESSEE COMPANY REC EIVED FUNDING IN TWO ROUNDS IN THE FORM OF COMPULSORILY CONVERTIB LE PREFERENCE SHARES (CCPS) AND EQUITY SHARES TOTALLING TO INR 20,34,92,330/- DURING FY 2010-11 AND FY 2011-12. PURSUANT TO THE FUNDING, THE TOTAL INVESTMENT IN THE COMPANY AS ON APRIL 1, 2012 WAS AS FOLLOWS: NAME OF INVESTOR NUMBER OF SHARES (WAY OF EQUITY AND CCPS) TOTAL INVESTMENT (INR) TIGER GLOBAL SIX INDIA II HOLDINGS, MAURITIUS (TIGER) 1,000 EQUITY SHARES 74,000 SERIES A PREFERENCE SHARES 25,000 SERIES B PREFERENCE SHARES 14,25,84,850 ACCEL INDIA VENTURE II (MAURITIOUS) LIMITED MAURITIUS (ACCEL) 1,000 EQUITY SHARES 36,500 SERIES A PREFERENCE SHARES 8,333 SERIES B PREFERENCE SHARES 5,87,52,280 MR. SACHIN BANSAL 800 EQUITY SHARES 7,18,400 MR. BINNY BANSAL 800 EQUITY SHARES 7,18,400 MR. MUKESH BANSAL 800 EQUITY SHARES 7,18,400 MR. ABHISHEK GOYAL 100,000 EQUITY SHARES 1,00,000 TOTAL 20,35,92,330 ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 7 OF 11 7. ON AUGUST 9, 2012, THE SHARES OF THE ASSESSEE CO MPANY WERE TRANSFERRED BY ITS SHAREHOLDERS I.E., TIGER, ACCEL, MR. SACHIN BANSAL, MR. BINNY BANSAL AND MR. MUKESH BANSAL (HEREINAFTER COLLECTIVELY REFERRED TO AS ANGEL INVESTORS) TO GOLDSQUARE SAL ES INDIA PRIVATE LIMITED (GOLDSQUARE OR THE BUYER), ANOTHER COMP ANY INCORPORATED IN INDIA ENGAGED IN A SIMILAR LINE OF BUSINESS AS T HE ASSESSEE UNDER THE DOMAIN NAME WWW.FASHIONANDYOU.COM FOR A TOTAL SALE CONSIDERATION OF INR 12,23,35,205/-. THE BREAKUP O F THE SALE CONSIDERATION RECEIVED BY THE SHAREHOLDERS PURSUANT TO THE TRANSFER ARE AS FOLLOWS: NAME OF SELLER NUMBER OF SHARES SOLD (BY WAY OF EQUITY AND CCPS) SALE CONSIDERATION (INR) TIGER 1,000 EQUITY SHARES 74,000 SERIES A PREFERENCE SHARES 25,000 SERIES B PREFERENCE SHARES 8,49,82,750 ACCEL 1,000 EQUITY SHARES 36,500 SERIES A PREFERENCE SHARES 8,333 SERIES B PREFERENCE SHARES 3,50,17,255 MR. SACHIN BANSAL 800 EQUITY SHARES 7,78,400 MR. BINNY BANSAL 800 EQUITY SHARES 7,78,400 MR. MUKESH BANSAL 800 EQUITY SHARES 7,78,400 TOTAL 12,23,35,205 8. A COPY OF DECLARATION FILED REGARDING TRANSFER O F SHARES FROM NON-RESIDENT TO RESIDENT IN FORM FC-TRS EVIDENCING THE TRANSFER OF SHARES FROM TIGER AND ACCEL TO GOLDSQUARE IS ON REC ORD (PAGE NOS. 171 TO 178 OF THE PAPER BOOK FILED). SUBSEQUENT TO THE TRANSFER OF ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 8 OF 11 SHARES, THE BUSINESS OF ASSESSEE WAS CONSOLIDATED U NDER GOLDSQUARE. MR. ABHISHEK GOYAL (WHO WAS A DIRECTOR IN REINDEER) WAS APPOINTED AS A CEO AND ALSO ADMITTED TO THE BOARD OF DIRECTOR S IN GOLDSQUARE. DURING MARCH, 2003, OWING TO CERTAIN ISSUES AND THE FACT THAT THE ASSESSEE COMPANY WAS RUNNING INTO HUGE LOSSES THE C OMPANY SOLD OFF ALL ITS ASSETS AND THE DOMAIN NAME OF WWW.URBANTOUCH.COM OPERATED BY THE ASSESSEE ALONG WITH ALL OTHER INTEL LECTUAL PROPERTY/BRAND ASSETS WERE TRANSFERRED TO GOLDSQUAR E VIDE BRAND ASSETS ASSIGNMENT AGREEMENT DATED MARCH 14, 2013 FO R A TOTAL CONSIDERATION OF INR 3,00,000/-. A COPY OF THE BRA ND ASSETS ASSIGNMENT AGREEMENT IS ENCLOSED AT PAGE NOS.179 TO 192 OF THE PAPER BOOK FILED. AS A RESULT OF THE ABOVE CONTINU ED LOSSES, THE MANAGEMENT OF GOLDSQUARE DECIDED THAT THE STAKE HEL D BY IT IN THE ASSESSEE COMPANY SHALL BE SOLD TO MR. SHOBHIT SINGH AL. ACCORDINGLY, THE SHARES OF REINDEER HELD BY GOLDSQUARE WERE ACQU IRED BY MR. SHOBHIT SINGHAL FOR A VALUE OF INR 1,48,233/- AS TH E NET ASSET VALUE OF THE ASSESSEE COMPANY WAS NEGATIVE AND EACH SHARE WAS VALUED AT RS.1/-. THE INDEPENDENT SHARE VALUATION REPORT OF THE CHARTERED ACCOUNTANT VALUING THE SHARES OF THE ASSESSEE IS EN CLOSED AT PAGE NOS.193 TO 195 OF THE PAPER BOOK FILED. CONSEQUENT LY, AS ON MARCH 31, 2013, THE ENTIRE SHARE CAPITAL OF THE ASSESSEE COMPANY WAS HELD BY MR. SHOBHIT SINGHAL. THE SAME WAS DISCLOSED IN THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013. A CO PY OF THE FINANCIAL STATEMENTS HAVE BEEN ENCLOSED AT PAGE NOS .196 TO 211 OF THE PAPER BOOK FILED. THE AFOREMENTIONED FACTS WERE FURNISHED BEFORE THE A.O. HOWEVER, THE SAME WAS NOT CONSIDERED AT T HE TIME OF PASSING THE ASSESSMENT ORDER. BASED ON CERTAIN NEW S ARTICLES DATED AUGUST, 2012, THE A.O. HAD ALLEGED THAT THE ASSESSE E HAS RECEIVED AN AMOUNT OF USD 30 MILLION AS PROCEEDS FOR SALE OF UR BANTOUCH.COM THE SHAREHOLDERS OF THE ASSESSEE HAD SOLD THEIR SHA RES IN THE COMPANY IN THE MONTH OF AUGUST 2012 AND THE DOMAIN NAME WAS ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 9 OF 11 SOLD BY THE ASSESSEE IN MARCH 2013. THE INFORMATIO N DISSEMINATED THROUGH THE MEDIA IS DEVOID OF FACTS AND MAY NOT BE TECHNICALLY CORRECT. FURTHER, SUCH NEWS ARTICLES ARE NOT AUTHO RED BY TECHNICAL/FIELD EXPERTS SO AS TO ENSURE THAT NUANCE S OF THE TRANSACTION ARE REPORTED CORRECTLY. IN THE INSTANT CASE AS WELL, THE ARTICLE PRINTED MAY HAVE BEEN TO PROVIDE INFORMATIO N WITH RESPECT TO THE FACT THAT THE SHAREHOLDERS OF THE ASSESSEE ARE SELLING THE SHARES HELD BY THEM. HOWEVER, THE SAME HAS BEEN MISUNDERS TOOD BY THE A.O. AND AN ADJUSTMENT TO THAT EFFECT HAS BEEN MADE IN THE SUBJECT ASSESSMENT ORDER. IT WOULD ALSO BE PERTINENT TO NO TE THAT THE COPY OF THE ARTICLE WHICH WAS RELIED UPON BY THE A.O. WAS N OT PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S. ACCORDINGLY, THE INFORMATION CONTAINED IN THE NEWS ARTICLE WAS N OT RATIFIED BY THE ASSESSEE. IN THIS CONNECTION, WE PLACE RELIANCE ON THE JUDGEMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF L AXMI RAJ SHETTY AND ANR VS. STATE OF TAMIL NADU (1988 AIR 1274), WH ICH HELD AS FOLLOWS: JUDICIAL NOTICE CANNOT BE TAKEN OF THE FACTS STATE D IN A NEWS ITEM BEING IN THE NATURE OF HEARSAY SECONDARY EVIDE NCES, UNLESS PROVED BY EVIDENCE ALIUNDE. A REPORT IN A N EWSPAPER IS ONLY HEARSAY EVIDENCE. A NEWSPAPER IS NOT ONE O F THE DOCUMENTS REFERRED TO IN S. 78(2) OF THE EVIDENCE A CT, BY WHICH AN ALLEGATION OF FACT CAN BE PROVED. THE PRESUMPTI ON OF GENUINENESS ATTACHED UNDER S. 81 OF THE EVIDENCE AC T TO A NEWSPAPER REPORT CANNOT BE TREATED AS PROOF OF FACT S REPORTED THEREIN. IT IS NOW WELL SETTLED THAT A STATEMENT O F FACT CONTAINED IN A NEWSPAPER IS MERELY HEARSAY AND, THE REFORE, INADMISSIBLE IN EVIDENCE IN THE ABSENCE OF THE MAKE R OF THE STATEMENT APPEARING IN COURT AND DEPOSING TO HAVE P ERCEIVED THE FACT REPORTED. THE AFOREMENTIONED PRINCIPLE HAS ALSO BEEN UPHELD I N THE FOLLOWING CASES: 1. STATE OF HARYANA AND OTHERS VS. CH. BHAJAN LAL AND ANOTHER SHRI (AIR 1993 SC 1348)\ 2. S.P. SHENBAGAMOORTHY VS. DR. CHENNA REDDY, THE GOVERNOR (1994) 2 MLJ 23; AND ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 10 OF 11 3. RATAN LAL SONI VS. THE STATE OF RAJASTHAN AND ORS.(1994(1) WLC 679) ADDITIONALLY A LETTER WAS WRITTEN BY ASSESSEE COMPA NY OBJECTING TO THE MATERIAL PUBLISHED IN THE ARTICLE WHICH WAS THE BASIS, ON WHICH THE A.O. HAS PASSED THE ASSESSMENT ORDER. IN THIS LETTER TO THE EDITOR OF ECONOMIC TIMES, THE ASSESSEE STATES T HAT THE ARTICLE PER SE DID NOT SPEAK ABOUT ANY AMOUNT BEING RECEIVED BY THE ASSESSEE AND ONLY SPEAKS OF CONSIDERATION RECEIVED BY THE SH AREHOLDERS. GIVEN THE SAME, NO SPECIFIC ACTION WAS TAKEN BY THE ASSES SEE OR ANY OF ITS DIRECTORS AT THE TIME THE NEWS ARTICLE WAS PUBLISHE D. 9. MOREOVER, IT WOULD BE UNREASONABLE ON THE PART O F THE A.O. TO PRESUME THAT THE SHAREHOLDERS HAD RECEIVED AN AMOUN T USD 30 MILLION (APPROXIMATELY INR 167 CRORES), BECAUSE AS MENTIONED EARLIER THE INVESTORS HAD INVESTED AN AMOUNT CLOSE TO INR 2 0 CRORES. THEREFORE, IT IS IMPRACTICAL FOR THE A.O. TO PRESUM E THAT THE INVESTORS WOULD RECEIVE AN AMOUNT OF INR 167 CRORES (I.E., A RETURN OF 735% OVER THE PRINCIPLE INVESTED). FURTHER, THE ARTICLE S DATED MARCH 5, 2013 (COVERING THE SHUTDOWN OF URBAN TOUCH) HAVE BE EN PUBLISHED JUST BEFORE THE DOMAIN NAME WAS FORMALLY SOLD BY TH E ASSESSEE TO GOLDSQUARE (FASHION AND YOU). THIS THEREFORE SUBST ANTIATES THE FACT THAT THE BUSINESS OPERATIONS RUN BY THE ASSESSEE UN DER THE BRAND NAME OF URBAN TOUCH WERE INDEED SHUT DOWN BY MARCH 2013 PURSUANT TO WHICH THE DOMAIN NAME WAS SOLD BY THE A SSESSEE IN MARCH 2013. THE TRANSACTION OF SALE OF SHARES BY T HE INVESTORS IS DISTINCT AND SEPARATE FROM THE SALE OF SHARES UNDER TAKEN IN AUGUST, 2012. FURTHER, TO THE FINANCIALS OF GOLDSQUARE, DO WNLOADED FROM THE WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS (I.E. WWW.MCA.GOV.IN ) FOR FY 2012-13 AND FY2013-14, CLEARLY POINT TO THE FACT THAT THE GOLDSQUARE DID NOT HAVE THE RESOURCES TO PAY USD 30 MILLION TO THE INVESTORS OF THE ASSESSEE. COPIES OF THE FINANCIAL S HAVE BEEN ENCLOSED AT PAGE NOS.222 TO 280 OF THE PAPER BOOK WHEREAS OU R ATTENTION IS ITA NO.1354/BANG/2017 M/S. REINDEER SOFTWARE SOLUTIONS PVT. LTD., BANGALO RE PAGE 11 OF 11 DRAWN TO NOTE 36 OF THE FINANCIALS FOR THE FY 2012- 13, WHEREIN AN AMOUNT OF INR 12,21,86,967 HAS BEEN ACCOUNTED FOR B Y GOLDSQUARE AS AN EXCEPTIONAL ITEM BRING LOSS ON THE SALE OF IN VESTMENTS MADE IN REINDEER. NEITHER THE ASSESSEE NOR THE INVESTORS H AVE RECEIVED THE SAID AMOUNT OF USD 30 MILLION. THE AMOUNT HAS BEEN REPORTED IN THE NEWS ARTICLES RELIED UPON BY THE A.O. WITHOUT C ARRYING OUT ADEQUATE DUE DILIGENCE AND WITHOUT BEING RATIFIED B Y THE ASSESSEE OR THE INVESTORS. 10. IN VIEW OF THE AFORESAID FACTUAL SITUATION, WE ARE OF THE VIEW THAT THE ASSESSMENT IN THE INSTANT CASE HAS BEEN CO NCLUDED BASED ON A NEWS ARTICLE WHICH DOES NOT IN ANY CASE CONSTI TUTE ADEQUATE MATERIAL ON RECORD. ACCORDINGLY, ADDITION MADE BY THE A.O., HAS BEEN RIGHTLY DELETED BY THE CIT(A). IT IS ORDERED ACCOR DINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPT, 2020 SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER BANGALORE, DATED 9 TH SEPT, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER