Mrs. Soni Sonu Mirchandani, New Delhi V. ACIT, New Delhi

ITA 3223/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6667 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 05-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Keywords: Capital asset; Gift; Opportunity of being heard; Question of law; Right to appeal

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH . A. T. VARKEY , JM ITA NO. 3223 /DEL/2013 : ASSTT. YEAR : 2009 - 10 MRS. SONI SONU MIRCHANDANI, F - 166 , MALCHA MARG, NEW DELHI VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 32(1) , NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA QPM7786H ASSESSEE BY : SH. AJAY VOHRA, SR. ADV. , SH. ROHIT JAIN, ADV. & M S. DEEPASHREE RAO, CA REVENUE BY : SMT. ANIMA BARNWAL , SR. DR DATE OF HEARING : 05.01 .201 6 DATE OF PRONOUNCE MENT : 29 . 0 2 .201 6 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 14.03.2013 OF LD. CIT(A) - XXVI, NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. THAT O N THE FACTS AS WELL AS IN L AW THE LD. CIT(APPEAL S ) - XXVI, NEW DELHI WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.45 ,00,000/ - U/S 45 OF TH E INCOME TAX ACT, 1961. 2. THAT ON THE FACTS AS WELL AS IN LAW THE LEARNED CIT(A) - XXVI, NEW DELHI WAS NOT JUSTIFIED IN ASSUMING THAT THE ASSESSEE TRANSFERRED MANAGING RIGHTS OVER COMPANIES, IGNORING THAT MANAGING RIGHTS IS AN INCIDENCE OF SHARE HOLDING AND HAS NO INDEPENDENT EXISTENCE AND NO SHARES OF THESE COMPANIES WERE TRANSFERRED. ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 2 3. THAT ON THE FACTS AS WELL AS IN LAW THE LEARNED CIT(A) - XXVI, NEW DELHI WAS NOT JUSTIFIED IN TREATING THE COMPOUNDING FEE PAID TO THE CENTRAL EXCISE DEPARTMENT, BY THE CO MPANY (MONIKA ELECTRONICS LIMITED), TO COMPOUND THE PROSECUTION PROCEEDING PENDING AGAINST THE COMPANY AND ITS TWO DIRECTORS MR. V.K. GUPTA AND MRS. SONI SONU MIRCHANDANI AS DISCHARGE OF PERSONAL LIABILITY OF THE ASSESSEE. 4. THAT ON THE FACTS AS WELL AS IN LAW THE LEARNED CIT(A) - XXVI, NEW DELHI WAS NOT JUSTIFIED IN IGNORING THE PROVISIONS OF THE COMPANIES ACT, 1956 AND TREATING RIGHT TO MANAGE THE COMPANY AS CAPITAL ASSET. 5 . THE ASSESSEE RETAINS THE RIGHT TO ADD/ALTER ANY GROUND OF THE APPEAL. 3. TH E ASSESSEE ALSO MOVED AN APPLICATION UNDER RULE 11 OF THE INCOME TAX (AT) RULES, 1963 FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUND : THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/CIT(A) ERRED IN NOT HOLDING THAT THE AMOUNT RECEIVE D ON RE - AL IGNMENT OF SHAREHOLDING PURSUANT TO FAMILY SETTLEMENT / ARRANGEMENT WAS NOT LIABLE TO CAPITAL GAINS TAX UNDER SECTION 45 OF THE INCOME TAX ACT, 1961. 4 . THE ASSESSEE REQUESTED FOR ADMISSION OF THE ADDITIONAL GROUND VIDE APPLICATION DATED 18.11. 2014 STATING THEREIN ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 3 THAT THE ISSUE OF TAXABILITY OF CONSIDERATION RECEIVED ON TRANSFER OF ASSETS (I.E. SHARES) PURSUANT TO A FAMILY SETTLEMENT IS PURELY A LEGAL ISSUE AND THE FACTS IN RELATION TO THE SAME ARE UNDISPUTED WHICH ARE ALREADY AVAILABLE ON THE RECORD. IT HAS ALSO BEEN STATED THAT THE CBDT IN CIRCULAR NO. 14 (XL - 35) DATED 11.04.1955, HAS CLAR IFIED THAT INCOME TAX OFFICERS MUST NOT TAKE ADVANTAGE OF IGNORANCE OF ASSESSEE AND MUST DRAW ATTENTION OF THE ASSESSEE TOWARDS UNCLAIMED RELIEFS/DEDUCTIONS. RELIANCE IS PLACED ON THE JUDGMENT OF THE HON BLE SU PREME COURT IN THE CASE OF MALAB AR INDUSTRIAL CO. LTD. VS CIT REPORTED AT 243 ITR 83. IT IS SUBMI TTED THAT THE OMISSION TO RAISE THE ADDITIONAL GROUND OF APPEAL EARLIER IS NEITHER WILLFUL NOR DELIBERATE AND THE SAID GROUND C ALLS FOR BEING ADMITTED AND ADJUDICATED ON MERIT. THE RELIANCE IS PLACED ON THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER LIMITED VS CIT REPORTED AT 229 ITR 383. 5. DURING THE COURSE OF HEARING THE L D. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTS OF THE AFORESAID APPLICATION DATED 18.11.2014 AND REQUESTED TO ADMIT THE ADDITIONAL GROUND. ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 4 6 . IN HER RIVAL SUBMISSIONS THE LD. DR OBJECTED FOR ADMISSION OF THE ADDITIONAL GROUND. 7 . WE HAVE CONSIDERE D THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE HAS RAISED A LEGAL ISSUE WHICH GOES TO THE ROOT OF THE MATTER AND THE FACTS ARE ALREADY AVAILABLE ON THE RECORD FOR WHICH NO NEW INVESTIGATION IS REQUIRED. THEREFORE, THE ADDITIONAL GROUND DESERVES TO BE ADMITTED AS PER THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER COM PANY LTD. VS CIT (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER: THE POWER OF THE TRIBUNAL IN DEALING WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESSEE CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON - TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE T HE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM. THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 5 TH E COMMISSION OF INCOME - TAX (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS - OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) IS TOO NARROW A VIEW TO TAKE OF THE POWERS OF THE TRIBUNAL. IT HAS FURTHER BEEN HELD THAT: UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALLOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUE STION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 7.1 WE, THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION AND BY KEEPING IN VIEW THE RATIO LAID DOWN BY TH E HON BLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS CIT (SUPRA), ADMIT THE ADDITIONAL GROUND. 8 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 28.07.2009 DECLARING AN INCOME OF RS.92,15,12,886/ - WHIC H WAS PROCESSED U/S 143(1) OF THE ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 6 INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN OF R S.92,33,99,485/ - ON SALE OF SHARES AND ALSO CLAIMED LONG TERM CAPITAL LOSS AMOUNTING TO RS. 7,67,397/ - . THE AO ALSO NOTICED THAT THE ASSESSEE ALONGWITH HER HUSBAND SH. SONU L. MIRCHANDANI AND HER SONS SH. VARUN S. MIRCHANDANI AND SH. KARAN S. MIRCHANDANI HA D CONTROLLING STAKES IN TWO COMPANIES CALLED GUVISO HOLDINGS (P) LTD. AND IWAI ELECTRONICS (P) LTD. H E FURTHER OBSERVED THAT THE ASSESSEE AND HER ABOVE NOTED FAMILY MEMBERS ALONGWITH SH. GULU L. MIRCHANDANI HELD THE SHARES OF VARIOUS COMPANIES OF MIRC ELEC TRONICS LTD. AND OTHER ASSOCIATE COMPANIES WHO WAS OWNER OF THE BRAND NAME ONIDA . THE AO ALSO OBSERVED THAT BOTH GULU L. MIRCHANDANI (GLM GROUP) AND SONU L. MIRCHANDANI (SLM GROUP) ARE REAL BROTHERS WHO DECIDED THAT IN VIEW OF EXPANDING FAMILIES AND IN O RDER TO AVOID DISPUTE, DIFFERENCES AND MISUNDERSTANDING S WITHIN THE FAMILY, IT WOULD BE IN THE INTEREST OF BOTH THE GROUPS THAT THEY SEPARATE THEIR BUSINESSES. ACCORDINGLY, A FAMILY SETTLEMENT AGREEMENT/MEMORANDUM WAS ENTERED INTO ON 31 ST MAY, 2008 , ACCORD ING TO WHICH IN CONSIDERATION OF ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 7 RS.93,88,81,656/ - RELATING TO 59988 EQUITY SHARES IN GUVISO HOLDINGS (P) LTD. AND 4978 SHARES IN IWAI ELECTRONICS PVT. LTD. HELD BY THE ASSESSEE , SHALL BE TRANSFERRED TO SH. GULU L. MIRCHANDANI. THE AO CONSIDERED THE AFORE SAID CONSIDERATI ON AS CHARGEABLE U/S 45 OF THE A CT AND FINALLY DETERMINED THE LONG TERM CAPITAL GAIN OF RS.92,95,19,177/ - AND ASSESSED THE INCOME AT RS.92,84,18,760/ - . 9 . BEING THE AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WH O VIDE IMPUG NED ORDER PART LY ALLOWED THE APPEAL OF THE ASSESSEE. 10 . NOW THE ASSESSEE IS IN APPEAL AND HAS RAISED THE ADDITIONAL GROUND WHICH WE HAVE ALREADY ADMITTED IN THE FORMER PART OF THIS ORDER. THE ASSESSEE ALSO FURNISHED THE CO P Y OF THE FAMILY SETTLEMENT AN D SUBMITTED THAT NEITHER THE AO NOR THE LD. CIT(A) CONSIDERED THE ISSUE IN RIGHT PROSPECTIVE AS THE AMOUNT RECEIVED ON RE - ALIGNMENT OF SHARES PURSUANT TO THE FAMILY SETTLEMENT WAS NOT TAXABLE U/S 45 OF THE ACT BECAUSE IT IS A SETTLED LEGAL POSITION THAT AM OUNT RECEIVED UNDER FAMILY SETTLEMENT IS NOT LIABLE TO TAX, SINCE THE FAMILY SETTLEMENT DOES NOT INVOLVED ANY TRANSFER. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 8 DEWAS CINE CORPORATION 68 ITR 240 (SC) CIT VS KAY ARR ENTERPRISES 299 ITR 348 (MAD) CIT VS R. PONNAMMAL 164 ITR 706 (MAD) CIT VS AL RAMANATHAN 245 ITR 494 (MAD) CIT VS R. NAGARAJA RAO (2013) 352 ITR 565 (KAR.) CIT VS ASHWANI CHOPRA (2013) 352 ITR 620 (P&H) ZIAUDDIN AHMED VS COMMISSIONER OF GIFT TAX 101 ITR 253 (GAU) P SHEELA VS ITO 308 I TR 350 (AT) (BANG.) 11 . IT WAS ALSO STATED THAT THE FACT THAT THE ASSESSEE HERSELF OFFERED TO TAX THE OWELTY AMOUNT RECEIVED PURSUANT TO THE FAMILY SETTLEMENT, WOULD NOT ACT AS ESTOPPELS FOR CLAIMING EXCLUSION OF THE SAID AMOUNT FOR THE PURPOSE OF DETERMI NATION OF TAXABLE INCOME AS PER LAW. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS BHARAT GENERAL REINSURANCE CO. LTD. 81 ITR 303 (DEL) PT. SHEO NATH PRASAD SHARMA VS CIT 66 ITR 647 (ALL) ABDUL QAYUME VS CIT 184 ITR 404 (ALL) NIRMALA L. MEHTA VS CIT 269 ITR 1 (BOM) CIT VS BERGER PAINTS 254 ITR 503 (ALL) INDO JAVA & CO. VS ITO 30 ITD 161 (DEL. SB) 1 2 . IT WAS FURTHER SUBMITTE D THAT THE CBDT IN CIRCULAR NO. 14 (XL - 35) DATED 11.04.1955 HAD CLA RIFIED THAT INCOME ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 9 TAX OFFICERS MU ST NOT TAKE ADVANTAGE OF IGNORANCE OF ASSESSEE AND MUST DRAW ATTENTION OF THE ASSESSEE TOWARDS UNCLAIMED RELIEFS/DEDUCTIONS. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: C HOWKSHI METAL REFINERY VS C IT 107 ITR 63 (GUJ) MALABAR INDUSTRIAL CO. LTD. VS CIT 243 ITR 83 (SC) 13 . HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT THE SAID LEGAL PLEA IS RAISED FIRST TIME BEFORE THE TRIBUNAL. 14 . IN HER RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE HERSELF OFFERED THE IMPUGNED AMOUNT FOR TAXATION AS A LONG TERM CAPITAL GAIN. THEREFORE, THE AO AS WELL AS THE LD. CIT(A) RIGHTLY ASSESSED THE SAME UNDER THE HEAD CAPITAL GAIN. 15 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS RAISED THE LEGAL GROUND FIRST TIME BEFORE THE ITAT. HOWEVER, ALL THE RELEVANT MATERIAL IS ALREADY AVAILABLE ON THE RECORD . HOWEVER, THIS ISSUE I.E. THE TRANSACTION WAS RELATING TO THE FAMILY SETTLEMENT AND NO MONEY WAS RECEIVED BY THE ASSESSEE HAS NOT BEEN ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 10 ADJUDICATED BY THE LD. CIT(A). IN THE PRESENT CASE, THE ASSESSEE HAS RAISED A NEW PLEA THAT THE TRANSACTION RELATING TO A FAMILY SETTLEMENT IS OUTSIDE THE PURVIEW OF THE CAPITAL GAIN AND NO MONEY WAS RECEIVED BY THE ASSESSEE. HOWEVER, THIS FACT IS NOT CLEAR AS TO WHETHER THE ASSESSEE RECEIVED THE MONEY OR NOT, ON ACCOUNT OF THE TRANSACTION UNDER CONSIDERATION. THEREFORE, IT IS NOT CLEAR WHETHER THE AO WHILE FRAMING THE ASSESSMENT WAS AWARE OF THE SAID FACT OR NOT. IN OUR OPINION, THIS ISSUE REQUIRES A FRESH ADJUDICATION AT THE LEVEL OF THE AO. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO BE ADJUD ICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 16 . SINCE WE HAVE SET ASIDE THE ISSUE RAISED BY THE ASSESSEE BY WAY OF THE ADDITIONAL GROUND TO THE FILE OF THE AO , THEREFORE, THE ANOTHER ISSUE RELATING TO CONFIRMATION OF ADDITION OF RS. 45,00,000/ - U/S 45 OF THE ACT, WHICH IS ALSO CO - RELATED TO THE LEGAL ISSUE IS ALSO DIRECTED TO BE DECIDED BY THE AO AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. ITA NO. 3223 /DE L/2013 SONI SONU MIRCHANDANI 11 17 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 29 /02 / 2016 ) SD/ - SD/ - ( A. T. VARKEY ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 /02 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR