HIMANSHU V. PARIKH, MUMBAI V. ASST CIT CIR 6(3), MUMBAI

ITA 6522/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1803 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 24-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 27-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C P PATNAIK
• Assessee Lawyers: VINOD MODI
• Keywords: Opportunity of being heard; Valuation report
• Section: 143(3); 148

Judgement Text

ITA NOS.5124 AND 6522 OF 2011 HIMANSHU V. PARIKH MUM BAI PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL 'H' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 5124/MUM/2011 (ASSESSMENT YEAR: 2006-07) ACIT 6(3) ROOM NO.522, 5 TH FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 VS. HIMANSHU V. PARIKH, 2-A RITURAJ, 2 MITTAL PARK, 1 MILITARY ROAD, JUHU, MUMBAU-400049 PAN: AADPP 3194 K (APPELLANT) (RESPONDENT) ITA NO. 6522/MUM/2011 (ASSESSMENT YEAR: 2006-07 HIMANSHU V. PARIKH, 2-A RITURAJ, 2 MITTAL PARK, 1 MILITARY ROAD, JUHU, MUMBAU-400049 PAN: AADPP 3194 K VS. ACIT 6(3) ROOM NO.522, 5 TH FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI K.C.P. PATNAIK, CIT (DR) ASSESSEE BY: SHRI VINOD MODI DATE OF HEARING: 05/02/2013 DATE OF PRONOUNCEMENT: 05/02/2013 O R D E R PER AMIT SHUKLA, J.M. THESE ARE THE CROSS APPEALS FILED BY THE DEPARTMEN T AS WELL AS BY ASSESSEE AGAINST THE IMPUGNED ORDER DATED 31. 03.2011 PASSED BY THE CIT (A)-12 MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 147 FOR THE ASSE SSMENT YEAR 2006-07. ITA NO: 5124/MUM/2011 2. THE REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS: 1 (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. ITA NOS.5124 AND 6522 OF 2011 HIMANSHU V. PARIKH MUM BAI PAGE 2 OF 6 CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDEN CE IN THE FORM OF AN OPINION GIVEN BY SSP & CO. REGARDING THE VALUATION OF RIGHTS AWARDED TO AMIF I LTD. WITHOUT AFFORDING AN OPPORTU NITY TO THE A.O AS REQUIRED BY RULE 46A OF THE I.T. RULES, 1962 BEF ORE ADMITTING SUCH LEADING & FRESH EVIDENCE. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT SSP & CO. IS N OT A STATUTORY BODY PRESCRIBED BY ANY AUTHORITY TO GIVE SUCH REPOR TS AND THAT THE FINDING GIVEN BY SSP & CO. IS NOT BASED ON A METHOD OF STUDY SUBJECT TO OR SANCTIONED BY ANY PROFESSIONAL BODY. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THERE WERE CERTAIN EXTRA CONCESSIONS MADE AND RIGHTS AWARDED TO THE THIRD PA RTY I.E. AMIF I LTD & THAT THE VALUE OF THESE RIGHTS HAS TO BE REDU CED TO ARRIVE AT THE COMPARABLE VALUE OF THE SHARES ALLOTTED TO AMIF I LTD. (D) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN FIXING THE VALUE OF SUCH RIGHTS AWARDED TO AMIF I LTD. AT RS. 27.63 ON AN ESTIMATE BASIS WITHOUT GI VING ANY REASONS AS TO WHY MONETARY VALUE NEEDS TO BE PRESCRIBED TO SUCH INTANGIBLES & ON WHAT CRITERIA SUCH MONETARY VALUE IS TO BE DETERMINED. (E) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN ESTIMATING THE VALUE OF RIGHTS AWARDED TO AMIF I LTD AT RS. 27.63 AND IN HOLDING THAT THE ACTUAL V ALUE OF SHARES ALLOTTED TO THE ASSESSEE SHOULD BE TAKEN AT RS. 38. 25 PER SHARE INSTEAD OF RS. 65.88 PER SHARE AS HELD BY THE A.A.' 2. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. AT THE OUTSET THE LEARNED COUNSEL FOR ASSESSEE SUBM ITTED THAT SIMILAR ISSUE HAS COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI ABHIJIT RAJAN IN ITA NOS. 3936 AND 3963/MUM/2010 WHEREIN EXACTLY SIMILAR GROUNDS WERE RAISED BY THE DEPARTMENT. THE TRIBUNAL HAS SET ASIDE THIS ISS UE TO THE FILE OF AO FOR FRESH ADJUDICATION. THE LEARNED CIT (DR) FAI RLY AGREED THAT THIS ISSUE STANDS COVERED BY THE SAID DECISION. ITA NOS.5124 AND 6522 OF 2011 HIMANSHU V. PARIKH MUM BAI PAGE 3 OF 6 4. AFTER CAREFULLY CONSIDERING THE ORDERS PASSED BY TH E CIT (A) AS WELL AS AO, WE FIND THAT EXACTLY SIMILAR ISSUES HAD COME UP FOR CONSIDERATION BEFORE THE ITAT IN THE CASE OF ACIT V S. SHRI ABHIJIT RAJAN (SUPRA) WHEREIN THE TRIBUNAL HAS SET ASIDE TH E MATTER TO THE FILE OF AO TO CONSIDER THE MATTER AFRESH IN THE LIG HT OF RELEVANT MATERIAL THAT ASSESSEE HAD PRODUCED BEFORE THE CIT (A) AND ITAT. THE RELEVANT GROUNDS OF APPEALS RAISED BY THE DEPAR TMENT AS WELL AS THE FINDINGS GIVEN BY THE TRIBUNAL FOR THE SAKE OF READY REFERENCE IS REPRODUCED HERE BELOW: GROUNDS OF APPEAL: 1. (A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ACCEPTING THE ADDITION AL EVIDENCE IN THE FORM OF AN OPINION GIVEN BY SSP & C O REGARDING THE VALUATION OF RIGHTS AWARDED TO AMIF I LTD., WITHOUT AFFORDING AN OPPORTUNITY TO THE AO AS REQUI RED BY RULE 46A OF THE I.T. RULES,1962 BEFORE ADMITTING SU CH LEADING & FRESH EVIDENCE. (B) ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) HAS FAILED TO APPRECIATE THAT SSP & CO. IS NOT A STATUTORY BODY PRESCRIBED BY ANY AUTHORITY T O GIVE SUCH REPORTS AND THAT THE FINDING GIVEN BY SSP & CO IS NOT BASED ON A METHOD OF STUDY SUBJECT TO OR SAN CTIONED BY ANY PROFESSIONAL BODY. (C) ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) HAS ERRED IN HOLDING THAT THERE WER E CERTAIN EXTRA CONCESSIONS MADE AND RIGHTS AWARDED T O THE THIRD PARTY I.E. AMIF I LTD AND THAT THE VALUE OF T HESE RIGHTS HAS TO BE REDUCED TO ARRIVE AT THE COMPARABL E VALUE OF THE SHARES ALLOTTED TO AMIF I LTD. D) ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN FIXING THE VALUE OF SUCH RI GHTS AWARDED TO AMIF I LTD., AT ` .27.63 ON AN ESTIMATE BASIS WITHOUT GIVING ANY REASONS AS TO WHY MONETARY VALUE NEEDS TO BE PRESCRIBED TO SUCH INTANGIBLE AND ON WH AT CRITERIA SUCH MONETARY VALUE IS TO BE DETERMINED. E) ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ARBITRARILY ESTIMATING THE VALUE OF RIGHTS AWARDED TO AMIF I LTD AT ` .27.63 AND IN HOLDING ITA NOS.5124 AND 6522 OF 2011 HIMANSHU V. PARIKH MUM BAI PAGE 4 OF 6 THAT THE ACTUAL VALUE OF SHARES ALLOTTED TO ASSESSE E SHOULD BE TAKEN AT ` 38.25 PER SHARE INSTEAD OF ` .65.88 PER SHARE AS HELD BY THE AO. FINDING: 2.4. AT THE OUTSET, LEARNED DEPARTMENTAL REPRESENT ATIVE CONTENDS THAT THE ASSESSING OFFICER WAS NOT GIVEN A N OPPORTUNITY BY THE CIT(A) BEFORE ADMITTING THE ADDI TIONAL EVIDENCE AND, THEREFORE, THE MATTER BE RESTORED TO THE FILE OF THE CIT(A) OR THE AO. TO THIS, LEARNED COUNSEL H AS NO OBJECTION BUT LEARNED COUNSEL SUGGESTS THAT THE MAT TER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER SO AS HE CAN CONSIDER THE MATTER AFRESH IN THE LIGHT OF ENTIRE R ELEVANT MATERIAL, AS THE ASSESSEE IS ABLE TO PRODUCE NOW. I N VIEW THIS AND WITH THE CONSENT OF THE PARTIES, THE MATTE R IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR F RESH ADJUDICATION AFTER GIVING AN OPPORTUNITY OF BEING H EARD TO THE ASSESSEE, AND AFTER CONSIDERING THE ENTIRE RELE VANT MATERIALS BY WAY OF A SPEAKING ORDER AND IN ACCORDA NCE WITH THE LAW. 5. WE THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION, SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE THE SAME TO THE FILE OF AO FOR FRESH ADJUDICATION AFTER GIVING A REASONABLE OP PORTUNITY TO ASSESSEE AND CONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD. ACCORDINGLY THE GROUNDS RAISED BY THE DEPARTMENT AR E TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 6522/MUM/2011 6. IN ASSESSEES APPEAL, THE FOLLOWING GROUNDS HAVE BE EN RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 12, MUMBAI [ 'CIT(A)'], ERRED IN UPHOLDING THE ISSUANCE OF NOTICE DATED 4TH SEPTEMBER, 2009 UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 ('THE ACT') BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME, CIRCL E 6(3), MUMBAI ('AO'), REOPENING THE ASSESSMENT OF THE APPE LLANT FOR THE ASSESSMENT YEAR 2006-07 BY THE AO, REJECTING THE OB JECTIONS RAISED BY THE APPELLANT, AND PASSING OF ASSESSMENT ORDER DATED 10 TH FEBRUARY, 2010 BY THE AO UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CJT(A) ERRED IN HOLDING THAT THE APPELLANT OBTAINED BENEFIT FROM GA MMON INFRASTRUCTURE PROJECTS LIMITED ('GIPL') BY WAY OF ALLOTMENT OF ITA NOS.5124 AND 6522 OF 2011 HIMANSHU V. PARIKH MUM BAI PAGE 5 OF 6 SHARES OF GIPL TO THE APPELLANT AT A PRICE LOWER THAN THE ACTUAL VALUE OF SHARES, WHICH IS LIABLE TO BE TAXED AS INCOME UNDER SECTION 2(24)(IV) OF THE ACT. THE CIT( A) ALSO ERRED IN CONCLUDING THAT THE PRICE AT WHICH SHARES WERE ALLO TTED TO A THIRD PARTY IN THE SAME PERIOD OF TIME WOULD BE THE BEST INDICATOR OF THE ACTUAL VALUE OF SHARES AND NO T FOLLOWING THE BREAK UP VALUE OR NET ASSET VALUE METHOD. WITHOUT P REJUDICE, THE CJT(A) ERRED IN VALUING THE RIGHTS ATTACHED TO THE SHARES ALLOTTED TO A THIRD PARTY @ RS. 27.63 PER SHARE AS AGAINST THE VALUATION OF @ RS. 38.92 PER SHARE VALUED BY SSPA & CO. IN THEIR VALUATION REPORT, THUS HOLDING THAT THE APPELLANT O BTAINED BENEFIT @ RS. 38.25 PER SHARE OF GIPL, TO BE TAXED IN THE HAN DS OF THE APPELLANT UNDER SECTION 2(24)(IV) OF THE ACT. 7. AT THE OUTSET THE LEARNED COUNSEL SUBMITTED THAT GR OUND NO.1 IS NOT PRESSED. THUS THE SAME IS BEING DISMISS ED AS NOT PRESSED. 8. REGARDING GROUND NO.2, THE LEARNED COUNSEL SUBMITTE D THAT SIMILAR ISSUE WAS ALSO RAISED IN THE CASE OF SHRI A BHIJIT RAJAN (SUPRA) WHEREIN THE HON'BLE ITAT HAS SET ASIDE THIS MATTER TO THE FILE OF AO, SINCE THIS GROUND IS INTERLINKED WITH T HE GROUNDS RAISED BY THE DEPARTMENT. 9. THE LEARNED CIT (DR) AGREED THAT THIS ISSUE HAS ALS O BEEN SET ASIDE BY THE TRIBUNAL IN THE SAID CASE. 10. AFTER CAREFULLY GOING THROUGH THE IMPUGNED ORDER AN D ALSO THE ORDER OF THE TRIBUNAL, WE FIND THAT THIS GROUND IS INTERLINKED WITH THE GROUNDS RAISED BY THE DEPARTMENT WHEREIN THE MA TTER HAS BEEN RESTORED TO THE FILE OF AO. ACCORDINGLY WE ALSO HOL D THAT THIS MATTER NEEDS TO BE RESTORED BACK TO THE FILE OF AO TO CONS IDER THE MATTER AFRESH IN THE LIGHT OF THE RELEVANT MATERIAL ON REC ORD AFTER GIVING DUE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO ASSESSE E. ACCORDINGLY GROUND NO.2 IS SET ASIDE AND REMANDED BACK TO THE F ILE OF AO. 11. IN THE RESULT APPEAL FILED BY ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ITA NOS.5124 AND 6522 OF 2011 HIMANSHU V. PARIKH MUM BAI PAGE 6 OF 6 12. IN THE RESULT APPEAL FILED BY THE DEPARTMENT IS ALL OWED FOR STATISTICAL PURPOSES, WHEREAS THE APPEAL FILED BY A SSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2013 SD/- SD/- (B. RAMAKOTAIAH) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 5 TH FEBRUARY, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI