Shri Rasiklal Shantilal Mardia, Ahmedabad V. The ACIT., (OSD)-1, Range-4, Ahmedabad

ITA 873/AHD/2013

• Counselvise Citation: 87320514 RSA 2013
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-09-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 28-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL SRDR
• Assessee Lawyers: P D SHAH
• Keywords: Fair market value

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' &' &' &' ( & ' ( & ' ( & ' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.873/AHD/2013 [ASSTT.YEAR : 2002-2003] RASIKLAL SHANTILAL MARDIA MEHTA LODHA & CO. CHARTERED ACCOUNTANTS 105, SAKAR-I, ASHRAM ROAD AHMEDABAD 380 009. PAN : AAPPM 5974 J. /VS. ACIT (OSD-1) RANGE-4, AHMEDABAD. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI P.D. SHAH ( / 0 &/ REVENUE BY : SHRI P.L. KUREEL, SR-DR 2 / %3'/ DATE OF HEARING : 18 TH SEPTEMBER, 2013. 456 / %3'/ DATE OF PRONOUNCEMENT : 04/10/2013 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-2003 IS DIREC TED AGAINST THE ORDER OF THE CIT(A)-VIII DATED 28.1.2013. 2. THE GROUNDS OF THE ASSESSEES APPEAL ARE AS UNDE R: ITA NO.873/AHD/2013 -2 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND FACTS I N NOT QUASHING THE ORDER PASSED U/S.143(3) R.W.S. 254 OF THE ACT, AS THE SAID SAME IS AGAINST (A) THE FACTS AND CIRCUMST ANCES OF THE CASE AND (B) THE DIRECTION OF THE ITAT AND THEREFOR E THE ORDER PASSED BY THE AO SHOULD BE QUASHED AND ADDITION MAD E THEREIN SHOULD BE DELETED IN FULL. 2. THAT THE LD.CIT(A) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE DISALLOWANCE OF RS.21,00,000/- AND THEREFORE THE AO SHOULD BE DIRECTED TO DELETE THE DISALLOWANC E. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THIS IS SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL. IN THE FIRST ROUND OF LITIGATION, THE TRIBUNAL HAS SET ASIDE THE ISSUE OF ADDITION TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS INCLUDING THAT OF FU RNISHING OF VARIOUS QUOTATIONS ON THE DATE OF PURCHASE AND IN CASE QUOT ATIONS ON THE DATE OF PURCHASE OF SHARES ARE NOT AVAILABLE, IN THAT EV ENT, THE ASSESSEE SHALL FURNISH THE FAIR MARKET VALUE OF THE QUOTATIONS OF SHARES IMMEDIATELY BEFORE THE DATE OF PURCHASE AND IMMEDIATELY AFTER T HE DATE OF PURCHASES. THE TRIBUNAL FURTHER DIRECTED THE AO T O VERIFY THE SAME, AND MAY ALSO MAKE AN INDEPENDENT INQUIRY TO FIND OU T THE FAIR MARKET VALUE OF THE SHARES ON THE DATE OF PURCHASE AND REC OMPUTE THE INCOME OF THE ASSESSEE AFRESH. THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE AO HAS NOT COMPLIED WITH THE DIRECTIONS OF THE TRIBUNAL, AND HAS MADE NO EXERCISE TO ASCERTAIN THE FAIR MARKET V ALUE OF THE SHARES IN QUESTION, AND HAS REPEATED THE ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER. THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS TH E OFFER RATE OF THREE DIFFERENT PARTIES AT RS.5.00 TO RS.5.50 PER SHARE, AND THIS FACT HAS BEEN RECORDED BY THE AO IN THE ASSESSMENT ORDER. THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PURCHA SED THE SHARES FROM HIS WIFE AT RS.5/- PER SHARE, WHICH IS ALMOST AT PA R WITH THE PRICE ITA NO.873/AHD/2013 -3 OFFERED BY THREE DIFFERENT PARTIES FOR PURCHASE OF SHARES, AND THEREFORE, NO ADDITION SHOULD BE SUSTAINED. 4. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO AND THE CIT(A). HE SUBMITTED THAT THREE PARTIES, WHO HAVE OFFERED FOR PURCHASE OF SHARES AT RS.5.00 TO RS.5.50 PER SHARE, ALL ARE RELATED PARTIES OF THE ASSESSEE, AND THEREFORE, THE RATE QU OTED BY THEM COULD NOT BE RELIED UPON. MOREOVER, THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE TO PROVE THE MARKET WORTH OF T HE COMPANY I.E. AAKAR LEASING AND FINANCIAL SERVICES LTD. AND IN TH E ABSENCE OF ANY EVIDENCE PROVIDED ON RECORD BY THE ASSESSEE, EVEN I N THE SECOND ROUND OF THE LITIGATION BEFORE THE AO, THE AO WAS LEFT WI TH NO OTHER ALTERNATIVE, BUT TO REPEAT THE ADDITION MADE BY IT. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY, AND HAS ALSO PERUSED THE ORDERS OF THE AO AND THE CIT(A), AND AL SO THE ORDER OF THE TRIBUNAL IN THE FIRST ROUND OF THE LITIGATION DATED 11.12.2009, AND ALSO THE COPIES OF THREE OFFER RATE OF THREE DIFFERENT P ARTIES. WE FIND THAT NEITHER THE REVENUE NOR THE ASSESSEE COULD COMPLY W ITH THE DIRECTIONS OF THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION, V IDE THEIR ORDER DATED 11.12.2009 IN ITS TRUE SPIRIT. THE ASSESSEE HAS FI LED THE OFFER LETTER OF THREE DIFFERENT PARTIES, OFFERING THE PURCHASE OF S HARES OF AAKAR LEASING AND FINANCIAL SERVICES LTD. AT THE PRICE OF RS.5.00 TO RS.5.50 PER SHARE. BUT, WE FIND THAT ALL THESE PARTIES ARE RELATED PARTIES OF THE ASSESSEE, AND COULD NOT BE RELIED UPON. THE ASSESS EE COULD NOT FILE THE NET WORTH OF THE SHARES ON THE RELEVANT DATE OF THE SAID COMPANY BY FILING NECESSARY ACCOUNT PAPERS BEFORE THE AO. THE AO HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO PROVE THAT THE NET WORTH OF THE SHARES OF THE SAID COMPANY HAS BEEN HIGHLY EXAGGERATED BY THE ASSESSEE. IN ITA NO.873/AHD/2013 -4 THESE FACTS OF THE CASE, WE FIND THAT SOME REASONAB LE ESTIMATE OF THE MARKET RATE OF SHARES OF THE SAID COMPANY IS TO BE WORKED OUT BY WAY OF ESTIMATE CONSIDERING ENTIRE FACTS OF THE ASSESSE E. THIS CASE PERTAINS TO THE ASSESSMENT YEAR AS OLD AS 2002-2003, AND THE ASSESSEE IS IN SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL, AND WE DO NOT WANT TO RESTORE THIS ISSUE AGAIN TO THE FILE OF THE AO. CO NSIDERING THE ENTIRE FACTUAL MATRIX OF THE CASE, WE HOLD THAT ENDS OF JU STICE SHALL BE MET, IF THE MARKET VALUE OF THE SHARES IN QUESTION ON THE D ATE OF PURCHASE OF SHARES OF THE ASSESSEE IS ESTIMATED AT RS.2.50 PER SHARE, AS AGAINST RS.5.00 PER SHARE CALCULATED AND CLAIMED BY THE ASS ESSEE, AND THE AO IS DIRECTED TO WORK OUT THE ADDITION ACCORDINGLY. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER/ DR/AR, ITAT, AHMEDABAD