R.Venkatakrishnan, CHENNAI V. ACIT, Coimbatore

ITSSA 89/CHNY/2006

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5525 (ITAT-CHENNAI)
• Duration Of Justice: 12 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 28-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Valuation report; Block assessment; Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER / .I.T.(SS)A. NO. 89/CHNY/2006 BLOCK ASSESSMENT : 01.04.1986 TO 13.02.1996 SHRI. R. VENKATAKRISHNAN, 42, BRINDAVAN STREET EXTN., WEST MAMBALAM, CHENNAI 33. [GI NO: V-1160] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, COIMBATORE. ( /APPELLANT) ( /RESPONDENT) / .I.T.A. NO. 1428/CHNY/2009 /ASSESSMENT YEAR : 1996-97 SMT. V. MANJULA, 42, BRINDAVAN STREET EXTN., WEST MAMBALAM, CHENAI 600 033. [PAN: AADPV 9434G] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, COIMBATORE. ( /APPELLANT) ( /RESPONDENT) ASSESSEE B Y : SHRI. R. KUMAR, ADVOCATE REVENUE BY : SHRI. SAILENDRA MAMIDI, CIT $ /DATE OF HEARING : 27.09.2018 $ /DATE OF PRONOUNCEMENT : 05.11.2018 :- 2 -: IT(SS)A NO.89/CHNY/2006 ITA NO. 1428/CHNY/2009 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE, SHRI. R. VENKATAKRISHNAN, FILED AN AP PEAL AGAINST THE ORDER OF THIS TRIBUNAL IN IT(SS)A NO. 89/MDS/2006 D ATED 30.11.2007, WHEREIN, INTER ALIA, THIS TRIBUNAL QUASHED THE BLOC K ASSESSMENT ORDER AND REFRAINED FROM GOING INTO MERITS OF THE CASE. ON R EVENUES APPEAL, THE HONBLE JURISDICTIONAL HIGH COURT IN TC(A) NO. 1362 OF 2008 DATED 08.10.2013 HELD, INTER ALIA, THAT THE SEARCH IN THE ASSESSEES CASE TOO WAS CONSEQUENT UPON THE SEARCH CONDUCTED IN THE TAMIL N ADU TEXTILE CORPORATION LIMITED. IN THE LIGHT OF THE FACTS THU S AVAILABLE, THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DESERVES TO BE SE T ASIDE BY THIS COURT. CONSEQUENTLY, WHILE ALLOWING THE APPEAL, THE MATTER IS RESTORED TO THE FILES OF THE INCOME TAX APPELLATE TRIBUNAL FOR CONSIDERIN G THE CASE OF THE ASSESSEE ON MERITS. 2. ACCORDINGLY, THIS APPEAL WAS HEARD. THE LD. AR SUBMITTED THAT THE ASSESSEE PURCHASED 330 SHARES OF RS. 100 EACH, DURI NG THE PERIOD RELEVANT TO ASSESSMENT YEAR 1996-97 OF M/S. ANCHOR BREWERIES LTD., ON 21.12.1995. THE AO HAS VALUED THESE SHARES BASED ON THE VALUATI ON REPORT AND FIXED THE VALUE PER SHARE AT RS. 6,732/- BY ADOPTING THE BREAKUP VALUE METHOD. IN THE APPEAL, INTER ALIA, THE ASSESSEE CHALLENGED THE ASSESSMENT PLEADING THAT THE AO HAS NOT FURNISHED A COPY OF THE VALUATI ON REPORT RELIED ON BY :- 3 -: IT(SS)A NO.89/CHNY/2006 ITA NO. 1428/CHNY/2009 HIM AND ERRED IN PLACING RELIANCE ON THE SAME WITHO UT SEEKING OBJECTIONS FROM THE ASSESSEE. THE AR INVITED OUR ATTENTION TO THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF T HE SRINIVASAN VS ACIT, CENTRAL CIRCLE -1, COIMBATORE IN TC(A) NO. 353 OF 2 006 DATED 29.08.2012, THE RELEVANT PORTION IS EXTRACTED AS UNDER: 26. THIS, HOWEVER, DOES NOT CONCLUDE THE ISSUE AS FAR AS THE REVENUE IS CONCERNED, BEFORE THIS COURT. IT IS SEEN FROM THE O RDER OF ASSESSMENT AS WELL AS THE TRIBUNALS ORDER THAT THE ASSESSING OFFICER ASCERTAINED THE MARKET VALUE OF THE SHARES BY VALUING THE SHARES ON THE BA SIS OF BREAK-UP VALUE METHOD. TO FIND OUT THE BREAK-UP VALUE OF THE SHARE S, THE OFFICER REFERRED THE SAME TO THE VALUATION OFFICER TO FIND OUT THE V ALUE OF THE IMMOVABLE PROPERTIES OF THE COMPANY. THE ASSESSEE COMPANY WAS HAVING LAND AT ARCOT ROAD, MADRAS AND THE BALANCE SHEET DECLARED AS ON 3 1.03.1991 SHOWED THE VALUE AT RS.90,738/-. AFTER GOING THROUGH THE SALE INSTANCE AND AFTER CONSIDERING OTHER PARAMETERS, HE ARRIVED AT THE VAL UE AT RS.298/- PER SQ.FT. THUS, THE FINAL VALUE ARRIVED AT BY THE OFFICER ON PRO-RATA BASIS OF THE VACANT LAND TO THE EXTENT OF 2 ACRES 90 CENTS WAS RS.3,76, 44,552/-. ULTIMATELY, THE ASSESSING OFFICER FOUND THAT THE COMPANY HAD SUBSEQ UENTLY SOLD 1.25 ACRES OF LAND AND THE EXTENT OF 1.65 ACRES ALONE WAS AVAI LABLE. ACCORDINGLY, HE ARRIVED AT THE VALUE AT RS.2,14,18,320/- AND ARRIVE D AT THE VALUE OF THE SHARE AT RS.6,732/- EACH. 27. A READING OF THE ORDER OF THE ASSESSING OFFICER SHOWS THAT NOWHERE THE ASSESSEE WAS FAVOURED WITH A COPY OF THE VALUATION OFFICERS ASSESSMENT, ENABLING THE ASSESSEE TO PLACE HIS OBJECTION ON THI S VALUE. EVEN THOUGH THE OFFICER HAS A RIGHT TO REFER THE DOCUMENT FOR VALUA TION BY A VALUATION OFFICER, YET, WHEN HE SEEKS TO MAKE USE OF THIS PIECE OF EVI DENCE TO ARRIVE AT THE UNDISCLOSED INCOME, IN FAIRNESS TO THE CLAIM OF THE ASSESSEE, A COPY OF THE VALUATION REPORT SHOULD HAVE BEEN GIVEN TO THE ASSE SSEE, SO AS TO ENABLE HIM TO PLACE HIS OBJECTION, BY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. IN THE ABSENCE OF ANY MATERIAL SHOWN THAT THIS REQUIREMENT HAD BEEN COMPLIED WITH, WE HAVE NO HESITATION IN ACCEPTING THE PLEA O F THE ASSESSEE THAT THIS PORTION OF THE ORDER MERITS TO BE SET ASIDE AND THE MATTER BE REMITTED BACK :- 4 -: IT(SS)A NO.89/CHNY/2006 ITA NO. 1428/CHNY/2009 TO THE ASSESSING OFFICER SO AS TO FURNISH A COPY OF THE VALUATION REPORT TO THE ASSESSEE, FOR PLACING HIS OBJECTIONS. AFTER GIVING THIS OPPORTUNITY, IT IS OPEN TO THE ASSESSING OFFICER TO PASS SUCH ORDERS IN ACC ORDANCE WITH LAW, ON THE VALUATION. IT IS ALSO OPEN TO THE ASSESSEE TO PLACE HIS OBJECTIONS AS ARE AVAILABLE AS REGARDS THE VALUATION, FOR THE PURPOSE OF ARRIVING AT THE UNDISCLOSED INCOME. 28. AS ALREADY POINTED OUT, IN THE ABSENCE OF ANY M ATERIAL TO SHOW THAT THE ENTIRETY OF THE SHARES OF M/S. ANCHOR BREWERIES LIM ITED WERE TO BE TAKEN IN AS THE SHARES PROVED BY THE ASSESSEE, THE LIABILITY THAT COULD BE FASTENED ON THE ASSESSEE HAS TO BE ONLY WITH REFERENCE TO THE 1 320 SHARES, WHICH STOOD IN THE NAME OF THE ASSESSEE AND HIS WIFE. 29. IN THE LIGHT OF THE VIEW THAT WE HAVE THUS ARRI VED AT, WE SET ASIDE THE ORDER OF THE TRIBUNAL AND REMAND THE ASSESSMENT BAC K TO FILES OF THE ASSESSING OFFICER. THE TAX CASE STANDS PARTLY ALLOW ED AND TO THE EXTENT REFERRED ABOVE, THE ORDER OF THE TRIBUNAL IS PARTLY SET ASIDE. NO COSTS. 3. THEREAFTER, THE LD. AR INVITED OUR ATTENTION TO THE APEX COURT DECISION IN THE ABOVE CASE OF R. SRINIVASAN VS ACIT IN SL TO APPEAL (CIVIL) NO. 7741/2013 DATED 29.04.2014 R.W. THE ORDER DATED 20.08.2014, WHEREIN THE SUPREME COURT OBSERVED TO THE FOLLOWING EFFECT: HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE A RE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER. HOWEVER, WE ALL OW THE PETITIONER TO RAISE QUESTION BEFORE THE ASSESSING OFFICER, WHO MA Y DECIDE THE SAME UNINFLUENCED BY THE IMPUGNED ORDER PASSED BY THE HI GH COURT AND PLEADED THAT SINCE THE ISSUE IN THE ASSESSEES CASE IS ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE OF R. SRINIVASAN, SUP RA, THE ITAT MAY DIRECT THE AO TO COMPLY TO THE ABOVE REQUIREMENTS. :- 5 -: IT(SS)A NO.89/CHNY/2006 ITA NO. 1428/CHNY/2009 4. WE HEARD THE RIVAL SUBMISSIONS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CI T(A) AND REMIT THE ISSUES TO THE AO WITH A DIRECTION TO COMPLY WITH TH E DIRECTION OF THE HONBLE APEX COURT, SUPRA, AND PASS THE ORDER ON ME RITS. 5. IN THE RESULT, THE ASSESSEES APPEAL GROUNDS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1428/CHNY/2009 FOR ASSESSMENT YEAR 1996-97: 6. SMT. V. MANJULA IS SPOUSE OF SHRI. R. VENKATAKRI SHNAN, APPELLANT IN IT(SS)A NO. 89/CHNY/2006, SUPRA. IN HER CASE, A PR OTECTIVE ASSESSMENT OF THE TRANSACTIONS ASSESSED IN HER SPOUSE CASE WERE M ADE. ON APPEAL, THE LD. CIT(A) UPHELD THE ASSESSMENT. AGAINST THE ORDE R OF THE LD CIT(A), THE ASSESSEE FILED THIS APPEAL. 7. THE LD. AR SUBMITTED THAT SINCE THE SUBSTANTIAL ASSESSMENT MADE IN THE ASSESSEES SPOUSE CASE, HE HAS PLEADED FOR APPR OPRIATE RELIEF. THE LD. AR PLEADED THAT IN LINE WITH SUCH RELIEF, THIS CASE MAY ALSO BE CONSIDERED. 8. WE HEARD THE RIVAL SUBMISSIONS. SINCE, THE SUBS TANTIAL ASSESSMENT MADE IN THE ASSESSEES SPOUSE CASE IN IT(SS)A NO. 8 9/CHNY/2006 IS BEING REMITTED TO THE AO FOR A FRESH EXAMINATION, THE AO SHALL OFFER ADEQUATE :- 6 -: IT(SS)A NO.89/CHNY/2006 ITA NO. 1428/CHNY/2009 OPPORTUNITY TO THE ASSESSEE AND DECIDE THE MATTER I N ACCORDANCE WITH LAW. THUS, THE ASSESSEES APPEAL IS TREATED AS ALLOWED F OR STATISTICAL PURPOSES. 9. IN THE RESULT, THE ABOVE ASSESSEES APPEALS IN I T(SS)A NO. 89/CHNY/2006 & ITA NO. 1428/CHNY/2009 ARE TREATED A S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 05 TH DAY OF NOVEMBER, 2018 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) )* /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) * /ACCOUNTANT MEMBER /CHENNAI, ) /DATED: 05 TH NOVEMBER, 2018 JPV $*+,-, /COPY TO: 1. / /APPELLANT 2. *0/ /RESPONDENT 3. 1 ) ( /CIT(A) 4. 1 /CIT 5. ,* /DR 6. 4 /GF