ACIT Vs Shri M.K. Ajat Shatru (ITAT Delhi)
It has been contended by the revenue that the Ld. CIT(A) erred in law in admitting additional evidence by way of certificate from the Divisional Commissioner without giving any opportunity to the AO. He submitted that it would be seen from the revenues record itself, i.e. from the paper book filed by the revenue in the case of Shri M.K. Ajatshatru Singh that the AO had obtained a report from the Tahsildar and is dated 28.03.2006, (Pg. 114 of DPB) wherein he had reported the value of land at Rs. 30 lacs per kanal in the year 1998, when the fair market value had substantially fallen on account of insurgencies and terrorist activities, which shows that the fair market value of land as adopted by registered valuer at Rs. 8.80 lacs per kanal as on 01.04.1981 was supported by the evidence on record. It is thus incorrect to suggest that the learned CIT(A) had admitted any additional evidence by way of certificate from the Divisional Commissioner without giving any opportunity to the AO, since in the opinion of the AO the fair market value had far exceeded the fair market value of the land as on 01.04.1981. He thus submitted that no additional evidence had been filed by the assessee. In fact, such an evidence is only supporting evidence as held by the Tribunal in the case of Suresh Kumar Gupta vs. ITO reported in 14 TTJ 470. In fact, on the contrary it would be seen that the AO had himself made an application before the appellate proceedings in the case of Shri M.K. Ajatshatru Singh (Pg. 33 – 35) wherein he had prayed for the admission of additional evidence, when he contended that the facts in the instant case are identical to the facts of Dr. Karan Singh and others.
Ld. Senior Counsel for the assessee submitted that this ground has been raised in the case of Shri. Ajatshatru Singh, Dr. Karan Singh and Late Smt. Yasho Raja Laxmi. He submitted that in so far as the case of Shri. Ajatshatru Singh is concerned, from the perusal of the order of the ld CIT(A) dated 18.03.2003, it would be seen that he has held that though the Divisional Commissioner in his certificate dated 17.01.2003 has estimated the value around 5-6 lakhs per kanal, however if the lower value is also adopted, then also there would be no capital gain. In fact from the concluding para of the order of the ld CIT(A), it would be seen that he has accepted the fair market value based on the report of valuer which was filed during the course of the assessment proceedings. Hence, the report of the Divisional Commissioner was merely in the nature of the supporting evidence and cannot be regarded as additional evidence.
FULL TEXT OF THE ORDER OF ITAT DELHI
ITA.No.263/ASR/2003 filed by the Revenue is directed against the order dated 18.03.2003 of the Ld. CIT(A), Jammu (HQ at Amritsar) relating to the A.Y. 199899. ITA.No.267/ASR/2007 filed by the Revenue is directed against the order dated 21.03.2007 of the Ld. CIT(A), Jammu (HQ at Amritsar) relating to the A.Y. 1998-99. The assessee filed C.O.No.43/ASR/2007 against the appeal filed by the Revenue. ITA.No.268/ASR/2007 filed by the Revenue is directed against the order dated 22.03.2007 of the Ld. CIT(A), Jammu (HQ at Amritsar) relating to the A.Y. 199899. The assessee filed C.O.No.44/ASR/2007 against the appeal filed by the Revenue. ITA.No.269/ASR/2007 filed by the Revenue is directed against the order dated 22.03.2007 of the Ld. CIT(A), Jammu (HQ at Amritsar) relating to the A.Y. 1998-99. The assessee filed C.O.No.45/ASR/2007 against the appeal filed by the Revenue. Since common issues are involved in all these appeals and cross objections, therefore, these were heard together and are being disposed of by this common order.
2. First we take-up the appeal vide ITA.No.263/ ASR/ 2003 in the case of Shri M.K. Ajat Shatru, Jammu as the lead case.
2.1. Facts of the case, in brief, are that the assessee is an individual. He filed his return of income on 28.01.2000 declaring income of Rs.5,85,071/-. Later on notice under section 139(9) of the I.T. Act, 1961 was issued on 18.02.2000 asking the assessee to remove certain defects. Since the defects were not removed within the time, the return was declared invalid and non-est vide order under section 139(9) of the I.T. Act, 1961 dated 22.02.2000. Subsequently, notice under section 148 of the I.T. Act, 1961 was issued to the assessee on 10.01.2001 by recording the following reasons:
“In this case return declaring an income of Rs.585071/- was filed in this office on 28.1.2000. The return filed was defective as Form No.16 in r/o salary from J&K Govt. was not enclosed with the said return of Income. The assessee was issued a notice dated 18.02.2000 by which the assessee was asked to remove the defect within a period of 15 days. It was also made it clear to the assessee that if the defect was not rectified within 15 days from the date of receipt of the notice, the return of income would be treated as invalid without any further notice. But no reply was received from the assessee in the office of the undersigned upto 22.12.2000.
In the light of the above facts, the return of income so filed was treated as invalid vide this office order dated 22.12.2000. Since an invalid return is no return in the eyes of the law, as such, I have reason to believe that income amounting to Rs.585071/-declared by the assessee in the invalid return has escaped assessment in terms of sec. 147 of the Act. Accordingly notice u/s.148 is issued.”
2.2 In response to the said notice no return was filed. Subsequently, the assessee through his Counsel appeared on 23.01.2002 and filed written reply stating that the original return filed on 28.01.2000 be treated as return filed in response to notice under section 148 of the I.T. Act, 1961.
2.2.1 During the course of assessment proceedings, the A.O. noted from the computation sheet attached to the return of income where it has been mentioned as under :
“Sale of shares in M/s. Jyoti Private Ltd:- The assessee has sold his shares in Jyoti Pvt. Ltd. The total assets of the company as on 1-4-1981 were Rs.2,491.87 Lacs and the total liabilities of the company were Rs.123.49 Lacs. The net value of the shares of the company amounts to Rs.2368.38 Lacs i.e (2491.87-123.49) since sale value of the shares of the company amounts to Rs.3000.00 Lacs and hence there is no capital gain”
2.3. The A.O, therefore, asked the assessee to justify the exemption/claims with evidence. However, no evidence or copy of return of M/s. Jyoti Pvt. Ltd., was furnished, for which the A.O. held that assessee could not discharge the onus caste on him. The A.O. noted that the assessee during the course of assessment proceedings vide letter dated 18.03.2002 had stated that it had held 10,000 shares @ Rs.100/- each in M/s. Jyoti Pvt. Ltd., amounting to Rs.10 lakhs by way of gift. from his father since long, however, no proof of the same has been attached. During the year assessee sold all the 10,000 shares of the face value of Rs.100/- each to M/s. Bharat Hotels Ltd., Barakhamba Road, New Delhi through its CMD Mr. Lalit Suri. Copy of agreement to sell these shares has been filed on 3.10.1997 for consideration of Rs.4,76,19,048/-. As per this deed an amount of 56 lakhs was received in the shape of pay order and the balance was to be received within 60 days. As no final deed has been filed by the assessee till date so he presumed that the balance amount was received by the assessee during the financial year under consideration. He noted that the assessee in his case has received 10,000 shares as gift from father. Cost of shares is 10000 @ 100/-is Rs.10,00,000/- which has been stated and is disputed by the counsel of the assessee. The Assessing Officer therefore held that it is not understandable as to how against the cost of Rs.10 lakhs assessee has claimed the value as on 1.4.1981 by revaluing the asset of the company. According to him in this case cost of assessee is value of shares and not the assets of the company. The Assessing Officer accordingly valued the shares of Rs.10,00,000/- and after indexation computed the capital gain at Rs.4,43,09,048/-and added the same to the taxable income of the assessee, the details of which are as under:-
Cost of share X lndexing of the year under consideration.
100
i.e., 10,00,000 X 331
100
= Rs. 33,10,000/-
Sale price of share Rs.4,76,19,048/-
