ACIT, NOIDA vs. SMT. MADHU SINGH, NEW DELHI

IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH “E”: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

ITA No. 2165/Del/2011 A.Y. : 2006-07

Asstt. Commissioner of Income Tax VS. Smt. Madhu Singh, Circle Noida, G, Block, Legal Heir of Late Sh. Prabjot Shopping Complex, Singh Sabharwal, Sector-20, 8, Shaheed Bhagat Singh Marg, Noida Gole Market, New Delhi (PAN: BCJPS6248A) (APPELLANT) (RESPONDENT) AND

ITA No. 2495/Del/2011 A.Y. : 2006-07

Smt. Madhu Singh, vs. Asstt. Commissioner of Income Tax Legal Heir of Late Sh. Prabjot Circle Noida, G, Block, Singh Sabharwal, Shopping Complex, 8, Shaheed Bhagat Singh Marg, Sector-20, Gole Market, New Delhi Noida (PAN: BCJPS6248A) (Appellant) (Respondent)

Assessee by : None Department by : Ms. Pramita M. Biswas, CIT(DR)

O R D E R H.S. SIDHU, JM

These are the cross appeals filed by the Revenue and Assessee

emanate out of the Order of the Ld. Commissioner of Income Tax (Appeals), 1

Ghaziabad dated 24.2.2011 pertaining to assessment year 2006-07. Since

the issues involved in these appeals are common and identical, hence, the

appeals were heard together and are being consolidated by this common

order for the sake of convenience, by first dealing with Assessee’s Appeal

No. 2495/Del/2011 (AY 2006-07).

That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the determination of long term capital gains in a sum of Rs. 15,08,64,715/- by rejecting the claim of assessee that no capital gains accrued to him. The order being most arbitrary, erroneous and unlawful, it is prayed that the same must be quashed.

i) The Ld. CIT(A) has erred in law and on facts and circumstances of the case, by not appreciating that the assessee as individual, and the company are two separate entities in law and liability of the company, cannot be treated as cost of acquisition / improvement of the shares of the individual assessee.

ii) That the Ld. CIT(A) has erred in law by holding that payment made to the Supreme Court and Nainital Bank by the purchaser is cost of acquisition / cost of improvement of the share

without appreciating the facts of the case property.

iii) Hence, the order of the Ld. CIT(A) be cancelled and the other of the AO be restored.

30.3.2007 declaring income of Rs. 7,81,643/- and assessment was

completed on 31.12.2008 on total income of Rs. 26,95,67,032/- u/s. 143(3)

of the Income Tax Act, 1961. Assessing having been aggrieved with the

order, filed an application / petition before the Ld. CIT, Ghaziabad u/s. 264

of the Income Tax Act, 1961. The Ld. CIT, Ghaziabad after hearing the

assessee, passed an order dated 20.3.2009 u/s. 264 of the Income Tax Act

and cancelled the addition made by the AO and directed to recomputed

income of the assessee after giving adequate opportunity of being heard to

the assessee. In compliance to the direction contained in the order u/s. 264

of the Act, statutory notices u/s. 143(2) and 142(1) of the Act alongwith

query letter were issued and in response to the same, the A.R. for the

assessee attended the proceedings and filed the reply. In this case assessee

has filed the return and disclosed income from salary at Rs. 2,31,000/- from

M/s AJS Builders Pvt. Ltd. and income from commission at Rs. 4,85,167/-

after deducting expenses, income from other sources at Rs. 1,10,865/- and

loss of Rs. 1,79,76,231/- NIL long term capital gain from sale of shares of

Technology Parks Limited. AO asked the assessee to explain as to why the

sale consideration of Rs. 26,62,50,000/- should not be taken instead of 3

Rs. 16,00,00,000/- shown by assessee. AO observed that the cost of

acquisition of shares is only of Rs. 29,77,200/- and the other amounts

which were paid to Supreme Court of India of Rs. 10,78,00,000/- is the

personal liability of the assessee and not the purchase consideration, but

is a part of sale consideration paid by M/s Platinum Ventures Pvt. Ltd. on

behalf of M/s Endogram Leasing and Trading Co. Pvt. Ltd. inclusive of other

assessee’s personal liabilities of Rs. 9,50,000/- of Nainitak Bank, which also

forms part of sale consideration. Hence, the cost of acquisition of shares is

only Rs. 29,77,200/- and the assessee is entitled for indexation cost.

Accordingly, the AO worked the long term capital gain on sale of shares to

TPL works at Rs. 25,96,14,716/- and made the in the hands of the assessee

by completing the assessment at Rs. 26,03,96,360/- u/s. 143(3)/264 of the

Act vide order dated 11.12.2009. Against the order dated 11.12.2009,

assessee appealed before the Ld. CIT(A), who vide his impugned order dated

24.02.2011 has worked out the Long Term Capital Gain at Rs.

15,08,64,715/- by partly allowing the appeal of the assessee. Against the

impugned order, Assessee as well as Revenue are in cross appeal before the

Tribunal.

In this case, Notice of hearing to the assessee was sent by the 5.

Registered AD post, in spite of the same, assessee, nor its authorized

representative appeared to prosecute the matter in dispute, nor filed

any application for adjournment. Keeping in view the facts and 4

circumstances of the present case and the issue involved in the

present Appeal, we are of the view that no useful purpose would be

served to issue notice again and again to the assessee, therefore, we

are deciding the present appeals exparte qua assessee, after hearing

the Ld. DR and perusing the records.

tried to justify the action of the Assessing Officer.

payment of Rs. 10,78,00,000/- to Supreme Court (for distribution to

various claimants as admitted by Bahri Commission) and Rs. 9,5,000/- to

Nainital Bank) were liability of the Co. (Technology Park Ltd.), to be paid by

the purchaser (of the shares) on behalf of the Co., whose shares were held

by late assessee and his wife, as part of order of the Supreme Court; so,

in other words, necessary for effecting the entire deal of purchase / sale of

shares, the Ld. CIT(A) has rightly accepted the plea of the assessee that

this is part of acquisition / improvement of shares. We further note that in

the appellate stage it was the plea of the assessee that only

Rs. 15,75,00,000/- was the sale consideration received by the assessee,

which was not correct, because it was admitted by the Ld. counsel for the

assessee during the appellate proceedings. It is clear that sale consideration

for the relevant shares sold, would be total sum of Rs. 26,62,50,000/-,

which is simply because Rs. 10,78,00,000/- and Rs. 9,50,00,000/- were, in

principle, first received by the assessee and, then, were paid by the

assessee to the legal claimants. Therefore, the Ld. CIT(A) has rightly

determined the Long Term Capital gain of Rs. 15,08,64,715/-, which does

not need any interference on our part, hence, we uphold the finding of the

Ld. CIT(A) and reject the ground raised by the Assessee and accordingly

dismiss the appeal filed by the Assessee.

upheld the order of the Ld. CIT(A) in assessee’s appeal as aforesaid, hence,

the grounds raised by the Revenue has become infructuous and dismissed

as such. In the result, the Revenue’s appeal is also dismissed.

Revenue stand dismissed.

Order pronounced on 11/01/2019. Sd/- Sd/-

[PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date: 11/01/2019 SRBhatnagar