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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee, Shri. R. Venkatakrishnan, filed an appeal against the order of this tribunal in IT(SS)A No. 89/Mds/2006 dated 30.11.2007, wherein, inter alia, this tribunal quashed the block assessment order and refrained from going into merits of the case. On Revenue’s appeal, the Hon’ble jurisdictional High Court in TC(A) No. 1362 of 2008 dated 08.10.2013 held, inter alia, that the search in the assessee’s case too was consequent upon the search conducted in the Tamil Nadu Textile Corporation Limited. In the light of the facts thus available, the order of the Income Tax Appellate Tribunal deserves to be set aside by this court.
Consequently, while allowing the appeal, the matter is restored to the files of the Income Tax Appellate Tribunal for considering the case of the assessee on merits.
Accordingly, this appeal was heard. The Ld. AR submitted that the assessee purchased 330 shares of Rs. 100 each, during 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 valuation 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 valuation report relied on by him and erred in placing reliance on the same without seeking objections from the assessee. The AR invited our attention to the Hon’ble jurisdictional High Court decision in the case of the Srinivasan vs ACIT, Central Circle -1, Coimbatore in TC(A) No. 353 of 2006 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 order of assessment as well as the Tribunal’s order that the Assessing Officer ascertained the market value of the shares by valuing the shares on the basis of break-up value method. To find out the break-up value of the shares, the Officer referred the same to the Valuation Officer to find out the value of the immovable properties of the company. The assessee company was having land at Arcot Road, Madras and the balance sheet declared as on 31.03.1991 showed the value at Rs.90,738/-. After going through the sale instance and after considering other parameters, he arrived at the value 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 subsequently sold 1.25 acres of land and the extent of 1.65 acres alone was available. Accordingly, he arrived at the value at Rs.2,14,18,320/- and arrived at the value of the share at Rs.6,732/- each.
A reading of the order of the Assessing Officer shows that nowhere the assessee was favoured with a copy of the Valuation Officer’s assessment, enabling the assessee to place his objection on this value. Even though the Officer has a right to refer the document for valuation by a Valuation officer, yet, when he seeks to make use of this piece of evidence 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 assessee, 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 of the assessee that this portion of the order merits to be set aside and the matter be remitted back 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 accordance 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.
As already pointed out, in the absence of any material to show that the entirety of the shares of M/s. Anchor Breweries Limited 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 1320 shares, which stood in the name of the assessee and his wife.
In the light of the view that we have thus arrived at, we set aside the order of the Tribunal and remand the assessment back to files of the Assessing Officer. The Tax Case stands partly allowed and to the extent referred above, the order of the Tribunal is partly set aside. No costs.”
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 are not inclined to interfere with the impugned order. However, we allow the petitioner to raise question before the Assessing Officer, who may decide the same uninfluenced by the impugned order passed by the High Court” and pleaded that since the issue in the assessee’s case is on similar facts and circumstances of the case of R. Srinivasan, supra, the ITAT may direct the AO to comply to the above requirements.
:- 5 -: IT(SS)A No.89/Chny/2
We heard the rival submissions. In view of the above facts and circumstances, we set aside the order of the Ld. CIT(A) and remit the issues to the AO with a direction to comply with the direction of the Hon’ble Apex Court, supra, and pass the order on merits.
In the result, the assessee’s appeal grounds are treated as allowed for statistical purposes.
Smt. V. Manjula is spouse of Shri. R. Venkatakrishnan, appellant in IT(SS)A No. 89/Chny/2006, supra. In her case, a protective assessment of the transactions assessed in her spouse case were made. On appeal, the Ld. CIT(A) upheld the assessment. Against the order of the Ld CIT(A), the assessee filed this appeal.
The Ld. AR submitted that since the substantial assessment made in the assessee’s spouse case, he has pleaded for appropriate relief. The Ld. AR pleaded that in line with such relief, this case may also be considered.
We heard the rival submissions. Since, the substantial assessment made in the assessee’s spouse case in IT(SS)A No. 89/Chny/2006 is being remitted to the AO for a fresh examination, the AO shall offer adequate
:- 6 -: IT(SS)A No.89/Chny/2 opportunity to the assessee and decide the matter in accordance with law.
Thus, the assessee’s appeal is treated as allowed for statistical purposes.
In the result, the above assessee’s appeals in IT(SS)A No. 89/Chny/2006 & are treated as allowed for statistical purposes.
Order pronounced on Monday, the 05th day of November, 2018 at Chennai.