SUJAN PARIKH,MUMBAI vs. ACIT CEN CIR-XXXX, MUMBAI

Rival contentions have been heard and record perused. Facts in brief are that there was a search at the premises of the assessee, wherein incriminating documents and jewellery were found. The addition was 2 made by the AO on account of Rs.50 lakhs alleged to be received by assessee on account of payment from Natvar Parikh & Co. in addition to consideration mentioned in settlement deed for transfer of shares of NPCL. The CIT(A) has deleted the addition in the hands of assessee after having following observation :- “9. On careful consideration of the above facts, I find sufficient merits in the contentions of the appellant. The AO has not justified the addition on any cogent ground and has not been able to rebut the contentions of the appellant in any manner. It is further noticed from various clauses of the order passed by the Company Law Board dated 30.3.2005 as placed by the appellant that it was stressed on more than one occasion that the audited accounts of NPIL as drawn up by it would be accepted by the appellant group as true and correct and without raising any querries whatsoever and the payment was evidently in pursuance to such agreement along with the terms and conditions relating to buy back of shares. It may be stated here that the AO in the assessment of M/s Natwar Parikh and Co. P.Ltd. made addition on account of unexplained expenditure of the said amount. The undersigned in the appellate order no.CIT(A)ACIT-CC-40/lT-72/0B-09 of even date has deleted such evidence with a finding that the AO could not find any infirmity in the confirmation of the recipient nor in the contentions of the appellant in the matter and the addition had been made purely on presumptions and surmises. After taking into account the said order and the contentions made by the appellant as well as in the present case, it is held that there was no justification for the said addition which is, accordingly, deleted.”

Learned AR placed on record order of Tribunal in case of Natwar Parikh & Co. Pvt. Ltd., dated 20/11/2015 wherein Tribunal found that no extra payment has been made.

We found that the issue regarding payment of additional amount of Rs.50 lakhs has been considered by the Tribunal in the case of M/s Natvar Parikh & Co. Pvt. Ltd., ITA No.2146/Mum/2009, order dated 20-11- 2015, wherein the Tribunal have confirmed the action of the CIT(A) deleting the addition in the hands of Natvar Parikh and company Ltd. after having the following observation :-

3 “12. We have considered rival contentions, carefully gone through the orders of the authorities below and found that a categorical finding has been recorded by the CIT(A) to the effect that no additional amount was paid, the amount so paid was part and parcel of the total consideration paid to Shri Sujan Parikh. From the record we found that Mr. Sujan Parikh has received the consideration for transfer of shares of NPCL in direct proportion of the market value of the properties held by NPCL in the month of April 2006. There was no mention of any additional amount of Rs.50 lakh. There was no other mention anywhere in the correspondence exchanged for family settlement which indicated that Mr. Sujan Parikh was paid Rs.50 lakh extra over and above the consideration paid for sale of shares in the group companies. As per finding of the CIT(A) no cogent material was brought on record by the AO to hold that Rs.50 lakhs was paid in addition to normal consideration so determined. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition of Rs.50 lakhs.”

We have gone through the order of the Tribunal wherein issue with regard to the additional payment of Rs.50 lakhs have been considered and allowed in favour of assessee. As the facts and circumstances in the instant case are pari-metria, respectfully following the order of the Tribunal, we confirm the action of CIT(A) for deleting the addition of Rs.50 lakhs made in the hands of the assessee.

In the appeal filed by the assessee the assessee is aggrieved for addition of Rs.74,565/- being value of jewellery which does not tally with the declared income in the return of wealth for earlier financial year.

We have considered rival contentions and found that these jewellery were acquired by the assessee out of drawings. Considering the withdrawals made by the assessee during the year amounting to Rs.43,14,569.30 towards personal expenses and the income declared by the assessee amounting to Rs.2,81,83,911/-, we do not find any merit for the addition of Rs.74,565/- so made by AO.

Ld. AR raised an additional ground to the effect that amount of capital gain so offered by the assessee was received out of family settlement, therefore, not liable to tax.

We have considered rival contentions and found that this ground was raised before the AO, however, in view of the fact that assessee has not filed any revised return with regard to the capital gains originally offered in the return of income, the AO has declined to consider assessee’s claim of amount having been received under family settlement and not liable to tax. By the impugned order the CIT(A) confirmed the action of AO. From the record we found that during the year assessee sold shares of NPCL to the company itself, under a family arrangement scheme, endorsed by Company Law Board's order dated 30.03.2006, 13.04.2006 & 26.02.2007. Long term Capital gain arising out of said sale is Rs.16,23,94,604/-. Assessee invested the same in house property u/s 54F and residual amount of Rs.2,08,64,396/- was offered for capital gain and paid taxes accordingly. Assessee filed its return of income for the present year under assessment on 01.08.2007 declaring a total income of Rs. 2,81,83,911/- which includes the said capital gain. The said return was filed voluntarily by the assessee u/s 139 (1). No revised return has been filed by the assessee till date. However vide AR letter dated 15.05.2008, it is stated that out of ignorance of legal position this has been offered as capital gain although it is not a capital gain.AR relied on the following judgements: CIT Vs.Kay Arr Enterprises & Ors. (2008)215ClR (Mad)244 ClT VS.AL Ramanathan (2000) 245 ITR 494 (Mad)