TMI Blog2019 (6) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer that he has verified the information received and after that he found that a sum of ₹ 12,700,000 that should have been shown as a short-term capital gain by the assessee have not been disclosed in her return of income. Therefore, we do not agree with the argument of AR that reopening is at the instance of or at the dictate of the informing authority. No live link between the information received (tangible material) and formation of belief - In the present case the reasons for the reopening were recorded by the learned assessing officer though extracting the information that has been received from the investigation wing in preamble of the letter, and also noting that the assessee has filed return of income declaring income he further noted that that the return of income was perused where neither the long-term capital gain nor short-term capital gain have been disclosed. Such belief was formed after looking at the return of income in schedule CG that is shown as nil. Long-term capital gain shown in the tangible material is ₹ 108,00,00,000, which is far less than the amount that has been shown by the assessee in annexure EI. Therefore, it is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the central board of direct taxes provides otherwise. Commissioner of Income Tax (Appeals) has not erred upholding an addition representing alleged short term capital gain on sale of shares of M/s. NDTV Ltd by the appellant in the year under consideration - Decided against assessee. Income from house property - AO assumed that the assessee s share of rent of the above property would be 0.8% of the cost of property being ₹ 6 535315/ - assessee submitted that the annual letting value taken by the cantonment board at Mussoorie was Rs. ₹ 30,000 per annum for the whole house - HELD THAT:- With respect to the Mussoorie property the learned assessing officer in the remand report has submitted that the basis of the fair rental value has not yet been received by AO and therefore could not be submitted before the learned CIT A. Thus, there is no information available with AO of fair rent of the property. Contrary to that assessee has submitted annual let out value of such property that is claimed to not to exceed ₹ 30,000 as mentioned by cantonment board. Therefore, the learned CIT A should not have substituted the same on hypothetical basis. Accordingly, we di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the shares and further pledge in favour of the lenders. Facts before us shows that assessee entered into complex agreements with the lenders by creating the layer of RRPR Holdings private limited to pledge the shares and realize the sale consideration in guise of loans from lenders. We reverse the finding of the learned CIT(A) and hold that full value of the consideration of accrued to the assessee on sale of the shares of NDTV limited to RRPR Holdings private limited has resulted into understatement of capital gain to the extent of ₹ 55,88,73,564/ . Accordingly, ground of the appeal of the learned Deputy Commissioner Of Income Tax, New Delhi are allowed. Income from house property - as per DR CIT A has deleted the addition without granting any opportunity of hearing to the AO - HELD THAT:- CIT capital has not admitted any additional evidences but has considered the explanation of the assessee against the assessment order passed by the learned assessing officer. Further with respect to the certain properties the assessing officer could not produce the relevant information available with respect to the annual rent of those properties. Therefore, now revenue cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Shri Sachit Jolly, Adv For The Revenue : Shri Girish Dave, Adv ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the six appeals of two assesses namely, Mr. Dr. Prannoy Roy [ Dr. Roy] and Mrs. Radhika Roy, emanating from transactions of purchase and sale of shares of NDTV Limited entered in to by both of them with M/s RRPR Holdings Pvt Ltd [ RRPR, Company] and also issues of income from house properties pertaining to two assessment years. Shri Sachit Jolly, Ld Advocate on behalf of assessees and Shri Girish Dave, Ld Advocate, special counsel for revenue put extensive, erudite arguments. Thus, all these appeals were heard together on various dates fixed at the convenience and request of both the parties i.e. On 29/10/2018, 29/01/2019, 05/03/2019, 06/3/2019, and 19/3/2019 excluding request for adjournments moved. On 19/3/2019, bench asked certain details to be filed which were ultimately filed on 26/3/2019 and finally hearing was concluded on that date. Assessee has filed paper books an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t capital gain overlooks the fact that this figure was not based on the return of income filed by the appellant but bodily lifted and adopted from the information received from the Investigation Wing. 1.5 That the learned Commissioner of Income Tax (Appeals) has otherwise too failed to appreciate that there was no tangible, relevant, specific and reliable material on record on the basis of which, it could be held that, there was any reason to believe with the learned Assessing Officer that income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding an addition of ₹ 1,30,30,394/- representing alleged short term capital gain on sale of ₹ 6,25,000 shares of M/s. NDTV Ltd by the appellant in the year under consideration 2.1 That while upholding the addition the learned Commissioner of Income Tax (Appeals) has failed to appreciate the scope and ambit of provisions contained in section 45(2A) read with section 2(42A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n could not be held to be income of the assessee and as such the amount of capital gain ought to have been deleted altogether. 3. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining addition in respect of alleged income under the head house property from following properties:] Sr. No. Property Amount (Rs.) \ i) B-13, Greater Kailash-I, New Delhi 34,268 ii) One House at Dehradun 35,469 iii) Property at Mussorie 2,19,542 Total 2,89,279 3.1 That there is no material or valid basis adopted by the learned Commissioner of Income Tax (Appeals) to enhance the annual value declared by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has failed to appreciate that reasons recorded were based on factually incorrect assumptions and had been mechanically prepared without independent application of mind on the basis of diktat issued by Investigation Wing. 1.2 That even otherwise the learned Commissioner of Income Tax (Appeals) having not disputed that in the return of income filed, the assessee had duly reflected the capital gain earned by the assessee has erred in upholding the initiation of proceedings on an assumption that, there was an incorrect disclosure of such capital gain as a long term capital gain instead of short capital gain as has been assessed. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred when he overlooked and failed to appreciate that basis recorded for the initiation of proceedings was that assessee had neither declared long term capital gain and nor declared short term capital gain; whereas said gain was duly disclosed and claimed as exempt which itself demonstrated that action was taken mechanically without reference to the return of income filed by the appellant and as such action u/s 148 was wholly misconceived, misplaced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd by so doing it did not amount to any transfer made and otherwise too for the purpose of determination of the period of holding such shares, the period of holding of shares is to be reckoned from the date as were held by them and were reflected in such demat accounts and not from the date of shifting in the joint demat account from the individual demat account. 2.4 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that unless there was a transfer made, mere shifting of the shares is insufficient to restrict or reduce the period of holding of such shares so as to adopt the date of holding of shares, when they were shifted to the joint demat account and as such mechanical application of Circular No. 768 issued by Central Board of Direct Taxes to make the addition is wholly illegal, arbitrarily and unwarranted. 2.5 That various other adverse findings and conclusions recorded by the learned Commissioner of Income Tax (Appeals) are also factually and legally misconceived and are thus untenable. The addition made and sustained is based on fiction and could not be held as representing any income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s annual value of the property u/s 23(1) of the Act and thus he ought to have followed the judgment of Full Bench of Hon ble Delhi High Court in the case of CIT v. Moni Kumar Subba reported in 333 ITR 38 logically directed the Assessing officer to adopt the annual value at ₹ 1,53,586/- instead of ₹ 3,60,000/-. It is therefore, prayed that it be held that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) is without jurisdiction. It be further held that additions made of ₹ 1,33,19,673/- and upheld by the learned Commissioner of Income Tax (Appeals) deserves to be deleted and appeal of the appellant is thus prayed to be allowed. 4. As the facts are identical in case of both these assesses for AY 2009-10, we cull out the facts in case of Mrs. Radhika Roy, record the arguments of the parties in that case, provide our decision and reasons for that appeal and apply it in case of Dr Prannoy Roy. 5. Facts for assessment year 2009 10 in case of Mrs. Radhika Roy shows that assessee is an individual who filed her return of income for ₹ 1,66,61,534 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived LTCG/ (LTCL) Cumulative Balance 01/04/07 O.B. 1,66,53,300 54,512 0.00 1,66,53,300 22/01/08 Transferred to Joint account Stock Exchange 4,75,500 00 1,61,77,800 17/03/08 Transferred to Joint account Stock Exchange 1,50,000 00 1,60,27,800 17/04/08 Transferred to Joint acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition Cost per share Total consideration received LTCG/ (LTCL) Cumulative Balance 01/04/07 O.B. 1,66,53,300 0 0.00 1,66,53,300 22/01/08 Transfer Stock 4,75,000 0 1,61,77,800 Exchange 17/03/08 Transfer Stock Exchange 1,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion received LTCG/ (LTCL) Cumulative Balance 26/12/07 Purchase d in open offer Stock Exchange 48,35,850 2,07,95,93,242 430 48,35.850 22/01/08 Transferred from individual account Stock Exchange 9,51,000 3,113 0 57,86,850 17/03/ 08 Transferred from individual account Stock Exchange 1,50,000 491 0 59,36,850 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to compute the cost of acquisition and capital gain arising thereupon. In other words, shares that first entered into demat account will be sold first. In light of this circular, cost of acquisition for these 1250000 shares would be taken at ₹ 430/- per share being the cost of shares acquired through open offer on 26/1/2007 instead of ₹ 4092/- taken by the assessee. Further the date of acquisition of these shares would be recognized from the date on which initial lot of 4835850 shares were credited into this demat account i.e. 26/12/2007. Therefore, in the report it was mentioned that :- i. assessee has earned short-term capital gain instead of long-term capital gain and ii. Cost of acquisition of the shares sold would be at the rate of ₹ 430 per share. Accordingly, the report suggests that the computation of the capital gain would be as under:- serial number particulars amount in Rs. 1 Net realization of 1250000 shares at the rate of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annoy Roy and Mrs. Radhika Roy have opened a jointly held demat account. The first lot of 48,35,850 shares of NDTV limited were purchased on 26/12/2007 in an open offer through stock exchange @ ₹ 430/- per share resulting into cost of acquisition of ₹ 207.96 Crore. Therefore, total 1250000 shares of NDTV limited were transferred from their individual demat account to this account on 22/1/2008 and 17/3/2008. The costs of acquisition for these 1250000 shares have been taken as ₹ 4,092/ only. Thereafter, on 19/6/2008, 1250000 shares were sold through stock exchange @ ₹ 450 per share with net realization of ₹ 56.28 crores. 2. The assessee has taken cost of acquisition of these 1250000 shares as NIL. Therefore, it has recognized ₹ 56.28 crores as LTCG for FY 2008 09. On this issue, the board s circular number 768 of 1998 clearly mentioned that FIFO method should be applied to individual demat account in order to compute cost of acquisition and capital gain arising thereupon. In other words, shares first entered into demat account will be sold first. In light of the circular cost of acquisition for these 12,50,000 shares would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res (as discussed above) chargeable to tax, has escaped assessment within the meaning of provision of section 147 of the act. No assessment u/s 143 (3) was completed. Therefore notice u/s 148 is being issued to the assessee. 11. Thereafter, on 8/2/2013, assessee was asked to show cause as to why income from shares sold out of the joint demat account of the assessee with her husband on 19/6/2008 should not be treated as short-term capital gain. To this, assessee filed her reply dated 27/2/2013 and submitted that to facilitate sale of 1250000 shares jointly on 19/6/2008, equal number of shares i.e. 625000 shares from individual account of assessee and her husband were transferred to the joint demat account wherein total shares 1250000 were transferred. It was further submitted that the assessee is having several demat accounts, which are held by her in her individual capacity. Besides these accounts, she opened demat account jointly with her husband and purchased 4835850 shares of NDTV limited on 26/12/2007 at ₹ 430 per equity share in an open offer through Bombay stock exchange in that account. Thereafter, on 22/1/2008 and 17/3/2008 assessee and her husband ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/6/2008. Therefore on the date of sale of shares of 12,51,000 shares on 19/6/2008 , there were 45,65,850 (48,35,850 - 2,70,000) free shares were available. Hence, the submission of the assessee was found to be incorrect. iv. The shares would have been sold from the individual demat accounts. Hence, there was no need to transfer shares from individual demat accounts to Joint account by both the assesses. v. Assessee has not declared any short-term capital gain in return of income and long-term capital gain of ₹ 132,65,14,725/ is claimed as exempt. Therefore AO noted that the assessee has manipulated the cost of acquisition and period of holding of these shares to claim the capital gain as exempt and assessee has adopted dubious means under the garb of tax planning. vi. The learned AO applied the decision of the honourable Supreme Court in case of McDowell Co Ltd vs CTO 22 taxmann 11 and held that the transaction shown as long-term capital gain are nothing but Sham transactions which have been manipulated to avoid the tax arising on the transfer of shares of NDTV limited. vii. That assessee is a dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thly rent of ₹ 5000/- of that property. So he made an addition of deemed rent of that property of ₹ 6,24,000/ . Further it was found that the rent of two properties at Dehradun was also considered by the learned assessing officer and deemed let out value equivalent to the Mussoorie property and therefore the addition of ₹ 12,48,000/ was made further with respect to the above two properties at Dehradun. Further the assessee owns a property at B 213, GK 1, New Delhi that in the statement of affairs is shown as deemed to be let out and the ratable value of the same is shown to be ₹ 43,664 resulting into fair rental value of ₹ 2,16,000/ . Assessee treated 50% of the same and determined annual value of ₹ 1,08,000/ in the hands of the assessee. The learned assessing officer noted that since the property is located in one of the posh colonies of Delhi where actual rent is quite high, therefore, he determined the minimum property rent of the property at ₹ 2,00,000/- per month, considering 50% share of the assessee determined at ₹ 1,200,000 and therefore the net addition of ₹ 10,92,000/ was made as assessee has only declared ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT A under the head Income from House Property with respect to the property at New Delhi and Dehradun. The learned authorised representative also did not press the addition of ₹ 1,53,586/ made by the learned assessing officer and sustained by the learned CIT A with respect to the Hauz Khas property. 18. Coming to the first ground of appeal challenging the action of the learned assessing officer in reopening the assessment u/s 148 of the income tax act, the learned authorised representative, Shri Sachit Jolly, referred to the paper book filed by the assessee. He referred to page number 7 of the paper book wherein in schedule EI of the income tax return form ITR 2, assessee has disclosed at serial number 3 long-term capital gain from transactions on which security transaction taxes are paid amounting to ₹ 1,36,67,68,705/ . He further referred to page number 2 which is the 1st page of ITR 2 in part B TI , the long-term capital gain is shown as Nil for the reason that such long-term capital gain is exempt. He further referred to page number 9 of the paper book, which is the computation of the total income, wherein assessee has disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. He further stated that the investigation wing report does not speak about any factual issues but legal advice for initiating the reassessment proceedings, which is not permitted under the law. 19. He relied upon the decision of the honourable Delhi High Court in case of Meenakshi overseas Ltd (395 ITR 677) and Signature Hotels Pvt. Ltd. v. ITO [2011] 338 ITR 51 (Delhi) to show that there is no application of mind by the learned assessing officer, nothing more than DDIT report is recorded in the reasons. He further referred to the decision of CIT V Atul Jain 299 ITR 383 and submitted that there should be a live link between the reasons recorded. He further submitted that though the assessment is concluded under section 143 (1) of the act but there has to be a cogent reason which must exist and the borrowed reasons cannot be a basis for reopening of the assessment proceedings. He submitted that the facts in the case of the assessee are showing that assessee has disclosed long-term capital gain and particulars are shown in the return of income as well as the computation of total income furnished by the assessee. He further stated that on looking at the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the spouse of the assessee and therefore the ratio laid down of this decision is squarely applicable to the facts of the present case. He then referred to circular number 704 dated 28/4/1995 which is an instruction regarding dematerialization of the date of transfer and holding period for purposes of capital gains related to transactions in securities. He submitted that the circular applies to a person but cannot be made applicable to each account of the person. According to him, circular is not to be construed account basis but a person basis. He further referred to circular number 768 dated 24 6 1998 with respect to the date of transfer and the period of holding of securities held in dematerialized form under section 45 (2A) of the Act for transaction in securities and submitted that FIFO method be applied account wise. He otherwise submitted that because of the transfer from the individual account to the joint account of the shares of NDTV limited , period of holding and the cost of shares cannot change. He also referred to para number 9 and 10 of the decision of the coordinate bench wherein the above circular has been considered in ITO vs DeepChan G Shah 128 ITD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application of mind, he referred to page number 43 of the paper book. He submitted that it has been specifically mentioned that in reasons recorded that learned assessing officer before recording the reasons, has perused return of the total income filed by the assessee, compared the same with the information, it was noted by him that assessee has not shown any long-term capital gain and short-term capital gain in the return of income, therefore, he after application of the proper mind on the issue having regard to the return of income and information received has reopened the case of the assessee. He therefore submitted that the allegation and the argument of the learned authorised representative that there is no application of mind by the learned assessing officer are devoid of any merit. He further referred to the return filed by the assessee at page number 10 of the paper book, which shows that the computation of total income is made, by the assessee. However, in the return of income, he stated that assessee has shown only the exempt income under section 10 of ₹ 1,36,67,68,705/- but has not shown the computation of the total income vis a vis cost of acquisition and basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reopening proceedings. He further referred to letter dated 6/6/2011 in stating that in the present case the assessing officer was advised to take the necessary proceedings in the case of the assessee , it did not says that reopening is required to be done by the assessing officer. If possible, the assessing officer could have initiated some other proceedings also. Therefore, there is no direction or advice given by the Deputy Director of Income Tax (Investigation), New Delhi to the Assessing Officer to reopen the case of the assessee. Even otherwise, he submitted that the AO was not at all aware and made known about how the assessee has computed the capital gain arising on the sale of the share what is the cost of acquisition. He further stated that according to the dematerialization rules as per the depositories act, the identification of individual sets of lots are lost, moment they are dematrealised. He referred to the relevant provisions of the demat rules and stated that they became fungible and identification of individual share is not permissible as well as not visible. He further referred to the decision of the coordinate bench in ACIT vs Nawal Kishore Kejriwal ITA No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain on sale of these shares as long-term capital gain and exempt from taxation whereas according to the assessing officer on examination of the information he prima facie found that the transaction of the sale of shares resulted into the short-term capital gain. Hence, he submitted that there is a live nexus between the information received and reasons recorded by the learned assessing officer. 22. On the merits of the addition he stated that the decision relied upon by the learned authorised representative of 105 ITR 531 is pertaining to the Estate Duty Provisions and does not apply to the provisions of Income Tax Act. He further referred to the circular and stated that the learned assessing officer has correctly computed the capital gain arising on sale of 625000 shares as short-term capital gain. He extensively referred to the order of the learned CIT A and ld AO to support his claim. He further referred to the provisions of section 55 (2) (a) of the income tax act and the provisions of section 45 (2A) of the act to support the order of the learned AO and CIT A. He also referred to the applicability of circular and submitted that when the shares are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned departmental representative does not apply to the facts of the case. 24. Coming to the merits of the case he stated that the decision relied upon by the learned departmental representative of Nawal Kishor Kejriwal was with respect to the broker s contract note and no documents were produced in that particular case, therefore it does not apply in the impugned appeal. Even otherwise, he submitted that in the dematerialization of the shares, only the distinctive number of the shares are lost, but the period of holding and the cost of acquisition does not change at all. Therefore, he submitted that the orders passed by the authorities below are not sustainable. 25. We have carefully considered rival contentions and perused orders of authorities below. We have also perused the communication received by the Deputy Commissioner of income tax (AO) from the Deputy Director Of Income Tax (Investigation), New Delhi. We have also perused the reasons recorded by the learned AO reproduced in earlier paragraphs. We have also considered the various judicial precedents relied upon by rival parties. On careful consideration we found that as per ground number 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the assessee. Therefore the allegation was that assessee has shown the sale of 1250000 shares of NDTV limited as long-term capital asset instead of short-term capital asset by claiming wrong holding period of those shares and further has also shown the cost of acquisition of the share wrongly and not showing correct cost of acquisition of the share at ₹ 430/- per share. The letter was also accompanied by the 3 annexure titled as annexure A wherein date wise analysis of the shares held in all the 3 demat account including the joint demat account of the assessee was tabulated. As per that letter the detailed working of the capital gain on sale of short-term capital asset was worked out and stated that short short-term capital gain of ₹ 12,700,000 have accrued to the assessee and the identical amount to the other joint owner, i.e. husband of the assessee. The letter also advised the assessing officer that necessary proceedings should be initiated in the case of the assessee as well as her husband in order to tax short-term capital gain in each of these cases. Based on this informational AO verified the return of income. Thereafter, learned assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gain of ₹ 2,8,14,17,945.86 were shown. However, the dates of acquisition of those shares were neither disclosed nor specification whether shares are short-term or long-term capital asset was mentioned. Naturally, no basis of claiming them to be Long-term capital assets was shown. However, assessee has worked out the cost of acquisition of those share at RS. 0.003273 per share, however, above cost of acquisition was derived showing that cost of shares of ₹ 54512 were for 16653300 shares held. This return of income and probably the computation of total income filed by the assessee in the paper book at page number 10 were verified by the learned assessing officer. Thus, on receipt of the information from the Deputy Director of Income Tax (investigation), New Delhi the learned AO verified the above return filed by the assessee and formed a reason to believe that assessee should have disclosed the short-term capital gain of ₹ 12,700,000 but it has not been disclosed. Thus it is evident that ld AO held that shares sold by the assessee were not long term capital assets but short term capital assets as their holding period as per demat account is less than one year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice should be issued. Therefore it was held that after a foundation based on information is set up, there must still be some reasons, which warrant the holding of the belief so as to necessitate the issuance of notice u/s 148 of the income tax act, 1961. In the present case certain information was received by the deputy director of income tax (investigation), New Delhi on the basis of allegations received by Mr. Yashwant Sinha , member of Parliament and chairman of standing committee on Finance. Based on the above allegations DDIT issued a letter to the assessing officer. Along with the letter the detailed transactions in the demat account of the assessee and her husband and also in the joint account with her husband were tabulated showing cost of acquisition, date of transactions and resultant capital gain. The above information in the demat account summary clearly showed that whether the shares were held in the joint demat account by the assessee can be said to be a short-term capital asset or not. The annexure thus computed that long-term capital gain exempt could only be ₹ 1,08,53,50,759/ . Even in the exempt longterm capital gain, the assessee has shown in her return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable High Court has held that the reassessment proceedings were initiated on the basis of information received from the Director Of Income Tax (Investigation) without any reference to any document or statement but merely based on annexure, which was not a pointer and did not indicate escapement of income. Further, in that particular case the assessing officer did not apply his own mind to the information and examine the basis and material of the information. Therefore, the honourable Delhi High Court quashed the reassessment proceedings initiated by the assessing officer. In the present, case though the information is received from the Deputy Director Of Income Tax (Investigation), New Delhi accompanied with 3 different annexure showing the date wise transactions from the various demat accounts of the assessee and her husband and also from the joint account stating that the long-term capital gain earned by the assessee is only ₹ 108,00,00,000 and the other sale of shares resulted into the short-term capital gain to the assessee. Such annexure were not merely the pointers but did indicate the escapement of income then it is compared with the return of income where the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter of information issued by Deputy Director Of Investigation in the present case. Further, in the present case the authority, indicating the information was of the equal rank and not a higher authority. Further, the advice was clearly on the facts of the case of the information received. In view of this, we do not find that the reopening has been made at the instance of or at the dictate of higher authorities. In the present case, there is a clear-cut indication and discretion of the assessing officer that he has verified the information received and after that he found that a sum of ₹ 12,700,000 that should have been shown as a short-term capital gain by the assessee have not been disclosed in her return of income. Therefore, we do not agree with the argument of the learned authorised representative that reopening is at the instance of or at the dictate of the informing authority. 29. The next argument of the learned authorised representative is that the reasons recorded by the learned assessing officer is mere reproduction of the information received and further there is no live link between the information received (tangible material) and formation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the tangible material and formation of the belief and it is not merely the reproduction of the report of the investigation wing but the finding of the assessing officer himself also in such reasons. 30. Therefore, we confirm the finding of the learned CIT A in holding that there is no infirmity in the reassessment proceedings initiated by the learned assessing officer. 31. Now coming to the 2nd issue whether the sale of 1250000 shares of NDTV limited from the joint demat account of the assessee with her husband has resulted into gain on account of transfer of long-term capital asset or not. As facts stated earlier that on 22/1/2008, 475000 shares and on 17/3/2008, 150000 shares of NDTV limited were transferred from the individual demat account of the assessee and identical number of shares were also transferred from the day individual demat account of her husband to the joint account. This resulted into transfer of 951000 shares in the joint account on 22/1/2008 and 3,00,000 shares on 17/3/2008 totaling to 1251000 shares transferring in to the joint account from the individual account of joint holders. Further on 19/6/2008 1250000 shares were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,51,000 Transferred from individual demat account (out of above, 4,75,500 shares were transferred by the assessee from her individual demat account 17.03.2008 3,00,000 Transferred from individual demat account (out of above, 1,50,000 shares were transferred by the assessee from her individual demat account. 19.06.2008 12,50,000 Shares were sold for an aggregate consideration of ₹ 56,28,35,892/- (6,25,000 shares by the assessee) 7.3 Deeper analysis of the issue of treatment of capital gain on transfer of shares highlight that the whole controversy is on the manner of calculation of holding period of transferred demat shares. The appellant has made out a case that period of holding of the shares in question should be calculated assessee wise and not account wise. The assessee argued that the provisions of section 2(42A) provide holding of an asset by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitory, therefore, under this system, it is not possible to link the purchase of a security with its sale by means of its distinctive number etc. as in the case of physical certificate. Therefore, logically, the next level of identification is the account from where the security has been transferred. As against this, the assessee is claiming to take the identification to the higher level i.e at assessee level across the accounts, which is .not correct. In old physical system, the holding was with reference to specific share certificate there was no question of identification at 'assessee level', whereas in demat system, since the holding cannot be considered at share level, therefore, the best case scenario is to consider the holding with reference to specific demat account level from where the transfer has taken place as against the claim of the appellant to consider it at 'assessee level'. 7.5 It is for this reason that sub-section (2A) has been inserted in section 45 to provide for the computation of capital gains in respect of securities held in dematerialized form. This sub-section provides that for the purposes of section 48 and proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts of the assessee is, therefore, not correct. Therefore, the simplistic interpretation of the provisions of section 45(2A) is to apply FIFO method account wise and not across accounts of the assessee. The circular also confirms the thought process at the time of legislation. The Board's Circular No. 70-1 provides that In such a case, where on investor has more than one security account, FIFO method will be applied account-wise. This is because in case where a particular account of an investor is debited for sale of securities, the securities lying in her other account cannot be construed to have been sold as they continue to remain in that account. 7.8 As discussed above, the legislation has prescribed the manner of computation of period of holding as per the provisions of section 45(2A), therefore, there is no option at the end of the assessee to compute the period of holding in a different manner. The concept of FIFO cannot be applied across the multiple accounts of the assessee because the shares on transfer from one account to other lose their identity as transferred share. Statute incorporated the principle of FIFO in the provisions of section 45( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 45(2A). 7.13 In view of the above discussion, I do not find any force in the argument of the assessee and therefore, I uphold the addition on account of short term capital gain of ₹ 1.30 crore made by the Assessing Officer. 32. The 1st argument of the learned authorised representative is that provisions of section 2 (47) does not apply to the facts of the case when assessee puts a share from individual demat account to joint demat account along with her husband as it does not result into on transfer . He submitted that anyway such transfer is otherwise exempt. This issue that when the assessee transfers the shares from her individual account to the joint account there is no transfer as contemplated under section 2 (47) of the income tax act is not before us. Issue is that learned AO has taxed sale of shares from the demat account held jointly by the assessee along with her husband and he has considered the period of holding of such shares on FIFO basis based on the securities movement in that demat account and also considered the cost of acquisition of those shares which were considered as sold on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working of the depositories in securities and matters incidental thereto. A depository is an organisation where the securities of a shareholder are held in the electronic form on the request of the shareholder, through the medium of a depository participant. The depository is comparable to a bank where an investor who desires to utilise its services can open an account with it through a depository participant. However, a depository is not merely a custodian but is in fact the registered owner of the security and it is the depository whose name is entered as such in the register of the issuer. The person actually entitled to the security becomes the beneficial owner, whose name is recorded as such in the books of the depository. 3. The salient feature of this new system is that it is optional and would operate in conjunction with the existing system of holding securities in physical form. Where an investor opts to hold a security with a depository, i.e., not in physical possession of a certificate, the depository shall be intimated of the details of allotment of securities and accordingly the depository shall enter in its records the name of the allottee as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nique distinctive number linking it with its subsequent sale is not available. 5. Section 45(2A) stipulates that in the case of securities held in dematerialized form, for determining date of transfer and period of holding , the FIFO method would be applicable. The FIFO method is generally used to determine the value of any item moving out of a stock account and those remaining in stock at any point of time. When applied to an account holding dematerialized stock, it implies that, out of the existing holdings, the item that first entered into the account is deemed to be the first to be sold out. However, once a sale is linked with an earlier purchase, for determination of their date of transfer and period of holdings . Board's Circular No. 704 would be applicable. That is to say that the relevant contract notes as explained in Circular No. 704 will have to be referred to, for ascertaining the cost of the security sold and the date of transfer. When actually operating an account of dematerialized stock by applying the FIFO system, certain other issues can arise. For instance, an investor can hold part of his holdings of a security in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld with her husband. Assessee claims that revenue should treat the shares so sold from her joint account not on FIFO basis but to consider the period of holding as acquired by her in her individual demat account and also grant cost of that shares as acquired by her in the individual account as cost of acquisition. If the contention of the learned authorised representative is accepted that FIFO method should be applied person wise and not account wise , then it would lead to an anomaly for identification of shares. Prior to introduction of section 45(2A), as far as the shares and their offshoots, such as rights and bonus shares, are concerned, their costing for the purposes of capital gains would be cost of original shares , the actual cost paid in acquiring them, while the cost for rights shares and the cost of bonus shares shall be nil In the wake of this dispensation, 'bonus stripping' was common. Investors buy and sell original shares but don't sell their bonus shares as far as possible. There can be no objection to this kind of tax planning because the CBDT Circular 704, dated April 20, 1995 did not insist upon the first-in-first-out (FIFO) basis of costing as an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case was with respect to the computation of capital gain in the hands of a donee trust on sale of a capital asset with respect to the previous owner ( Donor) and the period of holding of the said asset. In that particular decision the appellant sold transferred the acquired property from 3rd party, therefore the question related to the computation of the long-term capital gain with respect to the indexed cost of acquisition from the date of acquisition of such assets by the person who donated the same to the trust or not. In fact the issue was whether the cost of previous owner in case of sale of property of buyer trust can be substituted as the cost of acquisition and for the purpose of holding period , property held by previous owner can be considered or not. The facts before the honourable Delhi High Court are nowhere near the facts before us. 36. The learned authorised representative further relied upon the decision of the Mumbai bench in ITO V Deepchan G Shah [2011] 9 ITR(T) 360 (Mumbai)/[2011] 128 ITD 488 (Mumbai)/[2011] 138 TTJ 180 (Mumbai) . We have carefully perused the facts and the decision rendered therein. The issue involved in that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting value taken by the cantonment board at Mussoorie was Rs. ₹ 30,000 per annum for the whole house. Further it was supported by the House tax bill also. It was further stated that the learned assessing officer has enhanced the income from house property purely on surmises, conjectures and suspicious without having any material or valid basis. The learned CIT A directed the learned assessing officer to make the enquiry to determine the fair rental value of the above property. However the learned assessing officer did not submit any such report before the learned CIT A. Therefore the learned CIT A determine the rental rates as per the website 99 Acre and Quikkr and adopted ₹ 16 per square feet as the fair rental value assuming appreciation of 10% over the 3 year. Such data was confronted to the assessee however; the assessee maintained that the annual value of the property for the assessment cannot exceed ₹ 30,000 per annum. The learned CIT A rejected the explanation of the assessee and stated that annual value of the rent can be determined only on the basis of the enquiry and publicly available information. He therefore held that there could not be any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 1 and ground number 2 of the appeal. Ground number 3 is partly allowed and ground number 4 is dismissed as it is withdrawn. Accordingly, the appeal of the assessee is partly allowed. AY 2010-11 ITA No 2020/Del/2017 Mrs. Radhika Roy ( Assessee) ITA No 2706/Del/2017 Mrs. Radhika Roy ( Revenue) ITA No 2022/Del/2017 Dr. Prannoy Roy ( Assessee) ITA No 2707/Del/2011 Dr. Prannoy Roy ( Revenue) 44. ITA No 2020/del/2017 filed by Mrs. Radhika Roy, assessee and ITA No 2706/del/2017 is filed by the ld AO for AY 2010-11 against the order of The Ld CIT (A) -42, New Delhi dated 23/02/2017. 45. The assessee has raised the following grounds of appeal in ITA NO. 2020/Del/2017 for the Assessment Year 2010-11:- 1. That the learned Commissioner of Income Tax (Appeals)-42, New Delhi has erred both in law and on facts in making an addition of ₹ 47,31,33,800/- by invoking the provisions contained in section 56(2)(vii) of the Act 1.1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the order is vitiated. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining addition in respect of alleged income under the head house property from following properties: Sr. No. Property Amount (Rs.) i B-13, Greater Kailash-I, New 34,268 ii) One House at Dehradun 35,469 iii) Property at Mussorie 2,19,542 Total 2,89,279 2.1 That there is no material or valid basis adopted by the learned Commissioner of Income Tax (Appeals) to enhance the annual value declared by the appellant and in absence thereof, addition sustained is illegal, invalid and untenable. 2.2 That while upholding the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accruing to the assessee of a quoted shares could be valued other than quoted price? 4. Whether on facts and in circumstances of the case, the CIT(A) is legally justified in holding that full value of consideration accruing on sale of shares in case of quoted shares at the Stock Exchange could be 2.96% of the quoted price of the shares if assessee chose to decide so? 5. Whether on facts and in circumstances of the case, the CIT (A) is legally justified in reducing addition of ₹ 23,59,700/- to ₹ 2,89,279/- on account of income from house property on the basis of new information without affording an opportunity of being heard to the AO? 47. Now we 1st state the facts in case of Mrs. Radhika Roy in ITA number 2020/Del/2017 for assessment year 2010 11. The assessee filed return of income on 31/7/2010 declaring total income of ₹ 90,80,683/ . The return was revised on 16/3/2011 stating the same taxable income but claimed carry forward of long-term capital loss of ₹ 3,54,000,000, which was not claimed in the original return of income. As a detailed information regarding incorrect disclosure of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale consideration at ₹ 780548535/- (Shares 5781841 @ ₹ 135/- per share). Thereafter computation of capital gain the ld AO made the net addition of ₹ 67,22,31,387/- to the income of the assessee on account of capital gain. 50. Further it was noted that assessee has purchased 34,78,925 shares of NDTV Limited from RRPR holdings Limited on 9/3/2010 @ ₹ 4/- per share when the market rate of such shares were ₹ 140/- per share. Therefore, assessee was asked to explain the difference between the rate of purchase and prevailing price on the same day when the fair value of the shares can be easily determined from National stock exchange and Bombay stock exchange. Assessee submitted that the promoter group of NDTV consists of Dr Roy and Mrs. Radhika Roy and RRPR Holdings private limited, which has only to shareholders being Dr Roy and Mrs. Roy. It was further stated that in the about transaction no law whether taxation or corporate has been violated or intended to be violated. This was a transaction solely within the promoter group and the promoters could not have benefited from transaction strictly between themselves. The learned AO noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the learned CIT (A) 42, New Delhi who passed an order on 23/2/2017 dealing with the issues. 53. On the issue of considering the full value of consideration accrued or received by the assessee for 5781841 shares transferred on 3/8/2009 by the assessee to RRPR Holdings Ltd at ₹ 4/- per share, though the shares were traded on stock exchange at ₹ 140/- per share, Therefore, learned assessing officer has treated average of the High and low of prices on the date of sale of shares as on that date as full value of consideration received and accrued to the assessee for the purpose of working out the capital gain on these shares, the learned CIT A held as under:- 6.2 I find that the assessee transferred 57,81,842 shares of NDTV to M/s RRPR Holdings Pvt. Ltd. on 3.8.2009 at ₹ 4/- per share whereas on the same day at BSE (Bombay Stock Exchange), NDTV share was traded within the range of ₹ 134.95 (lowest of the day) to ₹ 141.50 (highest of the day). Assessing Officer has computed the long term capital gain by taking arm's length price of ₹ 135 (lowest value of the share on the given date) as sale pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case. Hence, the accrued value of consideration in this case is the market value but not the actual value of the consideration as claimed by the appellant. 6.6 I find that the statute has specifically provided in certain provisions that full value of consideration shall be deemed to be fair market value of the asset which are tabulated below: Sl. NO. Section Mode of Transfer Deemed value of full consideration 1 45(1A) Money/ Asset received from an insurer on account of damage/ destruction of capital asset. Value of money received /or Full market value of asset on the receipt date. 2 45(2) Conversion of or treatment of Capital Asset into Stock in Trade Full market value of asset on the date of its conversion or treatment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or inadequacy of the consideration is not a relevant factor for the purpose of determining the full value of consideration except for specific provisions as tabulated above. Accordingly, the ground of appeal is allowed in this case. Accordingly, he decided this issue with respect to the sale of 5781841 shares in favour of the assessee. Therefore, the learned AO aggrieved with the order of the learned CIT A, has challenged the above deletion as per ground number 1 4 of the appeal. 54. With respect to the sale of 3478925 shares by RRPR Holding Pvt Ltd to the assessee at ₹ 4/- per share, for which the learned assessing officer has made the addition stating that when the fair market value of the above share is ₹ 140/ per share , assessee has purchased the shares at the rate of ₹ 4/- per share, therefore, difference between the fair market value of the share being the quoted price as on that date and the transaction price of ₹ 4/- per share was considered as unexplained investment of the assessee, the learned CIT A held as under:- 8.2 It is found that the assessee purchased 34,78,925 shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2)(vii): where on individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,- ( a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; ( b) any immovable property ( c) any property, other than immovable property,- ( i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; ( ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration : Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y;]'' 8.7 The extracts reproduced above clearly provide that in case an individual receives from any person on or after 1st oct, 2009, any property (including shares ) for a consideration which is less than the aggregate fair market value of the shares by an amount exceeding fifty thousand rupees, then the aggregate fair market value of such property as exceeds such consideration would be deemed as income from other sources in the hands of such Individual. Now, if the facts of the present case are* examined in view of the above discussed provisions as tabulated below, it is a clear case which fits into the provisions of section 56(2)(vii). Section 56(2)(vii) Facts of the case Individual receives any property (including shares) Appellant purchased 34,78,925 shares of NDTV | From any person or persons from RRPR Holding (P) Ltd. (person includes a company- section 2(31)) 1 On or after 1/10/2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee, and therefore, the plea of the assessee in this regard is not acceptable. 8.10 The assessee further contended that the it is not within the power of CIT(A) to confirm an addition under section 56(2)(vii) as the assessing officer has made addition under different section. 8.11 It is important to highlight that the subject matter of the appeal in the case is that the appellant has challenged the action of the assessing officer where the AO held that unexplained investment has been made in a particular transaction of purchase of 34,78,925 shares of NDTV from RRPR Holding (P) Ltd. @ ₹ 4 per share on 09/03/2010 on the basis of finding of quoted market rate of ₹ 129.95 to ₹ 134.70 per share on the same day on BSE market. The addition proposed by the undersigned under the provisions of Section 56(2)(vii)(c) is also in respect of the same transaction of purchase of 34,78,925 shares of NDTV from RRPR Holding (P) Ltd. @ ₹ 4 per share on 09/03/2010. No new issue has been flagged in this case. The only difference is in treatment of the same transaction as income .under different provision of income tax act. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary. If the AO has failed to exercise a power given to him under the law or if he has failed to apply his mind to tfre provisions or if he has come to a wrong determination in the computation of tax, CIT(A) can correct the error during the course of the appeal proceedings. This was also the law laid down by the Supreme Court in 1958 in CIT vs Macmillan Co (33 ITR 182). Supreme Court ruled in the Kapoor Chand Shrimaal case (131 ITR 451) that the Appellate Commissioner is duty bound to correct errors, if any, during the course of appeal proceedings and should issue proper directions to the AO. The plea of the assessee that the decision of Hon'ble Supreme Court in the case of CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 does not allow CIT(A) to enhance the assessment by discovering new sources of income, not considered by the ITO in the order appealed against. 8.15 In this case, there is no discovery of new stream of income or new subject matter. It may be important to note that Hon'ble Supreme Court in the case of CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 nowhere questioned the power of CIT(A) to align the treatment of a particular subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us as per ground number 1 of the appeal. The assessee has challenged that the learned CIT A has discovered the new source of income not considered by the learned assessing officer and therefore it is not in accordance with the provisions of section 251 (1) (a) of The Income Tax Act. The assessee has also challenged that the above shares were conditionally transferred by the assessee and on escrow account therefore, provisions of section 56 (2) (vii) (c) of the act has no application to the facts of the case. 55. With respect to the income from house property, the learned CIT A held as under:- 9.2 At the outset, it may be relevant to refer to the principle of determining the annual value of the property which has been highlighted in the judgment of Hon'ble Delhi High Court in the case of Vinay Bharat Ram Sons (HUF) 179 CTR 31 which is as under: the annual value of the property in accordance with my findings, he will limit the same to the higher of the following (a) the municipal valuation, (b) the fair rent determinable under the Rent Control Act, and (c) the actual rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that amount. 9.4 The relevant provisions in Income Tax Act governing the determination of AV are contained in Section 23(1). The relevant extracts are as below for ready reference: 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be - ( a) the sum for which the property might reasonably be expected to let from year to year; or ( b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or ( c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable; 9.5 The above mentioned properties of the appellant, in view of above submission fall under limb (a) of section 23 (1) of I.T.Act as the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,25,000/- during the relevant period based on the inspector report. The extracts of the inspector report are reproduced as under: Some of the local property dealers could not ascertained the rental market value as the matter is 7-8 years old. However, some of the property dealers say that during the mentioned period, the rental value was ₹ 1,00,000/- to 1,25,000/- per month approximately. The rental value of properties varies from property to property depending on locations, parking and quality of construction. The above mentioned property was constructed in many years back. The report is prepared on the basis of information gathered from the property dealers. 9.5.3 In view of the above discussed report, the assessing officer has suggested to reduce the annual value of the assessee's share of property from ₹ 12,00,000/- to ₹ 6,00,000/- (as the assessee has half share of the property). The assessee has objected to the fresh valuation as there is no substance to accept the deemed rent at Rs. llac to ₹ 1.25 lac per month. 9.5.4 The inspector report ought to have contained the des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BHK in Greater Kailash magicbricks 300 Sq. 61,0 22 1,South Delhi yards = 2700 Sq. Ft. 00/- 2 BHK in Greater Kailash 1,South Delhi magicbricks 1800 Sq. Ft. 40,0 00/- 2 BHK in Greater Kailash 1,South Delhi magicbricks 1200 Sq. Ft. 36,0 00/- 30 3 BHK in Greater Kailash 1,South Delhi magicbricks 2200 Sq. Ft. 60,0 00/- 27 Average rent per Sq. Ft. 345/11= 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction which sets the higher threshold for determining the annual value of the property. One cannot brush aside the information available on neutral platform like public portals. Property at SINOLA, Dehradun: 9.5.9 The house property at Dehradun is situated at village Sinola, Pargana Parva Doon, Distt. Dehradun. The covered area of the property is 104.65 Sq. mts. which comes to 1126 Sq. ft. out of the total plot area of the property of 459 Sq. mts.. Further the assessee has another vacant plot of area of 855 Sq. mt. in joint name. The vacant land has not been considered for valuation under section 22 of the Act. The said property is situated outside the municipal limits in a village area. 9.5.10 The assessee submitted that, The few quotes of the prevailing rent in proper Dehradun as on today are enclosed which shows that the average rent is between ₹ 3-15 per Sq. Ft. as on today, which would be still lower in village area and in FY 2008-09 and FY 2009-10. Flence, you are requested to consider the above in the remand report for AY 2009-10 and AY 2010-11. (Letter dated 13.10.2015 addressed to the DCIT Cir-18(l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Rs. (Per 1 Month) Rent per Sq.I Ft. Vasant vihar, Doon Olx 1800 Sq. Ft. 25,000/- 14 Race course road, dehradun Quikr 1300 Sq. Ft. 16,000/- 12 Gandhi park,rajpur road,dehradun Quikr 800 Sq. Ft. 14,000/- 17.5 Near KFC,Rajpur road,dehradun Quikr 700 sq. ft. 18,000/- 25 Independent house in rajpur road 99acres 320 sq yards=2880sq ft 32,000/- 11 Dun Palm City, Pathribagh, Dehradun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 per sq ft in FY 2009-10. The rationale for 10% appreciation is based on Section 6A of Delhi Rent Act. The assessee has also admitted the average rent in the range of ₹ 3 to ₹ 15 per Sq. Ft. in the submission as discussed above. 9.5.16 The above method of computation of fair value of rent was confronted to the assessee vide email dated 19.01.2017. The asessee responded vide letter dated 31.01.2017 as under: The appellants seriously objects to your aforesaid proposal and submits that there is no justification to adopt the rateable value at ₹ 7.5 per sq. ft. as the same is based on no valid material or justification ... Here too, it is not known whether any value in respect of those farm houses has been assessed to tax and what is the annual value of such farm houses. It is thus submitted that the report is entirely vague and does not serve any purpose other than where it has been accepted by the learned Inspector that the building in dispute is not situated at Dehradun but situated in a village. It is also submitted that, it is not known on what basis the learned DCIT has assumed juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Bellevue, Sister's bazaar, Landour Cantonment having an area of 0.677 acres with covered area of 0.100 acres (4356 Sq. Feet). It may be noted that the property is situated in residential area in Landour, Mussorie. Assessee has shown his share of the annual value of the property at Nil. The assessing officer has taken the annual value of the property at ₹ 6,24,000/- by applying rent of ₹ 52,000/- per month on the finding that the assessee's share of the rent per month of the said property should be at least 0.8% of the cost of property ( ₹ 65,35,315/-) which comes to ₹ 52,267/-. The assessee has objected to the valuation arrived at by the assessing officer. The assessee submitted that the Annual letting value taken by the cantonment board at Mussorie was ₹ 30,000/- per annum for the whole house. 9.5.21 AO was given specific instructions vide letter dated 14.09.2015 to get the enquiry made to determine the fair rental value of the property. No such report has been received from the assessing officer till now. The rental rates as per website (99 acre, Quikr) are tabulated below and the average rental rate per sq. feet is S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ... It is thus submitted the annual value of the property for the purpose of assessment under Act cannot exceed ₹ 30,000/- annually and after deducting municipal tax and water tax and, statutory deduction @ 30% the income under the head house property cannot exceed ₹ 14,112/- (₹ 30,000/- - ₹ 9,840/- - ₹ 6,048/-) It is submitted that in such circumstances purported comparable instances cited cannot be relied upon 9.5.24 The contention of the assessee is not acceptable as the assessee has failed to appreciate that fair reasonable value of rent can be determined only based on enquiry public information available in this regard. There cannot be any other yardstick. The standard rent is generally in the range of 7.5% to 10% of cost of construction of the property which sets the higher threshold for determining the annual value of the property. One cannot brush aside the information available on neutral platform like public portals. 9.5.25 Accordingly, the fair rental value of the property with covered area of 4356 Sq. Feet (0.1 acre) should be taken at ₹ 4356*12= ₹ 52,272/- per month. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property . Legally and etymologically, annual value cannot mean monthly value, weekly value, daily or momentary value. Where property income is brought to tax, therefore, if there is no annual value1, there is no authority for taxing the property income in the Act at all. If the Legislature wanted a taxing of property income for a shorter period, there was no purpose in utilizing the expression annual value of property . As pointed out earlier the concept of annual period for computation of income is completely absent with reference to all other sources and heads of income. The computation of property income under the Act is not only fictional but also contradicts the very normal conceptional idea of income. It would perhaps be absurd to say that a person who does not receive any rent or so from a property, by the mere holding of it, earns an income. This special method involved consideration of the property income as an annual income -, that is, only when the property income enured to the benefit of the owner for the full year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Contracting State may be taxed in that other State . Further paragraph 3 of Article 6 provides that, the provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property . 9.5.31 It is a fact that the South Africa has a right to tax the property income from a property situated in India. However, the residence country also has a right to tax the global income in pursuance to the provisions of section 5 of I.T.Act and the assessee has a right to claim the tax credit under section 90 of I.T.Act. against the tax charged, if any, in South Africa against this property. The assessee is bound to first report the income deemed to accrue or arise under section 22 of I.T.Act and thereafter, the assessee can claim tax credit against the tax paid in South Africa on the income from house property to avoid double taxation on income from house property. 9.5.32 However, in view of the discussion at para no. 9.5.27 to 9.5.29, the addition made by AO on account of income from house property in respect of South Africa property does not hold good. Accordingly, the ground of appeal related to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee may kindly be allowed four weeks time to prepare detailed submission on the contents of the call option agreement and the effect, if any, of the said agreement on the merits of the present matter. 60. Adverting to the appeal of the ld AO, the learned departmental representative, referred to the application of additional evidence filed by the learned assessing officer on 6/2/2018. By way of this, document titled as call option agreement dated 21/7/2009 between Subhgami Trading private limited and RRPR Holdings private limited and Dr Prannoy Roy and Mrs. Radhika Roy containing 16 pages was requested to be admitted. Ld AO claimed that during the course of hearing on 22/11/2017, revenue had requested for adjournment and further it was asked that the assessee may kindly be directed to provide all supporting agreements as mentioned in the loan agreement dated 21/7/2009 between Vishwapradhan commercial private limited and RRPR Holdings private limited filed at pages number 153 169 of the paper book. This agreement being supplementary and complimentary to the agreement dated 21/7/2009 would be relevant to decide the pricing of the shares of NDTV limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. sale of shares by the assessee to RRPR Holdings Ltd, iii. loan against pledge of those shares from Vishwapradhan Commercial Pvt Ltd, iv. call option agreement entered into on the same date Simultaneously with Subhgami trading private limited are required to be looked into not in isolation but as a complex structured transaction of transfer of controlling interest of the shares held by the assessee in favour of other parties. Therefore, he submitted that the call option agreement needs to be admitted as additional evidence to decide the issue involved in this appeal. He further stated that it is not fresh evidence. He further stated that all complimentary and supplementary agreements which forms part of the main agreement should have been necessarily be looked into to decide the whole issue and to reach at the true facts. To support his contentions, he referred to the decision of the honourable Supreme Court reported in (2012) 8 SCC 148 Union of India v Ibrahim Uddin, therefore he submitted that the above evidences required to be admitted at this stage. 62. The learned authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haser to purchase from RRPR holding certain quantity of shares of NDTV at a call option price in future. Even otherwise, he submitted that the call option price stated in the above agreement is a price derived at by dividing the number of shares held by RRPR Holdings Ltd in NDTV limited by the amount of loan of INR 350 crores. Hence even the call option price is not the fair market value of the shares of NDTV He further stated that crossreference to the above agreement was made as it was in the original agreement. vi. He further stated that if the agreement was so relevant and integral to the whole issue then why the same was not referred to by the learned assessing officer or the learned CIT A. Even otherwise, he submitted that the provisions of section 56 in case of listed shares are not applicable. Thus, the learned authorised representative vehemently objected to the application of the AO for admission of additional evidence in the form of call option agreement entered into by the assessee. 63. The learned departmental representative vehemently objected to the arguments of the learned authorised representative and submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules to justify the bringing on record additional documents in its possession. Thereafter the honourable High Court left it open to the revenue to move appropriate application to bring on record the documents which the assessee furnished. Therefore in respect of the compliance of the order of the honourable High Court these are additional documents to be placed before the coordinate bench which is a call option agreement dated 21/7/2009 between Shubhagami trading private limited and RRPR Holdings Pvt ltd and Dr Roy and Mrs. Roy. The application further states that this agreement is a supporting agreement to the loan agreement dated 21/7/2009 between Vishwapradahan Commercial P Ltd ( VCPL) and RRPR Holdings P Ltd which is a loan agreement filed by the respondent assessee. It was further stated that the definition clause of the loan agreement defines call option agreement as the same agreement that the short to be placed in the records through this application. It is further mentioned that the call option agreement as supplementary and complementary to the lowly agreement and is relevant to decide the pricing of shares of NDTV limited at the time of impugned transaction which is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the assessee. The assessee also relies upon an affidavit filed by its counsel in this regard. This Court is of the opinion that irrespective of what is apparent even if the documents were produced and in the possession of the ITAT, the question of their being part of the record of the lower appellate authority or the AO did not arise. That is the reason why in the first instance, a complete copy of the said agreement was sought from the assessee. Now there is no dispute that a complete copy is with the Revenue. Nevertheless, the proper procedure prescribed by law in this case has to be followed. In the given circumstances, this naturally means that the Revenue has to move a formal application under Rule 29 of the ITAT Procedure Rules to justify the bringing on record of these additional documents in its possession. 66. As the above agreement has also been received by the learned AO from the assessee herself, and as soon as it is received, at the first instance the learned AO made request for admission of the same. Therefore, there is no reason to say that it has not been pressed for admission at the first instance. 67. Further, at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68. Identical issue arose before us in 83 taxmann.com 282(Del) wherein the issue whether the revenue has a right to apply for admission of additional evidence are not has been discussed, and after giving a detailed reason, it has been held that revenue has a right to adduce additional evidences before the ITAT. 69. Further, it is relevant to note that in the present case , assessee has sold shares to a closely linked and controlled company shares of listed company at a substantially low price then quoted prices in the stock exchanges and further those shares are pledged to another company to raise a huge loan free of interest for a fairly long time clearly shows that unless all those agreements and documents referred into these transactions are looked into and real effect and substance of the transactions, if not found, one would not be able to reach at what the transactions are structured for and what is the real intention and effect of these transactions are. The impugned agreement required to be admitted as additional evidence by the AO is clearly linked to the agreement of the loan, therefore, the document being call option agreement is also required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k exchange was ₹ 140/- per share. Further, against those substituted shares, huge borrowings were made by that company, substituted shares were pledged, call option agreements were entered into, loan was used without payment of any interest, thus, resulting into transfer of shares by assessee, through an intermediary RRPR Holdings private limited, receiving the loan consideration in a controlled company and using the same money clearly shows that that the shares of NDTV limited were transferred by the assessee in favour of a third-party lender group , in the guise of loan, pledge and call option agreements. ii. He referred to page number 29 30 of the paper book filed by the assessee wherein the show cause notice dated 8/2/2013 refers to the various transactions of the sale of shares of NDTV limited which are in dispute. He further referred that in para number 4 of the notice clearly shows the view of the assessing officer. He further referred to the reply submitted by assessee on 27/2/2013 placed at page number 32 34 of the paper book. Therefore, he submitted that the only controversy that survives in this ground is what is the full value of consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich gives of 14.99% call option given to M/s Subhgami trading private limited and 11.01% given to Shyam equities private limited, which in turn controls 26% equity of NDTV limited. He further stated that 26% of the equity is also held by RRPR Holdings Ltd and therefore in pursuance of these 2 agreements and as well as the holding of the RRPR Ltd in NDTV it indirectly holds 52% holding in the NDTV limited. He further referred to the order of the SEBI at page number 12 and para number 10 of the order, which shows that the call option agreement between the Vishwapradhan Commercial private limited and Shyam equities private limited. He therefore submitted that according to that agreement the value of the share is taken at ₹ 214.65 per share, whereas the market rate of such share was ₹ 140/- per share and therefore the learned assessing officer has taken ₹ 135 per share for making the above addition. v. He further referred to page number 174 of the paper book which is a letter dated 11/9/2015 written by the learned CIT A to the learned assessing officer for his comment. He referred to para number 4 of that letter which is with reference to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a share where prevalent market value of the shares was in the range of ₹ 130/- to ₹ 140/- per share. x. He further referred to the order of the learned CIT A at page number 5-11 and also referred to the findings at para number 6.2 6.7 of his order where it is held that the market value cannot be adopted as full value of consideration received and accrued as there is no provision in the act. He submitted that the various provisions referred to by the learned CIT A in the table of the income tax to reject the adoption of the market rate of the shares was not at all applicable to section 48 of the act. He stated that each of the above section has different relevance. He further referred to the provisions of section 48 of the income tax and stated that it speaks about the full value of the consideration received or accrued to assessee and therefore the seller has accrued price at least of the listed price at the stock exchange, where the shares are transferred to the company, where the sellers are the only shareholders of equal share in buyer company. xi. He further referred to the letter dated 4 September 2015 of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee would be ₹ 140/- (mean taken by ld AO of ₹ 136/- per share) although RRPR Holdings P Ltd may t Have paid ₹ 4/- per share only. He therefore submitted that the actual consideration received by the assessee and accrued to the assessee through RRPR Holdings private limited is INR 136/ per share. He submitted that it need not be confused with the substitution of fair market value with the actual consideration issue. He submitted that issue is that assessee has received a consideration of INR 136/- per share as demonstrated above. 73. The learned authorised representative rebutting the arguments of the learned departmental representative stated the various dates on which the transactions have occurred. i. He firstly stated that the support of the law for making such addition is available under section 50D of the income tax at which has been inserted with effect from 1/4/2018. Therefore, to the impugned assessment year, such provisions do not apply and AO had no power to substitute the transaction value with the market value of those shares. ii. With respect to the argument of the learned depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and stated that call option price of ₹ 214.65 per share, but it is not the price of the Share But the price of option to buy the share, which is an altogether a different assets/ right then share. Therefore, that cannot be taken as a benchmark to determine the full value of the consideration accrued and received to the assessee. viii. With respect to the shareholding of 14.99% of option given to Subhgami Trading Co Pvt Ltd vide agreement dated 21/7/2009 and Shyam Equity private limited of 11.01% , ( 26 % in all ) , he stated that these are two different assesses and cannot be said that they hold 26% which is owned by the assessee. He further stated that in the decision of Honorable Bombay High court in Vodafone International (Bom) at page number 88 and 237 of that decision it has been stated that call option is not a capital asset at all. ix. He submitted that call option is in respect of RRPR holding Pvt Ltd in shares of NDTV Ltd and not by the assessee. x. With respect to the argument of the learned departmental representative on provisions of section 48 of the act with respect to the full value of the considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book. He submitted that it says that lender and its affiliates shall not purchase shares of entity which will increase their holding in the aggregate to more than 26% of the paid-up equity share capital of NDTV Limited without the consent of the other parties. He further stated that this agreement stops assessee and prohibits any change in the shareholding of the promoters of NDTV limited and RRPR Holdings Ltd. To support his argument, he further referred to clause 20 of the agreement dated 21 July 2009 having a heading of further assurances and stated that such assurances are to give full effect to the provisions contained in schedule three of the agreement wherein the matters in respect of the borrower which requires prior consent of the lender is mentioned. With respect to the call option agreement argument, he stated that it contains the right of first refusal ( ROFR) conditions therein. He therefore submitted that in fact the share price of ₹ 4/- per share transacted between the parties is a Sham price and the whole affairs of the transaction were so arranged that the full consideration accrued to assessee cannot be less than the listed price as taken by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of 5781842 shares at the rate of INR 135 amounting to INR 78,05,48,670/ for the purpose of calculation of capital gain thereon. The learned CIT A deleted the above addition stating that the market value cannot be deemed to be the full value of the consideration of assets in this case and therefore he did not find any force in the argument of the AO that accrual phrase introduced in the provision refers to the market value of the capital asset. He further held that adequacy or inadequacy of the consideration is not a relevant factor for the purpose of determining the full value of the consideration except for the specific provisions under the income tax act such as provisions under section 45 (1A), 45 (2), 45 (3), 45 (4), 46 (2), 49 (4) and section 50C of the act. Therefore, the revenue is in appeal. 77. According to the provisions of section 48 of the act, capital gain shall be computed by deducting from the full value of the consideration received or accruing as a result of transfer of the capital asset, the cost of acquisition of that asset, cost of improvement and any expenditure incurred wholly and exclusively in connection with such transfer. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest outgo during the year. The amount of outstanding loan as well as the number of shares held by the above company after this year remained almost same. The above company did not have any other business, assets, or liabilities except the amount of loan it has taken which is used in acquisition of shares of NDTV limited. Thus, unsecured loan as on 31/03/2010 was of INR 409,98,10,960/- against that the investment in shares of NDTV limited was INR 342,52,36,377/ . The balance resulted into loss of INR 67,05,91,963/- . Therefore, it is apparent that the above company was formed just to acquire the shares of NDTV limited from an open offer earlier and later on from the promoters. The above company did not have any other business. It did not have any revenue stream except minuscule interest income. The company acquired the shares originally in open offer by borrowing the money and subsequently also borrowed the money by obtaining shares from its promoters. The security given is always the shares of the company and the personal guarantee of one of the director. It is apparent that the company obtained loan by purchasing/transferring shares from the promoters. The company obtained the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Pvt Limited. On looking at the bank account of the company which is placed at annexure number 4 of letter dated 20/03/2019 submitted by the assessee, that immediately after receipt of the above loan on 09/03/2010 , the company transferred INR 53,84,60,960 to the account of Dr Roy. As the additional loan was given by that company, it needed an additional security of 2508524 shares of NDTV limited. The further loan of INR 53.85 crores was also interest free. According to clause 3 of the agreement giving this loan mentioned that the borrower i.e. RRPR Holdings Ltd shall utilize the above loan in full only for investment purposes. According to that agreement, clause 6 clearly gives an option to the lender to purchase from the promoters all the equity shares of the borrower at par value. According to clause number 9.2 ( C ) of the agreements, borrower and the promoters undertook to sale 2508524 equity shares of NDTV from the promoters to the borrower so that borrower holds 18813928 equity shares of NDTV aggregating to 30% of the equity share capital of NDTV. According to clause number 19 of that agreement, it was further stated that over the next 3 to 5 years the borrower and the len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he whole transaction has been structured. 80. Further, there are instances where the shares have been transacted by the company and its Promoters at Market rate and there are transactions, which have been entered in to by the assessee and Dr Roy at ₹ 4/- per share. Assessee has tried to support the above transaction stating that such shares were transferred by them conditionally and were on escrow account . However, the above contention has not been supported by any evidence. No conditions in those documents were shown to us, which even remotely suggests that assessee was to sale shares of NDTV at ₹ 4/- per share to RRPR Holdings private limited. We also did not find any such price conditions in the various agreements produced before us and referred to by both the counsels. No such escrow account was also shown to us. Even otherwise on reading of all the agreements, which were produced before us, the common fact emerged that shares were transferred to RRPR Holdings private limited which were later on pledged to obtain unsecured loan from Vishwapradhan Limited by loan agreement coupled with call option agreement and on reading of all these agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transaction documents, it would straightway mean that the 52% of the voting rights of NDTV has to be exercised by the promoters as per the dictates of the lender and the same may traverse as specified Veto rights under schedule 3. What is certain is the idea of the notice to start exercising control through the promoters by keeping a tight hold on 52% of the shares of NDTV, through the threefold options conveyed by the promoters, by helping them to meet the loan repayment that was pending to ICICI bank. 25. The related issue is as to whether the veto rights confer any rights of control in favour of the notice is not relevant for consideration in the instant case, in view of clause 20 of the loan agreement with specifically provides that the promoters/Moreover shall exercise their voting rights attached to NDTV to give full and complete effect to the obligations under the agreements executed and not limited to the veto rights specified in schedule 3 of the loan agreement. In other words, the veto rights in schedule 3 are eclipsed by the operative provision in clause 20 of the loan agreement and are not significant enough for an independent consideration from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey or moneys worth, and therefore the very assets transferred or parted with cannot be the consideration for the transfer. It follows that the expression full consideration in the main part of that section cannot be construed as having reference to the market value of the assets transferred but the expression only means the full value of thing received by the transfer in exchange for the capital asset transferred by him. The consideration for transfer is the thing received by the transferor in exchange for the asset transferred and it is not right to say that the assessee transferred and parted with is itself the consideration for the transfer. Therefore, the apparent consideration is always a question of fact, which has to be determined on the facts of each case. Thus, the facts of the present case before us does not show that apparent consideration shown by the assessee of ₹ 4/- per share of NDTV limited when the price of such company listed on stock exchange shows it to be INR 140/- per share is the full consideration. In fact, the assessee has got the benefit by pledging the assets worth INR 140/- per share by obtaining interest free loan to be coupled with call option ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85. The learned counsel for the assessee further referred the decision of the honourable Delhi High Court in 309 ITR 233 wherein it has been held that the full value of the consideration cannot be construed as having reference to the market value of the asset transferred but only means the full value of the consideration received by the transferor in exchange of the capital asset transferred by him. As stated, in present case before us , the assessee has got the consideration in transfer of shares of NDTV limited through RRPR Holdings private limited by obtaining interest free loans for a long tenure coupled with call option agreements which is based on the traded price of the shares of the NDTV limited, the actual consideration received by the assessee is not ₹ 4/- per share but the sums realized by RRPR Holdings Ltd , over which the assessee has complete control. Even otherwise, as stated herein above, the full consideration has not been replaced by the market value of the shares transferred but through series of agreements entered into by the assessee along with RRPR Holdings private limited with the lenders clearly showed that the assessee realized the consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the learned CIT capital has not admitted any additional evidences but has considered the explanation of the assessee against the assessment order passed by the learned assessing officer. Further with respect to the certain properties the assessing officer could not produce the relevant information available with respect to the annual rent of those properties. Therefore, now revenue cannot argue that learned assessing officer was not given proper opportunity of hearing before deleting the above addition. In view of this ground number 5 of the appeal of the learned assessing officer is dismissed. 91. Accordingly ITA number 2706/Del/2017 for assessment year 2010 11 filed by the learned Deputy Commissioner of Income Tax in case of Mrs. Radhika Roy is partly allowed. 92. Now we come to the appeal of the assessee in ITA No 2020/del/2017 where in assessee has challenged the addition of ₹ 47,31,33,800/- made by the ld AO u/s 69 of the act and CIT (A) confirmed the same u/s 56 (2) (vii) ( C ) of the Act. 93. Arguing the appeal of the assessee, ld AR submitted the facts that the learned CIT A has deleted the addition made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered but the view of the taxability has been considered and has been charged to tax under section 69 69B of the Act. He therefore submitted that it is beyond the power of the learned CIT A to find a new source of the income by applying the provisions of section 56 of the income tax at. He further referred the decision of the Honourable Delhi High Court in CIT versus Union Tyres 240 ITR 556 and reiterated that there is a solitary but significant limitation to the power of revision and that is not open to the appellate authority to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subject matter of original assessment. He similarly referred to the decision of CIT versus Sardarilal co 251 ITR 864, Shapoorji Pallonji Mistry versus CIT 34 ITR 342 (bom) and CIT versus M/s Nirbhayaram Deluram 224 ITR 610. He also referred to the decision in case of Mr Madan Mohan Sharma ITA number 2953/Del/2016 specifically para number 5 and 19 of that decision. In short, he stated that section 56 was not at all considered and adjudicated by the learned assessing officer and therefore the learned CIT (A) does not have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of learned CIT (Appeals) to invoke section 56 (2) (vii) (c) of the Act is challenged by and on behalf of the appellants on the grounds that: ( 1) the CIT (Appeals) Cannot find a new source of income; ( 2) If learned A.O makes an addition under a particular Head then learned CIT (Appeals) cannot change the Head ; ( 3) Source of income is altogether different than the concept of Head ; ( 4) If learned A.O failed to invoke provision of section 56 of the Act then there is no question of making assessment under section 56 of the Act; and ( 5) Lastly, power under section 251 of the Act cannot be equated with similar powers provided to other authorities under sections 263, 264.144C of the Act. In support of various contentions listed above, reliance was placed on case laws as under: 1. CIT v Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC); 2. CIT v Union Tyres [ 1999] 240 ITR 556 (Del.); 3. CIT v Sardari Lai And Co. [2001] 251 ITR 864 (Del.) (FB); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions or disallowances. he deals with such item or items of income in the body of order of assessment but he under-assessed such sums; or ( c) He makes no addition in respect of some of the items, though in the course of hearing before him holds a discussion of such items of income ( d) Yet, there can be another situation where the Assessing Officer inadvertently omits to tax an amount which ought to have been taxed and in respect of which he does not make any enquiry. ( e) Further another situation may arise, where an item or items of income or expenditure, incurred and claimed is not at all considered and an assessment is framed, as a result thereof, a prejudice is caused to the revenue, or ( f) Where an item of income which ought to have been taxed remained untaxed, and there is an escapement of income, as a result of the assessee's failure to disclose fully and truly all material facts necessary for computation of income. To ensure for each of such situations, an income, which ought to have been taxed and remained untaxed, the legislature has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another set of decisions are filed in the case of Dulari Digital Photo Services Pvt. Ltd to contend in the context of sections 56 vs. 69 of the Act. The issue involved in this case was limited to a situation that where the source of unexplained cash credit in books of account is not known the same cannot be linked to any known source of income in order to constitute income from other sources. On the powers of the CIT (Appeals) under section 251 (1)(a) of the Act, reliance is placed on following decisions in support of submission that the CIT (Appeals) was empowered under law to hold what he has held in the present case: 1. Smt. Sneh Lata v CIT [1966] 61 ITR 139 (All); 2. V. Subramonia Iyer v CIT [1978] 113 ITR 685 (Ker); 3. CIT v Ahmedabad Crucible Co. [1994] 206 ITR 574 (Guj); 4. Panchaman Traders v CIT [2010] 323 ITR 334 (Ker 5. CIT (Central) v K.S. Dattatreya [2012] 344 ITR 127 (Kar); and 6. Indian Steel Wire Products Ltd v CIT [1968] 69 ITR 379 (Cal). 98. On the merits of the addition u/s 56 (2) (vii) ( c) of the act th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer has not considered these aspect of the matter and therefore it is beyond the powers of the learned CIT A under section 251 (1) (a) of the act. 100. He further submitted that if the transaction is only one and it sources also one then it can only be done under section 263 of the income tax act and not under section 251 (1) of the income tax Act . He further referred to the decision of the coordinate bench in ITA number 2257/Del/2018 in CIT , Central Circle-15, Delhi vs Versatile Polytech P.Ltd, for assessment year 2009 10 and specifically referred to para number 23 -35 to say that it is beyond the powers of the learned CIT A to tax income under section 56 of the income tax, when the learned assessing officer has made addition under section 69 69B of the act. 101. We have carefully considered the rival contentions and perused the orders of the authorities below. The impugned transaction is that assessee has purchased 3478925 shares of NDTV limited at the rate of ₹ 4/- per share from M/S RRPR Holdings private limited on 9/3/2010. On that date the market price of the share was INR 140/- per share at National stock excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income tax act would not have been made applicable to the same. Further provisions of section 154 of the income tax act relates to the apparent mistake on the face of the record, which can be rectified. Admittedly, under the provisions of section 154 of the income tax act the debatable issues cannot be rectified. Therefore as mentioned in the order of the learned CIT A at para number 8.4 of his order that there would have been 2 scenarios for making the addition. In view of that the impugned issue is also out of the provisions of section 154 of the income tax act. The next section that needs to be tested is the provisions of section 263 of the income tax act, which would say that the order passed by the learned assessing officer is erroneous and prejudicial to the interest of the revenue and therefore it needs a revision. However, revision cannot be of an issue, which is considered and decided by the 1st appellate authority. Any aspect of the particular addition would have been out of the provisions of section 263 of the income tax act, with respect to the amount, provisions of the law, the year of taxation et cetera. Once any of the aspects of an issue is the subject-matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair market value in respect of a court in shares are the quoted price on the recognized stock exchange. Therefore the impugned transaction satisfied all the ingredients of the provisions of section 56 (2) (Vii) of the act. Therefore we do not find any infirmity in the order of the learned CIT A in invoking that provision with respect to the about transaction. 107. The learned authorised representative has stated that as it is a transaction between the closely related parties and there is no motive of the tax evasion is the provisions of section 56 (2) does not apply. Here the argument deserves to be rejected at the threshold itself as the assessee has failed to explain by credible evidence any reason of buying the shares of the above company at ₹ 4/- per share when the quoted price of the share on the recognized stock exchange is INR 140/ per share. As the motive itself of the assessee was not demonstrated at all with credible evidences the assessee now cannot say that there was no motive of tax evasion. Even otherwise the provisions of section 56 (2) deems certain differences/receipts of the transaction as income. 108. Further the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the assessee is partly allowed. 113. Assessee did not press ground number 3 of the appeal and therefore same is treated as dismissed. 114. Accordingly, appeal of the assessee is partly allowed. 115. Coming to the case of Dr Prannoy Roy wherein he has raised the following grounds of appeal in ITA NO. 2022/Del/2017 for the Assessment Year 2010-11 against the order of the ld CIT (A) -42, New Delhi dated 24/2/2017 1. That the learned Commissioner of Income Tax (Appeals)-42, New Delhi has erred both in law and on facts in making an addition of ₹ 47,31,33,800/- by invoking the provisions contained in section 56(2)(vii) of the Act 1.1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate discovering new source of income not considered by the learned Assessing Officer in the impugned order of assessment and therefore such enhancement was in excess of jurisdiction u/s 25 l(l)(a) of the Act. 1.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that what was retransferred were such shares which were condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount (Rs.) i B-13, Greater Kailash-I, New 34,268 ii) One House at Dehradun 35,469 iii) Property at Mussorie 2,19,542 Total 2,89,279 2.1 That there is no material or valid basis adopted by the learned Commissioner of Income Tax (Appeals) to enhance the annual value declared by the appellant and in absence thereof, addition sustained is illegal, invalid and untenable. 2.2 That while upholding the addition the learned Commissioner of Income Tax (Appeals) has failed to appreciate written submissions filed by the appellant wherein it was stated that comparable instances adopted are non comparable and inspector s report is without jurisdiction and otherwise too has no evidentiary value. 2.3 That the learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shares if assessee chose to decide so? 5. Whether on facts and in circumstances of the case, the CIT (A) is legally justified in reducing addition of ₹ 23,59,700/- to ₹ 2,89,279/- on account of income from house property on the basis of new information without affording an opportunity of being heard to the AO? 117. The Parties before us submitted that the facts and transactions are identical in case of Dr Prannoy Roy for this year too. Therefore for the reason stated by us in appeal of Dr Radhika Roy and ld AO in case of Dr Radhika Roy for AY 2010-11 in this order , we also :- ( a) Allow ground No 1-4 of the appeal of The ld AO ( b) Dismiss ground no 5 of the appeal of AO ( c) Dismiss Ground no 1 of the appeal of the assessee ( d) Partly allow ground no 2 of the appeal of the assessee ( e) Dismiss ground no 3 of the appeal of the assessee Consequently partly allow the appeal of the AO and assessee. 118. Before parting we would be failing in our dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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