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TMI Blog2017 (6) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... the valuation officer without affording any opportunity of being heard to the appellant and without providing proposed estimate of the value of the asset to the appellant with the opportunity to file objection as laid down in sub section (4) of section 16A of the wealth tax Act, is invalid and liable to be ignored. (b) That in any case, basis of the valuation of the share adopted by the valuation officer is illegal, unsustainable and is liable to be set aside being contrary to the directions of the learned Tribunal as contained in its order dated 20.07.2007 passed in ITA No.835/DEL/05 in the case of the appellant. 3(a) That that the learned CIT (A) has failed to appreciate that if the valuation report of the valuation officer is not to be considered by the AO, computation of capital gains will fail inasmuch as the valuation report was the only basis for computing the capital gains by the AO and impugned assessment made on the basis of invalid report is also invalid and is liable to be quashed. (b) That the learned CIT(A) has further erred in law in holding that sale consideration taken by the AO is justified on the basis of face value of shares and such a view being contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g into account the sale consideration to be worked out as per directions of the Tribunal and to adopt the net worth of the business of the assessee as per the provisions of section 50B(3) of the Act. 3.1 Consequent to the direction of the Tribunal, in proceedings before the Assessing Officer, the assessee filed a certificate from Chartered Accountant wherein the net worth of the company was adopted at Rs. 1,46,94,768/-. For the purpose of adopting the market value of the share as on the date of the sale, the Assessing Officer made a reference under section 55A of the Act to the valuation officer, who submitted his report vide letter dated 03/12/2008. The valuation officer estimated the value of the share at not less than Rs. 10 per share. The Assessing Officer provided a copy of the valuation report to the assessee for his objections if any to the valuation estimated by the valuation officer. The assessee objected that valuation officer did not provide any opportunity to the assessee. The Assessing Officer did not accept the contention of the assessee and computed the short-term capital gain under section 50B of the Act after taking sale consideration of Rs. 4,50,00,000/- in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace on 31/07/2000. In ground No. 4 the assessee has contested the finding of the Ld. CIT-A that acquisition of shares by the assessee was at a premium to the market rate due to purchase in bulk and purchase of controlling stake. 5. Before us, the Ld. counsel of the assessee submitted a paper book containing pages 1 to 59 and referred page No. 47 to 48 of the paper book, which is an affidavit of the director of the company deposing that notices dated 24/01/2013 and 13/03/2013 issued by the Ld. CIT-A were not received. The Ld. counsel also referred to page 49 of the paper book, which is an information downloaded from the website of "Department of post, India", according to which , consignment details were not available on tracking website. The Ld. counsel also contested that the Assessing Officer as well as the Ld. CIT-A has not followed the direction of the Tribunal to obtain authentic information from the concerned exchange, regarding prevailing rates in the market before and after the date of transfer. The Ld. counsel filed copies of the information downloaded from the website of Bombay Stock Exchange (BSE), indicating the high and low price of the shares of "Virtual Software Sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore as per direction of the Tribunal (supra) the market price of the shares in the month from June 2000 to August 2000 should be considered for determining the market price of shares. 9. In our opinion, the additional evidences filed on behalf of the assessee are relevant to decide the issue in dispute and accordingly, we admit the same. 10. We find that in the case in hand the matter was restored to the file of the Assessing Officer by the Tribunal for complying the specific directions regarding the computation of short-term capital gain on slum sale of the undertaking. The direction of the Tribunal (supra) on the issue in dispute is as under: "8.6. The stand of the assessee regarding determination of the value of shares right from the very beginning was that the consideration determined by the AO at Rs. 4.50 crores is wrong. In this regard before the ITAT also ground nos. 8 & 9 have been taken specifically. The learned counsel pointed out that before the AO as well as before the learned CIT (Appeals) this submission was made but has not been considered by the authorities. 8.7. On going through the assessment order it is found that before the Assessing Officer in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report News Snapshot Comp. History Peer Date Open High Low Close Volume 14 JUL 00 4.05 4.05 4. 05 4.05 200 13 Jul 00 5.00 5.00 5. 00 5.00 800 12 Jul 00 5.00 5.00 5. 00 5.00 400 11 Jul 00 5.00 5.50 5. 00 5.50 1000 06 Jul 00 5.60 5.60 4. 35 5.00 4700 05 Jul 00 4.05 4.50 4. 05 4.50 800 05 Jul 00 5.00 5.00 4. 50 4.50 2400 30 Jun 00 4.05 4.05 4. 05 4.05 100 Data Source - Asian CERC IT Ltd. 8.10. The above details were submitted before the AO and the learned CIT(Appeals) but they have not commented about the same. On the basis of the quoted price , as per above, the average price per share in any case will be around Rs. 4.70 per share on and near the date of transaction of sale and hence this may be the cost which should normally be taken into account for determining the sale consideration, but in the circumstances of the present case, where the shares of transferee company were acquired in bulk and controlling interest over that company was also acquired by the assessee, the market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 11.65 05-Sep-00 10.65 10.8 10.65 10.8 11. The above shows that the share was quoted at Rs. 12.05 on 7.9.2000 and 8.9.000. It was again quoted at Rs. 11.80 on 1.11.2000 and at Rs. 9.45 on 30.1.2001. This information is available in the public domain on the website of the Bombay Stock Exchange and can be easily accessed. It is clear from the above that the appellant's claim that the shares were quoted at around Rs. 4.70 is not correct. The shares quoted at more than the face value of Rs. 10 around the time of acquisition and slump sale. In any case, the A.O.'s decision to treat the value of shares at Rs. 10 being the face value is logical. If the appellant wanted to controvert this finding, the burden of proof was on him to show that the value of shares was less than its face value. The appellant has chosen to give the market rate of shares only for the limited period of 30.6.2000 to 14.7.2000. He has not given the share price for the remaining year apparently because as discussed above, the share price was at a much higher rate. The appellant has therefore, failed to discharge his burden of proof to show that the value of shares was much less than the face va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be said to be erroneous on the ground that he made a reference to the Valuation Officer. This is because this reference is valid in law and also because even if the valuation report is not considered, the sale consideration taken by the A.O. is justified by the face value of shares and the market rates. The appellant's arguments are therefore, not acceptable. 15. The appellant has also argued that the value of shares has been determined by the A.O. on the basis of totally irrelevant materials. In the assessment order, the A.O. has given the basis for computing the capital gain and consideration of the valuation report cannot be said to be a total irrelevant material, as contended by the appellant. This argument is therefore, not acceptable. 16. The appellant has argued that he was not given an opportunity of being heard by the valuation officer. The discussion in the assessment order shows that the appellant did have adequate opportunity during assessment proceedings to rebut the valuation report given by the valuation officer. In appeal, the appellant has filed a copy of the valuation report along with his submissions. The appellant did have adequate opportunity in appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified the valuation made by the valuation officer based on the net asset value(NAV) of the shares of the acquired entity. The information obtained from the website of the Bombay stock exchange is certainly authentic and cannot be said in violation of the direction of the Tribunal(supra). 15. In the grounds of appeal raised before us, the assessee is having grievances as under: 1. the valuation officer has not provided opportunity 2. the Ld. CIT-A has not provided opportunity 3. the Assessing Officer and the Ld. CIT-A has not followed the direction of the Tribunal (supra). 16. In the facts of the case, we observed that the Assessing Officer has provided the opportunity to the assessee for raising objections on the valuation report and the assessee has also raised its objections before the Assessing Officer. In such circumstances, we cannot say that the assessee has been deprived of the natural Justice. Further, the Ld. CIT- A also provided the opportunity to the assessee for raising objections on the finding of the Assessing Officer however as seen from the order of the Ld. CIT-A, we find that the assessee has not complied with the notices issued. The assessee has submit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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