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TMI Blog2019 (7) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous owners? Alternative:- (ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in not considering that once the transaction of gift is not valid and the Appellant had not become owner of the Shares and the same is held to be bogus, the capital gains cannot be assessed in the hands of the Appellant?" 3.Heard Mr.G.Baskar, learned counsel for the appellant/assessee. 4.Before we consider as to whether any substantial question of law arises for consideration or not in this appeal, we need to take note of the factual position. 5.The assessee is an individual filed his return of income on 09.11.2009 under Section 139 of the Act admitting a total income of Rs. 3,88,430/-. A search was conducted in the group of Dr.A.M.Arun and others, who were the sons-in-law of the assessee on 01.12.2015. During the course of search, it was found that the assessee sold shares for a consideration of Rs. 1.5 Crores during the financial year 2008-09. These shares were acquired by the assessee through gift from the wife of Dr.A.M.Arun, daughter of the assessee. It was found that no resultant capital gain was offered in return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act should not be launched or levied or should not levied against the assessee. The assessee did not respond to any of these notices. 7.Thus, the Assessing Officer having left with no other option, completed the assessment proceedings ex-parte under Section 144 of the Act. After taking note of the materials available on record, the Assessing Officer rejected the contention of the assessee as not acceptable and that the sale of shares was not disclosed in original return of income and it came to light only during the course of search of the residential premises of the assessee and that the assessee admitted during the course of search to offer this amount as his taxable income. Accordingly, addition was made and the assessment was completed, vide order dated 30.12.2016. 8.Aggrieved by such order, the assessee preferred appeal before the Commissioner of Income-Tax (Appeals) 18, Chennai (for brevity, "the CIT(A)") in I.T.A.No.367/16-17. The CIT(A) by order dated 21.09.2017 allowed the appeal. The reason assigned by the CIT(A) was that Section 49 of the Act clearly specifies that the cost of the acquisition of the asset will have to be reckoned on the basis of cost of acquisition to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's daughter is a valid gift and the share transfer forms clearly show the transfer of 1,50,000 shares to Advantage Strategic Consulting Private Limited, which was filed before the Registrar of Companies. It is further submitted that the Tribunal grossly erred in holding that Section 49 of the Act will not apply to the case of the assessee by observing that the assessee had not become the owner of the capital assets. When the assessee had become the owner of the shares by way of gift executed by his daughter and therefore, Section 49(1)(ii) of the Act would apply. Alternatively, it is submitted that the Tribunal having held that the transaction of gift is not valid, ought to have held that there was no capital gains that could arise out of a bogus transaction in the hands of the assessee. Thus, it is contended that the finding of the Tribunal is absolutely perverse and the substantial questions of law framed for consideration required to be decided by this Court. 12.After elaborately hearing Mr.G.Baskar, learned counsel for the appellant/assessee, we do not agree with the submissions made and the grounds canvassed before us. We substantiate this conclusion with the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity shares. 16.Further, the Assessing Officer observed that from the share application return of allotment in Form 2, M/s.Vasan Health Care Private Limited indulged in allotment of shares in cash for which without any basis inflated the share value by way of premium. Therefore, the Assessing officer rejected the same as unreliable in the absence of any business transaction with M/s.Advantage Strategic Consulting Private Limited that the assessee transferred the share to the said company on credit basis. Further, it was observed from the assessment records of M/s.Advantage Strategic Consulting Private Limited for the assessment year 2011-12 that, it had classified in computation of long term capital gains in respect of M/s.Vasan Health Care Private Limited, as number of shares sold, 30,000 equity shares of Rs. 10/- each, which indicated that the purchase value of such shares by M/s.Advantage Strategic Consulting Private Limited was still at a premium value Rs. 90/- per share. 17.With the above discussion, the Assessing Officer rejected the contention of the assessee as not acceptable. 18.The CIT(A), in our considered view, did not deal with all the issues and to say the least ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T)A should have seen the entire transaction wholistically and should have come to the final conclusion. Instead, he has viewed the issue of gift in isolation, thereby came to a wrong conclusion. 2.8. The ld. CIT(A) ought to have considered the fact that, within one day from the allotment of shares, there cannot be a change in the value of shares, therefore, there is no justification for not charging premium by Shri. Dwarakanathan. Further, once the gift is proved to be bogus and an arrangement, the ld. CIT(A) should have taken the Net Asset Value (NAV) and accordingly computed the cost per share as on 30.10.2008. by not doing so, the ld. CIT(A) had totally erred in coming to a wrong conclusion." 19.The Tribunal heard the parties and hold that the assessee has not disclosed the receipt of gift in the original return of income filed and later on claimed loss of Rs. 1,50,00,000/- on sale of shares in the return of income filed in response to the notice under Section 148 of the Act. The Tribunal noted that the assessee had not filed any registered document of gift either before the Assessing Officer, or before the CIT(A) which shows that the assessee had not owned the said shares wh ..... 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