9911796707
TMI Blog2019 (6) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and both the parties filed written notes. Further, both the parties relied up on several judicial precedents, which would be considered at the relevant point of time. All these appeals are heard together and therefore, disposed of by this common order. 2. First, we take up the appeals filed by assessee Mrs. Radhika Roy for AY 2009-10 in ITA NO. 2019/Del/2017 for AY 2009-10 raising following Grounds of appeals:- "1. That the learned Commissioner of Income Tax (Appeals), 42, New Delhi has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, completion of assessment u/s 147/143(3) of the Act which were without jurisdiction and deserved to be quashed as such. 1.1 That while upholding the assumption of jurisdiction the learned Commissioner of Income Tax (Appeals) has failed to appreciate that reasons recorded were based on factually incorrect assumptions and had been mechanicall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope and ambit of provisions contained in section 45(2A) read with section 2(42A) of the Act and further incorrectly applied Circular no. 768 dated 24.6.1998 to the facts of the case of the appellant and as such addition made and sustained is untenable. 2.2 That the learned Commissioner of Income Tax (Appeals) having not disputed that the assessee held and owned 1,66,60,658 shares on 19.6.2008 which were held since 28.2.1996, could not have arbitrarily reckoned the period of holding of shares from the date of shifting to the joint account and computed short term capital gain instead of long term capital gain as claimed by the appellant. 2.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that all what had happened was that shares held by the assessee and his wife and duly reflected in their individual demat account were shifted for the sake of convenience in a joint demat account and 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 acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property cannot exceed the municipal valuation and as such addition sustained is not in accordance with law, more particularly in respect of Mussorie property. 4. That the learned Commissioner of Income Tax (Appeals) has failed to comprehend that municipal value of property at Hauz Khas was Rs. 1,53,586/- and such a value represents annual value of the property u/s 23(1) of the Act and thus e 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 Rs. 1,53,586/- instead of Rs. 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 Rs. 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." 3. Bothe the parties admitted that facts are identical in case of Dr. Prannoy Roy, he has raised following grounds of appeal in ITA No. 2021/Del/2017 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 1,30,30,394/- representing alleged short term capital gain on sale of Rs. 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 (2 A) read with section 2(42A) of the Act and further incorrectly applied Circular no. 768 dated 24.6.1998 to the facts of the case of the appellant and as such addition made and sustained is untenable. 2.2 That the learned Commissioner of Income Tax (Appeals) having not disputed that the assessee held and owned 1,66,60,658 shares on 19.6.2008 which were held since 28.2.1996, could not have arbitrarily reckoned the period of holding of shares from the date of shifting to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3.2 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. 3.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that annual value of property cannot exceed the municipal valuation and as such addition sustained is not in accordance with law, more particularly in respect of Mussorie property. 4. That the learned Commissioner of Income Tax (Appeals) has failed to comprehend that municipal value of property at Hauz Khas was Rs. 1,53,586/- and such a value represents 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mrs. Radhika Roy were required to submit details of shares purchased, sold/transferred of NDTV limited. It was gathered that they were maintaining three different Securities Dematerialization account [demat] accounts i.e. One joint demat account and two individual demat accounts. These demat accounts were maintained in different depositories over the period. The various transactions undertaken by them in these accounts were also tabulated as under:- Annexure-A Prannoy Roy Date Particulars Whether through Stock Exchange or off market No. of shares Cost of Acquisition Cost per share Total consideration received 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 account Stock Exchange 24,10,417 7,890 434 1,04,51,04,669 1,04,50,96,779 1,36,17,383 05/06/08 Sold Stock Exchange 150 00 434 65,036 65,036 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35,892 48,36,850 09/03/10 Sold to RRPR Off market 48,36,850 2,07,95,93,242 140.00 67,71,59,000 (1.40,24,34,242 ) 0 9. In that report, it was further noted that Dr Roy & Radhika Roy have opened joint demat account. The first lots of 4835850 shares of NDTV limited were purchased on 26/12/2007 in open offer through/exchange at Rs. 430/- per share resulting into cost of acquisition of Rs. 2,07,95,15,500/-. Thereafter, total 1250000 shares of NDTV limited were transferred from their individual demat account to the joint demat account on 22/1/2008 (475000 shares from each individual accounts) and 17/3/2008 (transactions of the same date when 150000 shares were transferred from both individual accounts). [625000 shares from each individual demat account of Dr. Roy and Mrs. Radhika Roy] cost of acquisition for these 1250000 shares has been taken at Rs. 4092/- only. Thereafter, from this joint account, on 19/6/2008, 1250000 shares were sold through stock exchange at the rate of Rs. 450/- per share with net realization of Rs. 562,800,000. As the assessee has taken the cost of acquisition of these 1250000 shares as nil, therefore, it has recognized Rs. 562,800,000 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on this information received and on perusal of return of income filed by the assessee, the learned AO recorded the reasons for reopening extracted from page no 43 of the paper book as under:- "1. The assessee has filed E- return declaring total income of Rs. 1,67,64,284/-. A detailed information regarding wrong disclosure of capital gains have been received from The DDIT (Investigation) Unit - I, New Delhi, vide letter dated 9/6/2011, intimating that Dr Prannoy 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 @ Rs. 430/- per share resulting into cost of acquisition of Rs. 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 Rs. 4,092/- only. Thereafter, on 19/6/2008, 1250000 shares were sold through stock exchange @ Rs. 450 per share with net realization of Rs. 56.28 crores. 2. The assessee has taken cost of acquisition of these 1250000 shares as NIL. Therefore, it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain. 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 Rs. 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 transferred 951000 and 300000 (total 1251000) equity shares of NDTV limited. Thus, 625500 equity shares (475500+150000) were transferred by each of them to this joint account out of their individual accounts. On 19/6/2008, they sold jointly 1250000 equity shares of NDTV limited in the market and claimed that the 12,50,000 shares were sold out of share transferred from their individual demat account as against FIFO method prescribed under the act. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,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 director of NDTV limited and holding a substantial stake and is in a position that she can influence the decision of the company. Therefore, the actual matter of transaction has to be examined by lifting the corporate veil, which would reveal that the assessee and NDTV are not distinct entities as far as the camouflage is concerned and that both acted in connivance to evade the tax on capital gains. 13. Accordingly the learned assessing officer computed the short-term capital gain and the long-term capital gain in the hands of the assessee as under:- Amount (In Rs) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92,000/- was made as assessee has only declared Rs. 108000/- as income from that property. The learned AO granted 30% deduction under section 24 of the income tax act and determined additional income under the head income from house property of Rs. 2074800/-. Another disallowance of Rs. 2750/- u/s 80 (G) was made. Consequently, the total income of the assessee was determined at Rs. 3,17,39,478/- against the returned income of Rs. 1,66,61,534/- an assessment order u/s 143 (3) read with section 147 of the income tax act was passed on 30/3/2013. 15. Assessee, aggrieved with the order of the learned AO, preferred an appeal before the learned CIT (A) - 42, New Delhi, raising several issues. Assessee challenged the action of the learned assessing officer u/s 148 of the income tax act. The learned CIT - A held that the learned assessing officer did apply his mind before recording the reasons to reopen the case, so he upheld the action of the learned assessing officer. Assessee further challenged the addition made of Rs. 1,00,30,395/- on sale of 6,25,000 shares of NDTV limited considered by the learned assessing officer as shortterm capital gain, The learned CIT - A , after elaborate dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... television limited of Rs. 1,36,67,68,704.42 as exempt under section 10 (38) of the act. He further referred to page number 10 of PB, where the calculation of the capital gain for assessment year 2009 - 10 was given where under the heading 'B' the assessee has disclosed sale consideration of 625000 shares sold on 19/6/2008 holding that same is a long-term capital gain and therefore exempt. He further referred to the notice u/s 148 of the Act dated 15/7/2011 issued for assessment year 2009 - 10. He further referred to the report of the investigation dated 6/6/2011 placed at page number 28 of the paper book written by The Deputy Director Of Income Tax Investigation, New Delhi to the Assessing Officer wherein it is stated that the sale of 1250000 shares was made from joint demat account of the assessee and her husband. He further referred to page number 29 of the paper book where it is mentioned in the report of the investigation wing which advices to the AO that necessary proceeding should be initiated in the case of the assessee and her husband for assessment year 2009 - 10 in order to tax short-term capital gain of Rs. 1.27 crore in each of the cases. He further referred to page nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the no long-term capital gain was disclosed by the assessee. He stated that in fact the assessee has disclosed the long-term capital gain. He further stated that the reasons are copy paste from para number 1 and 2 from the report of the investigation wing and therefore such reasons are borrowed reasons and cannot be sustained in the eye of the law. He further stated that as the reopening has been made at the instance of the investigation wing and the dictate of the higher authorities, is not sustainable in law. To support his contentions, he further relied upon the decision of Honourable supreme court in CIT v. Greenworld Corporation [2009] 314 ITR 81 (SC) and Munjal Showa Corpo 382 ITR 555. Even otherwise, he submitted that the report of the investigation wing directing the learned assessing officer to initiate the reassessment proceedings is a question of law and not of a fact. The reasons are required to be recorded as per the reason to believe of the assessing officer and not of any other person. In view of this, he submitted that the reopening of the assessment u/s 147 of the income tax act made by the learned assessing officer and sustained by the learned CIT - A is devoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsey V DCIT 23 taxmann.com 21 (Mumbai) wherein the above circular number 704 and 768 has been considered. He further referred to the decision of the honourable Delhi High Court in case of Arvind Sungloo trust vs Commissioner Of Income Tax 249 CTR (del) 294 (2012) and referred to para number 12 of that decision to show that when the securities are held by the assessee, it should be the 1st year in which the assets were held by the assessee. In view of this, he submitted that assessee has correctly treated the cost of acquisition of the shares as well as the period of holding of the shares. He therefore submitted that according to the assessee the computation of long-term capital gain made by the assessee is correct and in accordance with the law. Therefore the order passed by the learned Assessing Officer and sustained by the learned CIT - A holding that the sale of shares has resulted in short term capital gain and tweaking the cost of acquisition on such gains earned by the assessee is devoid of any merit. 21. The learned special Counsel on behalf of revenue vehemently referred to the letter dated 6/6/2011 written by Deputy Director of Investigation to the Deputy Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book being return of income and compared it with schedule BTI at page number 2 and stated that it is 'blank'. He further referred to page number 10 of the computation of the total income. He submitted that with respect to the sale of shares of NDTV of 25, 03,259 shares on 17/4/2008 , there is no dispute, however, only dispute is with respect to the sale of 6,25,000 shares on 19/6/2008, where there is no evidence about the holding period and the cost of acquisition of those shares. He, therefore, stated that the learned assessing officer has compared the report of the investigation wing submitted by the Deputy Director of investigation of Income Tax, Compared it with the return of Income filed by the assessee . Thereafter he found that there is no such prima facie indication that the correct disclosure has been made in the return of income qua holding period and cost of acquisition of those shares. Therefore, he submitted that ld AO has 'reason to believe' that there is a failure on part of the assessee to fully and truly disclose the material facts relating to the income. He further stated that subsequent to the assessment u/s 143 (1) of the income tax act, if thereafter any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as distinctive numbers and share certificates nos. The significant feature of the dematerialized securities is that they are fungible i.e. all the holding of a particular security will be identical and inter- changeable and they will have no unique characteristic such as distinctive number, certificate number, folio number, etc. As the holdings of any securities in dematerialized, form is represented only by the account with the Depository and all transfers are affected through book entries in the accounts maintained by the Depository, under this system it is not possible to link the purchase of a security with its sale by means of its distinctive number, etc. It is for this reason that sub-section (2A) has been inserted in section 45 of the act 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 calculating the date of transfer and period of holding in respect of shares held in dematerialized form, the FIFO method would apply. Clarifications have been sought on the manner of application of the FIFO system for the determination of the date of transfer and the period of holding. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the circular where the reference is made to multiple demat accounts, it is held that same applies to account wise, therefore there is no merit in the argument of the ld AR that, circular applies person wise and not account wise. He further submitted that numbers of shares available with Joint account for sale was much higher than the number of shares sold, therefore, explanation of pledge given by the assessee is incorrect. 23. In rejoinder, the learned authorised representative referred to page number 29 of the paper book showing the letter dated 6/6/2011, which clearly shows that the assessing officer was advised that necessary proceedings should be initiated in the case of the assessee and therefore there is no option left with the assessing officer except to reopen the assessment proceedings. He therefore submitted that the reopening has been made on the dictate of the other officers. He further referred to the reasons recorded by the learned assessing officer and stated that para number 1 and 2 of the reasons are merely the copy paste of the information received from the investigation wing and further in para number 3 it is indicated that no short-term capital gain or lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings are correctly initiated, whether the shares held by the assessee in the joint demat account are short-term capital asset or long-term capital asset and what is the 'cost of acquisition' and 'period of holding' of those shares for computation of capital gain. 26. We address the first issue that whether the learned assessing officer has correctly initiated the reassessment proceedings under section 147 of the income tax act or not. Undoubtedly, the Deputy Commissioner Of Income Tax received a letter dated 6/6/2011 from the Deputy Director Of Income Tax, investigation, New Delhi wherein it is stated that there were certain allegations which were forwarded by Shri Yashwant Sinha , M P and the Member Of Parliament and Chairman Standing Committee Of Finance stating that assessee along with her husband is having 3 different demat accounts. One demat account is in the name of the assessee and her husband individually. The third demat account is the joint demat account of assessee and her husband. The facts clearly shows that assessee transferred 475000 shares on 22/1/2008, 1,50,000 shares on 17/3/2008 to the joint demat account with her husband from her individual demat account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return it was indicated that neither long-term capital gain nor short-term capital gain has been disclosed in the return of income. Therefore, he stated that he has reason to believe that because of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment in the above assessment year. The return of income was filed by the assessee, which is placed at page number 1 - 9 of the paper book filed by the assessee. Page number 1 is the acknowledgement. Page number 2 of the return of income is form No ITR-2. It has the breakup of total income offered by the assessee. In part B - TI (3) assessee is required to disclose the head wise income and in this column the assessee is required to show the short-term capital gain or long-term capital gain offered for taxation. In the return of income filed by the assessee, it is shown as nil. Further longterm capital gain is required to be disclosed in schedule CG- B5 and shortterm capital gain is required to be shown in column number A5 of schedule CG. Therefore, the capital gain computation is required to be shown in schedule CG that is placed at page number 4 and 5 of the paper book. In all the colu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endently validated the facts from the income tax return on receipt of the information from DDIT which shows that assessing officer did apply his mind before recording the reasons to reopen the case. As per para number 6.4 of the order, he held that letter from the investigation wing is not in the nature of a direction from a superior authority. However, it is a case of forwarding specific information by the investigation wing to the assessment wing as per the defined set of procedures of the income tax department therefore it cannot be said that AO has reopened the case on the dictating of the higher authorities. As per para number 6.7 of the order, he dealt with the argument of the assessee that AO is factually incorrect that assessee has not disclosed long-term capital gain or short-term capital gain in her return of income. He held that assessing officer has clarified the context in which the remark of nondisclosure of long-term capital gain and short-term capital gain were made and therefore the argument of the assessee was rejected. In paragraph number 6.9 of his order, he extracted the image of the income tax return filed by the assessee to show that the capital gain disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer clearly applied his mind to this and formed a reason to believe that shortterm capital gain income of Rs. 1. 27 crores chargeable to tax have escaped assessment. Therefore, clearly on the foundation of the information, the learned assessing officer independently verified return of income and noted that assessee has not disclosed short-term capital gain of Rs. 12,700,000/- and then formed a belief to necessitate the issuance of notice u/s 148 of the income tax act. Therefore, reasons recorded by the learned assessing officer for reopening of the assessment fulfils the criteria as laid down by the honourable Delhi High Court in the above judicial precedent relied upon by the learned authorised representative. The learned authorised representative also relied upon the decision of the honourable Delhi High Court in 319 ITR 221 in Shipra Srivastava V ACIT. In that particular decision the honourable Delhi High Court held that the reasons did not refer to any material which has come to the notice of the assessing officer subsequent to the finalization of the assessment u/s 143 (1). In the present case there is a definite information coming from the investigation wing which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me tax act. Accordingly, the above decision does not come to the rescue of the assessee but in fact fulfils all the ingredients for the proper initiation of reassessment proceedings in the present case laid down by the honourable Delhi High Court in that particular decision. 28. The learned authorised representative has also raised an issue that the reopening of the assessment has been carried out at the instance of the investigation wing wherein it has been dictated by them to the assessing officer to initiate reassessment proceedings. It is further argued that the report of investigation wing is an advisory, which is not permissible in law. The learned authorised representative pressed into service the decision of the honourable Delhi High Court in 382 ITR 555 and 314 ITR 81 where the learned assessing officer initiated the 148 proceedings at the instances of the higher authorities. In the present case, in para number 4.2 at the end of the letter dated 6/6/2011 by the Deputy Director of Income Tax Investigation, New Delhi mentions that the assessing officer is advised that necessary proceedings should be initiated in the case of the assessee and her husband for assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on objective criteria. The recording of reasons to believe and not the reasons to suspect is the pre-condition to the assumption of jurisdiction under section 147 of the act. The reasons to believe must demonstrate the link between the tangible material and the formation of the belief or the reason to believe that income has escaped assessment. Honourable Delhi High Court in that decision in para number 19 - 24 has held that when all the assertions made by the learned assessing officer in reasons recorded for reopening are clearly emanating from the report of the investigation wing and there was nothing to indicate that how the assessing officer has formed a reason to believe without linkage of such information with his formation of belief , it cannot be held to be a valid reason for reopening of the assessment. 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 of Rs. 16764284/- , he further noted that that the return of income was perused where n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng-term capital asset and the cost of acquisition was only Rs. 4092/-. The learned assessing officer held that shares transferred by the assessee from the joint demat account are short-term capital asset as they were acquired only on 28/12/2007 and are sold on 19/6/2008 on FIFO basis applicable to the dematarialsed securities. Assessing officer also considered the cost incurred by the assessee for crediting the shares into the joint demat account on 28/12/2007 accordingly the computation resulted in short-term capital gain of Rs. 13,000,000/-. On appeal, the ld CIT (A) Dealt with this issue as under :- "7.2 The issue involved is that whether the capital gain arising on transfer demat shares of NDTV Ltd. on 19/06/2008 out of joint DP account maintained with M/s IndiaBulls Securities Limited (depository participant) at a consideration of Rs. 56,28,35,892/- would result in short term capital gain or long term capital gain. The assessee's contention is that the capital gain on transfer of said shares is long term capital gain as the transfer of 12,50,000 shares was out of 12.5 lac shares transferred to Joint Demat account from their individual demat accounts of both i.e. Dr Pran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gain accruing on sale of such shares is long term capital gain. The Assessing Officer has not accepted the contention of the assessee regarding claim of long term capital gain on sale of 12,50,000 shares held in joint demat account. 7.4 it may be noted that under the old system, physical share certificates had unique characteristic such as distinctive number, certificate number, folio number, etc. and on sale of the same, the period of holding was computable from the date of purchase of the said share to the date of sale of the share since it was possible to link the purchase of a security with its sale by means of its distinctive number. However, under new system, whenever purchase/sale, i.e., any transfer of such securities held in dematerialised form is effected, delivery is given or taken by making adjustments in the account maintained with the Depository by the two parties. The significant feature of the dematerialized securities is that they are fungible, i.e., all the holdings of a particular security will be identical and interchangeable and they will have no unique characteristic such as distinctive number, certificate number, folio number, etc. As the holdings' o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NDTV' in two separate demat accounts i.e. (individual account and joint account). There is profit or gain on transfer of 12.5 lakh NDTV shares on 19/06/2008 out of joint demat account. This profit is chargeable to income tax as income of beneficial owner (i.e. the assessee) of the previous year in which transfer takes place. The cost of acquisition and period of holding of NDTV shares is to be determined on the basis of first in first out method. The principle of FIFO is to be applied 'to the account from where the transfer' i.e. "out" of electronic fungible shares takes place and the period of holding for such fungible "out" shares of a particular scrip is to be taken from the first "in" shares of the same scrip in the relevant demat account. The section nowhere allows to refer the shares held in some other account where no transfer has taken place. Logically, also, when a transfer from a particular demat account, it is wrong to resort to some other denat account. FIFO is not applicable across the accounts of the assessee because only that particular account has to be considered where the transfer has taken place. There is no logic to consider all accounts if the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he specific shares in the demat account. 7.11 The assessee has failed to substantiate the fact of pledging of a particular set of shares. As discussed above, the joint demat account with Indiabulls was opened with purchase of 48,35,850 shares on 26.12,2007. As per the D-mat statement on 1.1.2008, 40,00,000 shares were pledged out of 48,35,850 shares; whereas on 30.04.2008, only 27,00,000 shares were pledged out of 48,35,850 equity shares. However, it remains a fact that over 12,50,000 shares were free from pledge and thus, available in the account out of 48,35,850 equity shares as on 19.6.2008 i.e. the date of sale on which 12,50,000 shares were sold. Thus, the contention of assessee that shares purchased through open offer on 26.12.2007 were not available for sale on 19.6.2008 is not valid. 7.12 The assessee has also contended that the assessing officer has made the addition based on the CBDT circular and the circular cannot be used against the assessee. However, as discussed above, the circular only provides scenario based clarification in pursuance to section 45(2A). It nowhere exceeds the mandate of section 45(2A) but only provides the clear cut scenario based clarificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to remove these difficulties faced by the investors, a system of holding securities in the electronic mode at the option of an investor has now been introduced in India. The object of this system is to eliminate problems which are normally associated with settlement through physical certificates, like tearing/mutilation of share certificates due to careless handling, loss of certificates by postal authorities or registrars or investors, problems of bad delivery, forgery of certificates, etc. The new system is devised to ensure faster and hasslefree settlement of trade with shorter settlement cycles. 2. Under the new system, the movement of the scrips physically from one person to another is totally done away with by introducing certain intermediaries, chief among them being a depository and a participant. In order to implement the system of holding and transferring securities through the electronic media, firstly the Depositories Act, 1996, has been enacted. The object of this Act is to regulate the 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that for the purposes of calculating the date of transfer and period of holding in respect of shares held in dematerialised form, the FIFO method would apply. Clarifications have been sought on the manner of application of the FIFO system for the determination of the date of transfer and the period of holding. 4. The primary issue under the Income-tax Act in the case of securities whether held in physical form or in the dematerialized form remains the determination of cost of acquisition and the period of holding. The Board had earlier issued Circular No. 704, dated 28th April, 1995, which explains the manner in which the "date of transfer" and "period of holding" may be determined. This primary position as regards the "date of transfer" and "period of holding" does not change even when the securities are held in the dematerialized form. The only problem when securities are held in dematerialized form is that the distinct trail linking every share to a certificate and its unique 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" a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by us] On careful reading of para number 5 (b) of the above circular, it is clearly mentioned that in the depository system the investor can open and hold multiple accounts. In such cases where an investor is holding more than one security account, FIFO method would be applied account wise. After that, it has also been clarified reason for the same, holding that where a particular account of investor is debited and sale of securities the securities lying in his other account cannot be construed to have been sold as they continue to remain in that account only. Therefore it is clear that the applicability of the FIFO method when the shares are sold from the demat accounts should be applied each account wise. In the present case, assessee does not have multiple accounts in her own name. Assessee sold shares from a joint account held 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 autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee loses any enjoyment of possession of such shares but how if such shares are transferred in the joint account but the issue is whether the sales sold from the joint account have the period of holding for determination of its character as short-term capital asset are long-term capital asset would be considered from the date when the assessee originally purchased shares in her individual demat account or not. The provisions of section 45 (2A) and the circular is issued by the central board of direct taxes provides otherwise. In view of this the decision relied upon by the learned authorised representative does not help the case of the assessee. 35. Assessee has further relied upon the decision of the honourable Delhi High Court in case of Arun Shungloo Trust 249 CTR (Delhi) 294. We find that 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mains is property at Mussoorie wherein the authorities below have sustained the addition of Rs. 219542/- under the head income from house property. With respect to the above property the learned assessing officer has assumed that the assessee's share of rent of the above property would be 0.8% of the cost of property being Rs. 6 535315/-. Therefore, he assumed that the assessee would be earning rent of Rs. 5 2000/- per month and therefore the entire years rental income was assessed at Rs. 6 24000/-. Further from the above property the learned assessing officer granted deduction under section 24 of 30% and determined the income from of property at Rs. 4 36800/-. On appeal before the learned CIT - A, assessee submitted that the annual letting value taken by the cantonment board at Mussoorie was Rs. 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 rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on hypothetical basis. Accordingly, we direct the ld AO to take the let out value of the property as per the determination of same by cantonment board for this year to determine the annual fair rent of the property and then decide the issue afresh. Accordingly, this part of ground number 3 of the appeal of the assessee is allowed. 42. Accordingly, appeal of the assessee is partly allowed. 43. Coming to ITA number 2021/Del/2017 preferred by Dr. Prannoy Roy, which is on identical facts and circumstances as in the appeal of Mrs. Radhika Roy, therefore, for the reasons given by us while deciding that appeal, we dismiss ground number 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- which represented the alleged unexplained investment has erred both on facts and in law in making an addition by invoking the provisions of section 56(2)(vii) of the Act. 1.7 That in sustaining the addition, has deliberately overlooked the judgment of Full Bench of the Delhi High Court in the case of CIT Vs Sardari Lal & Co. reported in 251 ITR 864, therefore, 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 addition the learned Commissioner of Income Tax (Appeals) has failed to appreciate written submissions filed by the appellant wherein it was stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld 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 Rs. 23,59,700/- to Rs. 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 Rs. 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 Rs. 3,54,000,000, which was not claimed in the original return of income. As a detailed information regarding incorrect disclosure of capital gain received from the Deputy Director of Income Tax (Investigation) vide letter dated 6-9/6/2011, case of the assessee was selected for scrutiny and necessary notices u/s 143 (2) dated 27/7/2011 was issued. During the course of assessment proceedings, learned assessing officer found that assessee has sold 5781841 equity shares of NDTV limited on 3/8/2009 at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 that on 9/3/2010 the market value of the share of NDTV limited on the stock exchange was in the range of Rs. 129.95 to Rs. 134.70 per share and assessee has sold shares to RRPR holding private limited on the same day @ Rs. 140/- per shares . Therefore, learned AO noted that these transactions have been carried out to manipulate the gain or loss of long-term capital gain by the assessee. Ld AO applied the observation of the honourable Supreme Court in case of McD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 4/- per share whereas on the same day at BSE (Bombay Stock Exchange), NDTV share was traded within the range of Rs. 134.95 (lowest of the day) to Rs. 141.50 (highest of the day). Assessing Officer has computed the long term capital gain by taking arm's length price of Rs. 135 (lowest value of the share on the given date) as sale price of the NDTV shares in place of actual sale price of Rs. 4 per share. AO held the nature of "gain" on aforesaid transfer of shares to be long term capital gain. In arriving at the above conclusion, he has held as under: "2.3 Whereas under the Income Tax Act, each person is assessed to tax separately be it wife, husband or their promoted company. If the submissions of the assessee are believed to be correct then Dr. Prannoy Roy, Mrs. Radhika Roy, M/s RRPR Holding Pvt. Ltd. and also NDTV should be assessed as one unit. By following assessee's versions there is no need to verify the genuineness of transaction betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Capital in kind into Firm or AOP/, BOI by a partner/ member. Amount recorded in the books of accounts of Firm or AOP/ BOI as the value of Capital Asset. 4 45(4) Distribution of Capital Asset in kind on dissolution of Firm or AOP/ BOI. Full market value of assets on the date of distribution. 5 45(2) Shareholders receiving assets from liquidator on the liquidation of a company Market Value of the assets on the date of distribution less amount assessed as deemed dividend U/s 6 49(4) Gift etc. of shares/ debentures. Market value on the date of gift. 7 50C Transfer of Land &/ or Building. Value declared by the assessee or Value as assessed by Stamp valuation authority whichever is 6.7 Since in this case, the transfer of shares do not fall under any of the above mentioned provisions, therefore, market value cannot be deemed to be the full value of consideration of the asset in this case. I do not find force in the argument of the assessing officer that "accrual" phrase introduced in the provisions refers to the market value of the capital asset. If this interpretation is taken to be true, there would not have been any need for deeming provisions f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per share. The AO held that amount of investment made to acquire the shares cannot be less than the market worth of shares and hence, made an addition on account of unexplained investment. 8.4 It is a fact that the assessee has purchased 34,78,925 shares of NDTV from RRPR Holding (P) Ltd. at a rate of Rs. 4 per share on 09/03/2010 which is quite lower than the actual market rate quoted on the stock exchange. The moot point in this case is that whether an asset having a particular market value based on rate quoted on stock exchange can be transacted at a value less than the market rate? There can be two situations in this scenario. One, if the answer is yes, this shows that the buyer has been favoured in this transaction to the extent of difference amount. Second, if the answer is no, the buyer has paid difference amount (difference between market value and the transacted value) without disclosing it in books of accounts. The assessing officer took it to be a case of "second situation" and therefore, held it to be unexplained investment in the shares. 8.5 On examination of the facts of the case, it is noticed that provisions of Section 56(2) (vii) of the act enable the taxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of section 50C; (b) "fair market value" of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed86; (c) "jewellery" shall have the meaning assigned to it in the explanation to sub-clause (ii) of clause (14) of section 2, (d) "property" 87[means the following capital asset of the assessee, namely:-] (i) immovable property being land or building or both; (ii) shares and securities; (Hi) jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; (vii) sculptures; (viii) any work of art; (ix) bullion;] [(e) "relative" means, - (i) in case of an individual- (A) spouse of the individual; (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, any member thereof;] (f) "stamp duty value" means the value adopted or assessed or assessable by any authority of the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two shareholders. 8.9 It is pertinent to mention here that M/s RRPR Holding (P) Ltd is a separate and distinct legal entity and is not covered in the definition of the 'relative'. The meaning of relative is clearly defined in the explanation to Section 56(2)(vii)(c). The term 'relative' refers to seven different type of relations which have been defined in the explanation. The company M/s RRPR Holding (P) Ltd is a holding company. Generally, a holding company is used to facilitate transfer of ownership of parent company without sale of shares of the parent company. Therefore, shareholders of holding company can change at any moment of time. By no stretch of imagination, the aforesaid company is covered under the definition of 'relative' of 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)(c) 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only the ultimate computation arrived at by the Income-tax Officer but he can revise every process which led to the ultimate computation or assessment. In other words, what he can revise is not merely the ultimate amount which is liable to tax, but he is entitled to revise the various decisions given by the Income-tax Officer in the course of the assessment and also the various incomes or deductions which came in for consideration of the Income-tax Officer." 8.14 It flows from the above decision that the power of enhancement under Section 251 of the Income-Tax (l-T) Act, 1961 conferred on the CIT (Appeals) are plenary. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. Therefore, the stand of the assessee regarding conditional transfer on mutual convenience of the parties cannot help the assessee to avoid taxation under the provisions of Income Tax Act. Accordingly, the Ground of appeal is dismissed." Therefore, issue of the addition of Rs. 47,31,33,800/- made by the learned assessing officer as alleged unexplained investment was upheld by the learned CIT - A as chargeable to tax under section 56 (2) (vii) ( c ) of The Income Tax Act. Assessee is aggrieved and therefore, she has challenged it 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 releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entered by owner and tenant or matter of negotiation between them whereby if tenant agree to pay for municipal taxes on behalf of owner then these taxes should be added in actual rent receive/receivable to derive annual value. There could be vice versa case, where owner has agreed to pay some obligation of tenant, in that case rent will be reduced by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide letter dated 20/09/2016 that the prevailing fair rental value was Rs. 1,00,000/- to Rs. 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 Rs. 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 Rs. 12,00,000/- to Rs. 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 Rs. 1.25 lac per month. 9.5.4 The inspector report ought to have contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that is no reason for this Court to provide for a higher or more frequent increase. The same falls in legislative domain. This Court cannot step into the shoes of legislature (see Union of India v. Deoki Nandan Aggarwal 1992 Supp(l) SCC 323)" 9.5.7 The rental value of such property would be around Rs. 22 per sq ft in FY 2009-10 based on increase of 10% every three years. Accordingly, the fair rental value of the flat of 1175 Sq. Ft. area should be taken at Rs. 25,850/- per month (22*1175) and thus, the annual value of the property comes to Rs. 3,10,200/- out of which the share of the assessee comes to Rs. 1,55,100/-. The share of the assessee in the annual value of the property is worked out at Rs. 1,55,100/- by taking the higher of two values of Rs. 1,55,100/- as fair rental value and Rs. 43,664/- as municipal value. The income from house property is computed at Rs. 1,08,570/- after, providing standard deduction of 30%. There is a difference in income of Rs. 34,268/- between the value as computed by the assessee at Rs. 74,302/- and the value computed as above at Rs. 1,08,570/-. The difference of Rs. 34,268/- is to be added as income from house property(B-213,G.K.-l, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspector to check and report the fair rental value. The report submitted by the inspector, Dehradun, heads as under: " As per your direction, I visited to village Sinola, Dehradun, the rental rate for residential property are in the range of Rs. 7-10 per sq. ft and for commercial properties, the range of rental rates is Rs. 22-25 per sq.ft." as per the report, the village Sinola is situated on the way from Dehradun to Mussorie. It is located in the pristine Dehradun valley at the foothills of the famous hill station Mussorie. The village is lush green. The property rates are very high due to its location, greenery and serenity of the place. Good number of farmhouses are there in and around this village. As regards the property of the assessee, the plot has total open area of 564.3 SQ YARDS +855 sq: meter and covered area of 104.65 sq. meter." 9.5.14 In order to validate the rental value as reported in remand report through independent sources, information has been culled out from various property portals such as magicbricks.com, 99acres.com etc. which indicate the current rental value of the area at Rs. 12 per sq ft as tabulated below:- Property description Website Cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted 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 jurisdiction to obtain a report in respect of matter pending in appeal before your goodself. It is emphasized that the inspector has given no basis for his observation that rental rates for residential property are in the range of Rs. 7-10 per sq.ft. and for commercial properties, the range of rental rates his Rs. 22-25 per sq.ft. and therefore such an unsubstantiated report has no evidentiary value and cannot be relied upon " 9.5.17 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 asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 18/- based on the information available on the website. Screenshots of the quotes available on the said websites are placed on file. Property description Website Covered area Rent in Rs. (Per Month) Rent per Sq. Ft. Residential apartment for rent in LBSNAA 99 acre 500 Sq. Ft. 11,000/- 22 Independent floor for rent in Landour 99 acre 1100 Sq. Ft. 20,000/- 18 House for Rent Mussorie Quikr 1700 Sq. Ft. 25,000/- 14 Average rent per Sq. Ft. ' 54/3 = 18 9.5.22 It may be added that the usage of different property related portals have increased over the years for both landlords and tenants. Therefore, the information available on such portals is relatively reliable & reasonable as it is based on actual offers of landlords/brokers in the market. The average monthly rent rate of Rs. 18/- per Sq. Ft. for the Mussorie property has been further discounted keeping in account that the final rent rate may be negotiated at say 10 % discount. The main reason for giving discount for Mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. The share of the assessee in the annual value of property comes to Rs. 3,13,632/- (Half of Rs. 6,27,264/-). Accordingly, the income for house property comes to Rs. 2,19,542/- after allowing standard deduction of 30%. South Africa Property: 9.5.27 I find that the assessee and her husband had acquired a house property at Cape Town, South Africa under a deed of transfer executed at 15.11.2009 but registered on 15.01.2010. The appellant claimed that since the assessee did not co-own the property for the entire period of 12 months in the Assessment Year 2010-11, and therefore, there could have been no annual value of the said property u/s 22 of the Income Tax Act. The appellant relied upon the judgement of Special Bench of the Hon'ble Tribunal in the case of M. Raghunandan vs. ITO reported in 11 ITD 298,303,305 that basic concept in which section 22 differs from all other sections is in bringing in a taxable period by reference to 'annual value'. The court held as under: * A basic concept in which Section 22 differs from all other sections is in bringing in a taxable period by reference to 'annual value1. In other words, what is taxed under the Act is only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should go untaxed. * Section 4 and 5 of IT Act provide the basis of charge of income-tax and these provisions envisage that all income of an assessee (especially in case of a resident) from whatever source derived, is required to be charged to tax unless the same is exempt by a specific provision. 9.5.29 In the present case, the property in South Africa is a self occupied property and there is no rental receipt in actual from the said property. However, the assessee in 'P.J. Eapen' case received rental income. Therefore, the decision of P.J. Eapen to charge the rental income as income from other sources is not applicable. It is pertinent to mention here that the provisions of section 22 & 23 of I.T.Act nowhere specify the condition of ownership of the property for the complete year for invoking the aforesaid provisions. However, respectfully following the judgement of Special Bench of the Hon'ble Tribunal in the case of M. Raghunandan vs. ITO, the addition in this case does not hold good. 9.5.30 Further, the assessee pointed out that the notional income on the aforesaid property could only accrue or arise in South Africa. Article 6 of DTAA provides that "incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the shares of NDTV limited at the relevant point of time, which is the subject matter of challenge by the appellants. 58. On 06/08/2018, the learned AO submitted prayer for admission of additional evidence in ITA number 02706/Del/2017 in case of the assessee. The learned AO referred the decision of the honourable Delhi High Court dated 4/5/2018 and submitted that additional evidence in the form of 'call option agreement' dated 21/07/2009 between Subhgami trading private limited and RRPR Holdings private limited, Dr Roy and Mrs. Radhika Roy may be admitted as an additional evidence . 59. As per the letter dated 27th November, 2018 the assessee also filed a detailed preliminary objections to the application dated 6/8/2018 filed by the learned assessing officer seeking admission of additional evidence under rule 29 of Income Tax Appellate Tribunal Rules, 1963. the assessee has submitted that the alleged additional evidences placed on record by the revenue wide submission dated 6/8/2018 does not warrant admission under rule 29 of the income tax appellate tribunal rules and in-state the same must be rejected altogether. The assessee further stated that if the above additional evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion dated 3/8/2009 is pursuant to an agreement dated 21/7/2009 between Vishwapradhan commercial private limited. On 21/7/2009, one of the agreements was entered which supplementary agreement with Subhagami is trading private limited. He further submitted that Subhgami trading Pvt Ltd and Vsihwapradhan Commercial company private limited are having their offices in the same premises and signatory of the both the companies are also the same person. He further stated that the agreement with Vishwapradahn Commercial Co Pvt Ltd dated 21/7/2009 between that company and RRPR holding Pvt Ltd stated as 'borrower' therein whereas Dr Prannoy Roy and Mrs. Radhika Roy are co signatories. This agreement is with respect to the disbursal of loan of Rs. 350 crore to repay loan taken by RRPR Ltd from ICICI Bank Ltd. He further referred to page number 155 - 157 of the paper book. He showed that purpose of the loan stated in the agreement and as stated in clause 9 of that agreement are strange and not to repay the loan of ICICI bank. He further referred to various clauses of that agreement. Then he submitted that i. transactions of the loan by RRPR Holdings Ltd, ii. sale of shares by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to certain conditions. He therefore submitted that it is amply clear that revenue is not entitled to adduce any additional evidence before the coordinate bench. iii. He further stated that revenue at this stage could not change the complexion of the case. He further stated that the revenue cannot go beyond the order of the learned assessing officer as held by the special bench of the tribunal in Mahindra and Mahindra Ltd in 122 TTJ 577. iv. He further stated that the learned assessing officer has not pointed out or even indicated as to which ground of appeal the alleged additional evidence relates to. Further no ever meant to the effect that which part of the assessment order does the call option agreement help in sustaining has been made by him. He therefore submitted that the application filed by the revenue is vague, improper and unclear and thus needs to be rejected on this ground alone. v. Even otherwise, he submitted that the call option agreement only grants are right to the purchaser 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituted the fair market value but the actual consideration received and accrued to the assessee only which is benchmarked with the fair market value as the complexion of the whole transaction will unfold. He therefore submitted that application of the learned AO deserves to be admitted at this stage. 64. We have carefully considered the rival contentions and perused the orders of the authorities below as well as the application of the LD AO for admission of additional evidence. The learned AO submitted that as per letter 6/8/2018, the revenue had filed certain documents that were received from the respondent on the direction of the bench. In support of the right of the revenue to move the application for additional evidence under rule 29 the AO referred to the decision of the honourable Delhi High Court dated 4/5/2018 in WP ( C ) no. 4743/2018 wherein it has been held that revenue has to move a formal application under rule 29 of the ITAT rules 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. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanied by an application stating the reasons for filing such additional evidences. If rule 18 (4) is read with rule 29, there cannot be any difficulty in holding that in terms of rule 29, an additional evidence can also be produced by the revenue on an application. Further, under the words "or for any other substantial cause" an appellate court has the discretion to admit further evidences upon the application of a party. Therefore, according to us, there is no bar to file additional evidence by the learned assessing officer. More so in the present case the honourable High Court in W.P.(C) 4742/2018 & CM APPL.18248-18249/2018 dated 4/5/2018 in case of assessee has also held s as under :- "5. As far as the placing on record of the additional documents is concerned, there is considerable controversy as to whether in fact a statement was made on 22.11.2017, as is urged by the Revenue and contested on behalf 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263. We, therefore, do not permit the learned D.R. to transgress the boundaries of his arguments." In that particular case the learned departmental representative tried to argue that double taxation avoidance between India and United Kingdom is not applicable at all which was relied on by the learned assessing officer thereby making altogether a new point of argument. Such is not the case before us here the learned departmental representative has categorically stated that he is just supporting the order of the learned assessing officer and there are certain agreements which are mentioned and submitted by the assessee are required to be relied upon. In view of this, according to us, the learned departmental representative is not making an altogether new argument but is supporting the argument of the learned AO only. 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 pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complex structure of various agreements the actual consideration received or accruing to the assessee is linked to the listed price of the shares of NDTV limited. He therefore submitted that the learned CIT - A has not at all looked into the real nature and substance of the transaction but has simply accepted the written submission and arguments of the assessee and deleted the addition. He therefore submitted that learned assessing officer has aggrieved with that order and is in appeal. i. He submitted that two individuals i.e. Mr. Prannoy Roy and Mrs. Radhika Roy has substituted their quantities of share in the name of RRPR Holding P Ltd , a controlled and managed company, at Rs. 4/- when the quoted prices of those shares on stock exchange was Rs. 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention to bring/ acquire control over NDTV by the lender company without contemplating any repayment of the loan from the promoters of the borrowers. He therefore submitted that on reading of the order of the securities and Board of India ( SEBI) , it is clearly a transaction of sale of shares by the promoters, where the borrower ( RRPR Holdings P Ltd ) is merely an intermediate entity to create façade of 'borrowing' to hide the real transaction of the 'sale of shares' by the promoters to thirdparty, who is titled as ' the lender' . iv. He further stated that the complete documents have not been filed. He further stressed upon the fact that there are 2 agreement dated 21/7/2009 which 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the transfer of shares at Rs. 4/- for a share where prevalent market value of the shares was in the range of Rs. 130/- to Rs. 140/- per share. ix. He further referred the submission made by Assessee before the learned CIT - A on 17/2/2017 and stated that appellant has contended that the addition made is untenable since the learned assessing officers overlooked the factual position that shares were transferred were conditional and were on ' escrow' account. The Ld. Departmental representative stated that there were no conditions attached to the transfer of shares at Rs. 4/- for a share where prevalent market value of the shares was in the range of Rs. 130/- to Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be determined. He submitted that in the present case there was no intention on the part of the parties to obtain the loan but to transfer the controlling interest take by sale of the shares by the promoters. He submitted that RRPR Holdings private limited is merely used as an intermediary to give the colour of loan agreements. He also relied upon the decision of the honourable madras High Court in 139 ITR 736 (Madras) (1983). 72. Therefore he stated that full value of the consideration accruing to the assessee would be Rs. 140/- (mean taken by ld AO of Rs. 136/- per share) although RRPR Holdings P Ltd may t Have paid Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of shares at s. 4/- per share which is less than the market rate, assessee did gain anything and therefore nothing has accrued to assessee more than Rs. 4/- per share. vi. He further submitted that the rational of second and third transaction was just to repay the loan. vii. He further referred to the significance of 'Call option agreement' and stated that 'call option price of Rs. 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 capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not the case of assessee that ICICI wanted to exit and then Vishwapradhan Commercial private limited came into picture. He further referred to para number 6.3 of agreement placed at page number 162 of the paper 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 Rs. 4/- per shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion accruing to the assessee on transfer 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 original loan of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 lender will look for a stable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructured. 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 Rs. 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 Rs. 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 agreement the apparent transaction is of transferring shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters 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 the controlling angle." In para number 27 it was further held that the close look at the structure of the transaction involving around the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 Rs. 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 agreement speaks louder that full value of the consideration is INR 135/- per share. Further the decision relied upon by the learned authorised representative is pertaining to provisions of section 12B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 consideration for transferring the shares and further pledge in favour of the lenders. In the decision relied upon by the learned authorised representative as stated at page number 239, that case involves sales simpliciter whereas th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 Rs. 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 by the learned AO under section 69/69B of the Act. However, he confirmed the action by enhancing assessment by invoking provision of section 56(2) of the Act. He further referred to Para number 8.17 of the order of the learned CIT - A wherein it has been held that assessee cannot escape addition under the provisions of section 56 of the income tax act. Contesting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 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 any power to make the addition under that section. 95. He further submitted that the provisions of section 56 and 69 are different sources of income and for this he relied upon the decision of the coordinate bench on Dulari Digital photo services P Ltd 984/CHD/2010. He submitted that section 69 and section 56 are inherently contradictory and diametrically opposite sections. He further stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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); 4. Shapoorji Pallonji Mistry v CIT [1958] 34 ITR 342 (Bom.); 5. CIT v Kanpur Coal Syndicate [1964] 53 ITR 225 (SC). 6. CIT v Narbheram Daluram [1997] 224 ITR 610 (SC); and 7. Hari Mohan Sharma & Other v ACIT- ITA No 2953 & 2954/ Del /2018, ITAT 'E' Bench Delhi- Date of order 31/01/2019. In the last decision referred to in the list of cases above, Hon'ble Bench in Para (19) at Page 29 held as under: "The principle culled out from the above judicial precedents clearly shows that words "enhance the assessment" are confined to the assessment reached through a particular process. It cannot be extended to the amount, which ought to have been computed. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provided different remedial measures as are contained in sections 251(1)(a), 263, 154 and 147 of the Act. In the category stated in (a), obviously if an income escapes an assessment, the provisions of Section 147 of the Act can be invoked, subject to the condition stated in the proviso of the said section. In the category of cases falling in category (b). section 251(1)(a) provides the CIT(A) could enhance such an assessment qua the under-assessed sum i.e. where the AO had dealt the issue in the assessment and was the subject matter of appeal. In category falling In (c) & (e), the CIT has been empowered to take an appropriate action under section 263 of the Act In category of cases falling under clause (d) and (f), appropriate action under section 147 of the Act can be taken to tax the income which has escaped assessment or had remained to be taxed. There can be situations where an item has been dealt with in the body of the order of assessment and the assessee being aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the act the ld DR submitted that i. Learned Assessing Officer has discussed this issue in Para (3) at Page (4) to (6) of the assessment order by making addition of Rs. 47, 31, 33,800/- under section 69/69B of the Act adopting the value of 34, 78,925 shares of NDTV at Rs. 136/- per share. These shares were purchased by each of the appellants from RRPR on 08.03.2010 & explaining that these shares were part of 57, 81,842 shares transferred to RRPR by each one of them pursuant to loan agreement dated 21.07.2009 with VCPL. ii. Explanation of the appellants can be seen in Para (8.2) at Page (205) of letter dated17.02.2017 addressed to learned CIT (Appeals). It is explained that learned A.O overlooked the factual position that what was retransferred were such shares, which were transferred by the appellants conditionally and were on escrow account. iii. It is pertinent to mention here that there is no evidence till date in support of the explanation that certain conditions existed at the time of transfer among the parties to the transaction as well no evidence has till date been led that an escrow account existed/. iv. Legal position on the applicability has very well explaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 925 and made an addition of INR 47,31,33,800/-. AO was also of the view for the reason that on the same date assessee sold 4733187 shares to RRPR Holdings Pvt Ltd at INR 140/- per share based upon the market rate. Therefore, for sales of shares, assessee traded at the market rate and for buying the shares the rate was substantially lower than market rate. The AO at the end of the order at the time of making stated that the above sum is added to the income of the assessee under section 69/69B of the act. The learned CIT - A analyzed the addition made by the learned assessing officer in para number 8.4 of his order and stated that the learned assessing officer has presumed that the buyer has paid the difference in amount between market value and transacted value without recording the same in the books of accounts and therefore the addition has been made under section 69 of the income tax act. However, he examined the fact and noted that the provisions of section 56 (2)( vii) of the act enables the taxation of such a scenario on deemed basis. He then extracted the provisions of the law and noted that that assessee being an individual has received a property being 3478925 shares of NDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alone. Therefore such an issue with all its aspects has been merged with the order of the ld CIT A) and precludes the applicability of the provisions of section 263 of the act. Thus, that provision is also ruled out in the present case. 103. Admittedly, there is no new source of income, which has not been considered by the ld AO. In present case, ld AO has already considered the taxability of sum being difference between the market value of shares and purchase price of the shares. Therefore, it cannot be said that, CIT (A) has discovered a new sources of Income. 104. Reliance by ld AO on the decision of Madan Mohan Sharma is misplaced as in that case the issue before CIT (A) was with respect to eligibility of deduction u/s 54 / 54 F of the act, where the ld CIT )A found that sales consideration itself is chargeable to tax u/s 68 of the act as there was no sales of any property. Under that circumstances it was held that , CIT ()A has discovered already a new sources of Income and as such in that case, only option with revenue was to proceed u/s 263 of the act. The facts in the present case are distinguishable. 105. In view of the above facts we do not find any infirmity in in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave petition dismissed by honourable Supreme Court where the issue was whether the amount of profit earned by the assessee on commodity profit is income chargeable to tax under section 68 or under section 56 of the income tax act. The honourable Punjab and Haryana High Court at page number 10 of the decision has held that the expression income from other sources would come into play only where income is relatable to the known source. Where the income is not relatable to any known or any bona fide source it would necessarily be brought to tax has considered as income of the assessee u/s 68 of the income tax act. The facts of the above case are clearly distinguishable and not applicable because at that particular time such sum has in dispute before us was not covered under the head of income from other sources. 109. In view of the above facts we do not find any infirmity in the order of the learned CIT - A in enhancing the income of the assessee by invoking the provisions of section 56 (2)(vii) of the act by making an addition of INR 4 38170604/- on account of difference between the purchase price of the shares of NDTV limited and the market price of those shares quoted on recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. 1.4 That the finding recorded by the learned Commissioner of Income Tax (Appeals) that "the assessee cannot escape the taxation under the deeming provisions of section 56 of I.T. Act by making such claim of "conditional transfer" driven by mutual business interests. IT considers each transaction in the natural course of action. Therefore, the stand of the assessee regarding conditional transfer on mutual convenience of the parties cannot help the assessee to avoid taxation under the provision of Income Tax Act" is highly vague and is based on assumption which otherwise too are contrary to record, legally misconceived and untenable. 1.5 That in recording the aforesaid findings the learned Commissioner of Income Tax (Appeals) has failed to comprehend the powers vested in him u/s 251 (1 )a) of the Act; and has failed to appreciate that he had no powers u/s 263 of the Act, in as much as this issue could alone be examined by the learned Commissioner of Income Tax and not by him. 1.6 That the learned Commissioner of Income Tax (Appeals) having deleted the addition made by the learned Assessing Officer of Rs. 47,31,33,800/- which represented the alleged unexplained inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the CIT(A) is legally justified in deleting addition of Rs. 55,88,73,564/- on account of capital gain on sale of shares quoted @ Rs. 135/- to Rs. 140/- at BSE for sale consideration @ Rs. 4/- per shares to the related party by ignoring finding of facts recorded by the Assessing Officer (the AO)? 2. Whether on facts and in circumstances of the case, the CIT(A) is legally justified in deleting addition of Rs. 55,88,73,564/- on account of capital gain on sale of shares quoted @ Rs. 135/- to Rs. 140/- at BSE for sale consideration @ Rs. 4/- per shares to the related party by ignoring meaning of the phrase "...full value of consideration...accruing..." u/s 48 of the Income Tax Act 1961 (the Act)? 3. Whether on facts and in circumstances of the case, the C1T(A) is legally justified in holding that full value of consideration 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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