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TMI Blog1990 (4) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order (duly supported by documentary evidence gathered during search operations and collected from bankers which clearly proves understatement of consideration). 3. The learned CIT(A) further ignored the most important aspect that the very shares had been transferred by J.C. Gupta to his family members @ Rs. 100 per share only about 10 days before the purchase of shares by the assessee and the substantial downfall in value of only Rs. 8 is by no stretch of imagination understandable." 2. From the above, the impression projected is that addition of Rs. 81,989 was made on account of understatement of purchase consideration of shares of Angoora Wool Comber (P) Ltd. which, according to the respondent, were purchased @ Rs. 8 per share but as per the revenue the face value was Rs. 100 per share. But since in ground No. 4 restoration of the assessment on the point is prayed that controversy which emerges for adjudication is whether the addition of Rs. 81,989 worked out by the Assessing Officer by taking the value of per share at Rs. 149.36 was correct or there was no proved facts which controverted the assessee's version of purchase @ Rs. 8 per share. 3. Grounds Nos. 1 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. While processing the assessment the ITO noticing that the assessee had purchased 580 shares of Angoora Wool Combers (P) Ltd. -hereinafter referred as 'AWC' @ Rs. 8 per share as against the face value of Rs. 100 per share and having had the knowledge that a raid had been conducted on the business and residential premises of J.C. Gupta ground on 21st Dec., 1983 in which certain documents had been found and seized which indicated total consideration received for 'AWC' at Rs. 44 lake's addressed a query dt. 6th Oct., 1984 as to why consideration for purchase of shares should not be taken @ Rs. 250 per share. 9. The assessee vide communication dt. 14th Dec., 1984 asked for copies of all the documents in possession of the Department which were supplied with a covering letter of 24th Dec., 1984. 10. Two replies were submitted and both are reproduced in this order in order to avoid any controversy that the Tribunal did not consider certain aspect of the case: First Letter "M/s Angoora Wool Combers (P) Ltd. was floated by the previous owners on 25th Feb., 1977. Shri P.P. Gupta was the previous Managing Director and Shri Anil Gupta was Director and none of them in any way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the bank and the local bank officials might have been writing to their head office to save their own skin. Certificate from Hind Hosiery Mills, Ludhiana which parties referred to in the above note, is also enclosed to the effect that party never negotiated for any deal and all this abundantly shows that there is no substance in correspondence between the Bharat Overseas Bank and Head Office of the Bank and Mr. J.C. Gupta. In the circumstances in which the previous management was placed, the sale of shares was effected as recorded in the accounts of the company to the assessee. The copies supplied to the assessee by you only show the anxiety of the bank to salvage their own money from the unit, in question, and they also referred to another concern M/s Hind Hosiery Mills, who eventually did not take over the company. On the facts and circumstances, and in keeping in view the totality of all the factors, the recorded transaction of transfer of shares cannot be disputed." 11. From the above, an important feature is projected that the J.C. Group had been overplaying its hand because whereas liability in relation of 'AWC' to Bharat Overseas Bank was only Rs. 16,98,372 the group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Nov., 1987, Shri D. Chatterji, Sr. Deptl. Representative, submitted in writing that adjournment requests had been made earlier since assessment records were not available He also stated that Assessing Officer had met him and after discussion he found that: "some very vital evidence and material came to the possession of the Assessing Officer subsequent to the assessment order as well as the appellate order of the CIT(A)" and these material were absolutely essential in connection with the appeal cases. Time was requested for admission of the said evidence before the Tribunal. Alongwith the said request in learned Deptl. Representative filed a photocopy of the ITO's letter of 2nd Nov., 1987, which we like to notice as follows: "No. 4319 Office of the ITO Central Circle-III Ludhiana. Dt. 2nd Nov., 1987. To The Sri Authorised Representative, ITAT, S.C.O. No. 73-75, Sector 17-D, Chandigarh. Sir, Sub: S/Shri Dharam Paul, Vidya Prakash and others —Adjournment request regarding date of hearing 16th Nov., 1987. Kindly refer to our talks on 29th Oct., 1987 in the matter o Dharam Paul Others the hearing of which has been fixed for 16th before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. 18-3-77 100 Rs. 10,000 Tfd. from capita a/cl. of Rajasthan Wool Industries 2. 30-6-78 3,350 Rs. 3,35,000 Tfd. From Rajasthan Wool Inds. And Angora Spinners(P) Ltd. 3. 15-11-78 1,100 Rs. 1,10,000 Tfd. From Rajasthan Wool Inds. 4. 24-12-80 6,000 Rs. 6,00,000 Cash . . 10,550 Rs.10,55,000 . 8. These shares were sold by the assessee on 2nd Jan., 1981 @ Rs. 8 per share for Rs. 84,400 to the Nagesh Group of Ludhiana who are also in the hosiery business there. The indication as to the purchase and sale of the shares was a cryptic note at the bottom of the computation sheet filed with the return which stated that "Capital loss on sale of shares on 2nd Jan., 1983 of M/s Angora Wool Combers Pvt. Ltd. at Rs. 9,70,000 to be carried forward". 22. Other aspects of the assessment of Shri P.P. Gupta are not being referred to. 23. It would be necessary of state that later on for reason which are not known to the respondent, Shri Neeraj Kumar, counsel of Shri P.P. Gupta addressed a letter to the ITO reading as follows: "Letter of Shri Neeraj K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced from the application under s. 430 CrPC filed before the Hon'ble Delhi High Court. Consequential order of the High Court passed therein on 8th Sept., 1987 has the effect of exonerating the assessee from the charge that in view of statements made by certain members of J.C. Gupta Group, it was proved that purchase value of shares had been understated. The ITO was justified in making the addition by valuing per share @ Rs. 149 as against actual sale consideration @ Rs. 8 per share and the CIT(A) accordingly vacated the related addition. 28. To complete the picture, the averments in the application before the High Court challenging the maintainability of prosecution proceedings by the Department against J.C. Gupta Group of cases and the consequential order of the High Court dt. 8th Sept., 1987 are reproduced as under because Shri Mohan Lal, Advocate, stated at the Bar that the Revenue has refrained from going ahead with the prosecution proceedings against J.C. Gupta Group in view of the prayer made in the Petition that these were not maintainable: "In the High Court of Delhi at New Delhi. Criminal Original Jurisdiction Criminal Misc. (Main) Petition No. of 1987. In the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential premises of the petitioner was conducted by the Income-tax Department. Certain correspondence with the bank was seized wherein the value of the sale was indicated at Rs. 44 lakhs without giving any details thereof. On the basis of the aforesaid figure the ITO arbitrarily valued the assets and shares of the firm so as to somehow arrive at the amount of Rs. 44 lakhs and passed an assessment order on 13th March, 1986 holding therein that the sale consideration for the aforesaid transfer of shares worked out to each share having a value of income. There was no proof whatsoever to substantiate the valuation of the assets and shares of the said firm. (7) That the respondent No. 2 calculated the market value of the aforesaid shares at the rate of Rs. 149.36 per share. The aforesaid computation of share value was arrived at by the ITO without any evidence whatsoever to support it. It is submitted that the aforesaid enhanced value, on the basis of which the assessment was made, is wholly arbitrary and without any rational nexus with the actual value. The ITO assessed the land and building having book value of Rs.8.8 lacs in 1977 cost, at Rs. 26.36 lacs on the date of sale i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion against the petitioners is misconceived, arbitrary and not maintainable in law". "HIGH COURT OF DELHI Copy of an order dt. 8th Sept., 1987 passed by Hon'ble Mr. Justice Malik Sharief-Ud-Din in Crl. M(M) 1113/87 in Re: Sh. Anil Gupta Ors. vs. The Commissioner of Income Tax Ors Present: Miss Sandhya Goswami for the petitioner. Notice Mr. Pawan Bahl accept notice on behalf of respondents 1and 2. He wants time to file reply. Adjourned to 19th Oct., 1987. The proceedings in the trial Court are stayed meanwhile. Sd/- MALIK SHARIEF-UD-DIN JUDGE. 8th September, 1987". 29. Since lot of stress was placed by the learned Deptl. Representative on the statements of Shri Anil Gupta S/o Shri J.C. Gupta recorded under s. 132(4) of the Act on 21st Dec., 1983 and his subsequent statement under s. 131 of the Act, dt. 5th Dec., 1985. though Shri Mohan Lal. Advocate very strongly urged that there was no case for permitting the Revenue to adduce additional evidence in view of r. 29 of the Income Tax Appellate Tribunal Rules, 1963, we think a reference to such statements shall to a great extent have the effect of more or less putting an end to the litigation arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing by the Chandigarh Bench itself. Since an important issue is pending for decision in these cases and it has repercussions on the pending assessments as well, I shall feel obliged if an early action is taken at your end for the issue of necessary instructions in the matter. 32. From the averments in complaint filed before the High Court on the basis of which the prosecution proceedings on J.C. Gupta Group's cases came to be stayed it is clear even the parties selling the shares declared the sale value @ Rs. 8 per share and are contesting the arbitrary valuation assessed by the income-tax authorities in their cases. Therefore, most of so-called evidence for which permission was sought for admission is totally irrelevant particularly pages 11 and 12 to 20 purporting to be various replies sent by Shri Anil Gupta and others in their cases to the ITO, Central Circle-II, New Delhi. 33. In any case unproved averments and letters cannot be termed as evidence much less admitted under r. 29 of the Income Tax Appellate Tribunal Rules, 1963. To repeat, the complaints filed by the members of J.C. Gupta Group before the Hon'ble Delhi High Court though may not ultimately exonerate th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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