2011 (4) TMI 175

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....lso issues in both the appeals are common.   2. The assessees along with other family members are the promoters of Paper Products Limited (for short "PPL"). They entered into an agreement dated 16th July, 1999 with M/s.Royal Packaging Industries Van Leer, N.V. Netherlands (for short "M/s.RPIVL"). As per the agreement, the assessees along with other members of the promoters family were restrained for a period of 10 years from entering into any business that is same or similar to that of the business of PPL in India and at all such places where PPL has manufacturing presence or export boards or carries any trading activity. The assessees had received a sum of Rs.7.40 crores in consideration of said agreement from M/s.RPIVL. In the inc....

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....tion of penalty proceedings under Section 271(1)(c).   4. Aggrieved by this, the assessees preferred appeals before the Commissioner, Income Tax (Appellate) [CIT(A)], which came to be allowed by the common order dated 05.09.2003. The Revenue preferred appeals against the order of CIT(A) which were dismissed by the Tribunal by order dated 06.02.2009. It is against this common impugned order that the appeals have been preferred by the Revenue.   5. Learned counsel appearing for the Revenue tried to justify the order of the Assessing Officer by taking us through various items as noted by the Assessing Officer to be missing in the report of the M/s.Ernst and Young Pvt. Ltd. Our attention was also drawn to the table showing compa....

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....ybe the Assessing Officer was an expert on the subject, but still, in all fairness, he ought to have got the same either verified or compared by some independent report of an expert.   7. On his part, CIT(A) proceeded to rely upon the report of M/s.Ernst and Young Pvt. Ltd. and also a comparative charge presented by the assessees in support of their claims that the report had covered all the factors as pointed out by the Assessing Officer. The CIT(A) while further noting that the valuation report of an expert could not be brushed aside lightly also stated that the same could be done by report of another expert. The CIT(A) proceeded to pass a cryptic order in the following manner:   "It is a settled position of law that valua....

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.... And thus, ld. CIT(A) has held that the AO could not substitute the allocation by distributing the said report without calling another report of an expert. During the course of hearing ld. DR also could not controvert the findings of ld CIT(A) that the issues which have been brought in the charts reproduced in the order of CIT(A) were considered by Earnest & Young while preparing their report through the terminology was different. Ld. DR could not point out any discrepancy in such observation of CIT(A) that the issues which are stated to be not considered by the AO in the report of Earnest & Young were considered by them in their report. In this view of the situation, as no defect is pointed out in such observation of CIT(A) that all the po....