TaxTMI 
TaxTMI 
2025 (4) TMI 841
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.... was reversed and cancelled. 3. The Assessee, as per its cross objection, has also assailed the first appellate order on account of certain enhancements made therein. The grounds of cross objections are reproduced hereunder: - 1. "Because the CIT(A) has erred in law and facts making a new addition without any enhancement notice, of Rs.38,54,000/- based on an arbitrary valuation of the company at Rs.1,69,00,000/- and making addition of entire Rs.38,54,000/- to the income of the Assessee by wrongly invoking s. 69A of the Act; 2. Because the Ld.CIT(A) has erred in law and facts in computing capital gains on sale of shares at Rs.13,38,720/- in AY 2010-11 whereas the shares were transferred on 02.03.2011 and therefore were taxable in AY 2011-12; 3. Because alleged cash receipt of Rs.25,00,000/- as per agreement to sell, though not admitted, even if presumed to be true, the Assessee only held 1,61,000 shares out of total shareholding of 5,88,334 and thus the Assessee share in total sum of Rs.25,00,000/- comes out at Rs.6,84,135/- only." 4. Briefly stated, a search action was conducted on 30.09.2015 under s. 153A of the Act on the premises of the assessee ....
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....ributable to her shareholding in the company of 1,61,000 shares. On consideration of factual matrix, the CIT(A) granted partial relief and confirmed the addition to the extent of Rs.38,54,000/- under s. 69A of the Act. Further additions of Rs.13,38,720/- was confirmed as capital gains on sale of 161000 shares in the hands of the assessee. 6. The relevant operative para of the order of the CIT(A) is reproduced hereunder for ready reference: - "6.5 I have carefully considered the assessment order, written submissions filed by the Ld. A.R. and the remand report received from the AO. The property under consideration i.e. the property situated at B 21, 22 of Sector-16, Noida was owned by RD Finlease Pvt Ltd., N-176 Panchsheel Park, New Delhi-110017 and the shares of this company were held by the appellant i.e. Smt. Amarpreet Anand (1,61,000 shares) and husband of the appellant i.e. Sh. Ashish Anand (4,27,300 shares). The Agreement to sell dated 06.05 2009 has been found and seized as page no. 51 to 54 of Annexure A-1 of R-06 during the search proceedings conducted on 30.09.2015. From this Agreement to sell it is clear that property under consideration was agreed to be sold a....
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....Delhi-110017, it can be verified that Sh. Ashish Anand and Smt. Amarpreet Anand, themselves gave unsecured loan to this company and the same were outstanding till 31.03.2010 at Rs. 38,10,000/- and Rs. 1,75,000/- respectively. 6.7 It is undoubted that finally the entire company i.e. M/s. RD Finlease Pvt Ltd., N-176 Panchsheel Park, New Delhi-110017, was sold by the appellant and her husband to Sh. Manoj Chaudhary and Sh. Sanjay Kumar and this company owns underlying property. Hence, the ownership of the said property has been transferred and the deal was materialized. Now the only issue which needs to be determined is that of capital gain. Had only property under consideration been sold by the company i.e. M/s. RD Finlease Pvt Ltd., to the purchasers, there would have been capita! gain determined on sales consideration of Rs. 3,75,00,000/- but in this case the entire company has been sold as going on concern, the liability of Rs. 1,91,00,000/- needs to be given set off on this sales consideration which is mentioned in the seized Agreement to sell itself. Further there is no doubt that the appellant has received cash of Rs. 25,00,000/- on two installments i.e. on 08.04.2009 ....
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.... 4. Net sale consideration 1,69,00,000 5. Sales Consideration of Shares as shown by both the shareholders 1,30,46,000 6. Net undisclosed gain in the hands of the appellant 38,54,000 6.10 From the above discussion it is clear that the appellant is required to pay tax on this income of Rs.38,54,000/- which has not been shown in the books. This amount includes cash amount of Rs.25,00,000/-. Therefore addition to the extent of Rs. 38,54,000/- is hereby confirmed as undisclosed income u/s 69A of IT Act. Further the appellant is required to pay capital gain on sale of 1,61,000 shares which are sold at Rs 35,69,370/-, therefore capital gain tax is required to be paid on Rs. 13,38,720/- also. As on 30.09.2009 the appellant has shown the list of shareholders, therefore the capital gain in their hands is computed as under by taking the total sell consideration of Rs. 1,30,46,000/- for 5,88,334 shares by considering sales price i.e. Rs. 22.17 per share: S. No Name Address No. of Shares Sales Consideration @ Rs. 22. 17 per share Purchase Cost Indexed Purchase Cost (x*632/447) by considering Initial share holdi....
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....other hand, reiterated the facts placed before the lower authorities and submitted that the draft MOU found in the course of search was between the assessee in her personal capacity and Manoj Choudhary, whereas the property belonged to RD Finlease and not to the assessee. Such MOU has neither been acted upon nor could have been acted upon. Since the ownership of the property was vested with RD Finlease and not with Amarpreet Anand such MOU is a dumb document. Besides, Amarpreet Anand is only one of the shareholders of the Company holding the property in question and hence the question of selling the property through MOU by one of the shareholders do not arise. Furthermore, the said MOU was shown to be dated 06.05.2009 falling in the FY 2009-10 whereas the assessee and his brother were alloted shares of 'RD Finlease' in the FY 2010-11 and therefore, there was no authority with the assessee to enter into such MOU. Notwithstanding, the assessee (Amarpreet Anand) held only 1,61,000 shares of the company, whereas another shareholder Ashish Anand held 4,75,300 shares. The Ld. Counsel also pointed out that the valuation of shares as per Rule 11UA of the Rules (although not applicable in t....
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....ee company on sale of shares carried out in subsequent year(s) is beyond the scope of s. 69A of the Act and also do not emanate from the MOU found and seized in the course of search. Similarly apart from non-issuance of any enhance notice incumbent under s. 251(1)(a) of the Act, the additions of Rs.13,38,720/- under the head "capital gains" also pertains to AY 2012-13 and thus, could not be assessed by way of enhancement in the AY 2010-11 in question. The Ld. Counsel, thus, sought relief as claimed in the cross objection. 11. We have carefully considered the rival submissions and perused the material available on record. As per the Revenue appeal, the additions towards unaccounted income to the tune of Rs.3,75,00,000/- is subject matter of controversy. As contended on behalf of the assessee and also as per facts noted in the first appellate order, we find that the genesis of additions is an agreement to sell found to be entered between the assessee and Manoj Choudhary for sale of property at a consideration of Rs.3,75,00,000/-. As demonstrated on behalf of the assessee before the CIT(A), firstly the property belongs to RD Finlease and, therefore, the MOU executed in personal cap....