Defect in Share Valuation under Income Tax Act: Delhi HC Remands for Re-adjudication [Read Order]

The Delhi High Court remanded the matter for re-adjudication of miscellaneous application to rectify the defect in the assessment of share valuation under the Income Tax Act, 1961. Analjit Singh, the petitioner filed an application seeking an early hearing of the writ petition. The petitioner/assessee approached the court to challenge the order passed vis-à-vis its Miscellaneous  Application i.e., M.A. No.742/Del/2017 by the Income Tax Appellate Tribunal [“the Tribunal”].

The central issue around which the dispute veers is the price at which the shares of Scorpio Beverages Pvt. Ltd. were sold by the petitioner/assessee, i.e., Mr Analjit Singh and his wife, Ms Neelu Analjit Singh. The petitioner had valued the shares at Rs.63.65 per share, while the Tribunal arrived at a valuation of Rs.131.86 per share. Through the miscellaneous application, the petitioner had attempted to point out the defects in the valuation.

The Tribunal with the impugned order viewed that entertaining the miscellaneous application would amount to review and therefore, rejected the application.  In the early hearing application, the petitioner alluded to the fact that insofar as his wife is concerned, the valuation offered by her concerning the subject shares, which was pegged at Rs.70.59 per share, has been accepted by the Tribunal. Based on the aforesaid order of the Tribunal, an appeal effect order was passed by the Deputy Commissioner of Income Tax on 12.02.2020.

The petitioner stated that the writ petition can be disposed of with a direction to the Tribunal to reexamine the merits of the miscellaneous application, which was dismissed via the order dated 19.03.2018. Mr Puneett Singh, who appeared on behalf of the respondent/revenue, stated that he could have no objection if the court were to direct the Tribunal to re-examine the merits of the miscellaneous application.

A two-member bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia set aside the impugned order and the miscellaneous application was restored to its original number and position. The Tribunal is directed to pass a fresh order, after hearing the counsel for the parties.

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