Dadha Pharma Pvt. Ltd.,268 Lloyds Road,Chennai - 14 v. S.mohandchand Dadha (Indl

T.C.A.Nos.1925 of 2008 & 648 of 2009 IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved On 28.11.2022Pronounced On 05.04.2023 CORAM THE HONOURABLE MR.JUSTICE S.VAIDYANATHAN AND THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.Nos.1925 of 2008 & 648 of 2009 Commissioner of Income Tax,Chennai. ... Appellant in both T.C.As. Dadha Pharma Pvt. Ltd.,268 Lloyds Road,Chennai - 14. Vs. ... Respondent in T.C.A.No.1925/2008 S.Mohandchand Dadha (Indl) 268 Lloyds Road,Chennai - 14. ... Respondent in T.C.A.No.648/2009 Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961, against the orders of the Income Tax Appellate Tribunal, Madras 'A' Bench, both dated 16.11.2007, in IT(SS)A.No.150/Mds/ 2006 and in IT(SS)A.No.180/Mds/2002 respectively. https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 For Appellant : Mr.T.Ravikumar in both T.C.As. in both T.C.As. For Respondents: Mr.T.Pramodkumar Chopda in both T.C.As.--------- in both T.C.As.--------- C O M M O N J U D G M E N T C.SARAVANAN, J. By this common order, both these Tax Case Appeals are being disposed of. INTRODUCTION:- 2. Both these Tax Case Appeals have been filed by the revenue viz., the Commissioner of Income Tax against the impugned orders both dated 16.11.2007 passed by the Income Tax Appellate Tribunal [hereinafter referred to as “Tribunal”] in I.T(SS).A.No.150/Mds/2006 and in I.T(SS).A.No.180/Mds/2002 respectively. Details of the respective appeals are as under:- Table No.1 https://www.mhc.tn.gov.in/judis 3. By the impugned orders, the Tribunal has dismissed the respective appeals of the Income Tax Department in I.T(SS).A.No.150/Mds/2006 and in I.T(SS).A.No.180/Mds/2002 filed against the orders of the Commissioner of Income Tax (Appeals) [hereinafter referred to as “Appellate Commissioner”] allowing the respective appeals of the respondents in ITA TR No.65/04-05 vide order dated 28.03.2006 and in ITA No.CIT(A)(C).VIII/DCCC.32/1.T/ 100/2001-02 vide order dated 05.07.2002 respectively. 4. The dispute in these appeals pertains to the Block Assessment period between 01.04.1988 and 15.12.1998. At the time of admission of these appeals, the following substantial questions of law were framed for being:- i. Whether in the facts and circumstances of the case, the Tribunal was right in holding that since the amalgamation is a reality, amounts received by the assessee from the amalgamated company from even the Tribunal was right in holding that since the amalgamation is a reality, amounts received by the assessee from the amalgamated company from even _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 before the amalgamation cannot be brought to tax? ii. Whether in facts and circumstances of the case, the Tribunal was right in holding that interest on the amounts agreed to be paid by the amalgamated company on outstanding amounts cannot be brought to tax?Tribunal was right in holding that interest on the amounts agreed to be paid by the amalgamated company on outstanding amounts cannot be brought to tax? iii. Whether in the facts and circumstances of the case, the Tribunal was right in permitting the assessee to take up the issue regarding the validity of assessment in the revenue's appeal when the respondent in T.C.A 648/09 had neither filed an appeal nor a cross objection?the Tribunal was right in permitting the assessee to take up the issue regarding the validity of assessment in the revenue's appeal when the respondent in T.C.A 648/09 had neither filed an appeal nor a cross objection? iii. Whether in the facts and circumstances of the case, the Tribunal was right in permitting the assessee to take up the issue regarding the validity of assessment in the revenue's appeal when the respondent in T.C.A 648/09 had neither filed an appeal nor a cross objection?the Tribunal was right in permitting the assessee to take up the issue regarding the validity of assessment in the revenue's appeal when the respondent in T.C.A 648/09 had neither filed an appeal nor a cross objection? iv. Whether in the facts and circumstances of the case, the Tribunal was right in invoking Rule 27 of the Income Tax Appellate Tribunal Rules, 1962 when the issue was not at all decided by the Commissioner of Income Tax (A) and did not arise out of his order?the Tribunal was right in invoking Rule 27 of the Income Tax Appellate Tribunal Rules, 1962 when the issue was not at all decided by the Commissioner of Income Tax (A) and did not arise out of his order? T.C.A.No.648/2009:OPERATIVE PORTION OF THE IMPUGEND ORDER DATED16.11.2007in I.T(SS).A.No.180/Mds/2002 5. The operative portion of the impugned order of the Tribunal dated 16.11.2007 in I.T(SS).A.No.180/Mds/2002 reads as under:- 7.We have heard both the parties and perused the records available with us. We are of the considered view that the contention of the ld. Departmental Representative has little merit. Section 158BC of the Act is specific provision for assessment in respect of cases where as a result of search in the premises of an Assessee, valuables, assets, books of account and other documents are found showing his undisclosed _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 income. If the said seized material shows undisclosed income. If the said seized material shows undisclosed income of any other Assessee, such income has to be assessed in the hand of the latter under section 158BD read with section 158BC of the Act. Section 158BD has to be invoked where the Assessing Officer is satisfied from the contents of the seized material that any undisclosed income belongs to any person other than the person, search in whose case resulted in seized of such material. In the instant case, the papers, which according to the Assessing Officer showed undisclosed income of the Assessee, were seized from the search in the cases of SPIL and Mahendra Dadha. There is not dispute that search inthe case of the Assessee did not result in discovery ofany undisclosed income belonging to him. In such a case we find that block assessment under sec.158BC of the Act is not valid in this case, on the anvil of the Hon'ble Jurisdictional High Court decision in the case of CIT v. G.K.Senniappan[2006] 284 ITR 220. The Hon'ble High Court expounded as under: Section 158BB occurs in Chapter XIV-B, which provides for special procedure for assessment of search cases. The computation of undisclosed income of the block period is contemplated under section 158BB. As per the section, the undisclosed income of the block period should be the aggregate of the total income of the previous year falling within the block period computed in accordance with the provisions of this Act, on the basis of the evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such _______________ https://www.mhc.tn.gov.in/judis previous years. _______________ https://www.mhc.tn.gov.in/judis previous years. A mere reading of the above provision clearly indicates that the sentence “such other materials or information as are available with the Assessing Officer” cannot be bisected or taken in isolation for, the purpose of computation. Such other materials or information as are available with the Assessing Officer, should as per the section relatable to such evidence. The word “such” used as a prefix to the word “evidence” assumes much significance, in this provision, as it indicates only the evidence found, as a result of search or requisition of books of account or other documents, at the time of search. Any other material cannot form basis for computation of undisclosed income of the block period. Hence, we are of the view that the Commissioner as well as the Tribunal have the issue in accordance with the statutory provisions, and requires no interference. The appeal is accordingly dismissed. Now coming to the present case, we find that the search at the Assessee's premises did not result in unearthing of book of accounts and other documents which lead to the computation of undisclosed income. In this view of the matter, on the basis of exposition of the Hon'ble Jurisdictional High Court in Senniappan's case cited supra, this block assessment cannot be sustained. It was the seized material from other Assessees which was the basis of block assessment. It was incumbent upon the Revenue Authorities to invoke the provisions of sec.158BD of the Act. Now, invoking sec.158BD is not a mere formality. The Hon'ble Apex Court had an occasion to deliberate upon it in the case of the case of ManishMaheshwari v. ACIT & Another [2007] 289 ITR 341 has held that: _______________ https://www.mhc.tn.gov.in/judis https://www.mhc.tn.gov.in/judis Condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132-A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132 or documents or assets have been requisitioned under Section 132-A. Section 158-BD, however, provides for taking recourse to a block assessment in terms of Section 158-BC in respect of any other person, the conditions precedents wherefor are: (i) satisfaction must be recorded by the assessing officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 of the Act; (ii) the books of accounts or other documents or assets seized or requisitioned had been handed over to the assessing officer having jurisdiction over such other person; and (iii) the assessing officer has proceeded under Section 158-BC against such other person. Hence, the plea that essence of this assessment is under sec.158BD of the Act, cannot be sustained as clearly the conditions precedent to initiate sec.158BD as expounded by the Hon'ble Apex Court above, have not been followed. This is therefore a case where section 158BD was required to be invoked. Such requirement cannot be obviated merely because a search was also conducted in the case of the Assessee, admittedly yielding no undisclosed income. Section 158BB(1) only provides for computation of undisclosed income during the block period. It does not override or negate the provisions of section 158BD. Irrespective of whether the assessment is made under section 158BC or under section 158BD T.C.A.Nos.1925 of 2008 & 648 of 2009 Hence, the plea that essence of this assessment is under sec.158BD of the Act, cannot be sustained as clearly the conditions precedent to initiate sec.158BD as expounded by the Hon'ble Apex Court above, have not been followed. This is therefore a case where section 158BD was required to be invoked. Such requirement cannot be obviated merely because a search was also conducted in the case of the Assessee, admittedly yielding no undisclosed income. Section 158BB(1) only provides for computation of undisclosed income during the block period. It does not override or negate the provisions of section 158BD. Irrespective of whether the assessment is made under section 158BC or under section 158BD T.C.A.Nos.1925 of 2008 & 648 of 2009 read with section 158BC, the undisclosed income of the block period has to be computed under section 158BB of the Act. Since in the instant case the undisclosed income of the Assessee was found from the material seized from search of other persons, such income could not be assessed under Chapter XIVB without invoking the provisions of section 158BD. In the prevailing facts and circumstances the block assessment made under section 158BC without invoking the provisions of section 158BD is illegal. This issue is therefore decided in favour of the Assessee and against the Department. ........ 11. We have carefully considered the submissions of both sides. Identical issue has been considered by us in the case of S.Mohanchand Dadha (HUF) in AppealNo. IT(SS)A No.178/Mds/2005, wherein weelaborately discussed the issue and held that therecould not be any capital gains as there is clearevidence that TDPL amalgamated with SPIL. Since there is amalgamation, there should not be sale of shares by Dadhas as contented by the ld. Departmental Representative. Hence, on the same reasoning as given in the case of S.Mohanchand Dadha (HUF) cited supra, we see no reason to interfere with the order of the CIT(A) in this respect. This appeal fails on this issue. ........ 15. We have considered the rival submissions. Since it has been found that amalgamation of TDPL with SPIL is a fact and therefore TDPL shares could not have been sold to SPIL, the question of receiving any interest by the Assessee on account of the delayed payment of sale consideration does not arise. The order of the CIT(A) deleting the addition of the _______________ https://www.mhc.tn.gov.in/judis aforesaid amount as interest income of the Assessee is therefore sustained. ........ 19. We have heard both the sides and perused the records available with us. We have gone through the assessment order as well as the appellate order. Weagree with the observation of the C.I.T. (Appeals)that once it is accepted that the Assessee had notpurchased shares from the Dadhas and that theamalgamation is a reality, there is no scope foragreeing with the Assessing Officer that all theseamounts formed part of income of the Assessee fromsale of TDPL shares and interest on delayed paymentof sale consideration. It is also observed from the records that no concerned party has during the search or afterwards, admitted of such an amount being paid or received towards interest. Accordingly, we uphold the order of the C.I.T. (Appeals) in deleting the addition of Rs.69,750/-. ........... ........... 23. We have heard both the sides and perused the records available with us on this issue. Without entering into the debate of whether protective addition is possible in a block assessment, we wouldlike to reiterate that once it is accepted that there hasbeen no sale of TDPL shares to SPIL, there is noscope of making this addition for the reasons forwhich it was made.The other arguments of the learned Counsel of the Assessee for the deletion of this protective addition also appear to us to be quite convincing. It is observed that Sri Sudhir Valia during the course of recording of the statement under sec.131 of the Act, stated that Rs.1,28,50,000/- was offered for taxation on account of various amounts paid to Dadhas of Chennai and the said _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 amount after verification from the records of SPIL increased to Rs.1,33,50,000/- and the same was disclosed in the block return of SPIL. This addition is also not sustainable in view of the Hon'ble Apex Court's decision in the case of CIT v. D.P.SandhuBros. Chembur P. Ltd.[2005] 273 ITR 1 wherein it was held that if a particular income falling under a particular head of income cannot be so taxed, the same cannot be taxed in any other head. In the background of the aforesaid discussion and precedent, we are of the view that the C.I.T. (Appeals) was justified in deleting the addition of Rs.1,33,50,000/- made in the hands of the Assessee on protective basis. In the result, the appeal of the Revenue is dismissed. T.C.A.No.1925/2008: OPERATIVE PORTION OF THE IMPUGEND ORDER DATED 16.11.2007 IN I.T(SS).A.NO.150/MDS/2006 6. The impugned order dated 16.11.2007 of the Tribunal in I.T(SS).A.No.150/Mds/2006 refers to Paragraph No.7 of the impugned order of the Tribunal dated 16.11.2007 in I.T(SS)A.No.180/Mds/2002 impugned in T.C.A.No.648 of 2009. Relevant portion of the impugned order in I.T(SS).A.No.150/Mds/2006 reads as under:- 11. We have heard both the parties and perused the relevant records available with us. We have considered the submissions of both the parties. Sub https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 sec.(1) of sec.158BA of the Act provides that only undisclosed income of a person discovered from seized/requisitioned books of account, other documents or any assets under sec.132/132, could be assessed under Chapter XIV-B of the Act. No such disclosed income of the Assessee from the seized books of accounts/other documents. We have already dealt with this issue in detail in para 7 of IT(SS)A No.180/Mds/02 in the case of Shri S.Mohanchand Dadha (Indl.). On the same reasoning, we hold that this issue has to be decided in favour of the Assessee. 7. In so far as the other issue regarding deletion of addition made by the C.I.T. (Appeals) on account of gain on sale of shares of M/s.Tamil NaduDadhaPharmaceuticalsLtd.(TNDPL)in I.T(SS).A.No.150/Mds/2006 filed by the revenue which is the subject matter of T.C.A.No.1925 of 2008 is concerned, the Tribunal has relied upon the decision in the case of S.Mohanchand Dadha (HUF) in I.T.(SS)A.No.178/Mds/2005. There, the Tribunal had held that theory of sale of M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) shares by the said assessee to M/s.Sun Pharma Industries Limited (SPIL) and money earned therefrom, as alleged by the Commissioner of Income Tax (Appeals) was not cogent as there were clear evidences that amalgamation of M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) with M/s.Sun Pharma Industries Limited (SPIL) was a reality and therefore, there was _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 no reason for the Sun Group to pay money to the Dadha Group after they were allotted shares of M/s.Sun Pharma Industries Limited (SPIL) on amalgamation at the swap ratio of 4:1 determined in the Scheme of Amalgamation sanctioned by the respective High Courts. The Tribunal in the impugned order has further held as under:- 13. ………….We have also found that on facts of these cases, the seized sheets of paper on the basis of which the theory of receipt of sale consideration by the Assessees is sought to be established by the Department are by themselves not adequate to prove that any such amount was received by the Assessee. The facts being identical, in these appeals also there is no reason to differ from the aforesaid findings. In the said case of Shri S.Mohandchand Dadha (HUF) cited supra in para 26, reliance had also been placed upon the Hon'ble Apex Court's decision in K.P.Varghese v. ITO (1981) 131 ITR 597,P.V.Katyanasundaram (294 ITR 49) and CIT v.D.P.Sandu Bros.Chembur P.Ltd.(2005) 273 ITR 1. In the background of the same reasoning and precedent, we decide this issue in favour of the Assessees and reverse the order of the C.I.T.(Appeals) on this issue. Since there is no sale of shares, capital gain did not arise an the C.I.T. (Appeals) was justified in deleting the capital gain in the case of Dadha Pharma P.Ltd. Hence, we allow the appeals of the Assessees on this issue and the appeal of the Revenue on this issue is dismissed. _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 8. As far as the supplementary issue relating to the interest on delayed payment of consideration received from M/s.Sun Pharma Industries Limited (SPIL) is concerned, the Tribunal has held that there was no sale of shares in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) in view of the amalgamation of two companies. Relevant portion of the order reads as under:- 14. .......... This issue is inextricably linked with the earlier issue since, if there was no sale of TDPL shares to SPIL, and actually there had been amalgamation of the two companies, there would be no sale consideration payable by the SPIL and consequently no interest receivable by the assessees for delayed payment of the same. This matter has been examined by us in the case of S.Mohachand Dadha (HUF) in IT (SS)A No.178/Mds/2005. In the said case, we held that the theory of sale of TDPL shares by the Assessee to SPIL and earning of on money therefrom, as alleged by the CIT (A) has no legs to stand, as there are clear evidences that amalgamation of TDPL with SPIL is a reality. The facts being identical, in these appeals also there is no reason to depart from out earlier finding. The issue is therefore decided in favour of the Assessees and against the Department. As a result, the order of the CIT (A) in deleting the addition is confirmed in the case of Dadha Pharma Pvt.Ltd and in the other Assessees, the orders of the CIT(A) are reversed and the additions are deleted. Accordingly, we allow the Assessees appeals on this issue and dismiss the Revenue's appeal on this issue. _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 9. In the light of the above, the Cross Objection No.149/Mds/2006 filed by the assessee namely, the M/s.Dadha Pharma Pvt. Ltd. (the respondent in T.C.A.No.1925 of 2008) was also dismissed with the following observations:- 15. Now coming to the cross objection filed by the Assessee, we are of the view that identical issue has been considered by us in para 7 above and decided this issue in favour of the Revenue. Accordingly, the cross objection filed by the Assessee on jurisdiction is dismissed. SUBMISSIONS:- _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 9. In the light of the above, the Cross Objection No.149/Mds/2006 filed by the assessee namely, the M/s.Dadha Pharma Pvt. Ltd. (the respondent in T.C.A.No.1925 of 2008) was also dismissed with the following observations:- 15. Now coming to the cross objection filed by the Assessee, we are of the view that identical issue has been considered by us in para 7 above and decided this issue in favour of the Revenue. Accordingly, the cross objection filed by the Assessee on jurisdiction is dismissed. SUBMISSIONS:- 10. The learned Standing Counsel for the appellant Revenue submits that the agreement between the Dadha Group (DG) and the Sun Group for sale of shares shows the total amount payable to each sub group of Dadha depending upon their share holding pattern at Rs.290/- per share, installment scheme for such payment and interest payable calculated on reducing balance method. 11. It is submitted that the funds were transferred by the Sun Group to the Dadha Group by way of interest free loans and advances, deposits https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009and trade advances and that if the scheme of amalgamation is to be followed, then there was no need for Sun Group to advance loan to Dadha Group to acquire shares from the M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO). It is submitted that the transfer of huge amounts from Sun Group to Dadha Group for this purpose is also accepted by the respondent. 12. It is submitted that though the Scheme of Amalgamation was approved by the Gujarat High Court and this Court in November, 1997, payments have been made continuously by the Sun Group to Dadha Group till the date of search in December 1998 and interest were charged on the defaulted installments. 13. It is submitted that there was absolutely no need of any payment as per the Amalgamation Scheme. Many of the correspondence between the Dadha Group and Sun Group were subsequent to the High Courts’ order indicates that over and above the Scheme of Amalgamation was approved by the High Courts, the cash payments as mentioned in the agreements were made for the share transfer. https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 14. It is submitted that the Tribunal erred in holding that the amounts cannot be taxed as there was no sale of transfers and the Appellate Commissioner has treated the receipt of moneys only as income from other sources and not capital gains. Therefore, the learned Standing Counsel for the appellant Revenue prays for setting the aside the impugned order and allowing these appeals. 15. The learned Standing Counsel for the appellant Revenue relied on the following decisions:- i. Commissioner of Income Tax Vs. Estate of Late Balu Bai Dadha, dated 08.01.2020 passed by this Court in T.C.Nos.1482 to 1487 and 937 of 2008.Balu Bai Dadha, dated 08.01.2020 passed by this Court in T.C.Nos.1482 to 1487 and 937 of 2008. ii. Ramanlal Kamdar Vs. Commissioner of Income Tax, (1977) 108 ITR 0073.Tax, (1977) 108 ITR 0073. iii. P.R.Narahari Rao Vs. Commissioner of Income Tax, (2008) 299 ITR 0400.Tax, (2008) 299 ITR 0400. iv. B.Jayalakshmi Vs. Assistant Commissioner of Income Tax, (2018) 407 ITR 0212 (Mad).Income Tax, (2018) 407 ITR 0212 (Mad). v. Smt.Jaswinder Kaur Kooner Vs. Commissioner of Income Tax, (2007) 291 ITR 0080.Income Tax, (2007) 291 ITR 0080. vi. Commissioner of Income Tax Vs. Jamnadas Virji Shares and Stock Brokers Pvt. Ltd., (2013) 258 CTR 0458.Shares and Stock Brokers Pvt. Ltd., (2013) 258 CTR 0458. vii.Surjeet Singh Chhabra Vs. Union of India and others, (1997) 1 SCC 508.others, (1997) 1 SCC 508. viii.Commissioner of Income Tax Vs. Durga Prasad _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 More, (1971) 82 ITR 0540. iii. P.R.Narahari Rao Vs. Commissioner of Income Tax, (2008) 299 ITR 0400.Tax, (2008) 299 ITR 0400. iv. B.Jayalakshmi Vs. Assistant Commissioner of Income Tax, (2018) 407 ITR 0212 (Mad).Income Tax, (2018) 407 ITR 0212 (Mad). v. Smt.Jaswinder Kaur Kooner Vs. Commissioner of Income Tax, (2007) 291 ITR 0080.Income Tax, (2007) 291 ITR 0080. vi. Commissioner of Income Tax Vs. Jamnadas Virji Shares and Stock Brokers Pvt. Ltd., (2013) 258 CTR 0458.Shares and Stock Brokers Pvt. Ltd., (2013) 258 CTR 0458. vii.Surjeet Singh Chhabra Vs. Union of India and others, (1997) 1 SCC 508.others, (1997) 1 SCC 508. viii.Commissioner of Income Tax Vs. Durga Prasad _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 More, (1971) 82 ITR 0540. ix. Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala and another, (1973) 91 ITR 0018.Kerala and another, (1973) 91 ITR 0018. x. Anjuga Chit Fund (P) Ltd.Vs.Deputy Commissioner of Income Tax, (2009) 318 ITR 0121.Commissioner of Income Tax, (2009) 318 ITR 0121. xi. K.Ramasamy Vs. Commissioner of Income Tax, (2003) 261 ITR 0358.(2003) 261 ITR 0358. xii.C.K.Gangadharan and Another Vs. Commissioner of Income Tax, (2008) 304 ITR 0061.of Income Tax, (2008) 304 ITR 0061. xiii.Commissioner of Income Tax Vs. Oswal Agro Mills Ltd., (2009) 313 ITR 0024.Mills Ltd., (2009) 313 ITR 0024. xiv.Mangalore Ganesh Beedi Works Vs. Commissioner of Income Tax, (2015) 378 ITR 0640 (SC).of Income Tax, (2015) 378 ITR 0640 (SC). xv.Sumati Dayal Vs. Commissioner of Income Tax, (1995) 214 ITR 0801.(1995) 214 ITR 0801. xvi.Commissioner of Income Tax Vs. P.Mohanakala and others, (2007) 291 ITR 0278.and others, (2007) 291 ITR 0278. xvii.Tapan Kumar Dutta Vs. Commissioner of Income Tax, (2018) 404 ITR 0028.Tax, (2018) 404 ITR 0028. xviii.Commissioner of Income Tax Vs. Jamnadas Virji Shares and Stock Brokers Pvt. Ltd., (2013) 258 CTR 0458.Shares and Stock Brokers Pvt. Ltd., (2013) 258 CTR 0458. xix.Commissioner of Income Tax Vs. Durga Prasad More, (1971) 82 ITR 0540.More, (1971) 82 ITR 0540. xx.Surjeet Singh Chhabra Vs. Union of India and others, (1997) 1 SCC 508.others, (1997) 1 SCC 508. xxi.Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala and another, (1973) 91 ITR 0018.Kerala and another, (1973) 91 ITR 0018. xxii.Commissioner of Income Tax-II, Ahmedabad Vs. Mastek Ltd., [2013] 358 ITR 252 (SC).Mastek Ltd., [2013] 358 ITR 252 (SC). 16. Per contra, in so far as T.C.A.No.648 of 2009, the learned counsel for the respondent [S.Mohanchand Dadha (Indl)] submits that the _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 Assessment Order dated 19.06.2001 was passed for the block period 01.04.1988 to 15.12.1998. It is submitted that in the Assessment Order dated 19.06.2001, the following additions were made:- Undisclosed income for the block periodRs. 47,56,638/-Addition made by way of protective assessmentRs.1,33,50,000/---------------------Rs.1,81,06,638/--------------------- 17. It is submitted that the respondent had filed an appeal before the Appellate Commissioner in Appeal No.CIT(A)C.VIII/DCCC.32/I.T.100/ 2001-02 against the above addition. The said appeal was partly allowed by deleting the both undisclosed income and protective assessment. The protective assessment was deleted on the ground that same was disclosed in the block Rate of Interest filed by the Sun Pharma India Ltd. (SPIL) as undisclosed income. 18. It is submitted that against the said order of the Appellate Commissioner, the appellant Revenue has filed an appeal before the Tribunal in I.T.(SS) A.No.180/Mds/2002 which was dismissed vide _______________ https://www.mhc.tn.gov.in/judis Page No. 18 of 48 T.C.A.Nos.1925 of 2008 & 648 of 2009 impugned order dated 16.11.2007, against which, the present T.C.A.No.648 of 2009 has been filed. Appellate Commissioner in Appeal No.CIT(A)C.VIII/DCCC.32/I.T.100/ 2001-02 against the above addition. The said appeal was partly allowed by deleting the both undisclosed income and protective assessment. The protective assessment was deleted on the ground that same was disclosed in the block Rate of Interest filed by the Sun Pharma India Ltd. (SPIL) as undisclosed income. 18. It is submitted that against the said order of the Appellate Commissioner, the appellant Revenue has filed an appeal before the Tribunal in I.T.(SS) A.No.180/Mds/2002 which was dismissed vide _______________ https://www.mhc.tn.gov.in/judis Page No. 18 of 48 T.C.A.Nos.1925 of 2008 & 648 of 2009 impugned order dated 16.11.2007, against which, the present T.C.A.No.648 of 2009 has been filed. 19. It is submitted that in the present appeal, the appellant revenue had not disputed the deletion of the addition of Rs.1,33,50,000/- made by way of protective assessment as evident from the statement of facts, grounds of appeal and question of law raised in the present appeal. The dispute in the present T.C.A.No.648 of 2009 only relates to the deletion of undisclosed income of Rs.47,56,638/- and therefore, the tax due on such disputed income is much below Rs.1,00,00,000/-. 20. It is submitted that T.C.A.No.648 of 2009 is liable to be dismissed as withdrawn in view of monetary limit for filing of appeal by the Department as per the Circular/Instruction of the CBDT vide Circular No.17/2019 dated 08.08.2019 in F.No.279/Misc.142/2007-ITJ(Pt.). 21. In so far as T.C.A.No.1925 of 2008, the learned counsel for the respondent/assessee submits that there was an amalgamation of M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) with M/s.Sun Pharma https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 Industries Limited (SPIL) Group and there was no sale of shares. It is submitted that initially, there was a discussion about the sale of shares held by Dadha Group in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) to the M/s.Sun Pharma Industries Limited (SPIL). However, M/s.Sun Pharma Group was interested in getting merged M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) with M/s.Sun Pharma Industries Limited (SPIL). Therefore, the discussion remained only as a discussion and was not acted upon. 22. It is submitted that before Schemes of Amalgamation were sanctioned by both the High Courts, the publicity was made in respect of amalgamation in the following newspapers on 15.05.1997:- i. Business Standard, Calcutta. ii. Business Line, Chennai. iii. Business Express, Chennai. iv. The Economic Times, Chennai. v. The Hindu, Chennai. vi. The Economic Times, Chennai. 23. It is submitted that no shareholder raised any objections to the proposed amalgamation. It is submitted that for computing capital gain, the necessary condition is that there should be transfer of an asset. There _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 are no records to substantiate that there was a transfer. It is submitted that as per Section 108 of the Companies Act, 1956, there is a proper procedure laid down for registration of transfer of shares. 24. The share certificates along with their distinctive numbers should be surrendered to the company along with the transfer forms duly executed by the transferor and the transferee in the office of the company. It is submitted that there were no such transfer forms duly executed by purchaser and seller were submitted to M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL). _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 are no records to substantiate that there was a transfer. It is submitted that as per Section 108 of the Companies Act, 1956, there is a proper procedure laid down for registration of transfer of shares. 24. The share certificates along with their distinctive numbers should be surrendered to the company along with the transfer forms duly executed by the transferor and the transferee in the office of the company. It is submitted that there were no such transfer forms duly executed by purchaser and seller were submitted to M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL). 25. It is submitted that the Assessing Officer concluded that the funds were received by the Dadha Group from Sun Pharma Group through its various companies for sale of shares or the interest on delayed payments, but, only the amount of Rs.3 Crores was received from Aditya Medi Sales Ltd. (AML) which is one of the companies of the Sun Pharma Group for construction of godown which was later refunded to the Aditya Medi Sales Ltd. (AML) as the construction of godown could not be feasible owing to the new guidelines issued by the Chennai Metropolitan https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 Development Authority (CMDA). 26. It is submitted that any interested party or any shareholder whose rights would have been affected by such take over did not lodge any complaint before the SEBI. SEBI has also not taken any action suo moto. 27. The learned counsel for the respective respondents relied on the following decisions:- i. Sree Meenakshi Mills Ltd. Vs. Commissioner of Income Tax, [1957] 31 ITR 28 (SC)Income Tax, [1957] 31 ITR 28 (SC) ii. K.P.Varghese Vs. Income Tax Officer, [1981] 7 Taxman 13 (SC)Taxman 13 (SC) iii. Union of India Vs. Kaumudini Narayan Dalal, [2001] 249 ITR 219 (SC)[2001] 249 ITR 219 (SC) iv. Commissioner of Income Tax Vs. Narendra Doshi, [2002] 254 ITR 606 (SC)Doshi, [2002] 254 ITR 606 (SC) v. Commissioner of Income Tax Vs. Shivsagar Estate, [2002] 257 ITR 59 (SC)Estate, [2002] 257 ITR 59 (SC) vi. CommissionerofIncomeTaxVs. P.V.Kalyanasundaram, [2006] 155 Taxman 454 (MAD.)(MAD.) vii.Commissioner of Income Tax, Salem Vs. P.V.Kalyanasundaram, [2007] 164 Taxman 78 (SC) viii.Commissioner of Income-tax, Coimbatore Vs. G.K.Senniappan, [2006] 155 Taxman 118 (Mad.) _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 ix. Manish Maheshwari Vs. Assistant Commissioner of Income Tax, [2007] 159 Taxman 258 (SC)of Income Tax, [2007] 159 Taxman 258 (SC) x. The State of Tamil Nadu, rep. by the Joint Commissioner (CT) Vs. Tvl.Union Surgicals, dated 14.03.2018 in T.C.(Rev.) No.27 of 2018.Commissioner (CT) Vs. Tvl.Union Surgicals, dated 14.03.2018 in T.C.(Rev.) No.27 of 2018. xi. Principal Commissioner of Income Tax Vs. M/s.Ojasvi Motor Finance Pvt. Ltd., dated 05.09.2022 in T.C.A.No.231 of 2022.M/s.Ojasvi Motor Finance Pvt. Ltd., dated 05.09.2022 in T.C.A.No.231 of 2022. 28. The learned counsel for the respective respondents therefore prays for dismissal of both the appeals. CONSIDERATION:- 29. We have considered the arguments advanced by the learned Standing Counsel for the appellant and the learned counsel for the respondent in the respective appeals. T.C.A.No.648 of 2009 30. An Assessment Order dated 19.06.2001 was passed by the Assessing Officer against S.Mohanchand Dadha (Ind.) the respondent in T.C.A.No.648 of 2009 for the block period. 31. Against the Assessment Order dated 19.06.2001, T.C.A.Nos.1925 of 2008 & 648 of 2009 Mr.S.Mohanchand Dadha (Ind.), the respondent herein filed an appeal beforetheAppellateCommissionerin I.T.A.No.CIT(A)C.VIII/DCCC.32/I.T/ 100/2001-02. The Appellate 28. The learned counsel for the respective respondents therefore prays for dismissal of both the appeals. CONSIDERATION:- 29. We have considered the arguments advanced by the learned Standing Counsel for the appellant and the learned counsel for the respondent in the respective appeals. T.C.A.No.648 of 2009 30. An Assessment Order dated 19.06.2001 was passed by the Assessing Officer against S.Mohanchand Dadha (Ind.) the respondent in T.C.A.No.648 of 2009 for the block period. 31. Against the Assessment Order dated 19.06.2001, T.C.A.Nos.1925 of 2008 & 648 of 2009 Mr.S.Mohanchand Dadha (Ind.), the respondent herein filed an appeal beforetheAppellateCommissionerin I.T.A.No.CIT(A)C.VIII/DCCC.32/I.T/ 100/2001-02. The Appellate Commissioner vide order dated 05.07.2002 partly allowed the appeal of the Mr.S.Mohanchand Dadha (Ind.), the respondent herein in T.C.A.No.648 of 2009. 32. Against the said order dated 05.07.2002 in I.T.A.No.CIT(A) C. VIII/DCCC.32/I.T/100/2001-02, the appellant has filed I.T. (S.S.) No.180/Mds/2002 before the Tribunal. The above appeal was dismissed vide impugned order dated 16.11.2007 by the Tribunal by upholding the decision of the Appellate Commissioner. T.C.A.No.1925 of 2008 33. Similarly, an Assessment Order dated 30.07.2003 was passed by the Assessing Officer against M/s.Dadha Pharma Pvt. Ltd., the respondent herein. 34. Against the said order dated 30.07.2003, M/s.Dadha Pharma https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 Pvt. Ltd., the respondent herein filed an appeal before the Appellate Commissioner in ITA No.65/04-05. The said appeal was partly allowed by the Appellate Commissioner vide order dated 28.03.2006. 35. Challenging the same, the Assistant Commissioner of Income Tax filed I.T.(SS) A.No.150/Mds/2006 before the Tribunal. The said appeal was dismissed by the Tribunal vide impugned order dated 16.11.2007. 36. In fact, all the members of the Dadha Group had filed similar appeals and the issue came for consideration before the Tribunal. Details of the appeals filed before Tribunal are as under:- https://www.mhc.tn.gov.in/judis Sl.No.6. is the subject matter of T.C.A.No.1925 of 2008.Sl.No.10 is the subject matter of T.C.A.No.648 of 2009. 37. Aggrieved by the above decisions in appeals at Sl.Nos.1, 2, 3, 4, 5, 7 & 9, the Commissioner of Income Tax had filed appeals before this Court in Tax Case Nos.1482 to 1487 and 937 of 2008. These appeals were however dismissed as withdrawn vide Judgment dated 08.01.2020 on account of the litigation policy of the Income Tax Department. 38. As far as the present appeals are concerned, we are concerned _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 with the impugned orders passed by the Tribunal in the I.T. (SS) As. at Sl.Nos.6 & 10. 39. The dispute in these two T.C.As. arises out of acquisition of 26% shares of M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) by Dadha Group(DG) in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) which was later merged with M/s.Sun Pharma Industries Limited (SPIL). 40. Dadha Group consisted of the following persons/entities:- i. S.Mohanchand Dadha (SMD) ii. M.Mohanchand Dadha (MCD) iii. M.Mahendra Dadha (MMD) iv. M/s.Phalodi Investment Pvt. Ltd. v. M/s.Antriksh Pharma vi. M/s.Dukan 41. In these appeals, we are concerned with two of the persons/entities of S.Mohanchand Dadha Group (SMD Group). Mohanchand Dadha Group (SMD Group) consisted of the following persons/entities who/which held about 2,06,820 shares in M/s.Tamil Nadu _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 Dadha Pharmaceuticals Ltd. (TNDPL) before the acquisition of shares from M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) as detailed below:- Table No.2 * The respondent in T.C.A.No.1925 of 2008 The respondent in T.C.A.No.648 of 2009 i. S.Mohanchand Dadha (SMD) ii. M.Mohanchand Dadha (MCD) iii. M.Mahendra Dadha (MMD) iv. M/s.Phalodi Investment Pvt. Ltd. v. M/s.Antriksh Pharma vi. M/s.Dukan 41. In these appeals, we are concerned with two of the persons/entities of S.Mohanchand Dadha Group (SMD Group). Mohanchand Dadha Group (SMD Group) consisted of the following persons/entities who/which held about 2,06,820 shares in M/s.Tamil Nadu _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 Dadha Pharmaceuticals Ltd. (TNDPL) before the acquisition of shares from M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) as detailed below:- Table No.2 * The respondent in T.C.A.No.1925 of 2008 The respondent in T.C.A.No.648 of 2009 42. It emerges that M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) was incorporated as a Joint Venture between the said Dadha Group (DG) at Chennai and M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO). 43. About 25 % of the shares in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) were held by Dhadha Group (DG). 26% of _______________ https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 the shares numbering 4,29,178 were held by M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL). 44. M/s.Sun Pharma Industries Limited (SPIL) was apparently interested in acquiring the shares in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL). It appears that as per Memorandum of Understanding (MOU) between the co-promoters viz., Dadha Group, Chennai and M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO), the Dadha Group, Chennai had a peremptory right to purchase the shares in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL), if M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) wanted to disinvest its holdings in the latter. 45. M/s.Sun Pharma Industries Limited (SPIL) however could not directly acquire the aforesaid 26% of the shares in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) held by M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO). 46. Therefore, M/s.Sun Pharma Industries Limited (SPIL) funded https://www.mhc.tn.gov.in/judis T.C.A.Nos.1925 of 2008 & 648 of 2009 the Dadha Group, Chennai to acquire 26% of shares held by M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL). 47. It is not clearly stated as to the total number of shares of M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL). Total number of shares of M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) would have been 16,52,568 based on reverse calculation on the percentage of shares held by M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL) as follows:- 48. 26% of the shares held by M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL), i.e. 4,29,178 shares were purchased by Dadha Group, Chennai, on 13.05.1997 at the rate of Rs.87.41 per share https://www.mhc.tn.gov.in/judis_______________Page No. 30 of 48 T.C.A.Nos.1925 of 2008 & 648 of 2009 out of the funds provided by M/s.Sun Pharma Industries Limited (SPIL) and its group of companies (Sun Group), though Dadha Group were paid Rs.290/- per share by M/s.Sun Pharma Industries Limited (SPIL) for the consolidated shares held by the Dadha Group after acquisition. 49. After acquiring 26% of the shares held by M/s.Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) in M/s.Tamil Nadu Dadha Pharmaceuticals Ltd. (TNDPL), the composition of