COMMISSIONER OF INCOME-TAX Vs. JOYTSNA PODDAR

JUDGEMENT

(1.) The following question has been referred for our opinion :

(2.) The facts giving rise to the aforesaid reference, briefly stated, are that the assessee, a resident individual, transferred in June, 1983, certain shares and debentures belonging to her and shown in the books of account. As per the books of account maintained by the assessee, the total value of these shares was shown at Rs. 15,19,503. A company newly formed by the name of Akshoy Trading Co. Pvt. Ltd., in the meantime, received, by the transfer, these shares from the assessee. The above referred book value of the shares was the value shown by the assessee which she received on transfer of the shares belonging to her to the abovenamed company, Akshoy Trading Co. Pvt. Ltd.

(3.) The Assessing Officer, however did not agree with the aforesaid contention of the assessee with regard to the value of the shares that she claimed to have received by the sale of these shares. According to the Assessing Officer, the ascertained market value of these shares on transfer ought to have been Rs. 23,62,014 and after deducting the price of book value being Rs. 15,19,603, Rs. 8,42,414 was calculated as the income that the assessee ought to have received by the sale of these shares. The assessee feeling aggrieved preferred an appeal before the Commissioner of Income-tax. The Commissioner of Income-tax, however, took an entirely different view of the matter. Notwithstanding the difference in the sale value of the shares as determined by the Assessing Officer, since the assessee had adopted the transfer of shares as a subterfuge in order to deprive the Revenue of the dividend income, and based on the ratio in the case of McDowell and Co. Ltd. v. CTO, the Commissioner of Income-tax passed an order under Section 263 of the Income-tax Act setting aside the entire assessment order passed by the Assessing Officer and directing him to pass a fresh assessment order based on the observations made by him. While exercising his revisional power under Section 263 of the Income-tax Act, the Commissioner of Income-tax made observations with regard to the nature of the transfer of the shares by the assessee to Akshoy Trading Pvt. Co. Ltd., and held that this was a device used by the assessee to deprive the Revenue of the income-tax by way of yearly income every year and for the next ten years or thereabout.