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2019 (8) TMI 439 - ITAT CHANDIGARHReopening of assessment u/s 147 - Addition u/s 56(2)(viia) - investment in unquoted shares with difference of FMV and the actual consideration paid - no incriminating material was found during survey u/s 133A - HELD THAT:- The said provision of Section 56(2)(viia) of the Act were applicable from 01/06/2010. It is evident from the annual report in Form No. 20B of M/s Bharatnet Technology Limited furnished to the Registrar of the Companies, copy of which is placed at page no. 42 to 55 of the assessee’s compilation that 719681 shares were transferred to the assessee on 10/05/2010. Therefore the reasons recorded on the basis of application of provisions of Section 56(2)(viia) read with Rule 11UA were not applicable to the assessee’s case. In the present case nothing is brought on record that any incriminating material was found during the course of search and survey to substantiate that any payment exceeding ₹ 1/- per share was made by the assessee. Therefore the reasons recorded by the A.O. were based as suspicion only. Reassessment proceedings was initiated by the A.O. on suspicion which cannot be a ground for reopening of the assessment. See KROWN AGRO FOODS PVT. LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 5 (1) NEW DELHI [2015 (3) TMI 1030 - DELHI HIGH COURT] Addition by invoking the provisions of Section 56(2)(viia) - Nothing is brought on record to substantiate that the shares were transferred in the month of November 2010 on the contrary the annual return filed by the Seller of the shares M/s Bharatnet Technology Limited clearly established that the transfer of the shares took place on 10/05/2010 and even the certificate issued by the practicing company secretary also confirmed that the shares were transferred on 10/05/2010 and not in the month of November 2010 as presumed by the A.O. therefore on merits also the addition made by the A.O, on the basis of presumption and by invoking the provisions of Section 56(2)(viia) of the Act which were applicable w.e.f 01/06/2010, was not justified. In view of the aforesaid discussion, we are of the view that on merits also the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. Therefore, by considering the totality of the facts, we are of the view that the reopening made by the A.O. on the basis of suspicion was not valid and the addition made by invoking the provisions of section 56(2)(viia) which were not applicable to the facts of the assessee’s case, was not justified. Accordingly the same is deleted. - Decided in favour of assessee.
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