TMI Blog2018 (6) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... ional evidence on the ground that it had no relevance to the issue involved in the appeal of the assessee. The assessee by relying on Explanation (a)(ii) to section 56(2)(viib), the said additional evidence was very much relevant to decide the issue relating to the addition made under section 56(2)(viib) involved in the case of the assessee and the ld. CIT(Appeals), in my opinion, was not justified in declining to admit the same. Set aside the impugned order of the CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer with a direction to decide the issue relating to the addition under section 56(2)(viib) afresh on merit after considering the valuation report filed by the assessee to substantiate its clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,73,632/- calculated at the rate of ₹ 61.47 per share, therefore, was added by the Assessing Officer to the total income of the assessee under section 56(2)(viib) in the assessment completed under section 143(3) vide an order dated 09.12.2015. 3. Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the addition of ₹ 15,73,632/- made by the Assessing Officer under section 56(2)(viib). During the course of assessment proceedings before the ld. CIT(Appeals), it was contended on behalf of the assessee-company that proper and sufficient opportunity was not afforded by the Assessing Officer during the course of assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O had added back the premium of ₹ 61.47 per share u/s 56(2)(viib) of the I.T. Act, 1961 for total addition of ₹ 15,73,632/-. However, during appellate proceedings, the AIR of the appellant had submitted a second valuation report under which shares were valued at ₹ 535.70 per share. The contention of the A/R is that as the shares were sold at below market value (as per second valuation report) the question of addition of share premium does not arise. 3.4. The appellant in his desperation to escape the clutches of section 56(2)(viib) has unwittingly fell into the clutches of section 56(2)(viia) of the I.T. Act. Section 56(2)(viia) reads as follows: Where a firm or a company not being a company in which the publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration amounting to ₹ 57,13,920/- on 25600 equity shares sold, u/s 56(2)(viia) of the I.T. Act. When this fact was brought to the notice of the A/R of the appellant, he could not submit any reply. It is obvious from the above facts that the appellant had sold his shares at a premium for which the AO had rightly added back the amount of ₹ 15,73,632/- u/s 56(2)(viib) of the Act. The A/R of the appellant during the appellate proceedings has submitted a fresh valuation report, valuing shares at ₹ 535.70 per share. If this Valuation Report is accepted than the provision of deemed gift under section 56(2)(viia) would apply. The deemed gift chargeable to tax amounts to ₹ 57,13,920/-. As discussed, the A/R of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not considered by the ld. CIT(Appeals) and he even declined to admit the same on the ground that it was not relevant to decide the issue. He contended that the said additional evidence filed by the assessee to substantiate its claim for higher fair market value of its shares was very much relevant and urged that the matter may be sent back to the Assessing Officer for deciding this issue afresh after verifying the claim of the assessee. 6. The ld. D.R., on the other hand, strongly supported the impugned order of the ld. CIT(Appeals). He contended that its claim for the higher fair market value of its shares was never made by the assessee during the course of assessment proceedings and the ld. CIT(Appeals), therefore, was fully justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(Appeals), however, did not admit the said additional evidence on the ground that it had no relevance to the issue involved in the appeal of the assessee. As rightly contended by the ld. Counsel for the assessee by relying on Explanation (a)(ii) to section 56(2)(viib), the said additional evidence was very much relevant to decide the issue relating to the addition made under section 56(2)(viib) involved in the case of the assessee and the ld. CIT(Appeals), in my opinion, was not justified in declining to admit the same. I, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer with a direction to decide the issue relating to the addition under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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