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TMI Blog2020 (12) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... facts on circumstances of the case the Ld. CIT(A) erred in law and on facts in upholding the action of Ld. AO in framing the assessment which is contrary to Instruction No. 20/2015 dated 29.12.2015 i.e. assessee was asked to furnish the information's which were out of the purview of limited scrutiny guidelines. 4. On the facts and circumstances of the case the Ld. CIT(A) erred in law and on facts in upholding the action of Ld. AO in making additions on account of security premium received on fresh issue of shares u/s. 56(2)(vii-b) of the Act. 5. On the facts and circumstances of the case the Ld. CIT(A) erred in law and on facts in not accepting the valuation report which was a crucial evidences as submitted during the appellate proceeding as additional evidences which was in accordance with Rule 11U and Rule 11UA of the Rules and hence defeating the principles of natural justice. 6. On the facts and circumstances of the case the Ld. CIT(A) erred in law and on facts in upholding the action of Ld. AO in making additions on account of unsecured loan received from Shri Nitin Bansal amounting to Rs. 14,51,000/- even when the supporting documents were submitted which proves the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in para No. 1 that, therefore, approval from ld. Pr. Commissioner of Income Tax has been sought for complete scrutiny communicated vides order dated 21st December, 2016. On next day, i.e. on 22/12/2016 he passed assessment order u/s 143 (3) of the act by making the following additions:- (i) Addition on account of share premium of Rs. 34,05,000/-; (ii) Addition on account of un-secured loan from Shri Nitin Bansal of Rs. 14,51,000/-; (iii) Loan from Ms. Alpna Saxena Rs. 8,40,000/-; (iv) Loans from Shri Himanshu Mittal Rs. 42,00,000/-; (v) Loans from others of Rs. 39,94,120/-. Thus, the assessment order was passed determining total income of the assessee at Rs. 1,32,30,678/-. The assessee on appeal before the ld. CIT (Appeals) remained unsuccessful and appeal of the assessee was dismissed. Therefore, assessee is in appeal before us. 3. Ground No. 1 of the appeal is general in nature, therefore, same is dismissed. 4. Ground No. 2 of the appeal is challenging the action of the AO in violation of instruction No. 5 of 2016 dated 14.07.2016. Ground No. 3 is with relation to action of the AO contrary to instruction No. 20/2015 dated 26.12.2015. 5. We have heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete scrutiny, the Assessing Officer can deal with any issue emerging from the scrutiny proceedings. In the present case the notice is shown to us at page Nos. 1, 2 & 3 of the paper book that the ld. AO on 5.07.2016 asked assessee to appear and therein in para No. 9 asked for the borrowings and its details despite the issue not being in limited scrutiny. Further in para No. 4 of instruction dated 29th of December, 2015 it has been specifically stated that where the AO proposed to make any addition he shall issue an appropriate show cause notice for the reasons of addition. It is stated by the ld AO that he sent the draft assessment order itself for approval of limited scrutiny case to complete scrutiny case. Surprisingly, Even the Pr CIT also granted approval. Had the Pr. CIT applied his mind on the case, looking at the draft assessment order itself, the approval should have been refused, as it is clear violation of the instructions of CBDT. But unfortunately, in this case approval was granted. In the present case, the day on which case was converted into full scrutiny i.e. on 21.12.2016 the ld. AO on the very next day passed the order of assessment by making the addition which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector and was running a proprietary concern in the name of Ganesh Trading Company and the funds were transferred from the current account of that proprietary concern to the appellant. Assessee submitted the audited accounts of proprietary concern and Income Tax return of the firms over and above the proprietary concern from which funds were received. The copies of the bank account of those firms were also submitted. With respect to unsecured loan of Rs. 8,30,500/- from Smt. Uma Bansal, assessee submitted the copy of the Income Tax return and bank statement. In case of Smt. Anupam Kumari Jha a loan of Rs. 13,00,000/- was also supported by the Income Tax return, bank statement and the source of the funds received by her on sale of a property. With respect to unsecured loan of Rs. 18,63,630/- from Shri Sharad Kumar Raizada, assessee submitted return of income also the bank statement of the person depositor along with the confirmation statement. The ld. Assessing Officer without making any enquiry disbelieved the submission made by the assessee. In view of this, it is apparent that even on the merits assessee has clearly established the identity, creditworthiness and genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the action of the ld. Assessing Officer. On careful examination of Rule 11UA of the Income tax Rules, 1962, the assessee can value the shares for determining its fair market value of unquoted equity share either at the book value of the assets as per the prescribed formula or as per the discounted free cash flow method. The assessee has justified the valuation of shares by adopting discounted free cash flow method and such method is one of the acceptable methods as per Rule 11UA and the ld. CIT (Appeals) did not find any fault in the same. The ld. Assessing Officer was also supplied with the above evidences and did not comment against the same. Unless the valuation made by the assessee applying Discounted cash flow method is not found fault with by pointing out deficiencies and inadequacies, same cannot be rejected at threshold. In view of this, we do not find any merit in the addition. In view of this the addition of Rs. 34,05,360/- made under Section 56(2)(viib) is devoid of any merit. 9. In view of this, Ground Nos. 2 and 3 with respect to the with respect to the addition of cash credit and Ground Nos. 4 and 5 with respect to addition under Section 56(2)(viib) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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