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TMI Blog2019 (12) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... in their bank account before making payment to the assessee company for purchasing shares and in this respect, it was felt by the ld.Pr.CIT that this issue was not examined by the ld.Assessing Officer(AO) concern during the course of assessment proceedings which shows lack of enquiry on his part. Apart from this, it was also observed by the ld.Pr.CIT that the shareholders of the company were issued at Rs. 50 per share. In this respect, a valuation report obtained by the assessee from the Chartered Accountant(CA) in which valuation of the shares of the company was valued at Rs. 52 per share as on 31.03.2013. The ld.Pr.CIT also observed that the valuation report carry various data which were taken as projected financial results of the assessee company and the same were not as per the real trend of business, but it was taken without any basis as per the need of the management of the assessee company and also no supporting details in the projected data used in the valuation certificate was filed during the course of assessment proceedings. 4. On the other hand, the ld.Authorised Representative(AR) submitted before this Tribunal that all supporting details in respect of source of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utiny assessment proceedings vide various submissions and were duly verified by the A.O. Copy of relevant notices and their respective submissions are enclosed herewith. (Annexure- 1) We therefore request your honor not to treat the amount of Rs. 2,94,89,700 as unexplained cash credit in the hands of assessee as assessment order was passed by the A.O. after detailed verification of the source of said cash deposited by the investors. So far as details of shares issued are asked for, initially shares were issued at face value of Rs. 10. However to fulfill further requirement of huge fund for the ACC Blocks project, valuation of shares was obtained and subsequently shares were issued at premium of Rs. 40. 2. So far as proposal for addition of premium of Rs. 4,60,76,000 accepted by the assessee during the year under consideration to the total income, we have to state that the said premium has been accepted as per the valuation of shares as per DCF method. Valuation report for the same has been taken from the respected CA. Rule 11UA of The Income Tax Rules, accepts the fair market value of the unquoted equity shares determined by a CA. as per Discounted Free Cash Flow Method. DCF me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow: Sr No Particulars l REGENCY PARK PROPERTY MANAGEMENT SERVICES PVT LTD VS CIT ................................ 130 TTJ 669 (DELHI-T) 2 SHREE SALASAR OVERSEAS P LTD VS CIT 144 TTJ 41 (JAIPUR-T) 3 KAMAL KUMAR GUPTA VS CIT ....142 TTJ 9 (JAIPUR-T) 4 CIT VS SUNBEAM AUTO LTD .227 CTR 133 (DELHI-HC) 5 HITENDRA A NANAVATI VS CIT ..135 TTJ 17 (AHD-T) 6 NARAIN SINGLA VS PCIT ................. 156 ITD 275 (CHD-T) 7 SMT PRAGNABEN VINODBHAI PAREKH VS PCIT ITA/12 76/AHD/2 017 & OTHER 3 CASES DECIDED BY COMMON ORDER 8 CIT VS GREEN FIELD COMMERCIALS P LTD 3272 ITR 740 (J&K-HC) 9 AMERICAN SPRING & PRESSING WORKS P LTD VS PCIT 166 ITD 92(MUM-T) 10 CINESTAAN ENTERTAINMENT P LTD VS Income Tax Officer 177ITD 809 (DELHI-T) 11 RAMESHWARAM STRONG GLASS P LTD VS Income Tax Officer 172ITD 571 (JAIPUR-T) 12 ' India TODAY ONLINE P LTD VS Income Tax Officer 176 ITD 459 (DELHI-T) 7. On the other hand, the ld.Departmental Representative(DR) relied upon the written submissions submitted by him and the judicial pronouncements and supporting order passed by the ld.Pr.CIT. It was also submitted that both the twin conditions contain in section 263 of the Act are co-jointly p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the valuation report the various data taken as projected financial result of the assessee company were not as per the real trend of business, but it was taken without any basis as per the need of management of the assessee company and also no supporting details for the projected data used in the valuation certificate was filed during the course of assessment proceedings. In this respect, we notice that the premium was accepted by the assessee as per the valuation of shares as per DCF Method it is widely followed method for valuation of unquoted equity shares. This method involves projection of future cash flows. Techno, economic viability stata report was also obtained based on the said projection and conserving the profitability of the project. Thus, the projection was drawn as per the assessee after stating various aspects of the whole nature and other factors related to project. The actual figures may differ from the projections due to various factors and circumstances of the market in real time. On the entirety of the aspects, we rely upon the decision of the Co-ordinate Bench of ITAT in the case of Shree Salasar Overseas Pvt. Ltd., Vs. CIT [2012] 27 taxmann.com 129 (Jaipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. The Co-ordinate Bench of ITAT in the case of Narayan Tatu Rane Vs. ITO [2016] 70 taxmann.com 227 (Mumbai Trib.) had held that since Commissioner had not brought any material on record to substantiate his inference, Commissioner had passed impugned revision orders only to carry out fishing and roving enquiries with objective of substituting his view with that of Assessing Officer. Further, in the case of Sangeeta Jain Vs. Pr.CIT-II of Hon'ble ITAT Delhi Bench in ITA No.3888/Del/2017 it was concluded at para no.8 that "Explanation 2 to section 263 inserted by Finance Act 2015 cannot be interpreted in a manner which would make the enquiries unending. If Explanation 2 to section 263 is invoked by the Commissioner in such manner as applied in the present case, in our considered opinion, the process of enquiry would be unending and no assessment order can be said to be final as all the assessment order can be found fault on the ground that enquiries should have been made more elaborate. We have also considered the decision in the case of Cinestaan Entertaiment Pvt. Ltd., Vs. ITO [2019] 106 taxmann.com 300 (Del) wherein it was held as "as per section 56(2)(viib) read with rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nutes of meeting held in F.Y. 2013-14 and copy of board resolution thereof. vii. Resolution authorizing issuance of share under section 81(1A) of companies Act. viii. Date of issue of share application form. ix. Attendance register of AGM. x. Share certificate. xi. Proof of communications to shareholders. xii. Proof of dispatch of share certificates. xiii. Date on which issue was approved by passing of special resolution of AGM. xiv. Date of execution of share application forms. xv. Copies of share application forms/letters received and share allotment letters. 3. Please comment as to how the money raised has been utilized. Give complete details. 4. Please note that the above information is being called u/s 142(1) of the Act and the same should be furnished duly signed and verified by you in the prescribed manner. You may submit the information before the scheduled date also, if you wish so. Yours faithfully, Sd/- (MAHESH KUMAR SAINI) Income Tax Officer Ward-1(1)(4), Surat" Reply/Submission of details from the Assessee to AO: "N.J.ECO-BUILD PVT.LTD. S-42, BELGIUMSQUARE OPP.LINEAR BUS STOP RING ROAD, SURAT. DATE: 12/12/2016 To, Income Tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered hand to hand. xiii. The assessee company being private limited company, there is no requirement of special resolution to be passed. xiv. The date on which share applications were issued have been mentioned in point (viii) above. The allotment further were made and resolutions giving effect to the same were passed. xv. Copy of share allotment letters are enclosed. (Annexure-6) 3. The money raised through issue of shares have been utilized for purchase of machineries for business and for construction of factory building. The details submitted hereinabove may fulfill the purpose of the department in the interest of justice. Kindly expedite the assessment proceedings and oblige Thanking you, Yours faithfully, For N.J.ECO-BUILD PVT.LTD. Sd/- Director Encl: as above." 13. Thus, considering all the facts and circumstances, we do not agree with the contention of the ld.Pr.CIT in order u/s.263 of the Act on the basis of our detailed reasons mentioned above. We hold that the order passed by ld.Pr.CIT u/s.263 of the Act for the above stated reasons is hereby set-aside and quashed. Since we have quashed the order u/s.263 of the Act, we do not deal with the merits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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