TMI Blog2021 (9) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... to his directions given during the appellate proceedings. In our considered view, the AO has passed the assessment order after examining and verifying the documents and the details furnished by the assessee.In the present case since the AO has passed the assessment order after due application of mind and after accepting the explanation given by the assessee the same cannot be termed as erroneous. Therefore, in our considered view the observation of the Ld. Pr. CIA that AO has passed the order without making proper enquiries is not factually correct, hence not sustainable. Whether Pr. CIT has wrongly rejected the valuation of shares @ ₹ 33.44? - Evidence on record do not suggest that the valuation report submitted by the assessee had been prepared without verification of the data supplied by the assessee. Hence, we do not find any merit in the contention of the Ld. DR that the Ld. Pr. CIT has rightly rejected the valuation report submitted by the assessee. We therefore, do not find any cogent and convincing reason for rejecting the valuation report prepared as per the provisions of law and the guidelines issued by the Institute of Chartered Accountants of India. Hence, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration the assessee had received total share capital and premium of ₹ 5.9 crore and the AO has not examined the applicability of section 56(2)(viib) of the Act during the assessment proceedings. Accordingly, the Ld. Pr. CIT issued notice directing the assessee to show cause as to why an appropriate order u/s 263(1) of the Act should not be passed. In response to the said notice the assessee submitted written submissions inter alia contending that the AO has passed the assessment order after proper verification of all the documents relating to shares issued on premium of ₹ 10/- and ₹ 20/However, the Ld. Pr. CIT rejecting the submissions made by the assessee set aside the assessment order holding that the said order is erroneous and prejudicial to the interest of the revenue and directed the AO to pass the assessment order afresh making addition of share premium in excess of fair market value as discussed in the order. 4. The assessee has challenged the impugned order passed by the Ld. Pr. CIT on the following grounds: 1. The order passed by Worthy Pr. Commissioner of Income Tax, Hisar being against law facts and provisions of I.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 at a premium of ₹ 10/- per share and thereafter the shares as per fifth issue were allotted on 15.2.2013 at a premium of ₹ 20/- per share. The third issue at a premium of ₹ 10/- were allotted to the existing shareholders and their family members only. The fourth issue at a premium of ₹ 20/- were offered at the time when the company was in urgent need of finance and were offered to existing shareholders only on pro-rata basis. Further the shares were allotted to the existing shareholders or their family members of their close friends only on renouncing their entitlements in favour of the allottee. The ld. counsel invited our attention to pages 141 to 144 of the paper book submitted on 13.5.2018 containing Annexure-A format of list of allottees, pages Nos. 126 to 133 of the same paper book containing the return of the partnership firm for guar manufacturing business declaring an income of ₹ 1,32,58,518/- for the assessment year 2012-13 and the assessment order dated 31.12.2014 to demonstrate that the details regarding the allotted shares and the return of partnership firm were furnished during the assessment proceedings. The ld. counsel further submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commercial prudence of an assessee relating to valuation of an asset. Similarly, the Hon'ble Mumbai High Court has held that AO has jurisdiction to scrutinize valuation report and determine fresh valuation, however it is not open to him to change the method of valuation which had been adopted by the assessee. In this case since there was no defect in the valuation report the Ld. Pr. CIT has wrongly rejected the DCF method adopted by the assessee holding that the fair market value of unquoted equity shares is required to be done as per method prescribed in the Rule 11UA(2)(a) and directed the AO to make addition of ₹ 1,09,98,548/computed by him. The Ld. counsel further relied on the decision of the Mumbai Bench of the Tribunal in the case of Karmic Labs Pvt. Ltd. vs. ITO ITA No 3955/Mum/2018, order of the Cuttack Bench of the Tribunal in the case of Alishan Palace Resorts Provision. Ltd vs. ITO, ITA No 114/CTK/2019, order of the Bangalore Bench of the Tribunal in the case of Innoviti Payment Solutions (P) Ltd. vs. ITO 102 taxmann.com 59 (Bangalore Trib.), order of the Jaipur Bench of the Tribunal in the case of Rameshwaram Strong Glass (P) LTd. vs. ITO 96 taxmann.com5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record including the cases relied upon by the parties. The Ld. Pr. CIT has set aside the assessment order basically on the ground that the AO has passed the assessment order u/s 143(3) of the Act, without making any enquiry or verification on the issue of share premium received and applicability of section 56(2)(viiib) of the Act. The contention of the Ld. counsel is that since the AO has passed the assessment order after making proper enquiry including applicability of section 56(2)(viiib) of the Act, the Ld. Pr. CIT has wrongly exercised the jurisdiction u/s 263 of the Act. As contended by the Ld. counsel for the assessee, the assessee during the course of assessment proceedings filed point wise reply to the notice issued u/s 142(1) and 143(2) of the Act, copy of which is available at pages 179 to 182 of the paper book. Further, the assessee submitted reply to the AO in response to queries raised after submission of reply to the notices aforesaid. The copy of the said reply is also available at pages 183 and 184 of the paper book. Moreover, the Ld. Pr. CIT in his order has observed that the AO has examined the aspect of identity, genuineness and creditworthiness of the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation report of fair market value of unquoted equity shares determined as per DCF method provided under section 56(2)(viib) r/w rule 11UA(2)(b) of the Income Tax Rules. The contention of the Ld. DR is that the valuation has been done on the basis of material supplied by the assessee without verifying the genuineness of the data supplied. The Ld. counsel has rebutted the said contention on the ground the facts and figures were verifiable from Annexure (B) attached with reply dated 06.02.2018 submitted before the Ld. Pr. CIT. As pointed out by the Ld. counsel, the Hon'ble Mumbai High Court has held in the case of Vodafone M-Pesa Limited vs. Pr. CIT (supra), DCF method cannot be ignored at all and the AO cannot change the method of valuation adopted by the assessee. The Hon'ble High Court of Delhi in the case of Cinestaan Entertainment (P) Ltd. vs. ITO (supra) has upheld the findings of the Tribunal holding that the revenue is unable to demonstrate that the methodology adopted by the assessee is not correct as the AO had simply rejected the valuation of the assessee on the ground that performance did not match projections and it has failed to provide fair valuer of the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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