TMI Blog2022 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ve gone through statements recorded from some persons, which are part of assessment order and we find that nowhere persons directly alleged that the assessee is involved in the activity of taking accommodation entries of share capital / share application money from those companies. In fact, the assessee has proved with necessary evidence that an allegation of the Assessing Officer is wrong and transaction between the assessee and investor companies are genuine business transactions. Therefore, we are of the considered view that the Assessing Officer has completely erred in making additions towards share capital / share application money received from certain companies as unexplained cash credit which is taxable u/s.68. Thus the assessee, by filing enormous details, has discharged its initial onus to prove identity, genuineness of transactions and creditworthiness of the shareholders. The AO, without carrying out further inquiries in order to ascertain the claim of the assessee, jumped into conclusion on the basis of report of Investigation wing, and financial statements of the subscribers that none of the subscribers had enough source of income to establish creditworthiness. Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26.10.2017 and pertains to assessment year 2012-13. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are being disposed off, by this consolidated order. ITA No.274/Chny/2018:- 2. The Revenue has raised following grounds of appeal:- 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The leaned CIT(A) erred in deleting the addition of Rs.51,00,00,000/- made by the Assessing Officer towards share application money/share premium treated as unexplained cash credit u/s 68 of the Income Tax Act, 1961, in the assessment for A.Y 2012-13 passed u/s 143(3) r.w.s.153A of the IT Act in the assessee s case. 2.1 Having relied on the decision of Hon ble High Court in the assessee s own case for AY 2007-08 in 2017(9) TMI 665, the d.CIT(A) ought to have appreciated that the facts of the case for the year under consideration are different in that, for AY 2007-08, he investor has admitted to have invested in share application money/share premium, whereas for A.Y 2012-13, Shri. Shirish Chandrakant Shah, Director of the investor Companies and his ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act, if the source of receipt is not satisfactorily established by the assessee. 2.6 The ld.CIT(A) ought to have taken cognizance of the decision of the Hon ble Kolkota High Court in the case of CIT Vs Precision Finance P Ltd[1994] 208 ITR 465, wherein it was held that mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine It is for the assessee to prove the identity of the creditors, their credit worthiness and the genuineness of the transactions. Mere furnishing of the particulars is not enough 2.7 The ld.CIT(A) ought to have appreciated that in the case of Sri.Sanjay Bimalchand Jain L/H of Late Santidevi Vs Pr.CIT- 1,Nagpur, in ITA No.18/2017 dated 10.04.2017, the Hon ble Bombay High Court, upheld the action of the AO in treating the sale of shares as adventure in the nature of business for the reasons that the assessee could not adduce any reason for the exorbitant jump in the sale price of shares sold. 2.8 Having regard to the documentary evidence gathered and admission made by the Director of the investing company during search and post search proceedings, establishing that the alleged share holders were on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to various parties through web off companies floated by him. During the course of investigation, statements were recorded u/s.132(4) of the Act, from Mr. Shrish Chandrakanth Shah and his associates Mr. Deepak Patwari from Kolkata, Mr. Hare Krishna Behara from Kolkata Mr.Rajendra Bhubna from Kolkata Mr.Goutham Ghouse from Howrah, Mr. Mahendra Sethia from Kolkata. Mr. Shrish Chandrakanth Shah, in response to various questions admitted that he had floated various companies to provide accommodation entries of share capital to various beneficiaries through number of layer of transactions. The relevant statements recorded from Mr. Shrish Chandrakanth Shah is reproduced at para 3.6 of the assessment order. From the statements recorded from Mr. Shrish Chandrakanth Shah, the Assessing Officer noticed that, he had floated more than 200 companies with dummy directors, who are either his employees or associates and through said companies facilitated accommodation entries of share capital / share premium to various companies, including Assessee Company. The Directorate of Income Tax (Investigation), Ahmedabad had also recorded statements from employees and associates of Mr. Shrish Chandrakant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apers for purchase of shares as requested by M/s. Lalithaa Jewellery Mart Pvt.Ltd. Therefore, from the information gathered during the course of search in the case of Mr. Shrish Chandrakanth Shah, coupled with statements recorded from his associates, the Assessing Officer came to the conclusion that the assessee is one of the beneficiaries of accommodation entries of share capital / share application money received from various companies floated and controlled by Mr. Shrish Chandrakanth Shah. The Assessing Officer had also taken note of fact that the department has provided an opportunity to Managing Director of the assessee company Mr. M.Kiran Kumar, to appear either in person or with an Authorized Representative at the time of recording statement from Mr. Shrish Chandrakanth Shah so as to enable him to cross examine the witness. However, the assessee company and its Director did not avail opportunity and thus, the Assessing Officer came to the conclusion that so called share application money received from companies controlled and operated by Mr.Shrish Chandrakanth Shah is nothing but accommodation entries used by the assessee company to convert its undisclosed income in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the valuation of shares, with regard to allotment of shares to resident Indian, the same is not obtained. However, the growth, goodwill and present value of the business has been duly explained to the prospective subscribers to convince their investment in our company. Further one more practical advantage was to save on account of cost of fees payable on increase of authorised capital. When shares are issued at premium, number of shares and authorised capital increase lesser in comparison of capital raised by way of capital and premium. Entire payments including premium had been received from shareholders by means of banking transactions duly recorded in the books of account of the company. After receipt of payment and ratification the allotment of shares had been communicated to the Registrar of Company by filing requisite forms. 3.24 The submissions made by the assessee have been duly considered. A duty is cast on the assessee to substantiate the share premium charged, as to how it is arrived at. This onus cannot be wished away by saying that it is prerogative of Board of Director of company to decide the premium. As can be seen from the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by Shri Shrish Chandrakanth Shah and others regarding accommodation entries given by him using certain companies is a clinching evidence in support of finding that the assessee introduced its unaccounted income in the form of share application money! share premium. 3.27 In the light of the aforesaid pieces of evidence and the prima facie finding, it can be said that the three requirements: (A) identity of the shareholders; (B) genuineness of the transaction and (C) the creditworthiness of the share-holders repeatedly impressed, by assessee have not been satisfied. Identity of the alleged shareholders is known but the transaction was not a genuine transaction. The transaction was nominal rather than real. The creditworthiness of the alleged shareholders is also not established because they did not have any money of their own. Each one of them received from somebody and that somebody received from a third person. Therefore, prima facie, the share-holders are mere name lenders. 3.28 Judicial pronouncements, while recognizing that the pernicious practice of conversion of unaccounted money through masquerade of investment in the share capital of a company needs to be prevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received, their PAN, financial statements and also confirmation from the parties. 7. The learned CIT(A), after considering relevant submissions of the assessee and also by following various judicial precedents, including decision of the Hon ble Jurisdictional High Court of Madras in assessee s own case for assessment year 2007-08 reported in (2017) 399 ITR 425 (Mad), has deleted additions made by the Assessing Officer towards share capital received from certain companies by holding that the assessee has filed necessary evidence and proved identity of the persons from whom share capital / share application money was received and also proved genuineness of transaction and creditworthiness of parties. The relevant findings of the learned CIT(A) are as under:- I0. Next coming to the addition on unexplained cash credit u/s 68, the AO added a sum of Rs.51,00,00,000/- being share capital (including premium) received from the following companies as unexplained cash credit u/s 68. (i) M/S Speciality Papers Ltd., 81,250 shares (ii) M/s Emporis Projects Ltd., -- 62,500 shares (iii) M/s Sanguine Media Ltd., -- 68,750 shares (iv) M/s Swastik Securities and Finance L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited company to the appellant company in a manner that lends credibility and acceptance. There was no real investment that transpired in this case. 10.3. In response to the show cause notice to add the amounts as unexplained credits U/s.68. Pie appellant stated as follows: (i) The appellant has no nexus whatsoever with Mr.Shah or his activities. (ii) The appellant needed funds for business expansion and hence shares were issued to various companies at a premium (iii) All statutory requirements for issue of shares at a premium were duly met and the money was brought in after due deliberations with the applicants on the issue price and share premium. (iv) The rationale for issue of shares at a higher share premium was to reduce the cost of fees payable to Registrar of Companies for increase in authorised share capital, (v) There is no statutory provision requiring the valuation shares by a chartered accountant and that the subscribers were convinced on the goodwill and the present value of the business. (vi) All requisite documentation is complete and the transaction is routed through bunking channels 10.4 However, the submission have not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y made from their respective business enterprises The assessee cannot also call upon its investors to prove their good business sense in investing in the assessee company, as such investors cannot gain any controlling stake. 10.6. Respectfully, following the above decision of the Hon ble Madras High Court, I hold that, the action of the AO in rejecting the appellant s claim and thereby making an addition of Rs.51,00,00,000/- is incorrect Accordingly, this ground is allowed. 8. The learned DR submitted that the learned CIT(A) erred in deleting addition of Rs.51 crores made by the Assessing Officer towards share premium / share application money treated as unexplained cash credit u/s.68 of the Income Tax Act, 1961, by relied upon the decision of the Hon ble Jurisdictional High Court of Madras in the assessee s own case for the assessment year 2007-08, without appreciating fact that facts of the case for the year under consideration are different from that of assessment year 2007-08, because investor has admitted to have invested in share premium / share application money, whereas for the assessment year 2012-13, Mr. Shrish Chandrakanth Shah, director of the investor compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vs PCIT (2016) 386 ITR 162. The learned DR has also relied upon decision of the ITAT., Mumbai Benches in the case of DCIT Vs. Leena Power Tech Engineers (P) Ltd. (2021) 130 taxmann.com 341. 9. The learned A.R for the assessee, on the other hand, supporting order of the learned CIT(A) submitted that this issue is squarely covered in favour of the assessee by the decision of the Hon ble Jurisdictional High Court of Madras in assessee s own case for the assessment year 2007-08 reported in (2017) 399 ITR 425 (Mad) and also decision of the co-ordinate Bench of ITAT., Chennai in the case of ACIT Vs M/s. Suryadev Alloys Power Pvt. Ltd. in ITA Nos. 1982, 1746 to 1751/Chny/2017 vide order dated 17.12.2021, where an identical issue has been considered by the Hon ble Jurisdictional High Court and held that once the assessee has discharged its onus by filing various evidences to prove identity, genuineness of transaction and creditworthiness of parties, then onus shifts to the Department to prove, otherwise that sum credited in the books of account of the assessee as share capital / share premium is unaccounted income of the assessee which has been re-routed through accommodation entrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Investigation), Ahmedabad. During the course of search, it came to light that Mr.Shrish Chandrakanth Shah had been involved in the business of providing accommodation entries of share capital to various parties through web off companies floated by him. During the course of investigation, statements were recorded u/s.132(4) of the Act, from Mr. Shrish Chandrakanth Shah and his associates Mr. Deepak Patwari from Kolkata, Mr. Hare Krishna Behara from Kolkata Mr.Rajendra Bhubna from Kolkata Mr.Goutham Ghouse from Howrah, Mr. Mahendra Sethia from Kolkata. Mr. Shrish Chandrakanth Shah, in response to various questions admitted that he had floated various companies to provide accommodation entries of share capital to various beneficiaries through number of layer of transactions. The relevant statements recorded from Mr. Shrish Chandrakanth Shah is reproduced at para 3.6 of the assessment order. From the statements recorded from Mr. Shrish Chandrakanth Shah, the Assessing Officer noticed that, he had floated more than 200 companies with dummy directors, who are either his employees or associates and through said companies facilitated accommodation entries of share capital / share premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to examine three ingredients, i.e., identity, genuineness of transaction and creditworthiness of the parties. But, as per law, under section 68, it is the assessee who is required to offer an explanation about the nature and the source of credit, for which an entry is found in his books and such explanation has to be to the satisfaction of the Assessing Officer. Therefore, it is for the assessee to explain credit with necessary evidences to the satisfaction of the Assessing Officer. Such proof includes proof of the identity of the creditor, the capacity of such creditor to advance the money and lastly, the genuineness of the transaction. Only when the assessee has proper evidence to establish prima facie the aforesaid facts, the onus shifts on to the Department. Once the source of the credit, the genuineness of the remittance and the identity of the sender are established, it would be for the Department to show that the amount in question is not a loan but constitutes income assessable to tax. In such a case the Departmental authorities are entitled to probe further into the matter and investigate the materials available to them to come to an independent and unbiased finding as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for investments. This aspect has been explained in judgments of various courts, as per which, the courts had interpreted provisions of section 68 of the Act, and its implications on the assessee as well as the Assessing Officer. The Hon ble Supreme court in the case of CIT v. Lovely Exports P Ltd (SC) 216 CTR 195, has very clearly held that If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money cannot be regarded as undisclosed income u/s.68 of the assessee company. Therefore, from the above discussion what is clear is that the assessee shall first discharge its onus by filing necessary evidences and once, the assessee files all details, then it is for the AO to disprove what is claimed is not real and sum credited in the books is income from undisclosed sources of the assessee. 14. In light of above settled legal position, if we examine facts of present case, there is no doubt, the assessee has discharged burden cast upon it under section 68 of the Income-tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nowhere the parties stated that the assessee is one of the beneficiaries of alleged transactions. In fact, the director of Assessee Company denied meeting any of the persons from whom statements were taken by the department. If you go through statement relied upon by the AO, except a general statement of modus operandi of entry providers, there is no direct or indirect reference to Assessee Company in any of statements. From the above, it is clear that the AO totally ignored genuine documents produced before him and passed the Assessment Order on a sweeping statement without any material evidence or fact on record. The AO has merely stated modus operandi of how, the transaction took place without considering the facts of the present case. He had instead passed a general statement on the lines of suspicion and surmises without any vital material evidence against the Assessee. From the above, it is very clear that the observations of the AO in his assessment order on the basis of report of investigation wing, Kolkata is a general observation of modus operandi of certain parties who are involved in alleged activity of entry providing, but it cannot be a conclusive evidence to draw an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts recorded from them. Further, assessee has filed complete set of documents, including name and address of the parties. Once, assessee filed complete documents, it is for the AO to carry out further investigation by exercising all possible options available to him, but merely on the basis of their confession, the assessee cannot be implicated to alleged scam of hawala business. There may be various reasons for Shri SCS and his associates to confess before the Department about their activity, however unless evidences found during the course of search indicates involvements of the assessee in to alleged scam, no action can be taken on the basis of statements of those persons alone. The shareholder companies are very much available in the given address. They had filed their annul accounts with Registrar of Companies every year. As per ROC website, the companies are in active status. Further, the assessee done what best it could have done and filed, whatever information available with it, in order to satisfy the AO. Therefore, we are of the considered view that when, assessee has filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has relied upon plethora of decisions in support of its arguments, including decision of the Hon'ble jurisdictional High Court in assessee own case for Asst. Year 2007-08. 13. The Hon ble Jurisdictional High Court of Madras in the assessee s own case for assessment year 2007- 08 reported in (2017) 399 ITR 425 (Mad) had considered an identical issue in light of additions made by the Assessing Officer towards share application money u/s.68 of the Income Tax Act, 1961. The Hon ble High Court, after considering relevant facts and also by following decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation Pvt.Ltd. (1986) 158 ITR 78 held that when the assessee company had completely explained source of investments received by it by way of share application money, it had also disclosed identity of such investors and all payments had been received through banking channels and amount of share application money could not be treated as assessee s undisclosed income u/s.68 of the Income Tax Act, 1961. 19. The assessee had also relied upon decision of the ITAT., Chennai in assesseee s own case for the assessment year 2013-14 to 2015-16 reported in (201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer has extracted the statement in his order. Even though Shri Mahendra Sethia claims that accommodation entry was given to the assessee-company, it is not his claim that he received money from the asessee company. In response to question No.19, Shri Mahendra Sethia clarified that it is possible that cash would have been received by any of the group companies and he did not remember clearly. For the purpose of convenience, we are reproducing question No.19 and its answer as follows: Qn. No.19: Did you receive cash from either MIs. Lalithaa Jewellery Mart Pvt. Ltd. or its promoter which as finally routed back to the company as share capital and premium? Ans: It is possible that cash would have been received by any of the group companies. I do not remember clearly. 11. From the above question and answer, the Assessing Officer presumed that the assessee-company paid to M/s. Kothari Credit India Pvt. Ltd. From the above question and answer, it is obvious that it is not a categorical statement of Shri Mahendra Sethia that M/s. Kothari Credit India Pvt. Ltd. received money from the assessee. It is only a presumption. In other words, Shri Mahendra Sethia presumed that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine and also admitted the capacity of the person for making investment in the shares of the assessee-company. Therefore, the addition made under Section 68 of the Act cannot stand in the eye of law. 13. Moreover, the Madras High Court in the assessee s own case Lalitha Jewellery Mart (P.) Ltd. (supra) for assessment year 2007-08, considered an identical issue and observed as follows at para 42:- 42. On the other hand, the legal principle enunciated by the Supreme Court, as noticed supra by us, is that so long as the proof and identity of the investor and the payment received from him is through a doubtless channel like that of a banking channel, the receipt in the hands of the assessee towards share capital or share premium does not change its colour. The money so invested in the assessee-company would still be the money available and belonging to the investors. The consistent principle followed is that the investors sources and creditworthiness cannot be explained by the assessee. If the Department has a doubt about the genuineness of the investors capacity, it is open to it to proceed against those investors. Without taking such a course of action, the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on value on the date of issue including its assets. Assets include intangible assets such as goodwill, knowhow, patents, copyrights, trademarks, licences, franchises, etc. The Assessing Officer has not taken into consideration the second limb in explanation to Section 56(2)(viib) of the Act. The second limb provides that when valuation was made by the company, if the Assessing Officer is not satisfied about the valuation, he has to call for material from the assessee how the valuation was made by the assessee-company. Satisfaction of the Assessing Officer as referred in explanation to Section 56(2)(viib) of the Act would be judicial satisfaction of the Assessing Officer. Judicial satisfaction means the Assessing Officer has to take into consideration the well established method of valuation of shares including the assets as explained in Explanation 2 to Section 56(2)(viib) of the Act. It cannot be arbitrary. The Assessing Officer has to take note of the judicial and established principles in arriving at his satisfaction. In this case, the Assessing Officer has not found any specific fault in rejecting or not satisfying with the valuation made by the assessee. When the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eat the genuinely raised share capital as deemed income u/s.68 of the Act. In the event the intermediary companies were to be taken as conduits or persons without requisite creditworthiness and even if they were to be treated as bogus shareholders, then also nothing stopped the Revenue to reopen their individual assessments in accordance with law and bring to tax such unexplained money in their respective hands. Therefore, we are of the considered view that the AO was erred in making additions towards share capital, including share premium u/s 68 of the Income Tax Act, 1961. The learned CIT(A) after considering relevant facts and also by relied upon various case laws has rightly deleted additions made by the AO towards share capital u/s 68 of the Income Tax Act, 1961 for the Asst years 2008-09 to 2012-13. In so far as Asst year 2013-14, because of applicability of proviso to section 68 of the Act, the ld. CIT(A) deleted addition made by the AO towards share capital u/s 68 of the Act, wherever assessee proved source of source in the hands of shareholders. But, sustained addition made by the AO towards share capital u/s 68 of the Act, wherever the assessee could not prove source of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shareholders, including share capital received from so called shell companies. From the above, it is very clear that facts of the present case is entirely different from facts of the case considered by the Hon ble Supreme Court in the said case and thus, case law relied upon by the learned DR is treated as not applicable to the facts of the present case. 22. The learned DR has also relied upon the decision of Hon ble Calcutta High Court in the case of Rajmandir Estates P.Ltd. Vs. PCIT (2016) 386 ITR 162. We case law relied upon by the Ld. DR in the light of facts of the present case and find that the case law relied upon by the Ld. DR is not applicable, because, in this case, the subscribers to the share capital did not establish their financial capacity to subscribe share capital in the assessee company. The bank account of all the applicants have been found credited from other sources immediately before transfer of funds to the assessee company. The companies did not have any business activity to establish their financial capacity. Under those facts and circumstances, the Hon ble Calcutta High Court came to the conclusion that the assessee has failed to establish genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed necessary details and explained source of investments received by way of share application money, then amount of share application money could not be treated as assessee s undisclosed income u/s.68 of the Act, and thus, we prefer to follow the Hon ble Jurisdictional High Court of Madras judgement in the assessee s own case for the assessment year 2007-08 reported in (2017) 399 ITR 425 (Mad), rather following decision of the co-ordinate Bench of ITAT., Mumbai in the case of DCIT Vs. Leena Power Tech Engineers P.Ltd (supra). 25. In this view of the matter and considering the facts and circumstances of this case and also taking into consideration various case laws as discussed hereinabove, we are of the considered view that the assessee, by filing enormous details, has discharged its initial onus to prove identity, genuineness of transactions and creditworthiness of the shareholders. The AO, without carrying out further inquiries in order to ascertain the claim of the assessee, jumped into conclusion on the basis of report of Investigation wing, and financial statements of the subscribers that none of the subscribers had enough source of income to establish creditwo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search. 5. For that the Commissioner of Income Tax (Appeals) erred in upholding the disallowance of Rs. 12,99,429/- u/s.40A(2)(b). 6. For that the Commissioner of Income Tax (Appeals) erred in upholding the determination of market rate of rent at Rs.95/- per sq.ft., by the Assessing Officer. 7. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the lease rent paid by the appellant company was at the market rate and that the same was based on the location of the property. 8. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the guiding factors of rent include location of the property, ease of access, amenities available, prevailing competition in the locality etc. 9. For that the appellant company objects to the levy of interest under sections234A, 234B and 234C. 28. The first issue that came up for our consideration from ground Nos.5 to 8 of the assessee appeal is disallowance of rent u/s.40A(2)(b) of the I.T Act, 1961. The facts with regard to impugned dispute are that during previous year relevant to assessment year under consideration, the assessee company has paid lease rent of Rs.16,85,400/- to Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. counsel, the property is situated in a prime commercial location in the heart of Chennai city, therefore, the lease rent at the rate of Rs. 418/- is very reasonable. Hence, according to the Ld. counsel, it does not call for disallowance under Section 40A(2)(b) of the Act. 19. On the contrary, Shri S. Bharath, the Ld. D.R. submitted that the Assessing Officer made enquiry through Inspector. According to the Ld. D.R., no doubt, the property was situated in a prime commercial location in the heart of Chennai, but, the average lease rent paid in that area is only Rs. 100/- per sq.ft. Therefore, according to the Ld. D.R., the Assessing Officer found that the assessee was paying Rs. 318/- per sq.ft. in excess of fair market value. Hence, according to the Ld. D.R., the disallowance of Rs. 12,79,314/- was rightly made. 20. We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer found that the lease rent paid by the assessee-company to its Managing Director was in excess of fair market value. This Tribunal is of the considered opinion that the fair rent has to be estimated considering the location of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unabated / concluded. 34. The learned DR, on the other hand, supporting order of the learned CIT(A), submitted that assessment has been completed on the basis of materials found during the course of search, which suggest escapement of income. Therefore, there is no merit in legal ground taken by the assessee challenging validity of assessment proceedings. 35. We have heard both the parties, perused material available on record and gone through orders of the authorities below. Having considered relevant materials available on record, we find that there is no merit in legal ground taken by the assessee challenging validity of assessment order passed u/s.143(3) r.w.s. 153A of the Income Tax Act, 1961. We further noted that assessment for the impugned assessment year has been completed consequent to search operation conducted in the case of the assessee, where certain incriminating materials were found and seized which suggest escapement of income. Therefore, we are of the considered view that there is no merit in legal ground taken by the assessee in light of certain judicial precedents and thus, grounds of appeal filed by the assessee are rejected. 36. In the result, appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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