TMI Blog2022 (11) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... al year 2011-12, and not the impugned assessment year under consideration. Addition u/s 56 of the Act as per Rule 11UA of the Income Tax Rules - HELD THAT:- Assessee has submitted that the source of investment of Rs. 50 lakhs in the shares of API industries Ltd stands fully explained since such allotment was made out of deposits held with the said company from the previous year. Further, all transactions were made by way of account payee cheques, and hence there is no doubt about the genuineness of the same. We also observe that the assessee had submitted that the Ld. CIT(Appeals) has not considered the submission of the assessee to the effect that firstly there was an arithmetical error committed by the AO while computing the value of shares of API industries Private Ltd and secondly, Ld. CIT(Appeals) has erred in facts and in law in not considering the fact that the company has gone into liquidation, and accordingly, the valuation of Rs. 26.39 per share of a company which is in financial distress, is clearly excessive and unreasonable. As in the interest of justice, we are restoring the matter to the file of Ld. CIT(Appeals) so that he may consider the above submissions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income filed by the assessee, no such investments in shares in API Industries Private Ltd was found. During the course of assessment, none appeared on behalf of the assessee, despite issuance of several notices by the AO. Accordingly, in the absence of any information forthcoming from the assessee, the AO passed ex parte order and added a sum of Rs. 50 lakhs on account of investment made in equity shares of API Private Ltd. as unexplained investment under section 69 of the Act, in the hands of the assessee. 3.1 Further, the AO observed that M/s API Industries Private Ltd. allotted 5 lakh equity shares at face value of Rs. 10/- to the assessee, however, said shares should have been issued at fair market value (FMV) arrived at in accordance with Rule 11UA of the Income Tax Rules r.w.s. 56 of the Act. In this regard, since the necessary details were not furnished by the assessee regarding valuation of shares, accordingly, the AO computed the FMV of equity shares at Rs. 26.39/- per share, and added the difference of Rs. 16.39/- per equity share between the FMV of shares at Rs. 26.39 per equity share and face value of equity share of Rs. 10/- in the hands of the assessee under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. During appeal proceedings, the appellant submitted that 'the AO has wrongly worked out share price at Rs. 26.39 and that it should be Rs. 16.40 per share. The appellant further submitted that after taking into consideration share application money of Rs. 2.5. cr., the share value works out to Rs, 11,85 per share. The appellant further submitted that as per certificate of CA M/s. Shyarn C Agarwal Co, the value of share of API Industries is Rs. 13/- per share. Further during appeal proceedings, the appellant submitted another certificate from CA Piyush V Doshi Co. where value of share as per Rule 11 UA of the Rules is worked out at Rs. 2.13 per share. Submitting thus the appellant submitted that addition of Rs. 81,95,000/- may be deleted. After considering all facts and circumstances of the case, I am not inclined to agree with contention of the appellant. As can be seen from submission of the appellant, the appellant has given so many different values of share value. As per appellant himself, as per CA Shyam Agarwal CO, share value is Rs. 13/-. As per certificate of CA Piyush V Doshi, value of share is Rs. 2.13 per share. The appellant has also mentioned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Accordingly, the source of Rs. 50 lakhs has been fully explained by the assessee. The counsel for the assessee submitted that all these facts were submitted before Ld. CIT(Appeals), however, the same omitted to be considered in the appellate order. 7. In response, the Ld. DR drew our attention to page 10 of the paper book and submitted that the cheque was received by API industries Ltd, however, whether the same was credited/encashed in financial year 2011-12 is yet to be verified. Therefore, it cannot be concluded that a transaction in question pertains to financial year 2011-12, and not the impugned assessment year under consideration. Ground No.2: addition of Rs. 81,95,000/- under section 56 of the Act as per Rule 11UA of the Income Tax Rules: 8. The counsel for the assessee submitted firstly that there is an arithmetical error committed by the AO while computing the market value of shares of API industries Private Limited at Rs. 26.39 per share. The said error was brought to the notice of Ld. CIT(Appeals), who completely ignored the assessee s submission in this regard in the appellate order. The counsel for the assessee also submitted that the AO erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
