TMI Blog2023 (11) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the additional documentary evidence that the assessee has placed before us, restore the matter to the file of the CIT(Appeals) with a direction to him to re-adjudicate the same after taking cognizance of the additional documentary evidence and also addressing the additional grounds of appeal that have been raised by the assessee in the course of the proceedings before us - CIT(Appeals) shall, in the course of set-aside proceedings, afford a reasonable opportunity of being heard to the assessee company, which shall remain at liberty to substantiate its contentions on the basis of fresh documentary evidence. Assessee appeal allowed for statistical purposes - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : Shri Nikhilesh Begani, CA For the Revenue : Smt. Ila M Parmar, CIT-DR ORDER PER RAVISH SOOD, JM: The captioned appeals filed by the assessee company are directed against the order passed by the CIT(Appeals)-II, Raipur, dated 10.01.2018 and CIT(Appeals)-3, Bhopal, dated 06.10.021, which in turn arises from the orders passed by the A.O. u/s. 153A r.w.s.143(3) of the Income-tax Act, 1961 (for short Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 in view of second proviso to Section 153A(1), accordingly, the Search Assessment Order is bad in law legally unsustainable hence, it is earnestly prayed that the Assessment Order passed u/s. 153A r.w.s. 143(3) of the Act may please be quashed and cancelled in limine. (II) That the Search Assessment Order framed under section 153A r.ws. 143(3) of the Act on the strength of purported approval granted u/s. 153D by the Ld. Joint Commissioner of Income Tax, Range-Central is void ab initio, invalid, illegal and bad in law, hence, deserves to be quashed and declared a nullity since, the mandatory prior approval granted is no approval in the eyes of law as the same has not been obtained on the Final Assessment Order passed, is mechanical, mere empty formality, lacks due application of mind and further, the Search Assessment Order was passed based on invalid, inchoate and consolidated approval, accordingly, the Search Assessment Order is bad in law legally unsustainable hence, it is earnestly prayed that the Assessment order passed u/s. 153A r.w.s. 143(3) may please be quashed and cancelled in limine. 3. Succinctly stated, the assessee company is engaged in the business of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot that before allotment, as the same would otherwise result to taxation of unreal and imaginary income which was against the basis scheme of taxation under the Act. However, the aforesaid explanation of the assessee did not find favor with the A.O. The A.O was of the view that as the assessee company had received the property on allotment of shares in lieu of inadequate consideration, therefore, the provisions of Section 56(2)(vii) of the Act were validly applicable in its case. Rejecting the claim of the assessee that the word receive used in Section 56(2) of the Act was to be construed as to get by a transfer, the A.O was of the view that there was nothing available in the statute which would justify ascribing such a narrow interpretation. 6. After rejecting the aforesaid claim of the assessee company, the A.O. computed the amount of inadequate consideration for which the assessee company had purchased shares of its group entities and brought the same to tax in its hand u/s. 56(2)(vii) of the Act, as under: Accordingly, the A.O., based on his aforesaid observations, worked out an addition under the head income from other sources u/s. 56(2)(vii) of the Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction assumed by the A.O for framing assessment vide his order passed u/s. 153A r.w.s 143(3) of the Act dated 08.11.2016, which being purely legal issues that would not require looking any further beyond the records, therefore, we have no hesitation in admitting the same. Our aforesaid view that where an assessee had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then the same merits admission finds support from the judgment of the Hon ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 11. Shri Nikhilesh Begani, Ld. Authorized Representative (for short AR ) for the assessee appellant has assailed the order passed by the A.O u/s. 153A r.w.s. 143(3) dated 08.11.2016 on the ground that he had traversed beyond the scope of his jurisdiction on two-fold reasons, viz. (i) as during search proceedings conducted on the assessee company u/s. 132 of the Act on 10.10.2012 no incriminating material or document was seized, therefore, no addition as regards the unabated assessment of the assessee company for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2011). (iii). Copy of Minutes of BOD approving the allotment of equity shares on 01.12.2011. (iv) Copy of Form No.2 intimating the allotment of equity shares on 11.12.2011 to ROC along with the List of Share Allottees. (v). Consolidated Chart depicting Calculation of FMV of Equity Shares of Akshata Mercantile Pvt. Ltd. on various 'Valuation Date(s)' as per Section 56(2)(viia) r.w. Rule 11U/11UA. (vi). Copy of Acknowledgment of Return of Income, Computation of Total Income, Annual Report Audited Financial Statements of Akshata Mercantile Pvt. Ltd. for Asst. Yr. 2011-12. (vii). Copy of Financial Statements (including Balance Sheet) of Akshata Mercantile Pvt. Ltd. as on the Valuation Date (01.12.2011). (viii) Copy of Acknowledgment of Return of Income, Computation of Total Income, Annual Report Audited Financial Statements and Tax Audit Report of Akshata Mercantile Pvt. Ltd. for Asst. Yr. 2012-13. (ix). Copy of Sanction Letter increasing the sanctioned limits of Akshata Mercantile Pvt. Ltd. along with copies of Form No.8 for creation of charges with ROC along with Loan Agreements/ Hypothecation Agreements. (x) Copy of Minutes of BOD authorising ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies including the aforesaid AMPL (treating them as Corporate Debtor ) under the provisions of section 7, 9 10 of the IBC, 2016 before the Benches of Hon'ble NCLT and subsequently, the Insolvency Petitions filed by the Financial Creditor(s) were `admitted' and Resolution Professionals were appointed for initiation of Corporate Insolvency Resolution Process. That, owing to severe financial crisis, at the relevant time, the skilled experienced accounts personnel left their jobs, leaving behind a few employees who were still new to the nuances of assessment/appellate procedure and hence, there was complete lack of co-ordination between all the factions involved and time required for making compliances was also insufficient keeping in view the locational and personnel constraints and the said limitations acted as a deterrent factor for delay in making compliances at the appellate stage also. Pertinently, in order to establish the case before the Ld.CIT(A), in accordance with the provisions of Rule 11U/11UA r.w.s.56(2) (vii), Balance Sheet of the share issuer company viz. AMPL was required to be drawn up as on the `Valuation Date' [Rule 11U(b)] 01.12.2011/03.03.2012 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be filed for justifiable reasons in the course of the proceedings before the CIT(Appeals), therefore, the same in all fairness merits admission. 15. Shri Nikhilesh Begani, Ld. AR focused on his contention that the A.O. had valued the shares of M/s. AMPL, at an unrealistic value, had drawn our attention to a chart, viz. Calculation of FMV of shares u/s. 56(2)(vii) r.w. Rule 11UA of the Income-tax Rules, 1962 on the valuation dates, i.e., on 01.12.2011, 06.03.2012, and 30.03.2012 . The Ld. AR submitted that as per provisions of Section u/s. 56(2)(vii) r.w. Rule 11U/ 1UA of the Income Tax Rules, 1962, as inserted vide Notification dated 08.04.2010 w.e.f. 01.10.2009, as stood at the relevant point of time, contemplated derivation of the intrinsic value per share on the basis of balance sheet (defined under Rule 11U(b)] prepared on the valuation date, i.e., the date on which property is received/date of allotment of equity shares. The Ld. A.R referring to the anomaly in the valuation carried out by the A.O., submitted that he had grossly erred in adopting the intrinsic value or the book value of the shares on the basis of the audited balance sheet of the share issuer company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del. HC) (viii) Pr. CIT Vs. Alchemist Capital Ltd. (2022) 6 NYPCTR 951 (Del. HC) (ix) DCIT Vs. Mahavir Ashok Enterprise (P) Ltd. (2022) 36 NYPTTJ 1081 (ITAT, Raipur) (x) Vodafone Idea Ltd. Vs. ACIT (2020) 424 ITR 664 (SC) (xi) Pr. CIT Vs. Kimberly Clerk Lever Pvt. Ltd. (2023) 455 ITR 576 (Bom. HC). (xii) Smt. Pooja Jain Ors Vs. DCIT, ITA No.885 to 891/Mum/2019 dated 31.03.2023 (ITAT Mumbai). On a specific query by the Bench, that now when the time limit for issuance of notice u/s 143(2) of the Act to the assessee was available as on the date of search, i.e., on 10.10.2012 therefore, on what basis, the assessment proceedings in its case for the year under consideration were claimed to be unabated, the Ld. AR had drawn support from the order of the ITAT, Mumbai, in the case of Wind World India Infrastructure Pvt. Ltd. Vs. Pr. CIT-2, Mumbai, ITA Nos. 2370 to 2373/Mum/2017 dated 27.09.2017. Based on his aforesaid contention, it was submitted by the Ld. AR that as the assessment proceedings in its case on the date of the search were unabated, therefore, in the absence of any incriminating material having been seized in the course of the search proceeding, no additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (viii) M/s. Goyel Energy Steel Pvt. Ltd. Vs. ACIT, CC-2, Raipur, ITA No.240 to 243/RPR/2019 dated 17.09.2021 ( ITAT Raipur) (ix) Arch Pharmalabs Ltd. Vs. ACIT (2021) 62 CCH 9 (ITAT Mumbai) (x) Pr. CIT Vs. Smt. Shreelekha Damani, 2018-TIOL-2516-HC-Mum ( Bom. HC) (xi) Inder International Vs. ACIT (2021) 35 NYPTTJ274 ( ITAT Chandigarh) (xii) DCIT Vs. Amolak Singh Bhatia, CO Nos. 126 to 130/Del/2022 dated 18.04.2023 (ITAT Delhi). Backed by his aforesaid submission, it was the claim of the Ld. AR that as the Joint Commissioner of Income Tax (supra) had failed in his statutory duty and granted approval u/s. 153D of the Act in a most mechanical and perfunctory manner without application of mind, therefore, the assessment order was liable to be struck down on the said count itself. 18. Also, the Ld. AR, carrying his contention qua the impugned addition made by the A.O., submitted that even otherwise notional, unreal, and imaginary income determined by the A.O. by wrongly construing Section 56(2) (vii) had resulted in absurdity and unintended consequence. Apart from that, the Ld. AR averred that as Section 56(2)(vii) is a counter-tax evasion or anti-tax abuse measure, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AMPL were reeling under great financial stringency/severe financial crisis; thus, for the said reason, the requisite documents could not be obtained from them within the time. The Ld. AR drew our attention to the fact that various financial creditors had also initiated insolvency proceedings against most of the group companies, including the aforesaid AMPL, under the provisions of Sections 7, 9 10 of the IBC, 2016 before the Benches of the Hon ble NCLT and subsequently, the insolvency petition filed by the financial creditors were admitted and Resolution Professionals were appointed for initiation of Corporate Insolvency Resolution Process (CIRP). 21. Based on the aforesaid financial crisis faced by the group entities, it was submitted by the Ld. AR that skilled, experienced accounts personnel had left their jobs, leaving behind a few employees who were still new to the nuances of assessment/appellate procedure, which, thus, had resulted in a complete lack of co- ordination resulting in delay in making compliances by the assessee at the appellate stage. The Ld. AR submitted that as the balance sheet of the share issuer company, viz. AMPL was required to be drawn up as on va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, failed to place on record the requisite details/explanation, the CIT(Appeals) had on the last occasion, i.e., on 27.12.2017 had in all fairness adjourned the case for 10.01.2018 but with a word of caution to the assessee to file his explanation/documents, etc. on the said latter date failing which the matter would be disposed on the basis of the material available on record. The ld. DR submitted that though the CIT(Appeals) had aforesaid sufficient opportunity for the assessee company to come forth with its explanation/supporting documents, it had, however, failed to avail the same. It was, thus, the claim of the Ld. DR that the contention of the assessee s counsel that the CIT(Appeals) had hushed through the hearing of the appeal and disposed of the same without affording any reasonable opportunity of being heard to the assessee company was devoid and bereft of any merit. 27. We have thoughtfully considered the multi-faceted issues involved in the present appeal in the backdrop of the contentions advanced by the Ld. Authorized Representatives of both the parties. Admittedly, the assessee has assailed the validity of the jurisdiction that the A.O. had assumed for framing as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y.2012-13 is allowed for statistical purposes in terms of our aforesaid observations. ITA No.108/RPR/2021 A.Y.2013-14 30. In the captioned appeal, the assessee has assailed the impugned order of the CIT(Appeals)-3, Bhopal, dated 06.10.2023 on the following grounds of appeal before us: GROUND NO. I 1. That the ex-parte Appellate Order passed by the Learned Commissioner of Income Tax(Appeals)-3, Bhopal ( the Ld.CIT(A)) under section 250 of the Income Tax Act, 1961 ( the Act ) is highly unjustified, bad in law, without providing reasonable opportunity of being heard, against the principles of natural justice and not in accordance with the provisions of law. It is prayed that the Appellate Order passed under section 250 of the Act may please be cancelled/set-aside on this ground alone. GROUND NO.II 2. On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has grossly erred in confirming an addition of Rs. 50,99,55,000/- made by the Learned Assessing Officer invoking the provisions of section 56(2)(viia) of the Act which is highly unjustified, unwarranted, unsustainable, not proper on facts, dehors any incriminating materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced by both parties are the same as regards the admission of additional evidence, our observations rendered in IT(SS)A No.01/RPR/2018 for A.Y.2012-13 shall mutatis mutandis apply in this case also. 32. Apropos the issue of grant of approval u/s 153D by the Joint Commissioner of Income Tax, Range (Central), Raipur, as the facts relating to the same in the captioned appeal remain the same as were there before us in the immediately preceding year, i.e., A.Y.2012-13 in IT(SS)A No.01/RPR/2018, therefore, our decision rendered in IT(SS)A No.01/RPR/2018 shall mutatis mutandis apply in this case also. 33. Apropos the merits of the case, as the facts leading to the impugned addition of Rs. 50,99,55,000/- qua the valuation of shares of AMPL u/s. 56(2)(vii) remains the same as were there before us in the immediately preceding year, i.e., A.Y.2012-13 in IT(SS)A No.01/RPR/2018, therefore, our decision rendered in IT(SS)A No.01/RPR/2018 shall mutatis mutandis apply in this case also. 34. As regards other multi-facet contentions, on the basis of which, the impugned addition qua merits of the case as had been assailed by the assessee company before us remains the same as were there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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