TMI Blog2024 (1) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... him while holding the assessment order to be erroneous. He has specifically referred to the contentions made regarding non-applicability of section 56(2)(viib) to the Right Issue issued, that there is no mala fide intention involved in the Right shares which is said to be brought in the ambit and scope of the deeming provision of section 56(2)(viib) of the Act. As for the decision cited in the case of Sudhir Menon HUF [ 2014 (3) TMI 534 - ITAT MUMBAI] we have noted from the ld. Pr. CIT order, that the issue in the said case related to the invocation of the provisions of 56(2)(vii) which relates to the receipt of any money or property without any consideration or without adequate consideration. While in the present case, the issue relates to the provisions of section 56(2)(viib) of the Act which deems the amounts received in lieu of the issue of shares in excess of their FMV as income of the assessee. CIT, therefore, has rightly found the facts of the case to be different and distinguishable from that in the present case before us. Therefore, we do not agree with the assessee that the ld. Pr. CIT has held the assessment order erroneous without dealing with averments made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned delay was caused. It is therefore prayed that the impugned delay being unintentional, the same be condoned, and the appeal may be taken for adjudication on merits. The relevant contents of the letter dated 29.9.2023 are extracted as under: 3. The order of the PCIT u/s. 263 was sent to the Finance Department of the Company. The Finance Department of the Company was pre-occupied with the closing of accounts for financial reporting for the year ending 31-3- 2019. The Company was required to complete several formalities pertaining to closing of books of accounts as well as GST compliances. The Finance department was under pressure for collecting various data for closing the accounts. Since the order of the PCIT was received just few days before the year end and the Finance department being busy with closing of accounts the order was inadvertently not sent to the Top Management for review. It may also be mentioned that the Top Management was not aware about the receipt of the order of the PCIT u/s. 263. 4. It is also submitted that the Company was under the process of finalizing a Joint Venture agreement with a foreign company. For the same, the Top Management of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and no sufficient cause was adduced by the assessee for the delay. 5. We have heard contentions of both the parties; gone through the facts relating to delay in filing of the appeal as presented before us, and have also gone through various settled decisions of higher Courts on the issue of condonation of delay. Section 5 of the Limitation Act and section 253(5) of the Act provides power to condone delay on demonstrating sufficient cause to the satisfaction of the courts. This satisfaction accordingly has been held by Courts to be interpreted liberally, for advancement of substantial justice. The Hon ble Apex Court in the case of Collector, Land Acquisition Vs. Mst.Katiji Others, 167 ITR 471 (SC) exhaustively dealt with power conferred by the Legislature to condone the delay by enacting section 5 in the Limitation Act, holding that purpose for the same was to enable Courts to advance substantial justice to the party by disposing of the matters on merit.The Hon ble Court in the said case held that expression sufficient cause for section 5 of Limitation Act was to be applied in a manner to sub-serve the ends of justice and therefore a justifiable liberal approach had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical grounds but because it is capable of removing injustice and is expected to do so. Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the 'State' which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even handed manner. There is no warrant for according a step-motherly treatment when the 'State' is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non- grata status. The Courts ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. Pr. CIT set aside the assessment order passed by the ld.AO under section 143(3) of the Act holding it as erroneous and prejudicial to the interest of the Revenue. Our discussions for adjudication of this issue as follows. 10. The error noted by the ld. Pr. CIT in the assessment order framed in the case of the assessee under section 143(3) of the Act was to the effect that the AO had failed to make proper inquiries regarding valuation of fair market value of shares issued by the assessee during the year at a premium, which valuation as per the ld. Pr. CIT was not in accordance with law as done by the assessee. As per the ld. Pr. CIT, the fair market value of the shares was below premium at which the shares were issued, accordingly the provisions of section 56(2)(viib) of the Act were invocable in the present case, and addition of Rs. 64,65,000/- was warranted on account of the shares being issued at a value less than its fair market value. The assessee had issued 5,00,000 equity shares, having face value of Rs. 10/- at premium of Rs. 50/- per equity share. As a consequence it had received Rs. 2,50,00,000/- as premium. The assessee had justified the premium received by c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total value of liabilities 66,22,66,701 Less: Paid up share capital 4,00,00,000 Reserves Surplus 14,33,64,935 Provision for taxation 95,00,000 Amount set apart for equity and preference dividend 0 Any amount representing provisions made for unascertained liabilities 0 Any amount representing contingent liabilities 0 Book value of liabilities 49,94,01,766 Note No.3 Calculation of amount of paid up of equity shares 46,94,01,766 Particulars Amount Paid up share capital 4,00,00,000 Amount of paid up share capital 4,00,00,000 11. Before us, the assessee has not raised any contention or conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T did not deal with any of the contentions of the assessee while finding the assessment order to be erroneous for having accepted incorrect valuation of shares submitted by the assessee as noted by him. 15. During the course of hearing before us, the ld.counel for the assessee contended that in a recent decision of the ITAT, Raipur Bench in the case of Chhatisgarh Metaliks and Alloys P.Ltd. Vs. ITO, (2023) 147 taxmann.com 441 (Tri-Raipur) has held the provision of section 56(2)(viib) not invocable in the case of Right Issue. 16. The ld.DR per contra pointed out that the ld. Pr. CIT had adequately dealt with the above contentions of the assessee, and also case laws referred to before him in the case of Vaani Estates (P.) Ltd. Vs. ITO (supra) at para-6 of his order as under: The submission of the assessee has been considered and not found tenable. The assessee company has converted the amount of unsecured loans of Rs. 3,00,00,000/-- in the name of existing share holders, in Equity shares at a premium of 50 Rs. Per share. The main contention of the assessee is that no fresh money has been brought in through this issuance of equity shares and the shares have been issued to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the ld.counsel of the assessee that the contentions made by the assessee before the ld. Pr. CIT were not dealt with by him while holding the assessment order to be erroneous. He has specifically referred to the contentions made regarding non-applicability of section 56(2)(viib) to the Right Issue issued, that there is no mala fide intention involved in the Right shares which is said to be brought in the ambit and scope of the deeming provision of section 56(2)(viib) of the Act, and he has referred to the decision of the ITAT, Chennai Bench in the case of Vaani Estates (P.) Ltd. Vs. ITO (supra) before the ld. Pr. CIT, which as per the ld.counsel for the assessee, the ld. Pr. CIT has not dealt with. We find that para-6.1 to 6.3 of the ld. Pr. CIT order deals with the above contentions of the assessee. The same is extracted hereunder for brevity: 20. As is evident from the above, the ld. Pr. CIT has noted above contentions of the assessee, as also taken note of the case laws cited by the assessee, and has rejected the same stating that it is acceptable legal principle that an interpretation cannot be given to a deeming fiction so as to bring to naught. He has also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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