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TMI Blog2024 (2) TMI 1229X X X X Extracts X X X X X X X X Extracts X X X X ..... h an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because the learned Commissioner of Income Tax had a different opinion and that too, without having established in any manner that, view adopted by the learned Assessing Officer was an impossible or unsustainable view. 3. That further more the learned Principal Commissioner of Income Tax has proceeded to set aside the order on mere speculation, generalized observations, theoretical allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law. 4. That even otherwise the finding that order of assessment is erroneous in as much prejudicial to the interest of revenue on the ground that an amount of Rs.6,19,383*97=60080054 is liable to be in the income of the appellant u/s 56(2)(x)(c)(B) of the Act" is based on factually incorrect assumption, incorrect applicable to the provisions of law and therefore untenable. 5. That finding of the learned Principal Commissioner of Income Tax that "As per the valuation report of M/s Ozone Overseas Pvt. Ltd. the FMV value of these shares is Rs.2,392/-. Thus, the FMV purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any person receives in any previous year any property other than immovable property, the aggregate fair market value of such property as exceeds the purchase consideration is liable to be included in the income of the assessee as income from other sources. Thus an amount of Rs.6,19,382 x 97=60080054 is liable to be in the income of the assessee. It is noted that the Assessing Officer has not included this income to the total income declared by the assessee, has been passed by the Assessing Officer without due diligence and without making inquiries or verification which should have been made, is prejudicial to the interest of assessment order which is passed by the assessing officer without making inquiries or verification which should have been made or the order is passed allowing any relief without inquiring into the claim, shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue." 3. Aggrieved by the order dated 31/03/2023 passed u/s 263 of the Act by the PCIT, the Assessee preferred the present appeal on the ground mentioned above. 4. The Ld. Counsel for the assessee submitted that the order impugned dated 31/03/2023 passed u/s 263 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income along with computation of income and financial statement for financial year 2016-17 relevant to A.Y 2017-18. 9. The Assessing Officer asked the further details vide letter dated 24/11/2020 as follows:- "Please furnish the following documents/information. 1. Detailed note on nature of business carried out during the AY. 2018-19 as well as during last three preceding previous years. 2. Computation of income for the AY 2018-19. 3. Copies of bank statements of all bank accounts with narration for the period 01.04.2017 to 31.03.2018. 4. With respect to the fresh issue of share during the year under consideration, kindly submit the below specified details: a) Name and address of the shareholders. b) PAN of the shareholders. C) Face Value of each share. d) Number of shares allotted to each shareholder. e) Total value of the shares allotted to each shareholder. f) Payment received from each shareholder during the financial year. 5. Provide documentary evidence to substantiate the identity and ITR of last 3 years of the shareholders to substantiate creditworthiness the shareholders as well as the proof of genuineness of transaction in respect of fresh credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce trading as well as retail trading business of all types of mobile phones accessories such as speakers, tempered glass, data cables etc and medical devices. The assessee Company was doing the same business in the preceding three previous years too and there is no change of business. 2. We enclose copy of computation of income for the year under review for records and perusal. 3. Copies of bank statements for the year under review are enclosed. The assessee Company had maintained following bank accounts details of the same are as under:- S. No. Name of Bank Address Account No. 1 Yes Bank KIRITI NAGAR, NEW DELHI 034081300000227 2 HDFC Bank Bali Nagar, New Delhi 034081300000227 3 Axis Bank Moti Nagar, New Delhi 917020075874440 The assessee Company had issued fresh preference shares of Rs. 90 cr to Ozone Overseas Pvt. Ltd. The details of the allottee of preference shares for the year under review is as under:- a. Name & Address Nagar, :- Ozone Overseas Private Limited, H-40, Bali New Delhi-110015. b. PAN :- AAACO3093J c. Face Value of each share :- Rs. 10 each share d. Number of shares allotted:- 9,00,00,000 shares e. Total val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Ozone Overseas Pvt. Ltd. in the year under review which are duly reflecting in the audited financials of company. As required details of investment made during the year is as under:- S. No. Nature of Asset Purchase Consideration (Rs.) Date of Purchase Mode of Acquisition Source of funds for Investment 1 607067 Equity Shares 1,39,35,04,086/- 17.11.2017 By Bank Transfer Issue of Preference Shares and Loan from Axis Finance Limited /Sale proceeds 2. 2667 Equity Shares 61,22,018/- 15.12.2017 By Bank Transfer Issue of Preference Shares and Loan from Axis Finance Limited /Sale proceeds 3. 342 Equity Shares 7,85,051/- 20.12.2017 By Bank Transfer Issue of Preference Shares and Loan from Axis Finance Limited /Sale proceeds 4. 244 Equity shares 5,60,095/- 20.12.2017 By Bank Transfer Issue of Preference Shares and Loan from Axis Finance Limited /Sale proceeds 5. 1136 Equity Shares 20,67,654/- 25.03.2018 By Bank Transfer Issue of Preference Shares and Loan from Axis Finance Limited /Sale proceeds 6. 801 Equity Shares 18,38,671/- 25.03.2018 By Bank Transfer Issue of Preference Shares and Loan from Axis Finance Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. Further the Interest paid on loan of Rs. 2.12 cr to Axis finance limited was also capitalized to the cost of investments. Thus the total Investment value as on 31.3.2018 stood at Rs. 136.28 cr 2. No Income has been received on the investments made by the Company during the year under review. 3. The Assessee Company has also sold part of the shares purchased on 7.12.2017 and 14.12.2017 at the purchase price to the following persons:- Dinesh Kumar Jhunjhunwela 8713 Shares 2,00,00,430/- Gaurav Kumar Jhunjhunwela 13069 Shares 7,99,99,497/- S Chand Properties (P) Ltd. 13069 Shares 2,99,99,4977- No Capital Gains accmed on the sale as the same were sold at the acquisition price of Rs. 2295.47 per share within a span of less than one month. Annexure C 1. Details with respect to Investment are as under:- a. Nature of Investment- Equity Shares of Ozone Overseas Private Limited were acquired b. Net Total Investment of Rs. 134.17 cr c. Source of Investment- Loan from Axis Finance Limited Rs. 51.00 cr. Issue of Redeemable Preference Shares Rs. 90.00 cr Total Rs. 141.00 Cr. d. Interest paid on fund utilized- The Interest paid on funds utilized on loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the purchase consideration is liable to be included in the income of the assessee as income from other source, therefore, an amount of Rs. 6,19,382 x 97 i.e equal to 6,00,80,054/- is liable to be income of the assessee. The option to adopt either NAV or DCF Method for valuing the shares has been given to an Assessee in the statute itself. When the A.O. has appreciated this option availed by the Assessee, his order cannot be construed as erroneous. 13. From the above, it is observed that it is not a case wherein the Assessing Officer failed to conduct enquiry rather it is the case wherein the Assessing Officer has conducted an elaborate enquiry and adopted one of the two views which was plausible view. The question would be as to whether in such circumstances the power u/s 263 of the Act would be invoked or not. The above said question is no longer res-integra and the said issue is well settled in several decisions. In the case of Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax, (2000) 243 ITR 83 (SC). The Hon'ble Supreme Court held as follows :- "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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