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TMI Blog2024 (3) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... th the provisions of law. It is prayed that the Appellate Order passed under section 250 of the Income Tax Act, 1961 ("the Act") may please be cancelled/set-aside on this ground alone. 2. On the facts and in the circumstances of the case as well as in law, the Ld. ClT(A) has grossly erred in confirming an addition of Rs. 2,15,25,00,000/- made by the Ld.AO invoking provisions of section 56(2)(via) of the Act which is highly unjustified, unwarranted, unsustainable, not proper on facts, dehors any incriminating material or documents seize the course of search, based on presumptions & surmises, contrary to the principles of natural justice and not in accordance with the provisions of law. Hence, it is prayed that the addition of Rs. 2,15,25,00,000/- confirmed by the Ld. ClT(A) please be deleted. 3. That the Appellant craves leave to add, amend, alter or delete all or any of the ground Appeal at the time of hearing of the appeal. 3. Apart from aforesaid grounds the assessee also submitted an application for admission of additional ground of appeal the same is extracted as under: BEFORE THE HON'BLE INCOME - TAX APPELLATE TRIBUNAL RAIPUR BENCH. RAIPUR (C.G.) In the Matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In view of the above, since the additional ground of appeal raised thus, goes to the root of the matter having a vital bearing on the tax liability of the appellant, it is prayed that the additional ground of appeal raised may kindly be admitted exercising plenary powers vested in your honors under Rule 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby determining the Total Income at an astronomical figure of Rs. 215.25 Cr. with a consequential humongous demand of Rs. 148.06 Cr. wherein the addition on sole issue pertains to the 'fresh allotment' of equity shares by a group company viz. M/s.Akshata Mercantile Private Limited ("AMPL") on 01.12.2011 & by another group company viz. M/s.Topworth Pipes & Tubes Pvt. Ltd. ("TPTPL") on 30.03.2012. 4. That the impugned appeal though filed before the Ld.CIT(Appeals)-3, Bhopal was transferred to the appellate jurisdiction of Ld.CIT(A)-2, Raipur in the month of September, 2017 only and the first notice was issued fixing the hearing on 13.11.2017 and thereafter, the case was transferred to the appellate jurisdiction of Ld.CIT(A) and pursuant to an Order issued by the Hon'ble Central Board of Direct Taxes Dated 12.10.2017 directing the disposal of pending appeals having tax effect of Rs. 50 Crore or more till 31.12.2017, the appeals the impugned appeal in the case of appellant was disposed off within a very short span of time (less than 2 months) without providing adequate opportunity of being heard & denuding the right of effective representation. That the ex-parte Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the 'Valuation Date' [Rule 11U(b)] 01.12.2011 (instead of Book Value of equity shares as on 31.03.2011 fallaciously adopted by the Ld.AO) by the share issuer company which in view of the aforesaid limitations could not be accomplished thereby disabling the appellant from filing of written submissions. With a view to substantiate its claim that there was a reasonable cause and due to extenuating circumstances beyond its control the appellant could not file the documentary evidences before the Ld.CIT(A) and the Ld.AO, the appellant has filed an 'Additional Paper Book' running into 148 Pages before this Hon'ble Bench with all the Documents and evidences with S.No.1 to 12 of the said Paper Book. It is further submitted that the documents and evidences at Sl.No.1 to 12 are in the form of additional evidences which were not filed before the lower authorities being in the nature of the Balance Sheet of AMPL on the 'Valuation Date' strictly in accordance with the terms of Rule 11U(b)/11U(j) as it stood at the relevant time, Loan Sanction Letters from Banks & Financial Institutions along with Form No. 8 prescribed under the Companies Act, 1956 w.r.t. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as the 'Act', was conducted on the business and factory premises of various companies and concerns relating to Crest Topworth Group of cases at Raipur, Mumbai, rune, Nagpur, Ahmedabad and other places on 10/10/2012. Simultaneously, factory premises of various assessee's and the residential premises of the directors and key persons of various concerns of this Group known as Crest Topworth Group' were also covered for action u/s 132(1) of the Act. The case was centralized under section 127 of the Act vide Order dated 24/05/2013 of the Commissioner of Income tax-3, Mumbai to the DCIT (Central), Raipur, Subsequently, the case was centralized to DCIT/ACIT (Central)-2, Raipur vide order passed by Pr. Commissioner of Income Tax (Central), Bhopal on 03.07.2015. In response to notice u/s 153A returns of income were filed as under:- A.Y. Date of filing of return u/s 139(1) Returned income against u/s 139(1) (In Rs. ) Date of filing of return by the assessee against notice u/s 153A Income declared in return u/s -153A (Rs.) Additional income offered by the assessee 2007-08 28/02/2008 NIL 25/08/2015 NIL NIL 2008-09 30/09/2008 NIL 25/08/2015 NIL NIL 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make compliance during assessment proceedings. Vide letter filed in this office on 29/09/2016 the counsel for the assessee has requested to keep the proceedings in abeyance till the disposal of the writ petitions filed in Hon'ble High Court of Bombay. The relevant portion of the letter is reproduced as under: "4. The assessee 's group has filed writ petitions before the .Hon'ble High Court of Mumbai. Copy of the said petition is already served to the counsel of the department and the matter is under the consideration of the Hon'ble High Court of Mumbai, 5. that in view of the pending petitions, the assessee humble prays that the proceedings may kindly be kept in abeyance till disposal of writ petitions. 6. that without prejudice to the above the assessee humbly submits that all requisite compliances were made earlier and if you honor desires further compliances with respect to the compliances made earlier, the assessee may kindly be informed accordingly to enable the assessee to do the needful....". The contention of counsel for the assessee that all requisite compliances were mad earlier is not factually correct. The only issue is regarding addition u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d like to further bring to your tind notice that section 56(2)(vii) talks about receive of property, however in the case of assessee the assessee not received any property it is mere allotment. (d) We would like to further bring to your kind notice that section 56(2)(vii) presupposes receive of capital assets. The word "receive" means to get by a transfer. However, in the above case the assessee has been allotted the shares and not by transfer (receive) as such the allotment of shares is not covered by the provisions of section 56. (e) We would like to further bring to your kind notice that section 56(2)(vii) presupposes inadequate consideration of transfer of shares if the intention of the legislation would have been cover fresh issue of share (allotment) as in the case of the assessee they would have specifically included the word "on issue of share as has been done in the section (f) The independent CA submitted two valuations one considering values before allotment and the other after allotment, Therefore, in the facts and circumstances of the case and without prejudice to assessee 's objection stated in (a) to (e) above, if the provisions are proposed to forcefully i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee that it has not submitted any plausible explanation. The assessee has merely stated that the equity shares issued by the company cannot be said to be "property" as envisaged u/s 56 of the Income Tax Act as the same were not in existence before allotment. The explanation of the assessee is however, not acceptable in as much as the term "property" as defined in Explanation (d)(ii) above, doesn't makes distinction between the existing shares i.e. the shares already allotted by the company and 'those shares which are pending allotment. If the contention of the assessee is accepted, it would limit the applicability of the provisions of Section 56(2) to purchase of existing shares which is commonly referred to as 'the transfer of shares', however, from the language employed in the Income Tax Act, it cannot be inferred that the legislature intents to provide such limitation. If the intention of the legislature was to limit the applicability to existing shares, the legislature in its wisdom would have worded the provisions suitably. Furthermore, so far as the assessee is concerned, immediately upon allotment of shares, the property comes into existence in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,15,00,000/- For investment in Topworth Pipes & Tubes Pvt Ltd Face value of each share=Rs. 10 Premium of each share=Rs. 30 Issue Price of each share=Face value + premium Rs. 10+ Rs. 30=Rs. 40 Book Value of each share=Rs. 47 As the assessee has received each share ai a price of Rs. 40/- , against the book value of share at Rs. 47/- at the time of issue, therefore, it gained a profit of Rs, 7/- (Rs. 47-Rs, 40) per share So the total profit received by the assessee for buying 30, 00, 000 shares -30, 00, 000 X Rs. 7=Rs.2,10,00,000/- From the above calculation, it is found that the assessee has gained Rs. 2,10,00,000/- by virtue of acquisition of shares of Topworth Pipes & Tubes Pvt Ltd The amounts of Rs + has been considered as income from other sources u/s 56(2)(viia) of the Act and added to the income of the assessee for respective A.Y. 2.2 I have gone through the assessment order. The assessee has invested in the share of the company Akshata Mercantile Pvt Ltd and Topworth pipes and tubes Pvt. Ltd, The assessee has invested Ste he shares at the face value whereas the apparent value of the shares was higher reply to show cause notice as to why addition should not be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations have not been dislodged by the assessee before the revenue authorities. Ld. CIT(A) has decided the issue against the assessee stating that the term "Property" as defined in explanation (d) (ii) of section 56(2)(vii) does not makes distinction between the existing shares i.e. the shares already allotted by the company and those share which are pending allotment. However, since there were certain additional information submitted by the assessee which could not be submitted before the revenue authorities for the reasons refer to in the application of admission of additional evidence, also additional grounds have been submitted for admission taking shelter of settled principle of law as laid down by the Hon'ble Apex Court in the case of NTPC (supra), therefore, in the interest of justice the matter requires to be restored back to the files of Ld. CIT(A) for fresh adjudication. Herein, it would be pertinent to mention that on similar aspect and issues under the identical circumstances in the case of group concern of the assessee M/s Riya Real Estate Private Limited for the AY 2012-13 & 2013-14, coordinate bench of the ITAT, Raipur had set aside the matter to the files of Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dressing the additional grounds of appeal that have been raised by the assessee in the course of the proceedings before us. Needless to say, the 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. 29. In the result, the appeal of the assessee company in IT(SS)A No. 1/RPR/2018 for A. Y. 2012-13 is allowed for statistical purposes in terms of our aforesaid observations. 9. Regarding ground no. 1 of the assessee that the Ld. CIT(A) has passed an ex-parte order that provide reasonable opportunity of being heard against the principle of natural justice since no explanations or evidence that opportunities were not granted to the assessee by Ld. CIT(A) have been brought on record or to our attention by the assessee neither such contentions are emerging from the impugned order of Ld. CIT(A) therefore such contentions raised in ground. No. 1 are unsustainable, thus, are rejected. 10. In view of aforesaid observations, respectfully following the view adopted by the tribunal which is mutatis mutandis appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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