9911796707
TMI Blog2024 (12) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... he business of doorstep delivery of railway ticket on 'Cash on Delivery' basis. During the assessment proceedings the Assessing Officer observed from audited balance-sheet of the year under consideration that assessee had issued 182360 shares at the face value of Rs. 1 and share premium of Rs. 64/- per share. In order to verify the above said transaction notices u/s 142(1) along with questionnaire dated 14.06.2019 and 12.09.2019 were issued to the assessee and asked to furnish details of transactions in respect of requisite form along with supporting documentary evidence, bank statement, valuation report etc. In response to notice dated 25.11.2019 the assessee has submitted vide letter dated 27.11.2019 in which assessee has made submissions with regard to share application money and share premium along with justification for adopting the valuation method of DCM under rule 11UA of Income Tax Rules, 1962. In the above said letter the assessee had submitted that assessee is a 'start-up' company and has developed software to do e-commerce business of the booking of railway tickets on online platform and delivery of the booked tickets on 'Cash on Delivery' basis. The assessee also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee at Rs. 15.31 per share. Accordingly, he disallowed Rs. 90,22,347/- as differential amount as per provisions of Section 56(2)(viib) and further he proceeded to make addition of share application money of Rs. 1,82,360/- u/s 68 of the Act. 5. Aggrieved with the above order assessee preferred appeal before the NFAC, Delhi and filed detailed submissions before him. Though learned NFAC issued 4 notices for hearing, assessee did not comply the same except to the notice issued on 10.08.2022 and filed a reply dated 18.08.2022. After considering the submissions of the assessee he has sustained the addition made by the Assessing Officer and also accepted the findings of the Assessing Officer. Aggrieved, assessee is in appeal before us raising following grounds of appeal: "1. That, the order of Ld. Authority is bad in law and is against the facts and circumstances of the case, hence is unsustainable. "2. Because, Id. Commissioner of Income Tax 2 (Appeals) erred in dismissing the appeal without providing proper opportunity of being heard in the circumstances of the case merely on the basis of part reply of assessee. 3. That, Id. lower authority erred in sustaining the 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate order, in which learned CIT(A) has sustained the addition made on the basis of observation of the Assessing Officer. He submitted that the method adopted by the assessee is the proper method as per rule 11UA. 8. With regard to ground no. 5 he brought to our notice observation of the Assessing Officer at page 2 and he further brought to our notice page 4 of the appellate order wherein the learned CIT(A) has not given any finding and merely sustained the addition made by the Assessing Officer u/s 68 of the Act. 9. On the other hand, learned DR relied on the observations of the Assessing Officer and supported the finding of the Assessing Officer for rejecting the DCF method adopted by the assessee and also brought to our notice para 5.4 of the assessment order. He supported the verification of the actuals with projection adopted in the valuation report. He submitted that the projection provided by the assessee is without any basis and adopting the DCF @ 7% as the discounting factor is also not justified. Accordingly, he relied on the orders of lower authorities. 10. Considered the rival submissions and material placed on record. We observe that the Assessing Officer has reviewe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an exact science, and therefore cannot be done with arithmetic precision. It is a technical and complex problem which can be appropriately left to the consideration and wisdom of experts in the field of accountancy, having regard to the imponderables which enter the process of valuation of shares. The Appellant-Revenue is unable to demonstrate that the methodology adopted by the Respondent-Assessee is not correct. The AO has simply rejected the valuation of the Respondent-Assessee and failed to provide any alternate fair value of shares. Furthermore, as noted in the impugned order and as also pointed out by Mr. Vohra, the shares in the present scenario have not been subscribed to by any sister concern or closely related person, but by outside investors. Indeed, if they have seen certain potential and accepted this valuation, then Appellant-Revenue cannot question their wisdom. The valuation is a question of fact which would depend upon appreciation of material or evidence. The methodology adopted by the Respondent-Assessee, accepted by the learned ITAT, is a conclusion of fact drawn on the basis of material and facts available. The test laid down by the Courts for interfering wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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