2024 (3) TMI 529 - AT - Income Tax

Tribunal remands Section 56(2)(viia) addition case for fresh adjudication after allowing additional evidence

M/s Phoenix Realtors Private Limited Versus Asst. Commissioner of Income Tax, Central Circle-2, Raipur

ITAT Raipur remanded the matter back to CIT(A) for fresh adjudication regarding addition under section 56(2)(viia). The tribunal found that CIT(A) ... Addition u/s 56(2) - “Property” as defined in explanation (d) (ii) of section 56(2)(vii) makes distinction between the existing shares i.e. the shares already allotted by the company and those share which are pending allotment or not? - application of admission of additional evidence - HELD THAT:- As proper working of the addition u/s 56(2)(viia) were drawn and correct figures of the additions were arrived at. Such calculations 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. 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 in the case of NTPC [1996 (12) TMI 7 - SUPREME COURT] 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 [2023 (11) TMI 198 - ITAT RAIPUR] had set aside the matter to the files of Ld. CIT(A) - Appeal of assesee allowed for statistical purposes. Issues Involved:1. Ex-parte Appellate Order2. Addition under Section 56(2)(viia) of the Income Tax Act3. Admission of Additional Grounds and Evidence4. Validity of Search Assessment Order under Section 153A r.w.s. 143(3)Summary:1. Ex-parte Appellate Order:The assessee contended that the ex-parte order passed by the CIT(A) was highly unjustified, bad in law, and against the principles of natural justice. However, the Tribunal found that the CIT(A) had provided adequate opportunities for the assessee to present its case, and thus, the contention that the order was passed without reasonable opportunity was unsustainable and rejected.2. Addition under Section 56(2)(viia) of the Income Tax Act:The primary issue was the addition of Rs. 2,15,25,00,000/- made by the AO invoking Section 56(2)(viia) of the Act. The assessee argued that the provisions were not applicable as the transactions involved allotment of shares, not transfer. The CIT(A) upheld the addition, stating that the term 'property' in Section 56(2)(viia) does not distinguish between existing shares and those pending allotment. The Tribunal noted that the proper working of the addition was drawn, and the figures were correct. However, due to additional evidence submitted by the assessee, the matter was remanded back to the CIT(A) for fresh adjudication.3. Admission of Additional Grounds and Evidence:The assessee submitted additional grounds and evidence, arguing that these were purely legal and did not require new facts or evidence. The Tribunal admitted the additional grounds, citing the principles laid down by the Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT. The Tribunal directed the CIT(A) to re-adjudicate the case considering the additional documentary evidence and addressing the additional grounds of appeal.4. Validity of Search Assessment Order under Section 153A r.w.s. 143(3):The assessee challenged the validity of the search assessment order, arguing that it was illegal and void ab initio as it was made without incriminating material or documents seized during the search. The Tribunal found that this issue required vetting by the AO by referring to the seized record/material. The Tribunal restored the matter to the CIT(A) for fresh adjudication, considering the additional documentary evidence and addressing the additional grounds of appeal.Conclusion:The Tribunal set aside the order of the CIT(A) and remanded the matter back for fresh adjudication, directing the CIT(A) to consider the additional documentary evidence and address the additional grounds of appeal. The appeal of the assessee was allowed for statistical purposes.