Share valuation dispute under section 56(2)(vii)(c) remitted for fresh examination, with Valuation Officer reference recognised.

Share valuation adopted for an addition under section 56(2)(vii)(c) was held to require fresh examination, as the Tribunal noted that valuation disputes may be referred to a Valuation Officer under section 142A(1). The Revenue's technical objection that the assessee had not raised the issue earlier was rejected, because the correctness of the fair market value had to be considered on merits. The matter was remitted to the Assessing Officer for reconsideration in accordance with law, and the valuation addition was not finally sustained.

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Issues: Whether the addition made by adopting a different fair market value of the assessee's shares under section 56(2)(vii)(c) of the Income-tax Act, 1961 was liable to be set aside and the valuation issue restored for fresh adjudication, including reference to a Valuation Officer under section 142A(1) of the Income-tax Act, 1961.

Analysis: The addition arose from the Assessing Officer's substitution of the assessee's share valuation with a lower fair market value, leading to an enhancement under section 56(2)(vii)(c). The Tribunal noted that the statutory scheme permits reference of valuation disputes to a Valuation Officer under section 142A(1). It also rejected the Revenue's technical objection that the assessee had not raised the valuation issue earlier, holding that the valuation controversy required proper examination on merits. The matter was therefore restored to the Assessing Officer for fresh adjudication in accordance with law.

Conclusion: The valuation addition was not finally sustained and the issue was remitted to the Assessing Officer for reconsideration.

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