TaxTMI 
TaxTMI 
2021 (9) TMI 1364
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....ently, the case was selected for scrutiny and the AO issued notices u/s 143(2) and 142(1) of the Act. In response thereof the authorized representative of the assessee appeared before the AO and filed the details and documents called for and discussed the case from time to time. It was noticed that the assessee had claimed wage expenses amounting to Rs. 45,676/-and discount expenses amounting to Rs. 5,09,658/- and some of the payments had been made in cash. Since the assessee failed to produce some of the vouchers to substantiate the said claim, AO made a lumpsum addition of Rs. 50,000/- and determined the income of the assessee at Rs. 1,60,250/- 3. Thereafter, the Ld. Pr. CIT Hisar, noticed that during the year relevant to the assessment year under consideration the assessee had received total share capital and premium of Rs. 5.9 crore and the AO has not examined the applicability of section 56(2)(viib) of the Act during the assessment proceedings. Accordingly, the Ld. Pr. CIT issued notice directing the assessee to show cause as to why an appropriate order u/s 263(1) of the Act should not be passed. In response to the said notice the assessee submitted written submissions inter....
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....d, add or modify the grounds of appeal, till the same is finally heard and disposed of." 5. Before us the Ld. counsel for the assessee submitted that the assessee company came into existence on 14.03.2012. It started manufacturing 'Guar Gum' products in May 2013. The return of income for the assessment year under consideration was filed showing income from trading activities. During the year relevant to the assessment year under consideration the company allotted shares on different dates. The assessee initially allotted 10000 shares on face value on 16.03,2012. Thereafter, the shares were allotted on 27.7.2012 and 10.10.2012. The shares as per fourth issue were allotted on 10.11.2012 at a premium of Rs. 10/- per share and thereafter the shares as per fifth issue were allotted on 15.2.2013 at a premium of Rs. 20/- per share. The third issue at a premium of Rs. 10/- were allotted to the existing shareholders and their family members only. The fourth issue at a premium of Rs. 20/- were offered at the time when the company was in urgent need of finance and were offered to existing shareholders only on pro-rata basis. Further the shares were allotted to the existing shareholders or t....
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....contained in certified management account (CMA), regarding working capital, term loan, unsecured loans and equity capital etc. Placing reliance on the judgment of the Hon'ble Delhi High Court in the case of Pr. CIT vs. Cinestaan Entertainment (P) Ltd. 199 DTR 345 (Delhi) and judgment of the Hon'ble Mumbai High Court Court in the case of Vodafone M-Pesa Limited vs. Pr. CIT in writ petition No 654 of 2018 dated 01.03.2018 submitted that the Hon'ble Delhi High Court has upheld the findings of the Tribunal and deleted the addition made u/s 56(2)(viib) holding that Tribunal has followed the dicta of the Hon'ble Supreme Court in matter relating to the commercial prudence of an assessee relating to valuation of an asset. Similarly, the Hon'ble Mumbai High Court has held that AO has jurisdiction to scrutinize valuation report and determine fresh valuation, however it is not open to him to change the method of valuation which had been adopted by the assessee. In this case since there was no defect in the valuation report the Ld. Pr. CIT has wrongly rejected the DCF method adopted by the assessee holding that the fair market value of unquoted equity shares is required to ....
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.... of the decision of the Delhi Bench of the Tribunal in the case of Agro Portfolio (P) Ltd vs. ITO [2018] 94 taxmann.com 112 (Delhi-Trib.) submitted that in the present case since the fair market value of shares has been determined on the basis of direct cash flow (DCF) method without verifying the correctness of data supplied by the assessee, the Ld. Pr. CIT has rightly set aside the assessment order by exercising revisional power u/s 263 of the Act. The Ld. DR accordingly contended that there is no infirmity in the order passed by the Ld. Pr. CIT to interfere with. 8. We have heard the rival submissions of the parties and perused the material on record including the cases relied upon by the parties. The Ld. Pr. CIT has set aside the assessment order basically on the ground that the AO has passed the assessment order u/s 143(3) of the Act, without making any enquiry or verification on the issue of share premium received and applicability of section 56(2)(viiib) of the Act. The contention of the Ld. counsel is that since the AO has passed the assessment order after making proper enquiry including applicability of section 56(2)(viiib) of the Act, the Ld. Pr. CIT has wrongly exercis....
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....fication which should have been made. In the present case since the AO has passed the assessment order after due application of mind and after accepting the explanation given by the assessee the same cannot be termed as erroneous. Therefore, in our considered view the observation of the Ld. Pr. CIA that AO has passed the order without making proper enquiries is not factually correct, hence not sustainable. 9. The second limb of the argument of the Ld. counsel is that the Ld. Pr. CIT has wrongly rejected the valuation of shares @ Rs. 33.44 As asked by the Ld. Pr. CIT, during the course of proceedings u/s 263 of the Act, assessee filed valuation report of fair market value of unquoted equity shares determined as per DCF method provided under section 56(2)(viib) r/w rule 11UA(2)(b) of the Income Tax Rules. The contention of the Ld. DR is that the valuation has been done on the basis of material supplied by the assessee without verifying the genuineness of the data supplied. The Ld. counsel has rebutted the said contention on the ground the facts and figures were verifiable from Annexure (B) attached with reply dated 06.02.2018 submitted before the Ld. Pr. CIT. As pointed out by the ....