2022 (12) TMI 1311

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.... assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30-12- 2017. 1.2 The grounds raised by the assessee read as under: - That the Ld. AO and the Ld. CIT (A) has erred in including an amount of Rs.3,55,25,108/- under Section 56(2)(viib) as undisclosed income and thereby arriving at a total income/loss of Rs.7,77,61,860/- for the AY 2015-16. That the Ld. AO and the Ld. CIT (A) has erred in rejecting the valuation of shares adopted by the Appellant viz., Cash flow method for issuance of shares for the AY 2015-16. The Ld. AO and the Ld. CIT (A) has failed to appreciate that the Appellant had rightly valued the shares as per the provisions of the Income tax Act and that no violation has been c....

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....tion of shares under the Discounted Cash Flow method but adopted valuation of equity share @Rs.100/- without following any method prescribed under the Act. 1.4 The Registry has noted delay of 03 days in assessee's appeal, the condonation of which has been sought by the assessee. Considering the period of delay, the delay is condoned and the appeal is admitted for adjudication on merits. Having heard rival submissions, the appeals are disposed-off as under. Assessment Proceedings 2.1 The sole issue that arises for our consideration is addition of Rs.355.25 Lacs as made by the Ld. AO u/s. 56(2)(viib). The assessee being resident corporate assessee is stated to be engaged in manufacturing, import, export of paper, paper pulp etc. The ....

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....rescribed methods. The valuation of Rs.74/- per share as done by Ld. AO was even less than the face value of the shares. 2.4 The Ld. CIT(A) concurred with the stand of Ld. AO that DCF valuation was not reliable since future cash flows were exaggerated and not supported by any corroborating documentation. Upon perusal of both valuation reports, it was found that there was substantial difference in the projections considered in both valuation reports. The cash flows were not independently evaluated by the valuer. No justification was given to adopt different cash projections having substantial difference. Therefore, the valuation remained unsubstantiated. At the same time, the argument that the shares could not be issued below the face val....