TaxTMI 
TaxTMI 
2023 (11) TMI 198
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....ing grounds of appeal before us: "Ground No. I That the ex-parte Appellate Order passed by the Learned Commissioner of Income Tax (Appeals) - 1 Raipur ("the Ld. CIT(A)") is highly unjustified, bad in law, without providing reasonable opportunity of being heard, against the principles of natural justice and not in accordance with the provisions of law. It is prayed that the Appellate Order passed under section 250 of the Act may please be cancelled on this ground alone. GROUND No. II On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has grossly erred in confirming an addition of Rs. 459,92,50,000/- made by the Learned Assessing Officer invoking the provisions of section 56(2)(viia) of the Act which is highly unjustified, unwarranted, unsustainable, not proper on facts, dehors any incriminating material or documents seized in the course of search, based on presumptions & surmises, contrary to the principles of natural justice and not in accordance with the provisions of law. Hence, it is prayed that the addition of Rs. 459,92,50,000/- may please be deleted. GROUND NO. III That the appellant craves leave to add, amend, alter or delete al....
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....ersons of various concerns of this group were also covered u/s. 132(1) of the Act. The business premises of the assessee were also searched on 10.10.2012. Notice u/s. 153A of the Act dated 20.03.2014 was, inter alia, issued to the assessee company for A.Y. 2007-08 to 2012-13 a/w. notice u/s. 142(1) of the Act for A.Y.2013-14. In response, the assessee company filed its return of income for the aforementioned assessment years, as under: 5. During the assessment proceedings, the A.O observed that the assessee company had during the aforementioned years, i.e., A.Y.2012-13 & A.Y 2013-14, made investments towards the purchase of shares in its different group companies, as under: Observing that the assessee company had made investments in the aforementioned shares at the face value, whereas their apparent value was substantially higher, the A.O., in light of provisions of Section 56(2)(vii) of the Act, directed it to furnish details as regards the rate at which shares were allotted vis-à-vis. their Fair Market Value (FMV) as of the date of allotment. In reply, it was claimed by the assessee that the provisions of Section 56(2)(vii) of the Act were not applicable to the allotment....
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....he CIT(Appeals) but without success. As is discernible from the order of the CIT(Appeals), the assessee had repeatedly sought adjournment on four occasions, viz.16.11.2017, 27.11.2017, 06.12.2017 & 27.12.2017. Ostensibly, as the assessee on the last date of hearing on 27.12.2017 had requested some time for obtaining material from Mumbai, the CIT(Appeals) had acceded to his said request and adjourned the matter on 10.01.2018 but with a word of caution that in case of failure on its part to make necessary compliance and furnish the necessary explanation on the next date, then the appeal will be disposed off on the basis of the material available on record. As the assessee on 10.01.2018 (supra) did neither put up an appearance nor filed any written submissions, the CIT(Appeals) proceeded with the appeal and dismissed the same. On a perusal of the CIT(Appeals)'s order, we find that he had observed that as the A.O. had discussed all relevant issues in connection with the addition made by him u/s. 56(2)(vii) of the Act a/w. calculation of the aforesaid additions, which the assessee had not rebutted on the basis of any material; therefore, the addition of Rs. 459,92,50,000/- did not merit....
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....approval could not be sustained and was liable to be quashed. 12. At the threshold of hearing of the appeal, the Ld. AR took us through an application dated 03.08.2022 filed by the assessee company requesting liberty for admission of the same as additional evidence. The Ld. A.R drew our attention to the additional documentary evidence filed by the assessee company to support its claim that as per Rule 11U/11UA r.w.s. 56(2)(vii) of the Act, the "balance sheet" of the share issuer company, viz. M/s. Akshata Mercantile Private Limited (for short, "AMPL") was required to be drawn up as on the "valuation date" [Rule 11U(b)], i.e., on 01.12.2011/03.03.2012 (instead of Book Value of equity shares as on 31.03.2011 that was fallaciously adopted by the A.O). Referring to the additional evidence/documents, the Ld. AR submitted that the same was in the nature of the balance sheet of AMPL on the "valuation date" as per Rule 11U(b)/11U(j) as it stood at the relevant time' Loan Sanction Letters from Banks and Financial Institutions along with Form 8 prescribed under the Companies Act,1956 with respect to creation of charge against the sum borrowed by AMPL, which established the fact that the lat....
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....e Ld.CIT (Appeals)-3, Bhopal was transferred to the appellate jurisdiction of Ld.CIT(A) in the month of September, 2017 only and the first notice was issued on 02.11.2017 fixing the hearing on 14.11.2017 and pursuant to an Order issued by the Hon'ble Central Board of Direct Taxes Dated 12.10.2017 directing the disposal of pending appeals having tax effect of Rs. 50 Crore or more till 31.12.2017, the appeals the impugned appeal in the case of appellant was disposed off within a very short span of time (about 2 months) without providing adequate opportunity of being heard & denuding the right of effective representation. That the ex-parte Appellate Order passed by the Ld.CIT(A) u/s. 250 is highly illegal, bad in law, without providing reasonable opportunity of being heard thereby resulting into violation of the principles of natural justice. That, in response to the hearing notices issued in a span of nearly two months, the requisite written submissions with supporting evidences could not be furnished before the Ld.CIT(A) primarily for the reason that the Group is being controlled & managed from Mumbai and all other paraphernalia is concentrated with the Books of Accounts and oth....
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.... appellant has filed an `Additional Paper Book' running into 173 Pages before this Hon'ble Bench with all the Documents and evidences with S.No.1 to 13 of the said Paper Book. It is further submitted that the documents and evidences at SLNo.1 to 5 & SL No. 8 to 13 are in the form of additional evidences which were not filed before the lower authorities being in the nature of the Balance Sheet of AMPL on the `Valuation Date' strictly in accordance with the terms of Rule 11U(b)/11U(j) as it stood at the relevant time, Loan Sanction Letters from Banks & Financial Institutions along with Form No. 8 prescribed under the Companies Act, 1956 w.r.t. the creation of charge against the sum borrowed by AMPL thereby establishing the factum of availment of secured loan with a stipulation of corresponding increase in promoter contribution in the form of Equity Share Capital, Form No. 2 prescribed under the Companies Act, 1956 (Return of Allotment) evidencing allotment of share capital in case of AMPL and pertinently, the Chart depicting the Computation of Fair Market Value of Equity Shares u/s. 56(2)(vii) r.w. Rule 11UA etc. and hence, are vital in order to appreciate the factual mat....
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....as submitted by the Ld. AR that as the A.O had failed to compute the value of the share of AMPL as per provisions of Section 56(2)(vii) of the Act r.w. Rule 11U/11UA, thus, it had resulted in taxation of notional, unreal, and imaginary income instead of real income, which could not be sustained and was liable to be vacated. The Ld. AR to support his aforesaid contention had relied on the following judicial pronouncements: (i). Bharat Hari Singhania Vs. CWT (1994) 207 ITR 1(SC) (ii). S. Viji Vs. CGT (1998) 229 ITR 421 (SC) (iii). Harry Inder Dhaul Vs. Addl. CIT, ITA No.3499/Mum/2016 dated 09.05.2018 (ITAT, Mumbai). (iv). Keva Industries (P) Ltd. Vs. ITO (2019) 112 Taxmann.com 137 (ITATMumbai) (v). ITO Vs. Mystical Infratech Pvt. Ltd, ITA No. 4266/Mum/2017, dated 19.09.2022. 16. Adverting to the validity of the jurisdiction that the A.O. had assumed for framing the assessment vide order passed u/s. 153A r.w.s. 143(3), dated 08.11.2016, it was submitted by the Ld. AR that as no incriminating material was found in the course of search proceedings conducted on the assessee company u/s 132(1) of the Act on 10.10.2012, therefore, the A.O losing sight of the said material fact, ....
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....n our attention to the copy of approval bearing F No. JCIT(C)/RPR/153D/Crest-Topworth/2016-17/281 dated 08.11.2016, Page 37 of APB. The Ld. AR referred to the aforesaid approval u/s. 153D of the Act, and submitted, that it was a consolidated approval for eight group entities wherein the name of the assessee company figured at Sr. No.8, for A.Y. 2007-08 to A.Y.2013-14. The Ld. AR took us through the language used in the aforesaid approval dated 08.11.2016 (supra) and submitted that the same glaringly revealed that there was no application of mind by the Joint Commissioner of Income Tax, much the less any verification of the seized material/ record, and the approval was granted in a mechanical manner as an idle formality or an eye wash. The Ld. AR submitted that the Joint Commissioner of Income Tax (supra) had himself stated in the approval, viz. "............it is presumed that the A.O has............". It was, thus, submitted by the Ld. AR that as there was no application of mind by the Joint Commissioner of Income Tax (supra) at the time of granting approval u/s. 153D of the Act; therefore, the assessment order on the said count itself could not be sustained and was liable to be v....
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....t appellate authority was invalid and bad in law as the same had resulted in sustaining an unrealistic addition without providing a reasonable opportunity of being heard to the assessee, which was a clear violation of the principle of natural justice and not in accordance with the provisions of law. The Ld. AR drew our attention. AR to the reasons due to which necessary compliance a/w. supporting documents/ explanation could not be made/filed with the CIT(Appeals) on 10.01.2018, i.e., the date on which the case was fixed for hearing. He submitted that the appeal, which was filed with the CIT(Appeals)-3, Bhopal, was transferred to CIT(Appeals)-II, Raipur, in the month of September 2017, and the first notice was issued by the latter on 02.11.2017 fixing the hearing of the appeal on 14.11.2017. The Ld. AR submitted that pursuant to the direction of the CBDT circular dated 12.10.2017, as per which all pending appeals involving tax effect of Rs. 50 Crore or more were to be disposed of by 31.12.2017, the appeal of the assessee company was disposed of within short span of two months (approx.) without providing adequate opportunity of being heard to the assessee company and denuding the ri....
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....mental Representative (for short, 'DR') relied on the orders of the lower authorities. Rebutting the claim of the Ld. AR that the A.O. had grossly erred in making the impugned addition with respect to the unabated assessment of the assessee company despite the fact that no incriminating material/document was found in the course of the search proceedings, the Ld. DR submitted that as of the date of search proceedings, i.e., on 10.10.2012, the time limit for issuance of notice u/s. 143(2) of the Act was available with the A.O, therefore, it was incorrect on the part of the Ld. AR to claim that the assessment proceedings in its case had remained unabated. 24. Apropos the claim of the Ld. AR that the Joint Commissioner of Income Tax, Range (Central), Raipur, had granted approval u/s. 153D of the Act in a mechanical manner and without application of mind, the Ld. DR submitted that the same was factually incorrect. The Ld. DR submitted that the Joint Commissioner of Income Tax (supra) had accorded his approval dated 08.11.2016 after carrying out thorough verifications and discussing various facets of the case with the A.O. 25. Apropos the merits of the case, it was submitted by the Ld.....
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....emature to adjudicate the same without affording a sufficient opportunity of perusing and verifying the correctness of the same by the A.O. Apropos the claim of the Ld. AR that no incriminating documents/material was found and seized in the course of the search proceedings conducted u/s. 132 of the Act on 10.10.2012 on the assessee company, the same cannot be summarily accepted on the very face of it and would require to be vetted by the A.O by referring to the seized record/material. 28. As stated by the assessee, and rightly so, there were justifiable reasons on its part for not filing the requisite details/documents, which have been filed before us as additional evidence, in the course of the proceedings before the CIT(Appeals). Also, it is a matter of fact borne from the record that the CIT(Appeals) had merely referred to the observations of the A.O. and disposed off the appeal by approving the same. We, thus, in the totality of the facts involved in the present case before us, read a/w. multi-facet contentions that have been raised by the assessee before us wherein adjudication of the majority of those would require a reference of the additional documentary evidence that the ....
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....153B of the Act is without application of mind, in a ritualistic manner, granted in a most mechanical manner, merely empty formality, illusory and hence, no approval in the eyes of law therefore, the same is invalid, illegal, non est and bad in law and hence, the consequential search assessment order passed u/s. 143(3) on the basis of such invalid approval is also invalid, illegal, nonest and bad in law and deserves to be annulled on this ground alone. GROUND NO. IV 4. That the Appellant craves leave to add, amend, alter or delete all or any of the grounds of appeal at the time of hearing of the appeal." Also, the assessee has assailed before us the impugned order on the basis of an additional ground, which reads as follows: "That the Search Assessment Order framed under section 143(3) r.w.s. 153B of the Act on the strength of purported approval granted by the Ld. joint Commissioner of Income Tax, Range-Central is void ab initio, invalid, illegal and bad in law hence, deserves to be quashed and declared a nullity since, the mandatory prior approval granted is no approval in the eyes of law as the same has not been obtained on the Final Assessment Order passed, is mechanical,....