TaxTMI 
TaxTMI 
2024 (3) TMI 529
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....nciples 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 Income Tax Act, 1961 ("the Act") may please be cancelled/set-aside on this ground alone. 2. On the facts and in the circumstances of the case as well as in law, the Ld. ClT(A) has grossly erred in confirming an addition of Rs. 2,15,25,00,000/- made by the Ld.AO invoking provisions of section 56(2)(via) of the Act which is highly unjustified, unwarranted, unsustainable, not proper on facts, dehors any incriminating material or documents seize 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. 2,15,25,00,000/- confirmed by the Ld. ClT(A) please be deleted. 3. That the Appellant craves leave to add, amend, alter or delete all or any of the ground Appeal at the time of hearing of the appeal. 3. Apart from aforesaid grounds the assessee also submitted an application for admission of additional ground of appeal the same is extracted as under: BEFORE THE HON'BLE IN....
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....gally unsustainable hence, it is earnestly prayed that the Assessment Order passed u/s. 153A r.w.s. 143(3) of the Act may please be quashed and cancelled in limine. (ii) That the Search Assessment Order framed under section 153A r.ws. 143(3) of the Act on the strength of purported approval granted u/s. 153D 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, mere empty formality, lacks due application of mind and further, the Search Assessment Order was passed based on invalid, inchoate and consolidated approval, accordingly, the Search Assessment Order is bad in law & legally unsustainable hence, it is earnestly prayed that the Assessment Order passed u/s. 153A r.w.s. 143(3) may please be quashed and cancelled in limine. 3. In view of the above, since the additional ground of appeal raised thus, goes to the root of the matter having a vital bearing on the tax liability of the appellant, it is....
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....he assessment proceedings effectively commenced before the Ld.AO from 13.10.2016 and within a span of about 25 days, the Search Assessment Order had been passed u/s. 153A r.w.s. 143 (3) of the Act thereby determining the Total Income at an astronomical figure of Rs. 215.25 Cr. with a consequential humongous demand of Rs. 148.06 Cr. wherein the addition on sole issue pertains to the 'fresh allotment' of equity shares by a group company viz. M/s.Akshata Mercantile Private Limited ("AMPL") on 01.12.2011 & by another group company viz. M/s.Topworth Pipes & Tubes Pvt. Ltd. ("TPTPL") on 30.03.2012. 4. That the impugned appeal though filed before the Ld.CIT(Appeals)-3, Bhopal was transferred to the appellate jurisdiction of Ld.CIT(A)-2, Raipur in the month of September, 2017 only and the first notice was issued fixing the hearing on 13.11.2017 and thereafter, the case was transferred to the appellate jurisdiction of Ld.CIT(A) 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 appe....
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....so. Pertinently, in order to establish the case before the Ld.CIT(A), in accordance with the provisions of Rule IIU/IIUA r.w.s.56(2)(vii), Balance Sheet of the share issuer company viz. AMPL was required to be drawn up as on the 'Valuation Date' [Rule 11U(b)] 01.12.2011 (instead of Book Value of equity shares as on 31.03.2011 fallaciously adopted by the Ld.AO) by the share issuer company which in view of the aforesaid limitations could not be accomplished thereby disabling the appellant from filing of written submissions. With a view to substantiate its claim that there was a reasonable cause and due to extenuating circumstances beyond its control the appellant could not file the documentary evidences before the Ld.CIT(A) and the Ld.AO, the appellant has filed an 'Additional Paper Book' running into 148 Pages before this Hon'ble Bench with all the Documents and evidences with S.No.1 to 12 of the said Paper Book. It is further submitted that the documents and evidences at Sl.No.1 to 12 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' ....
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....se and the findings of the Ld. CIT(A) which were challenged by the assessee, culled out from the order of Ld. CIT(A) as under: Background of the case is that a search and seizure action u/s 132 of the Income Tax Act, 1961, hereinafter referred as the 'Act', was conducted on the business and factory premises of various companies and concerns relating to Crest Topworth Group of cases at Raipur, Mumbai, rune, Nagpur, Ahmedabad and other places on 10/10/2012. Simultaneously, factory premises of various assessee's and the residential premises of the directors and key persons of various concerns of this Group known as Crest Topworth Group' were also covered for action u/s 132(1) of the Act. The case was centralized under section 127 of the Act vide Order dated 24/05/2013 of the Commissioner of Income tax-3, Mumbai to the DCIT (Central), Raipur, Subsequently, the case was centralized to DCIT/ACIT (Central)-2, Raipur vide order passed by Pr. Commissioner of Income Tax (Central), Bhopal on 03.07.2015. In response to notice u/s 153A returns of income were filed as under:- A.Y. Date of filing of return u/s 139(1) Returned income against u/s 139(1) (In Rs. ) ....
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.... honour the surrender of undisclosed income made u/s 132(4) of the Act completely and did not pay any tax on the surrendered income. However, this disclosure has not been honoured by the assessee. The return filed under section 153A is even less than the income declared earlier u/s 139(1) as has been listed in above table. Assessee has not even attempted to make compliance during assessment proceedings. Vide letter filed in this office on 29/09/2016 the counsel for the assessee has requested to keep the proceedings in abeyance till the disposal of the writ petitions filed in Hon'ble High Court of Bombay. The relevant portion of the letter is reproduced as under: "4. The assessee 's group has filed writ petitions before the .Hon'ble High Court of Mumbai. Copy of the said petition is already served to the counsel of the department and the matter is under the consideration of the Hon'ble High Court of Mumbai, 5. that in view of the pending petitions, the assessee humble prays that the proceedings may kindly be kept in abeyance till disposal of writ petitions. 6. that without prejudice to the above the assessee humbly submits that all....
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....ch defines property includes share and securities. Hence for the purpose of applicability of the said provisions, the properly should be in existence. In the assessee 's case "share ", we would like to bring to your kind notice that as per company law till allotment, there is no existence of shares„ As such there is no property in existence received by the assessee, Hence, section 56 could not apply 10 the case of the assessee as assessee has not received any properly, (c) We would like to further bring to your tind notice that section 56(2)(vii) talks about receive of property, however in the case of assessee the assessee not received any property it is mere allotment. (d) We would like to further bring to your kind notice that section 56(2)(vii) presupposes receive of capital assets. The word "receive" means to get by a transfer. However, in the above case the assessee has been allotted the shares and not by transfer (receive) as such the allotment of shares is not covered by the provisions of section 56. (e) We would like to further bring to your kind notice that section 56(2)(vii) presupposes inadequate consideration of transfer of shares if....
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....the aggregate fair market value of such property as exceeds such consideration: Provided that this clause shall not apply 10 any such property received by way of a transaction not regarded as transfer under clause (via) or clause (Vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. Explanation.-For the purposes of this clause, "fair market value" of a property, being shares of a company not being a company in which the public are substantially interested, shall have the meaning assigned to it in the Explanation to clause (vii); As seen from the submission of the assessee that it has not submitted any plausible explanation. The assessee has merely stated that the equity shares issued by the company cannot be said to be "property" as envisaged u/s 56 of the Income Tax Act as the same were not in existence before allotment. The explanation of the assessee is however, not acceptable in as much as the term "property" as defined in Explanation (d)(ii) above, doesn't makes distinction between the existing shares i.e. the shares already allotted by the company and 'those shares which are pending allotment. If the contention of the assesse....
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....t. Ltd. 3000000 Equity 10 30 40 47 2,10,00,000 Taxable Amount in the hand of share holder u/s 56(2)(viia): (A. Y. 2012-13) For investment in Akshata Mercantile Pvt Ltd Face value of each share=Rs. 10 Premium of each share=Rs. 0 Issue Price of each share=Face value + premium Rs. 10+ Rs. O-Rs. 10 Book Value of each share=Rs. 1025 As the assessee has received each share at a price of Rs. 10/- , against the book value of share at Rs. 1025/- at the time of issue, therefore, it gained a profit of Rs. 1015/- (Rs. 1025-Rs. 10) per share. So the total profit received by the assessee for buying 21, 00, 000 shares =21, 77, 000 X Rs. 1015= Rs. 213,15,00,000/- For investment in Topworth Pipes & Tubes Pvt Ltd Face value of each share=Rs. 10 Premium of each share=Rs. 30 Issue Price of each share=Face value + premium Rs. 10+ Rs. 30=Rs. 40 Book Value of each share=Rs. 47 As the assessee has received each share ai a price of Rs. 40/- , against the book value of share at Rs. 47/- at the time of issue, therefore, it gained a pro....
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....The addition of Rs. 2,15,25,00,000/- is hereby sustained. 7. Ld. CIT DR strongly supported the orders of the Ld. CIT(A), wherein the issue in hand has been dealt with on merits and deliberated at length, therefore, there is no unreasonableness in the order of Ld. CIT(A) and accordingly, the addition sustained by Ld. CIT(A) is requested to be upheld. 8. We have considered the submissions of the revenue and material available on record. In the present case, since the issues raised by the assessee before the Ld. CIT(A) have been decided on merits after considering and deliberating upon the facts and applicable provisions of law on the instant case. On perusal of the order of Ld. CIT(A), it is observed that 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 pendin....
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....stifiable 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(AppeaIs). 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 assessee has placed before us, restore the matter to the file of the CIT(Appeals) with a direction to him to re-adjudicate the same after taking cognizance of the additional documentary evidence and also addressing the additional grounds of appeal that have been raised by the assessee in the course of the proceedings before us. Needless to say, the CIT(Appeals) shall, in the course of set-aside proceedings, afford a reasonable opportunity of being heard to the assessee company, which shall remain at liberty to substantiate its contentions on the....