INCOME-TAX OFFICER - 12(1)(1), MUMBAI, MUMBAI V. ACUTE RETAIL INFRA PRIVATE LIMITED, MUMBAI

ITA 4570/MUM/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A), which had deleted the addition made by the Assessing Officer regarding unexplained share application money amounting to Rs. 62,82,86,580 under section 56(2)(viib) of the Income Tax Act, 1961. The Assessing Officer had initially added this amount as income from other sources, suspecting it to be unjustifiable subscription to share premium. The CIT(A) later deleted this addition without sufficient reasoning, leading to the Revenue's appeal. The Tribunal found that the CIT(A) had not adequately addressed the issues raised by the Assessing Officer and had not provided a reasoned order for the deletion of the addition. Consequently, the Tribunal remanded the case back to the CIT(A) for a thorough re-examination and a reasoned decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707078 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 05-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Set aside; Valuation report
• Section: 147; 148; 143(3); 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.4570/MUM/2024 (Assessment Year : 2015-16) ITO – 12(1)(1), Room No.129, 1st Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 PAN : AABCA3835H ............... Appellant v/s Acute Retail Infra Private Limited, Knowledge House, Shyam Nagar, Jogeshwary Vikroli Link Road, Jogeshwary, Mumbai - 400060 Maharashtra ……………… Respondent Assessee by : None Revenue by : Shri Rajesh Kumar Yadav, CIT-DR Date of Hearing – 08/07/2025 Date of Order - 10/07/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The Revenue has filed the present appeal against the impugned order dated 08.07.2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2015-16. 2. In this appeal, the Revenue has raised the following grounds: - “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of unexplained share application money amounting to Rs. 62,82,86,580/- without appreciating the fact that the ITA No.4570/Mum/2024 (A.Y. 2015-16) 2 assessee received share capital and security premium in their balance sheet as on 31.03.2014, even though no shares were issued in exchange for the share application money received. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made u/s 56(2)(viib) of Rs. 62,82,86,580/- summarily without assigning any reason and simply stating in last Para of order \"I have considered the assessment order and the submission of the assessee dated 11.04.2024 and find that the claim of the assessee is correct and therefore I direct the Assessing Officer to delete the addition of the entire capital raised by it for Rs.62,82,86,580/- made in the assessment order u/s. 56(2)(viib)\". 3. We have considered the submissions and perused the material available on record. The brief facts of the case are that the assessee is engaged in the business of leasing and sub-leasing immovable assets and trading in fabrics. For the year under consideration, the assessee filed its return of income on 25.09.2015, declaring a total income of Rs.31,64,110/-. The return filed by the assessee was selected for scrutiny, and vide order dated 24.10.2017 passed under section 143(3) of the Act, the assessment was concluded accepting the returned income. Subsequently, on the basis that the assessee had received unexplained share application money amounting to Rs.62,82,86,580/-, during the year under consideration, notice under section 148 of the Act was issued to the assessee. In response to the notice issued under section 148 of the Act, the assessee did not file its return of income. The Assessing Officer (“AO”), vide order dated 05.05.2023 passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, made an addition of Rs.62,82,86,580/- being the share application money received by the assessee under section 56(2)(viib) of the Act, by observing as follows: - “4.6 Conclusion drawn:- Regarding share application money amounting to Rs. 62,82,86,580/- credited in the Books of the Assessee Company during the year under consideration, the assessee was specifically asked to furnish the required details / ITA No.4570/Mum/2024 (A.Y. 2015-16) 3 documents, The assessee has filed reply to the statutory notices on 13.02.2023 which has been considered and found to be not tenable. The assessee company had received the said amount from FMNL (holding company) in respect of issue of shares & security premium and shown in the balance sheet as on 31.03.2014 but the assessee company has not issued shares against the said share application money. It is noticed that the assessee company has invested the share application money in the related parties as long term loans & advances. In this regard the assessee has failed to furnish satisfactory explanation in response to the specific questions as per the notice u/s 142(1) issued. In the present case, particularly in view of the detailed discussions of the circumstantial facts of the case and the enquiries made, it is clear that the assessee has received share application money valued at Rs. 62,82,86,580/-. It is also concluded that the assessee company has received unjustifiable subscription to share premium of Rs. 62,82,86,580/- which needs to be added to the total income of the assessee as income from other sources u/s 56(2)(viib) for AY 2015-16. Therefore, the said amount of share application money amounting to Rs. 62,82,86,580/- is treated as income from other sources in terms of section 56(2)(viib) of the Income Tax Act, 1961 which shall be added to the Total Income of the assessee company.” 4. The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee on merits and deleted the addition made by the AO under section 56(2)(viib) of the Act, by observing as follows: “3.4 However, on the core issue of the valuation of the shares, the assessee submitted its reply during the appeal proceedings on 11.04.2024, wherein it has categorically shown that, even if, the liability of Rs.36,00,00,000/- shown in the Valuation Report and the corresponding assets of loans advanced to related parties for the same value are both removed from the Valuation Report, the value of shares issued by the assessee still remains at Rs.3,670/- per share, which includes premium of Rs.3,660/- per share. The assessee submitted that, even if, the loans and advances to the related parties are removed, the total assets of the assessee company was Rs.112,56,30,221/-. On the other hand, if liabilities are calculated, keeping aside the share application money received by it during Financial Year 2013-14, which was refunded during the Financial Year 2014-15, the liabilities of the assessee stand at Rs. 108,89,29,489/- making the net worth of the assessee company for Rs.3,67,00,732/-. Since before the issue of the shares by the company there were 10000 equity shares issued, the value per share comes to Rs.3,670/- per share. 3.5 I have considered the assessment order and the submission of the assessee dated 11.04.2024 and find that the claim of the assessee is correct and therefore I direct the Assessing Officer to delete the addition of the entire capital raised by it for Rs.62,82,86,580/- made in the assessment order u/s.56(2)(viib).” ITA No.4570/Mum/2024 (A.Y. 2015-16) 4 5. From the perusal of the order passed by the learned CIT(A), we find that no reasons have been recorded for the deletion of the addition made by the AO under section 56(2)(viib) of the Act. Further, we find that the details as noted by the learned CIT(A) in paragraph 3.4 of the impugned order were not under consideration before the AO. Thus, it becomes all the more necessary for the learned CIT(A) to seek a report on the same from the AO. However, from the perusal of the record, it is evident that no steps in this regard were taken by the learned CIT(A). Accordingly, we deem it appropriate to set aside the impugned order and restore the appeal to the file of the learned CIT(A) for de novo adjudication and passing a reasoned order. We order accordingly. As a result, grounds raised by the Revenue are allowed for statistical purposes. 6. In the result, the appeal by the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 10/07/2025 Sd/- NARENDRA KUMAR BILLAIYA ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 10/07/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "