M/s. Sunglow Suitings Pvt. Ltd. , Bhilwara V. ACIT, Circle, Bhilwara

ITA 104/JODH/2020

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9721 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 29-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.C. BHADOK LD
• Assessee Lawyers: P.C. PARWAL LD
• Keywords: Revision of order; Fair market value
• Section: 263; 143(3)

Judgement Text

1 ITA NO.104/JODH/2020 M/S. SUNGLOW SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2015-16 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR , , BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.104/JODH/2019 ( / ASSESSMENT YEAR: 2015-16) M/S. SUNGLOW SUITINGS PVT.LTD. D-23, BHILWARA TEXTILE MARKET PUR ROAD, BHILWARA C/O.KALANI & CO. (CA) 5 TH FLOOR, MILESTONE BUILDING GANDHINAGAR TURN, TONK ROAD JAIPUR,RAJASTHAN-302 015. / VS. PR. COMMISSIONER OF INCOME TAX CR BUILDING OPP. SESSION COURT, JAIPUR ROAD AJMER, RAJASTHAN-305 001. ./ ./PAN/GIR NO. AAJCS-6248-Q ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI P.C. PARWAL (CA)- LD. AR REVENUE BY : SHRI K.C. BHADOK - LD. CIT DR / DATE OF HEARING : 04/11/2020 / DATE OF PRONOUNCEMENT : 21/12/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. BY WAY OF THIS APPEAL, THE ASSESSEE CHALLENGES T HE VALIDITY OF REVISIONAL JURISDICTION U/S. 263 AS EXERCISED BY LE ARNED PR. COMMISSIONER OF INCOME-TAX, AJMER [IN SHORT REFERRE D TO AS PR.CIT], FOR ASSESSMENT YEAR [IN SHORT REFERRED T O AS AY] 2015-16, 2 ITA NO.104/JODH/2020 M/S. SUNGLOW SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2015-16 VIDE ORDER DATED 24/03/2020. THE EFFECTIVE GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER:- THE LD. PCIT HAS ERRED ON FACTS AND IN LAW IN HOLDI NG THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE AO HAD FAILED TO MAKE ADDITION OF RS.5,65,81 4/- U/S 56(2)(VIIB) OF THE IT ACT AND THEREBY SETTING ASIDE THE SAME TO AO BY IN CORRECTLY CALCULATING THE FMV OF SHARE AT RS.58.40 PER SHARE ON THE BASIS OF BALANCE SHEET AS ON 31.03.2014 AS AGAINST RS.60.98 CALCULATED BY THE AS SESSEE ON THE BASIS OF BALANCE SHEET AS ON 31.03.2015. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING SUBMISSIONS M ADE DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING REVISIONAL PROCEEDINGS. THE JUDICIAL PRECEDENTS AS CITED DURING THE COURSE OF HEARING HAVE DULY BEEN DELIBERATED UPON. OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPH S. 3.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ASSESSED U/S. 143(3) ON 05/1 2/2017 ACCEPTING RETURNED INCOME OF RS.27.80 LACS. THE ASS ESSMENT ORDER IS SHORT ORDER AND THERE IS NO MATERIAL DISCUSSION, WHATSOEVER, REGARDING ISSUES CONSIDERED BY LD. AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. 3.2 SUBSEQUENTLY, LEARNED PR.CIT, UPON PERUSAL OF C ASE RECORDS AND INVOKING THE PROVISIONS OF SEC.263 OBSERVED THA T THE ASSESSEE ISSUED CERTAIN SHARES OF FACE VALUE OF RS.10/- AT A PREMIUM OF RS.50/- PER SHARES. THE VALUATION OF THE SAME AS PE R THE PROVISIONS OF SEC. 56(2)(VIIB) READ WITH RULE 11UA WOULD WORK OUT TO RS.58.40 PER SHARE. THEREFORE, LD. AO FAILED TO MAKE ADDITIO N OF RS.1.60 PER SHARE ON 353634 NUMBERS OF SHARES. 3 ITA NO.104/JODH/2020 M/S. SUNGLOW SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2015-16 3.3 THE ASSESSEE DEFENDED THE ASSESSMENT ORDER BY S UBMITTING THAT THE VALUATION OF THE SHARES CONSIDERING THE BA LANCE SHEET AS ON 31/03/2015 WOULD WORK OUT TO RS.60.98 PER SHARE AND HENCE, THE PROVISIONS OF SEC.56(2)(VIIB) WERE NOT APPLICAB LE. HOWEVER, LD. PR.CIT OPINED THAT THE VALUATION WAS TO BE ARRIVED AT CONSIDERING THE BALANCE SHEET AS ON 31/03/2014. SINCE ASSESSEE FAILED TO APPEAR ON THE DATE OF HEARING, LD. PR.CIT, INVOKING THE PROVISIONS OF SEC.263, DIRECTED LD. AO TO REDO THE ASSESSMENT AFT ER MAKING ADDITION OF RS.5.65 LACS U/S 56(2)(VIIB). AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US CHALLENGING THE VALIDITY OF REVISIONAL JURISDICTION AS EXERCISED BY LD. PR.CIT U/S 263. 4. BEFORE US, LD. AR HAS SUBMITTED THAT THE SHARES WERE ISSUED ON 17/03/2015 WHICH IS CLOSE TO THE BALANCE SHEET A S ON 31/03/2015. THE VALUE PER SHARE BASED ON THIS BALAN CE SHEET WOULD WORK OUT TO BE MORE THAN RS.60/- PER SHARE AN D THEREFORE, THE PROVISIONS OF SEC.56(2)(VIIB) WOULD NOT BE TRIG GERED. ALTERNATIVELY, THE PROFIT UP-TO THE DATE OF ISSUE O F SHARES I.E. 17/03/2015 WAS TO BE CONSIDERED FOR WORKING OUT THE VALUATION. IN SUPPORT OF THE VALUATION AS ON 15/03/2015, THE ASSE SSEE HAS PLACED ON RECORD THE CERTIFICATE OF AUDITOR VALUING UNQUOT ED EQUITY SHARES. UPON PERUSAL OF THE SAME, WE FIND THAT THE VALUATIO N OF THE SHARES COMES TO BE APPROX. RS.61.14 PER SHARE AS AGAINST I SSUE PRICE OF RS.60/- PER SHARE. THIS BEING THE CASE, INVOCATION OF THE PROVISIONS OF SEC. 56(2)(VIIB) WOULD NOT BE JUSTIFIED SINCE TH ERE WOULD BE NO 4 ITA NO.104/JODH/2020 M/S. SUNGLOW SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2015-16 LOSS TO THE REVENUE, ON THIS ACCOUNT. THE ORDER COU LD NOT BE TERMED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS BEING THE CASE, WE ARE INCLINED TO QUASH THE REVISIONAL ORDER DATED 24 /03/2020. WE ORDER SO. 5. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED U/R 34(4) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/- SD/- (SANDEEP GOSAIN) (MANOJ KUMA R AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21/12/2020 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT 3. % ( ) / THE CIT(A) 4. % / CIT CONCERNED 5. &'#( ) , ) , ) / DR, ITAT, JODHPUR 6. '+,-! / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, JODHPUR.