M/s SRM Portfolios Pvt. Ltd., Chandigarh V. ACIT, CC-II, Chandigarh

ITA 1564/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3858 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-10-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 09-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA CIT
• Assessee Lawyers: ASHISH GOEL
• Keywords: Opportunity of being heard; Principle of natural justice; Fair market value; Set aside; Audi alteram partem
• Section: 251; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH .., ! '# #$ %, & '( BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO.1564/CHD/2019 ASSESSMENT YEAR : 2014-15 M/S SRM PORTFOLIOS PVT. LD. 781, INDUSTRIAL AREA, PHASE II CHANDIGARH-160002 THE ACIT CENTRAL CIRCLE-II CHANDIGARH PAN NO: AAJCS1938B APPELLANT RESPONDENT !' ASSESSEE BY : SHRI VED JAIN & SHRI ASHISH GOEL, CA #!' REVENUE BY : SHRI SANDEEP DAHIYA, CIT $ %! & DATE OF HEARING : 28/10/2020 '()*! & DATE OF PRONOUNCEMENT : 28/10/2020 ')/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT . 11/06/2019 OF LD. CIT(A)-3, GURGAON. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY THE LEARNED CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDE R PASSED BY THE LEARNED CIT(A) IS BAD IN LAW HAVING BEEN PASSED EXPARTE WITHOUT GIVIN G THE ASSESSEE APPROPRIATE AND ADEQUATE OPPORTUNITY OF BEING HEARD IN CLEAR VIOLAT ION OF THE PRINCIPLES OF NATURAL JUSTICE. 3. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN ENHANCING THE INCOME ASSESSED BY THE AO. (II)THAT THE ENHANCEMENT ORDER PASSED BY THE LEARNE D CIT(A) WITHOUT SERVICE OF VALID SHOW CAUSE NOTICE OF ENHANCEMENT TO THE ASSESSEE. (III)THAT THE ENHANCEMENT MADE BY THE LEARNED CIT(A ) IS BAD IN LAW AND WITHOUT JURISDICTION. (IV)THAT THE ENHANCEMENT HAS BEEN MADE WITHOUT PROV IDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN GOING BEYOND THE SCOPE OF HIS POWER OF ENHANCEMENT UNDER SECTION 251 OF THE INCOME TAX ACT. 2 5. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN MAKING ENHANCEMENT OF RS.4,79, 81,320/- UNDER SECTION 56(2)(VIIB) ON ACCOUNT OF AMOUNT OF SHARE APPLICATION MONEY RECEIV ED BY THE ASSESSEE PRIOR TO ASSESSMENT YEAR 2013-14 (II) THAT THE ABOVE ENHANCEMENT HAS BEEN MADE DESPI TE THE FACT THAT THE PROVISIONS OF SECTION 56(2)(VIIB) HAD BEEN BROUGHT IN THE STATUTE W.E.F. 01.04.2013.I.E., A.Y. 2013-14 AND ACCORDINGLY NO ADDITION CAN BE MADE IN RESPECT OF T HE AMOUNT RECEIVED PRIOR TO A.Y. 2013-14 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS. 4,08,26,280/- MADE BY THE A.O. INVOKING PROVISION OF SECTION 56(2)(VIIB) OF THE INCOME TAX ACT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ACTION OF AO IN COMPUTING THE MARKET VALUE OF SHARES AT RS. 10.60 PER SHARE AS AGAINST RS.50 PER SHARE C LAIMED BY THE ASSESSEE. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ACTION OF AO IN SUBSTITUTING THE VALUE AS PER RULE 11UA(2)(A) AGAINST THE VALUE DETERMINED BY THE VALU ERS AS PER RULE 11UA(2)(B) DESPITE THE FACT THAT THE OPTION FOR SELECTING THE METHOD HAS B EEN GIVEN TO THE ASSESSEE AS PER THE RULES. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN REJECTING THE VALUATION ADOPTE D BY THE ASSESSEE MADE BY THE VALUERS ON FILMSY GROUNDS WITHOUT THERE BEING ANY BASIS FOR THE SAME. 10. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN SUBSTITUTING THE FMV AS COMPUTED BY THE AO ON TH E SHARE APPLICATION NOT RECEIVED DURING THE YEAR ALSO. 11. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS GROSSLY ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ABOVE ADDITIO N BY INDULGING IN SURMISES, ONLY ON THE BASIS OF PRESUMPTION AND ASSUMPTION. 12.THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3. VIDE GROUND NOS. 2 AND 3 THE MAIN GRIEVANCE OF THE ASS ESSEE RELATES TO THE EXPARTE ORDER PASSED BY THE LD. CIT(A) WITHOUT GIVING APPROPRIATE AND ADEQUATE OPPORTUNITY OF BEING HEARD. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E-FILED ITS RETURN OF INCOME ON 19/09/2014 DECLARING LOSS OF RS. 1,15,456/- WHICH WAS CLAIMED TO BE CARRIED FORWARD. LATER ON THE CASE WAS SELECTED FOR LIMITED SCRUTINY. T HE A.O. FRAMED THE ASSESSMENT AT AN INCOME OF RS. 4,07,10,824/- BY MAKING THE ADDITION OF RS. 4,08,26,280/- UNDER SECTION 56(2)(VIIB) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) BY OBSERVING THAT THE ASSESSEE HAD ALLOTTED THE SHARES WITH FACE VALU E OF RS. 10/- AT A PREMIUM OF RS. 3 40/- PER SHARE AND THAT THE MARKET VALUE OF THE SHARE S WAS ADOPTED AT RS. 10.60 AS PER THE PROVISIONS OF SECTION 11 UA(2)(A) OF THE ACT. THE A. O. ALSO OBSERVED THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY OF RS. 5 ,18,10,000/- FROM M/S FORTUNE INDIA CONSTRUCTION LTD. AND SHRI S.R. MEHTA DURING THE Y EAR RELEVANT TO THE A.Y. UNDER CONSIDERATION AT A PREMIUM OF RS. 40/- PER SHARE FOR 1036200 SHARES. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) WHO SUSTAINED THE ADDITION MADE BY THE A.O. AND ALSO ENHANCED THE INCOME BY RS. 4,79,81,320/- BY PASSING THE IMPUGNED ORDER EXPARTE. 6. NOW THE ASSESSEE IS IN APPEAL. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAD NOT GIVEN APPROPRIATE AND ADEQUATE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE WHICH IS CLEARLY A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IT WAS FURTHER SUBMITTED THAT NO NOTICE FOR HEARING WAS SERVED UPON THE ASSESSEE, THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE A.O. AS WELL AS IN E NHANCING THE INCOME OF THE ASSESSEE WITHOUT GIVING THE OPPORTUNITY OF BEING HEARD. 8. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY S UPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE LD. CIT(A) PASSED THE IMPUGNED ORDER EXPARTE. HE SIMPLY STATED IN PARA 4.1 THAT THE NOTICES WERE ISSUED FOR HEARING THE CASE ON 22/09/2017. 10/05/2019 AND 28/05/2019, HOWEVER, NOBODY APPEARED IN RESPONSE TO THOSE NOTICES AND NO SUBMISSIONS WERE FILED BY THE ASSESSEE. IN THE INSTANT CASE, NOTHING IS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE AFORESAID NOTICES FOR HEARING WERE SERVED UPON THE AS SESSEE. 10. IT IS WELL SETTLED THAT NOBODY SHOULD BE CONDEMNE D, UNHEARD AS PER THE MAXIM, AUDI ALTERAM PARTEM . WE, THEREFORE, BY KEEPING IN VIEW THE PRINCIPLES OF NA TURAL JUSTICE DEEM IT APPROPRIATE TO SET ASIDE THIS CASE BACK TO THE FILE OF LD. CIT(A) TO BE 4 ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVID ING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 28/10/2020). SD/- SD/- #$ % .., (SANJAY GARG ) ( N.K. SAI NI) & '(/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 28/10/2020 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE