M/S. Vision Habitate & Services Pvt. Ltd., Sambalpur V. Pr. CIT, Sambalpur

ITA 214/CTK/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7559 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-07-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 26-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Keywords: Period of limitation; Fair market value; Difference of opinion; Time period of passing order; Change of opinion; TDS; Set aside
• Section: 143(3); 142(1); 115JB; 201; 143(2); 13; 22; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 214 /CTK/20 1 9 ( / ASSESSMENT YEAR : 20 1 4 - 201 5 ) M/S VISION HABITATE & SERVICES PRIVATE LIMITED, KADAMBARI COMPLEX, GOLE BAZAR, SAMBALPUR - 768001 VS. PR. CIT, SAMBALPUR - 768004 PAN NO. : A ADCN 4768 J ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI B.N.A GRAWAL /BINOD AGR A WAL , ARS /REVENUE BY : SHRI M.K.GAUTAM, CITDR / DATE OF HEARING : 25 / 0 8 /20 20 / DATE OF PRONOUNCEMENT : 31 / 0 8 /20 20 / O R D E R PER L.P.SAHU , A M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED B Y THE PR.CIT, SAMBALPUR, DATED 30.03.2019 FOR THE A.Y.2014 - 2015 ON THE FOLLOWING GROUNDS : - 1. THAT THE ORDER U/S. 263 IS BAD IN LAW AS WELL AS IN FACTS. 2. THAT THE ORDER U/S. 263, STATED TO HAVE BEEN PASSED ON 30.03.2019, IS ANTE DATED AND BARRED BY LI MITATION, BEING ISSUED AND SERVED UPON THE APPELLANT ON 30.04.2019, WHICH IS AFTER THE EXPIRY OF PERIOD OF LIMITATION ON 31.03.2019. 3. THAT THE ASSESSMENT ORDER DT.29.12.2016 MAKING AN ADDITION OF RS.27,51,100 TO THE RETURNED INCOME U/S.56(2)(VIIB) CONSE QUENT UPON VALUATION OF BOOK VALUE OF 4,510 NOS. OF EQUITY SHARES @ RS.739 PER SHARE AS ON 31.03.2013 ALLOTTED ON 31.03.2014 @ RS.1,349 PER SHARE. THUS, THE DIFFERENCE OF RS.610 PER SHARE MULTIPLIED BY 4,510 NOS. OF SHARES ALLOTTED COMING TO RS.27,51,100 H AS BEEN ADDED AS ABOVE BY THE ID. AO. THE SAID VALUATION AND THE CONSEQUENTIAL ADDITION HAS BEEN DISPUTED BY THE APPELLANT IN THE APPEAL IN FORM NO.35 E - FILED BEFORE THE ID. ITA NO. 214 /CTK/201 9 2 CIT (A), SAMBALPUR ON 22.01.2017 VIDE ACKNOWLEDGEMENT NO.598992731220117, WHICH IS NOW PENDING FOR DISPOSAL. 4. THAT THE ID. PR. CIT, IN THE IMPUGNED ORDER U/S.263, HAS REVISED THE VALUATION OF THE EQUITY SHARES @ RS.708 PER SHARE AS AGAINST RS.RS.739 ADOPTED BY THE ID. AO AND CONSEQUENTLY DIRECTED THE I D. AO TO MODIFY THE ASSESSMENT ORDER DT.29.12.2016 BY MAKING A FURTHER ADDITION OF RS.1,39,810 (RS.31 PER SHARE X 4,510 SHARES) U/S.56(2)(VIIB) IN ADDITION TO RS.27,51,100 ALREADY ADDED BY THE ID. AO ON THE SAME GROUND. 5. THAT IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE ORDER OF ASSESSMENT MADE U/S. 143(3) COULD NOT BE TERMED OR HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE WITHIN THE MEANING OF SEC. 263(1). 6. THAT THE VALUATION OF SHARES BEING THE ONLY SUBJECT MATTER OF THE APPEAL P ENDING BEFORE THE ID. CIT(A), THE PR. CIT HAS NO JURISDICTION TO REVISE THE VALUATION OF THE SAME SHARES U/S.263, THEREBY DEPRIVING THE APPELLATE AUTHORITY OF THE POWER TO EXAMINE THE CORRECTNESS OF THE ASSESSMENT ORDER UNDER APPEAL VIDE CWT V. SAMPATHMAI CHORDIA, EXECUTOR TO THE ESTATE OF LATE NENI JAVUR BAI (2002) 256 ITR 440 (MAD.) AND REFERRED TO IN AERENS INFRASTRUCTURE & TECHNOLOGY LTD. VS. CIT (2004) 271 ITR 15 (DELHI). 7. THAT THE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDER U/S. 263 BASED UPON MERE CHANGE OF OPINION OR POSSIBILITY OF A SECOND VIEW IS NOT SUSTAINABLE IN LAW VIDE CIT V. MAX INDIA LTD. (2007) 295 ITR 282 (SC) AND MALABAR INDUSTRIAL CO. LTD. V. CIT (2000) 243 ITR 83 (SC). 8. THAT THE ID. PR. CIT IS NOT JUSTIFIED IN N OT ACCEPTING THE WRITTEN SUBMISSION OF THE APPELLANT AS STATED IN PARA 22 OF THE IMPUGNED ORDER ON GROUNDS STATED IN PARA 23, WHICH ARE PRIMA FACIE ILLOGICAL. 9. THAT THE IMPUGNED ORDER U/S. 263 IS DEVOID OF ANY SPECIFIC ERROR COMMITTED BY THE ID. AO IN T HE VALUATION OF SHARES BEING STATED THEREIN AND IN ABSENCE THEREOF, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 10. THAT THE APPELLANT CRAVES LEAVE TO URGE FURTHER GROUNDS AT THE TIME OF HEARING OR BEFORE. 2. BRIEF FACTS OF THE CASE ARE THA T THE ASSESSEE FILED RETURN OF INCOME ON 25.11.2014 DECLARING TOTAL INCOME OF RS.41,98,340/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S.143(3) OF ITA NO. 214 /CTK/201 9 3 THE ACT ON 29.12.2016 DETERMINING TOTAL INCOME OF RS.69,49,440/ - ON ACCOUNT OF I NCOME FROM OTHER SOURCES U/S.56(2)(VIIB) OF THE ACT. THE AO NOTICED THAT THE FAIR - MARKET VALUE SHOWN BY THE ASSESSEE FOR WHICH SHARES ISSUED DURING THE YEAR WAS RS.739/ - AS AGAINST THE ALLOTMENT OF RS.1349/ - , HENCE, THE DIFFERENTIAL PRICE OF RS.610/ - (1349 - 739) PER SHARE ON 4510 SHARES WERE ADDED U/S.56(2)(VIIB) OF THE ACT. LATER ON THE PR.CIT EXERCISING HIS JURISDICTIONAL POWER U/S.263 OF THE ACT CALLED THE REMAND RECORD AND EXAMINED THE SAME AND HE NOTED THAT THE AO HAS NOT DETERMINED THE CORRECT VALUE OF THE ALLOTMENT OF SHARES DURING THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, THE LD. PCIT CALCULATED THE FAIR - MARKET VALUE BY APPLYING RULE 11UA AND AS PER PRESCRIBED FORMULA THEREIN. HE CALCULATED THE VALUE OF SHARES AT RS.708/ - . ACCORDINGLY, HE OBSERVED THA T THE AO HAD CALCULATED THE SAID PRICE EXCESS BY RS.31/ - PER SHARE I.E. RS.739 - 708. ACCORDINGLY, FURTHER A SUM OF RS.139810(31X4510) WAS TO BE ADDED IN THE TOTAL INCOME OF THE ASSESSEE, THEREFORE, THE ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HE ALSO RELIED ON MANY CASE LAWS AS INCORPORATED IN HIS ORDER. 3. FEELING AGGRIEVED FROM THE ORDER OF THE PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 4. LD. AR OF THE ASSESSEE BEFORE US HAS FILED WRITTEN SUBMISSIONS WHICH READS AS UNDER : - ITA NO. 214 /CTK/201 9 4 BRIEF NOTE OF SUBMISSIONS OF THE APPELLANT REVISION ORDER IS ANTE DATED AND BARRED BV LIMITATION (GROUND NO.2) 1. THAT THE ABOVE APPEAR HAS BEEN FILED AGAINST THE ORDER DT. 30.03.2019 OF THE ID PR. CIT MADE U/ S. 263(1) MODIFYING THE ASSESSMENT ORDER DT. 29.12.2016 MADE U/S. 143(3) OF THE ACT BY THE ID. AO WITH A DIRECTION TO MAKE FURTHER ADDITION OF RS.1,39,810 U/S.56(2)(VIIB) IN ADDITION TO RS.27,51,100 ALREADY ADDED BY THE ID. AO ON THE SAME AROUND AND TO GIV E EFFECT TO HIS ORDER LATEST BY 30.06.2019 AS MANDATED U / S .153(5). THE SAID ORDER U/S. 263(1) WAS ISSUED AND SERVED UPON THE UNDERSIGNED AR OF THE APPELLANT AT BARGARH ON 30.04.2019. 2. THAT AS PER SEC.263(2) OF THE I. T. ACT, 1961, NO ORDER U/S.263(1) S HALL BE MADE AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. THE LIMITATION FOR PASSING THE IMPUGNED ORDER U/S.263(L), THEREFORE, EXPIRED ON 31.03.2019. BUT THE SAID ORDER WAS SERVED ON 3 0.04.2019 CAUSING A DELAY OF 31 DAYS FROM THE DATE OF ORDER. 3. THAT THE IMPUGNED ORDER TO BE EFFECTIVE SHOULD NOT ONLY BE PASSED BEFORE THE EXPIRY OF LIMITATION BUT ALSO BE COMMUNICATED TO THE APPELLANT BEFORE THE EXPIRY OF LIMITATION PERIOD AS AFORESAI D VIDE FOLLOWING JUDICIAL PRONOUNCEMENTS OF THE HON'BIE SUPREME COURT, HIGH COURTS AND TRIBUNALS. A. STATE OF A.P. V. M. RAMAKISHTAIAH & CO, (1994) 93 STC 406 (SC) (PAGE 8 TO 10 ) HEAD NOTE REVISION - LIMITATION OF FOUR YEARS - ORDER IN REVISION PURPORTIN G TO BE PASSED WITHIN FOUR YEARS - SERVED UPON ASSESSEE AFTER SUBSTANTIAL DELAY - NO EXPLANATION FOR DELAY - PRESUMPTION THAT ORDER WAS NOT MADE ON THE DATE IT PURPORTS TO HAVE BEEN MADE AND COULD HAVE BEEN MADE AFTER EXPIRY OF FOUR YEARS - ANDHRA PRADESH GENERAL SALES TAX ACT (6 OF 1957), SEC. 20(2) * 'AN ASSESSMENT ORDER PASSED IN SEPTEMBER, 1969 WAS SOUGHT TO BE REVISED BY THE DEPUTY COMMISSIONER UNDER SECTION 20(2) OFAPGST ACT, 1957. HE PASSED AN ORDER PREJUDICIAL TO THE ASSESSEE. THE ORDER WAS SAID TO HAVE BEE MADE ON JANUARY, 1973, BUT IT WAS SERVED AFTER THE EXPIRY OF FOUR YEARS FROM THE DATE OF THE ASSESSMENT ORDER, ON THE ASSESSEE ON 21.11.1973,10 VZ MONTHS LATER. THERE WAS NO EXPLANATION BY THE DEPUTY COMMISSIONER WHY THE SERVICE OF THE ORDER WAS S O DELAYED: HELD THAT, IN THE ABSENCE OF ANY EXPLANATION WHATSOEVER, THE COURT MUST PRESUME THAT THE ORDER WAS NOT MADE ON THE DATE IT PURPORTED TO HAVE BEEN MADE AND THAT IT COULD HAVE BEEN MADE AFTER THE EXPIRY OF THE PERIOD OF FOUR YEARS PRESCRIBED FOR PASSING SUCH AN ORDER IN REVISION. THE ORDER WAS BAD.' (SEE P. 407 H ) B. CHANDRIKA SAO V. STO (2015) BL WST 8 (ORISSA)(PAGE 11 TO 13) HEAD N OTE ITA NO. 214 /CTK/201 9 5 VALUE ADDED TAX - ASSESSMENT - LIMITATION - SIX MONTHS FROM DATE OF RECEIPT OF AUDIT VISIT REPORT - NO PERMISS ION OBTAINED FOR EXTENSION OF TIME - ASSESSMENT ORDER PASSED AFTER SIX MONTH PERIOD - BARRED BY LIMITATION - NO EXPLANATION FOR DELAY IN COMMUNICATING ORDER TO DEALER - ORDER NOT PASSED ON DATE IT BORE - ORDER QUASHED - VALUE ADDED TAX ACT, 2004 (4 OF 2005 ), S. 42(2). C. ACXT V OR I SSA STEVEDORES LTD, ITA NO S. 409 TO 411/CTK/2011 AND CO NO S 30 TO 32/201 1, ORD E R DATED 22,12.2011. (PAGE 14 TO19) D. AC I T V. DN TULSI PRASAD MO H APATRA & DR. (SMT.) DEBADUTTA MA LL ICK ITA N O S . 412 & 413/CTK/2011 AND CO. NOS. 27 & 2B/CTK/2011, ORDER DATED 17.02.2012. (PAGE 20 TO 24) E. SRI TR INATH CHOWDARY & OTHERS V ACIT IT(S$)A NOS. 44 TO 46/CTK/2016, 3, B TO 10, 13 & 14/CTK/2017, ORDER DATED 27.09.20IB. (PAGE 25 TO38) REASSESSMENT ORDER DATED 30.03,2015 SERVED ON 06.34*201 5, AFTER EXPIRY OF PERIOD OF LIMITATION ON 31.03.2015, HELD BARRED BY LIMITATION, PANKAJ SHARMA V. DOT ITA M OS . 3556 & 3557/BEL/2015, ORDER DATED 08.02.2019. (PAGE 39 TO 51 ) AO DATED 28.03.2013 SERVED ON 18.04.2013, AFTER EXPIRY OF PERIOD OF LIMITATION O N 31.03.2013, HELD BARRED BY LIMITATION AND THUS, NULL AND VOID. 4. IN VIEW OF THE ABOVE CASE LAWS, THE IMPUGNED REVISION ORDER DATED 30.03.2019 SERVED ON 30.04.2019 IS ANTE DATED AND B ARRED BY LIMITATION. VALIDITY OF REVISION ORDER DURING PENDENCY OF APPEAL BEFORE CIT(A) AGAINST THE IMPUGNED ASSESSMENT ORDER ON THE SAME ISSUE (GROUND NOS.3 TO 6) 1 . RETURN OF INCOME FILED BY THE APPELLANT HAS BEEN SELECTED FOR LIMITED SCRUTINY THROUGH CASS FOR THE FOLLOWING REASONS AS STATED IN THE 1 ST PARA OF THE ASSE SSMENT ORDER DATED 29.12.2016 MADE U/S,143(3). ( I ) LARGE SHARE PREMIUM RECEIVED DURING THE YEAR; (II) TAX CREDIT (AND RECEIPTS) IN ITR IS LESS THAT TAX CREDIT IN 26AS; AND ( III ) MISMATCH IN AMOUNT PAID TO RELATED PERSONS U/S.40A(2)(B) REPORTED IN AUDI T REPORT AND IT R. THAT IN COMPLIANCE TO NOTICES ISSUED U/SS. 142(1) AND 143(2) ALONG WITH THE QUESTIONNAIRE, THE ASSESSEE APPEARED BEFORE THE A.O. ON DIFFERENT DATES AND FILED WRITTEN SUBMISSIONS EXPLAINING AIL THE ABOVE ISSUES. 2. IN THE ASSESSMENT MADE U/S, 143(3), AN ADDITION OF RS.27,51,100 WAS MADE TO THE RETURNED INCOME OF RS.41,98,340 U/S,56(2)(VLIB) AND THUS, ITA NO. 214 /CTK/201 9 6 THE ASSESSED INCOME STOOD AT RS.69,49,440. THE SAID ADDITION HAS BEEN WORKED OUT BY DEDUCTING THE FAIR MARKET VALUE (IN SHORT - FMV) OF 4,510 UOS. OF EQUITY SHARES ALLOTTED ON 31,03.2014 ESTIMATED BY THE ID, AO @ RS,739 PER SHARE AT RS.33,32,890 FROM THE ALLOTTED VALUE THEREOF @ RS. 1,349 PER SHARE AT RS.60,83,990 IGNORING THE VALUATION CERTIFICATE THEREOF ISSUED BY THE CHARTERED ACCOUNTANT SRI C.S.SHAH CERTIFYING THE FMV PER SHARE AT RS, 1,349 ON THE GROUND OF SHARE APPLICATION MONEY OF RS.61,00,000 PENDING ALLOTMENT AS ON 31.03.2013 BEING INCLUDIBLE IN THE BOOK VALUE OF LIABILITIES, WHICH HAS BEEN EXCLUDED IN THE ABOVE CERTIFICATE. THIS HAS EXH AUSTIVELY BEEN DISCUSSED {FT THE ASSESSMENT ORDER AT PAGE 2 AND 3. 3. BEING AGGRIEVED WITH THE ABOVE ASSESSMENT ORDER, THE ASSESSEE HAS E - FILED AN APPEAL IN PERM NO.35 (PAGE 52 TO 54) BEFORE THE ID. CIT(A), SA M BALPUR ON 22.01.2017 VIDE ACKNOWLEDGEMENT NO .598992731220117 (PAGE 55) DISPUTING THE ABOVE ADDITION, WHICH IS NOW PENDING FOR DISPOSAL. THIS FACT WAS WITHIN THE KNOWLEDGE OF THE ID. PR. CIT VIDE ASSESSING OFFICER'S ORDER SHEET ENTRY DATED 23.01,2017 (P AGE 56 TO 62) STATING THAT THE ASSESSEE HAS FILE D AN APPEAL BEFORE THE CIT ( A), SA M BALPUR ELECTRONICALLY ON 22/01/2017 AGAINST THE ASSESSMENT ORDER PASSED U/S. 143(3) ON 29/12/2016, 4. THE ID. PR. C I T HAS NO JURISDICTION TO REVISE THE FMV OF EQUITY SHARES ALLOTTED ON 31 - 03.2014, WHEN THE SAID VALUATION IS THE SUBJECT MATTER OF APPEAL FILED BY THE ASSESSEE AND WAS PENDING WHEN THE REVISIONAL POWER WAS EXERCISED. THE REVISLONAL JURISDICTION CANNOT BE EXERCISED WHICH WOULD RESULT IN DEPRIVING THE APPELLATE AUTHORITY OF THE POWER TO EXAMINE THE CORRECTNESS OF THE ORDER UNDER APPEAL, WHEN AN APPEAL HAS, IN FACT, BEEN FILED IN RESPECT OF THE SAME MATTER AND WAS PENDING BEFORE THE APPELLATE AUTHORITY. THIS HAS BEEN SO HELD BY THE HON'BLE MADRAS HUGH COURT IN THE CASE OF CWT V. SAMPATHMAL CHORDIA, EXECUTOR OF L ATE NENI KAVUR BAI (2002) 256 ITR 440 (MAD,) (PAGE 63) R WHERE THE REVISION HAS BEEN HELD TO BE INVALID AS THE SUBJECT - MATTER OF THE REVISION WAS THE SAME AS THAT OF THE PENDING APPEAL AS INTERPRETED IN AERMNS INFRASTRU C TUR E & TECHNOLOGY LTD, V. CZT (2004) 271 ITR 5 (DEMI) (PAGE 64), 5. IN THE GROUND NO.3 OF THE APPEAL FILED AGAINST THE ASSESSMENT ORDER, THE ASSESSEE HAS ALSO CONTENDED THAT THE SAID ORDER IS BARRED BY LIMITATION AND NON EST IN LAW, BEING SERVED ON 12.01.2017, AFTER THE EXPIRY OF LIMITATION U/S.153 ON 31,12.2016* BASED UPON THE FOREGOING SUBMISSIONS, THE SAID ORDER IS MOST LIKELY TO BE QUASHED IN APPEAL AND CONSEQUENTLY, THE SAID ASSESSMENT ORDER WILL LOOSE ITS EXISTENCE FOR INVOKING REVISIONARY POWER U/S. 263. REVISION ON MERE CHANCRE OF O PIN ION OR POSSIBILITY OF A SECOND VIEW F GROUND NO. 7 1. THERE ARE TWO LIMBS IN SECTION 56(2)(VIIB) OF THE I. T. ACT, 1961. AS PER EXPLANATION TO SECTION 56(2)(V IIB ), THE FIRST LIMB IS FMV OF THE SHARES TO ITA NO. 214 /CTK/201 9 7 BE MADE AS PW THE PRESCRIBED METHOD. IN FACT, THE METHOD FOR VALUATION OF SHARES IS PRESCRIBED IN RULE 11UA OF THE I. T. RULES, 1962. THE SECOND LIMB IS THE VALUATION OF THE SHARES BASED ON VALUE, ON THE DATE OF ISSUE OF SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODWILL, KNOW - HOW, PATENTS , COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. THE HIGHER OF THE VALUATION AS PER THE FIRST AND THE SECOND LIMBS IS TO BE ADOPTED AS THE FSW FOR THE PURPOSE OF SEC.56(2)(V IIB ). KINDLY REFER TO APPELLANT'S WRITTEN SUBMISSION REPRODUCED IN PARA 2 OF PAGE 9 OF THE REVISION ORDER. 2. THE AO HAS FOLLOWED THE SECOND LIMB AND RULE 11 UA{2)(B) IN VALUING THE FMV BASED UPON THE VALUATION CERTIFICATE THEREOF ISSUED BY THE CHARTERED ACCOUNTANT SRI C. S. SH AH CERTIFYING THE FMV PER SHARE AT RS.L F 349 (ANNEXURE - 1 TO PARA 23(A) OF THE REVISION ORDER) BUT HE HAS REDUCED THE FMV OF SHARE TO RS.739 ON THE GROUND OF SHARE AP PLICATION MONEY OF RS.61.Q0. 000 PENDING ALLOTMENT AS ON 31.03.2013 BEING INCLUDIBLE IN THE BOOK VALUE OF LIABILITIES, WHICH HAS BEEN EXCLUDED IN THE ABOVE CERTIFICATE. THIS HAS EXHAUSTIVELY BEEN DISCUSSED IN THE ASSESSMENT ORDER AT PAGE 2 AND 3. 3. IN THE REVISION ORDER, THE ID. PR. CIT HAS WRONGLY APPLIED TH E FIRST LIMB FOR VALUATION OF SHARES AS PER FORMULA (A - L) / (PE) * (PV) PRESCRIBED IN RULE 11 UA(2){A) OF THE L T. RULES, 1962 AND FURTHER REDUCED THE FMV OF SHARE BY RS.3I TO RS.70 8 , 4. SINCE HIGHER OF THE FMV AS PER SUB - CLAUSE (F) AND (FT) OF CLAUSE (A ) OF EXPLANATION TO SEC.56(2)(VIIB) READ WITH RESPECTIVE CLAUSE (A) AND (B) OF RULE 11UA(2) IS TO BE ADOPTED, THE VALUATION MADE BY THE AO AT RS.739 UNDER THE ABOVE SUB - CLAUSE (II) AND RESPECTIVE CLAUSE (B) OF RULE 11UA(2) IS HIGHER THAN THE VALUATION MADE BY THE ID. PR. CIT AT RS.708 UNDER THE ABOVE SUB CLAUSE (I) AND RESPECTIVE CLAUSE (A) OF RULE 11UA(2). AS SUCH, THE IMPUGNED ORDER IS LIABLE TO BE QUASHED. MOREOVER, IT IS ENTIRELY BASED UPON CHANGE OF OPINION AND ADOPTION OF A SECOND VIEW, WITHOUT FINDI NG ANY SPECIFIC ERROR COMMITTED BY THE AO. THE IMPUGNED REVISION ORDER IS, THEREFORE, NOT SUSTAINABLE IN LAW VIDE CIT V, MAX INDIA LTD. (2007) 295 ITR 282 (SC)(PMGM 6S) AND MALABAR INDUSTRIAL CO, LTD, V, CXT(20@G) X43.XTR S3 (SC) (PAGE 66 TO 68). NON - APP L I CAB ILITY OF SEE 56F 21FVFI&) AS PER EXPLANATORY MEMORANDUM TO FINANCE ACT 2012 THE APPELLANT DOES NOT COME WITHIN THE MISCHIEF OF THE ABOVE PROVISION AS MANIFEST FROM CURSORY LOOK TO EXPLANATORY MEMORANDUM TO FINANCE ACT, 2012 BY WHICH THE SAID PROVISIO N WAS BROUGHT INTO THE LAW AND THE SHARE PREMIUM IS A CLEAN MONEY AND SO IT IS NOT COVERED WITHIN THE PROVISIONS OF SECR56{2)(VII&}, LEGISLATIVE INTENT IS TO APPLY THE SAID PROVISION WHERE MONEY RECEIVED IS NOT CLEAN AND IS UNACCOUNTED MONEY RECEIVED IN GA RB OF SHARE PREMIUM WHERE AS NOWHERE IT IS CASE OF REVENUE THAT STATED MONEY IS NOT CLEAN MONEY, RELIANCE IS PLACED UPON ITA NO. 214 /CTK/201 9 8 THE ITAT R DELHI BENCH ORDER DATED 03.01.2020 IN THE CASE OF M/S, CLEARVIEW HEALTHCARE PVT LTD, V. ITO M ITA N O. 2222/ D EL/ 2019 (PAG E ) . IN ADDITION TO THE ABOVE, HE ALSO SUBMITTED THAT THE CASE OF THE ASSESSEE WAS SUBJECT TO APPEAL BEFORE THE CIT(A). THEREFORE, THE PR.CIT WAS NOT JUSTIFIED TO APPLY THE REVISONARY POWERS AS PROVIDED IN THE INCOME TAX ACT. IN SUPPORT OF HIS CONTENTIONS, HE RELIED ON THE FOLLOWING DECISIONS : - I) ACC LIMITED CEMENT, ITA NO.3576/MUM/2019, ORDER DATED 08.07.2020 : II) ALISHAN PALACE RESORTS PVT. LTD., ITA NO.114/CTK/2019, ORDER DATED 16.06.2020; AND III) TRIMEX FISCAL SERVICES PVT. LTD., ITA NO.892/KOL/2018, ORD ER DATED 20.11.2019. 5. ON THE OTHER HAND, LD. CIT DR SUPPORTED THE ORDER OF PR. CIT AND HE SUBMITTED THAT THE REVISIONARY POWER EXERCISED BY THE PR.CIT IS AS PER LAW. HE SUBMITTED THAT THE AO HAD NOT CONSIDERED PROPERLY THE CALCULATION OF ASSET AND LIABI LITIES SHOWN IN THE BALANCE SHEET FOR PARTICULAR DATE, WHICH HAS BEEN RECTIFIED BY THE PR.CIT. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND ORDERS OF AUTHORITIES BELOW, WE NOTICED F ROM THE ASSESSMENT ORDER THAT THE AO HAS DEALT THIS ISSUE IN HIS ORDER AND HAS DETERMINED THE VALUE PER SHARE OF RS.739/ - WHEREAS THE ASSESSEE HAD VALUED PER SHARE AT RS.1349/ - TAKING INTO CONSIDERATION THE BALANCE SHEET FOR THE FINANCIAL YEAR 31.03.2013. THE PR.CIT HAS ALSO TAKING INTO CONSIDERATION THE FINANCIAL STATEMENT FOR THE FINANCIAL YEAR 31.03.2013 AND CALCULATED THE PER ITA NO. 214 /CTK/201 9 9 SHARE VALUE AT RS.739/ - , WHICH WAS LESS BY RS.31/ - , RESULTANTLY THERE WAS A LOWER VALUATION OF RS.1,39,810/ - . THEREFORE, THE PR. CIT EXERCISED HIS REVISIONARY POWERS U/S.263 OF THE ACT. ON GOING THROUGH THE PAPER BOOK FILED BY THE ASSESSEE AT PAGE NOS.52 TO 54, IT IS CLEAR THAT THE ASSESSEE HAS FILED APPEAL BEFORE THE CIT(A) CHALLENGING THE VALUATION OF SHARES MADE BY THE AO AT RS.7 08/ - PER SHARE BY TAKING THE GROUND AS UNDER : - FOR THAT THE LD. AO HAS ERRED IN LAW AND ON FACTS TO TREAT THE SHARE APPLICATION MONEY PENDING ALLOTMENT AS A LIABILITY, WHICH IS CONTRARY TO ADDL. CIT V. BANGALORE SOFT DRINKS PVT. LTD.(1980) 126 ITR 38 (KA RNATAKA) AND WINNER ESTATES PVT. LTD. V. DY.CIT (2004) 91 ITD 431 (DELHI TRIB). FOR THAT CREDIT OF EXTRA TDS OF RS.2,81,356 CLAIMED VIDE MEMO OF APPEARANCE DATED 20.12.2016 OUGHT TO HAVE BEEN CREDITED IN THE IMPUGNED ORDER. THE SAME MAY BE DIRECTED TO BE CREDITED. FOR THAT THE IMPUGNED ORDER HAS BEEN SERVED AFTER THE EXPIRY OF LIMITATION U/S.153 ON 12.01.2017 AND AS SUCH, BARRED BY LIMITATION AND NON EST IN LAW. FOR THAT FURTHER GROUNDS, IF ANY, SHALL BE URGED AT THE TIME OF HEARING OR BEFORE. WE ALSO NOTED FROM THE ORDER OF AO THAT WHILE CALCULATING THE VALUE OF LIABILITIES, THE ASSESSEE HAD NOT CONSIDERED THE VALUE OF MONEY RECEIVED UNDER THE ACCOUNT HEAD SHARE APPLICATION MONEY PENDING FOR ALLOTMENT OF RS.61 LAKHS, WHICH WAS STANDING AS ON 31.03.2013 AND THE AO HAS CONSIDERED IT AS A LIABILITY, WHICH HAS BEEN CHALLENGED BEFORE THE CIT(A) AS STATED SUPRA IN THE GROUNDS OF APPEAL. NOW, CONSIDERING THE ARGUMENTS PUTFORTH BY THE LD. AR OF THE ASSESSEE THAT THE PR.CIT CANNOT ITA NO. 214 /CTK/201 9 10 EXERCISE HIS JURISDICTIONAL POW ER U/S.263 OF THE ACT, IF THE ASSESSEES APPEAL IS PENDING BEFORE THE CIT(A). IT IS ALSO CLEAR FROM THE ORDER SHEET PLACED AT PAGE NO.60 OF THE PAPER BOOK, WHEREIN IT HAS BEEN MENTIONED THAT THE ASSESSEE HAD FILED APPEAL BEFORE THE CIT(A). TO SUPPORT THIS VIEW, EXPLANATION (C) TO SECTION 263(1) OF THE ACT, IS REPRODUCED HEREUNDER : - SECTION 263. (1) EXPLANATION (C) : - ( C ) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. F URTHER THE LD. AR OF THE ASSESSEE DREW OUR ATTENTION TO PARAS 11 TO 16 OF THE DECISION OF COORDINATE BENCH IN THE CASE OF ACC LIMITED (SUPRA) , WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - 11. THE COORDINATE BENCH OF THIS TRIBUNAL IN EVEREST INDUSTRIES (SU PRA) WHILE CONSIDERING THE VALIDITY OF ORDER PASSED UNDER SECTION 263, WHEN SIMILAR ISSUE WAS PENDING ADJUDICATION BEFORE CIT(A) HELD AS UNDER; 25. WE HAVE CONSIDERED THE RIVAL STANDS ON THIS ASPECT CAREFULLY. FACTUALLY SPEAKING, IT IS QUITE EVIDENT THA T THE ISSUES RAISED BY THE COMMISSIONER WITH REGARD TO THE TREATMENT OF EXCISE DUTY AND SALES TAX INCENTIVES WAS INDEED DEALT WITH IN THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER. IT IS ALSO CLEARLY EMERGING THAT THE STAND OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND THE MATTER HAS TRAVELLED TO THE CIT(A) FOR CONSIDERATION. IN THIS CONTEXT, THE IMPLICATIONS OF CLAUSE (C) OF EXPLANATION 1 TO SECTION 263 OF THE ACT, WHICH READ AS UNDER IS QUITE RELEVANT. (C) WHERE ANY ORDE R REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988], THE POWERS OF THECOMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND [AND SHALL BEDEEMED A LWAYS TO HAVE EXTENDED] TO SUCH MATTERS AS HAD NOT BEENCONSIDERED AND DECIDED IN SUCH APPEAL.] ITA NO. 214 /CTK/201 9 11 IT IS EVIDENT FROM THE ABOVE THAT THE COMMISSIONER IS NOT EMPOWERED TO EXERCISE HIS JURISDICTION ON AN ISSUE WHICH IS SUBJECT MATTER OF APPEAL BEFORE THE CIT( A). IN THE PRESENT CASE, IT IS UNDISPUTED THAT THE MATTER ON THE TWO ISSUES IN QUESTION IS PENDING BEFORE THE CIT(A). THUS, WE FIND THAT THE COMMISSIONER HAS NO JURISDICTION TO CONSIDER THESE ISSUES IN REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT I N TERMS OF CLAUSE (C) TO EXPLANATION 1 TO SECTION 263 OF THE ACT. 12. NOW, ADVERTING TO THE FACTS OF THE CASE IN HAND, IT IS NOT IN DISPUTE THAT THE AO EXAMINED THE ISSUE OF PROVISION FOR INTEREST ON INCOME TAX AND DISALLOWED THE AMOUNT OF RS. 30.14 CRO RE. FURTHER, IT IS CLEARLY EVIDENT FROM THE NOTE NO. 4, APPENDED TO THE BOOK PROFIT UNDER SECTION 115JB THAT THE AMOUNT WHICH WAS DIRECTED TO BE DISALLOWED, HAS ALREADY DISALLOWED BY AO WHILE PASSING THE ASSESSMENT ORDER. ONCE, THE ISSUE WHICH HAS BEEN EXA MINED AND DISALLOWED WOULD BE AMOUNT OF TAXING THE SAME TWICE OR FOR MAKING A DOUBLE DISALLOWANCE. WE HAVE NOTED THAT THE LD. CIT INSTEAD OF VERIFYING THE FACTS AND CONSIDERING THE CONTENTS OF THE REPLY OF ASSESSEE STRAIGHTWAY DIRECTED THE AO BY PASSING TH E FOLLOWING ORDER: 6.2. ON THE ISSUE OF ADDITION OF INTEREST UNDER SECTION 234D OF RS. 14.44 CRORE WITH BOOK PROFIT.: IN THIS REGARD, IT IS OBSERVED THAT THE INTEREST CHARGED UNDER INCOME TAX ACT INCLUDING UNDER SECTION 234D TOWARDS WITHDRAWAL OF EXCESS REFUND IS NOTHING BUT INCOME TAX AND SAME IS LEVIED AND ACCOUNTED AS SUCH IN ACCOUNTS OF DEPARTMENT, IT IS COVERED BY EXPLANATION 1(A) UNDER SECTION 115JB (2) OF THE IT ACT AND THEREFORE REQUIRED TO BE ADDED WITH BOOK PROFIT. 7. IN NUTSHELL, THE AO IS DIRE CTED TO PASS THE ORDER AS PER PROVISIONS OF INCOME TAX ACT, 1961 BY MAKING INTEREST CHARGED U/S 234D OF RS. 14.44 CRORES ADDED TO BOOK PROFIT. THE AO IS DIRECTED TO GIVE EFFECT TO THE ABOVE MENTIONED ORDER AND ISSUE DEMAND NOTICE. 13.WE HAVE FURTHER NOTE D THAT IN THE REPLY TO THE SHOW - CAUSE NOTICE, THE ASSESSEE SPECIFICALLY CONTENDED THAT THE ASSESSEE HAS ALREADY FILED APPEAL BEFORE THE CIT(A). THE ASSESSEE ALSO PLACED ON RECORD THE COPY OF FORM - 35 [APPEAL FORMAT BEFORE CIT(A)], WHEREIN THE ASSESSEE HAS R AISED SPECIFIC GROUNDS OF APPEAL I.E.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD ACIT WAS NOT JUSTIFIED AND GROSSLY ERRED IN ADDING RS. 30,14,80,247/ - BEING PROVISION FOR INTEREST ON INCOME TAX IN COMPUTING BOOK PROFIT UNDER SECTION 115 JB, FOLLOWING STAND TAKEN BY AO IN ASSESSMENT FOR THE PREVIOUS YEAR. 14. THE LD. CIT - DR WHILE MAKING HIS SUBMISSION FAIRLY ACCEPTED THAT THE APPEAL OF ASSESSEE AGAINST THE SIMILAR DISALLOWANCE MADE BY AO IS PENDING BEFORE THE LD. CIT(A), HOWEVER, THE LD DR MADE STRESSED THAT THE ORDER OF LD. CIT(A) HAS NOT YET RECEIVED/PASSED. THUS, THE ASSESSEE CANNOT CLAIM THE IMMUNITY OF CLAUSE (C) OF EXPLANATION - 1 OF SECTION 263(1) OF THE ACT. THE CONTENTION OF THE LD DR FOR THE REVENUE IS NOT ACCEPTABLE TO US AS IN THE PRESENT CASE THE AO HAS ALREADY ANALYSED ONE ASPECT OF THE MATTER WHICH WAS PENDING BEFORE THE CIT(A), THE MATTER CANNOT BE AGAIN RELOOKED BY THE LD. CIT, ON ANY OTHER ASPECT AS THE ORDER ITA NO. 214 /CTK/201 9 12 OF THE AO WOULD MERGED WITH THE ORDER OF CIT(A) IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN CIT VS K. SERA SERA PRODUCTION LTD (SUPRA). THUS, THE COMMISSIONER HAD NO POWER TO TOUCH UPON THE ISSUES OF DISALLOWANCE OF PROVISION OF INCOME TAX IN THE IMPUGNED PROCEEDINGS UNDER SECTION 263 OF THE ACT. IT IS EVIDENT FROM THE ABOVE THAT THE COMMISSIONER IS NOT EMPOWERED TO EXERCISE HIS JURISDICTION ON AN ISSUE WHICH IS SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). IN THE PRESENT CASE, IT IS UNDISPUTED THAT THE MATTER ON THE ISSUES IN QUESTION IS PENDING BEFORE T HE CIT(A). THUS, WE FIND THAT THE COMMISSIONER HAS NO JURISDICTION TO CONSIDER THESE ISSUES IN REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT IN TERMS OF CLAUSE (C) TO EXPLANATION 1 TO SECTION 263 OF THE ACT. 15. THE RATIO IN THE CASE LAW RELIED BY THE LD DR FOR THE REVENUE IN SUNJOY DIARY FARM VS SECOND INCOME TAX OFFICER (SUPRA) IS NOT HELPFUL TO THE REVENUE AS THE SAID CASE IS BASED ENTIRELY DIFFERENT SET OF FACT. IN THE SAID CASE THE AO, WHILE MAKING THE ASSESSMENT BY ORDER, ALLOWED THIS CLAIM O F INVESTMENT ALLOWANCE. SUBSEQUENTLY, HOWEVER, THE COMMISSIONER WAS OF THE VIEW THAT THE ORDER OF THE AO/ ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THUS, THERE WAS NO DISALLOWANCE OF CLAIM BY AO, RATHER THE CLAIM OF ASSESSEE WAS AL LOWED. FURTHER, THERE WAS NO OCCASION IN SAID CASE FOR TAKING THE ISSUE IN APPEAL, BEING ORDER OF AO WAS FAVOURABLE TO THE ASSESSEE. HOWEVER, IN THE CASE IN HAND THE SAME SUBJECT MATTER IS IN APPEAL, WHICH IS REVISED BY LD. CIT. 16.IN VIEW OF THE AFORESA ID FACTS AND LEGAL DISCUSSION, WE ARE OF THE VIEW THAT ONCE THE ISSUE WAS EXAMINED BY AO AND DISALLOWED WHILE PASSING THE ASSESSMENT ORDER AND THE SAME IS SUBJECT MATTER OF APPEAL BEFORE THE LD. CIT(A), THE LD. CIT WAS NOT JUSTIFIED IN REVISING THE ASSESSM ENT ORDER, THEREFORE, THE ASSESSEE SUCCEEDED ON HIS PRIMARY/FIRST CONTENTION. CONSIDERING THE FACT THAT WE HAVE ACCEPTED THE PRIMARY/FIRST CONTENTION OF LD. AR OF THE ASSESSEE, THEREFORE, DISCUSSION ON OTHER ALTERNATIVE SUBMISSION HAS BECOME ACADEMIC. WE M AY MADE IT CLEAR THAT WE HAVE EXAMINED THE VALIDITY OF ORDER PASSED UNDER SECTION 263 AND NOT TOUCHED THE MERIT OF ISSUE/CLAIM DISALLOWED BY AO WHICH IS SUBJECT MATTER OF APPEAL BEFORE THE LD. CIT. 7. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE ABOVE CASE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL AND THE PROVISIONS OF INCOME TAX ACT AS STATED ABOVE , WE ARE OF THE OPINION THAT THE PR.CIT CANNOT EXERCISE HIS JURISDIC TION IF THE ISSUE WAS A SUBJECT MATTER OF AN APPEAL BEFORE THE CIT(A), HENCE, THE LD. PR.CIT IS NOT ITA NO. 214 /CTK/201 9 13 JUSTIFIED IN DIRECTING THE AO TO MODIFY THE ASSESSMENT ORDER AND ACCORDINGLY, WE QUASH THE ORDER PASSED BY THE PR.CIT U/S.263 OF THE ACT. THUS, THE GROUND NO.6 RAISED BY THE ASSESSEE IS ALLOWED. 8. SINCE, WE HAVE ALREADY QUASHED THE ORDER PASSED BY THE PR.CIT U/S.263 OF THE ACT ALLOWING THE GROUND NO.6 OF THE ASSESSEE, THEREFORE, OTHER GROUNDS RAISED IN THIS APPEAL ARE FOR ACADEMIC PURPOSE AND DO NOT REQUIRE ANY FURTHER ADJUDICATION. 9 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 / 0 8 / 20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 31 / 0 8 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITA T, CUTTACK 1. / THE APPELLANT - M/S VISION HABI TATE & SERVICES PRIVATE LIMITED, KADAMBARI COMPLEX, GOLE BAZAR, SAMBALPUR - 768001 2. / THE RESPONDENT - PR. CIT, SAMBALPUR - 768004 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//