Brawny Nivesh P.Ltd, New Delhi V. ACIT, Central circle-13, New Delhi

ITA 571/DEL/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2447 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-03-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 27-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Depreciation; Deemed to accrue or arise in india; Cost of acquisition; Fair market value; Valuation report; Scheme of amalgamation; Bogus
• Section: 56; 143(3); 56(2); 274; 13; 119; 22; 20

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 571/Del/2019 (Assessment Year: 2015-16) M/s. Brawny Nivesh Pvt. Ltd, 1, Zamrudpur Community Centre, Kailash Colony, New Delhi Vs. ACIT, Central Circle-13, New Delhi (Appellant) (Respondent) PAN:AABCK4550B Assessee by : None Revenue by: Shri Kanv Bali, Sr. DR Date of Hearing 04/03/2024 Date of pronouncement 09/05/2024 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.571/Del/2019 for AY 2015-16, arises out of the order of the Commissioner of Income Tax (Appeals)-XXVI, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 10432/17-18 dated 19.11.2018 against the order of assessment passed u/s 143(3) of the Income- tax Act, 1961 (hereinafter referred to as „the Act‟) dated 29.12.2017 by the Assessing Officer, ACIT, Central Circle-13, New Delhi (hereinafter referred to as „ld. AO‟). 2. None appeared on behalf of the assessee despite issuance of notice to the assessee. Infact on earlier occasions, there was representation from the side of the assessee and on one occasion, the ld. AR was also directed to certify the paper book in this appeal. Even after taking note of the subsequent date of hearings, there was no representation from the side of the assessee. Hence the ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 2 Bench felt it appropriate to proceed with the disposal of this appeal on hearing the ld. DR and based on materials available on record. 3. The assessee has raised the following grounds of appeal before us:- “1. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm the addition of Rs.8,25,000/- made by the A.O. u/s 56(2)(viia) of the Act, on account of purchase of shares of M/s Gain E Commerce (P) Ltd. without accepting the valuation of shares declared by the assessee is against the provisions of law and the addition made is arbitrary, excessive and illegal. 2. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm the addition made by the A.O. of Rs.20,39,400/- u/s 56(2)(viia) of the Act, on account of purchase of shares of M/s Kanti Commercial (P) Ltd. without accepting the valuation of shares declared by the assessee is against the provisions of law and the addition made is arbitrary, excessive and illegal. 3. That on the facts and in the circumstances of the case the action of the Ld.CIT(A) to confirm the addition made by the A.O. of Rs.98,56,165/- as unexplained investments on the reason that the Sundry Debtors are fictitious is contrary to the settled principles of law and the addition is arbitrary, excessive and illegal. 4. That on the facts and in the circumstances of the case the action of the Ld.CIT(A) to confirm the addition made by the A.O. of Rs. 98,56,165/- as unexplained investments by partly treating the bogus Sundry Debtors of A.Y. 2014-15 is against the settled principles of law and the addition is arbitrary, excessive and illegal. 5. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to hold that the sales for AY 2014-15 & 2015-16 were not genuine on the basis of expenses debited in the Profit & Loss Account is contrary to the material evidences on record and contrary to be expenses claimed and debited in the Profit & Loss Account and therefore, the addition confirmed by the Ld CIT(A) of Rs. 98,56,165/- is illegal and bad in law. 6. That on the facts and in the circumstances of the case the action Ld CIT(A) to confirm the assessment made by the AO by rejecting the scope of limited scrutiny having being expanded by the AO without prior permission is in violation of the provisions u/s 119 of the Act and the assessments is illegal and bad in law. 7. That the assessment framed by the AO and confirmed by the Ld. CIT(A) is unjust, illegal, arbitrary and excessive. 8. That the above grounds of appeal will be argued in detail at the time of hearing and the appellant crave leave to submit additional grounds of appeal, if any, and/or alter, verify, modify or rectify any grounds of appeal at or before the time of hearing.” ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 3 4. We have heard the ld. DR and perused the materials available on record. Since the paper book filed by the assessee is not certified by the assessee or by its authorized representative, the same is not taken into cognizance and is hereby ignored. The return of income for the Asst Year 2015-16 was electronically filed by the assessee company on 24.09.2015 declaring total income of Rs 7,587/-. The ld. AO had noted in para 3 of his order that during the year under consideration, the assessee claimed to have earned income from sale of cotton knitted fabrics. The case was selected for scrutiny to verify the „large increase in investment in unlisted equities during the year‟ by the assessee. Details in this regard was sought for from the assessee by the ld. AO during the course of scrutiny assessment proceedings. Since no details were furnished by the assessee, the ld. AO issued a show cause notice on 28.11.2017 as to why the increase in investments during the year be not treated as unexplained investment for want of explanation of source for the same. In response, the ld. AR of the assessee filed his submissions on 5.12.2017 giving the complete details of investments made by the assessee and shares allotted thereon . The ld. AO noted that assessee has made investment in shares of Dahisar Traders Pvt Ltd , Gain E Commerce Pvt Ltd, Kanti Commercial Pvt Ltd and Purbanchal Power Company Ltd. Further assessee has claimed that shares of M/s Dahisar Traders Pvt Ltd were allotted as per the scheme of amalgamation and as such provisions of section 56(2)(viia) of the Act are not applicable in this transaction. The ld. AO noted that the assessee had failed to provide any details in respect of purchase of shares of Gain E Commerce Pvt Ltd, Kanti Commercial Pvt Ltd and Purbanchal Power Company Ltd and also failed to explain as to how the provisions of section 56(2)(viia) of the Act could not be applied on these transactions. Further the assessee also failed to provide the valuation report of shares of Gain E Commerce Pvt Ltd, Kanti Commercial Pvt Ltd and Purbanchal Power Company Ltd. The ld. AO on reproduction of provisions of section 56(2)(viia) of the Act observed that assessee claim is acceptable only in respect of allotment of shares of Dahisar Traders Pvt Ltd in a scheme of amalgamation and that the said provisions would squarely be applicable in respect of ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 4 investment in shares of other three companies listed supra. The ld. AO arrived at the fair market value of shares of aforesaid three companies as on 31.3.2014 on the basis of the balance sheet available in the website of Ministry of Corporate Affairs (MCA) as under:- Gain E Commerce Pvt Ltd - Rs 966.50 per share Kanti Commercial Pvt Ltd - Rs 3113.30 per share Purbanchal Power Company Ltd- Rs 2736.60 per share 5. The ld. AO noted that fair market value of 10000 shares of M/s Purbanchal Power Company Ltd @ Rs 2736.60 per share and it has been purchased by the assessee company at Rs 2750 per share which is more than its fair market value and as such the provisions of section 56(2)(viia) of the Act would not apply to the same. 6. The ld. AO noted that assessee has purchased 50000 shares of Gain E Commerce Pvt Ltd @ Rs 950 per share which comes to Rs 4,75,00,000/-, however the fair market value of 50000 shares @ Rs 966.50 per share comes to Rs 4,83,25,000/-. Accordingly, the difference of Rs 8,25,000/- was added by the ld. AO u/s 56(2)(viia) of the Act in respect of shares purchased in Gain E Commerce Pvt Ltd. 7. Similarly the ld. AO noted that assessee has purchased 18000 shares of Kanti Commercial Pvt Ltd @ Rs 3000 per share which comes to Rs 5,40,00,000/-, however the fair market value of 18000 shares @ Rs 3113.30 per share comes to Rs 5,60,39,400/-. Accordingly, the difference of Rs 20,30,400/- was added by the ld. AO u/s 56(2)(viia) of the Act in respect of shares purchased in Kanti Commercial Pvt Ltd. 8. Further the ld. AO noted that in the assessment order framed for the Asst Year 2014-15 u/s 143(3) of the Act, the assessee was treated as a mere name ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 5 lender and acting as a conduit for parties / beneficiaries behind the company and as such the assessee company had not done any actual sale or actual purchase. Accordingly, the sundry debtors of Rs 29,47,215/- created from fictitious sale made during the Asst Year 2014-15 has no worth and only book entry. Based on this conclusion drawn in Asst Year 2014-15, the ld. AO similarly treated the sundry debtors of Rs 69,08,850/- relating to current year as also fictitious and as such investment made during the year by the assessee company to the extent of aggregate of sundry debtors of Asst Year 2014-15 and 2015-16 of Rs 98,56,165/- was treated as not genuine and added to the total income of the assessee. 9. The aforesaid action of the ld. AO was upheld by the ld. CIT(A) by observing as under:- 5. Findings I have considered the facts of the case, the basis of addition made by the AO and the arguments of the AR during assessment as well as appellate proceedings. The cases cited by the Ld AR to support their case have all been considered. The decision in respect of the imputations is as below- The AO treated the shares investment as assessable under section 56(2) viia and assessed as below per order of assessment by making the following additions:- 1. Addition u/s 56(2)(viia) for investment in shares of M/s Gain E. Commerce Pvt. Ltd. Rs. 8,25,000/- 2. Addition u/s 56(2)(viia) for investment in shares of M/s Kanti Commercial Pvt. Ltd. Rs.20,39,400/- A 3. Addition of Sundry Debtors/Investments Rs.98,56,165/- The assessee aggrieved with the additions filed appeal by taking altogether 7 grounds of appeal out of which ground nos. 6 & 7 are general in nature. The general grounds are not adjudicated upon as the specific issues raised by the appellant have been dealt with in the specific grounds raised by the appellant. ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 6 A. Scope of Limited Scrutiny -Challenged in Ground No.1 This, matter has been examined. The AO has put the reasons for picking up the case for scrutiny. The AO has sought all the replies pertaining only to the issues as per criteria for scrutiny selection. This ground is not tenable. This ground is dismissed. It must be understood that in matter involving a corporate entity having engaged in complex transactions, it is but required to raise and seek replies to some queries in order to reach a reasonable and lawful conclusion. This ground is therefore, dismissed. B. Grounds 2 & 3 Kanti Commercial for investment of shares of M/s Gain E. Commerce Pvt. Ltd. and M/s Pvt. Ltd. The A.O. was of the view that the shares which have been allotted at Rs.10/- per share was in violation of the provisions of Section 56(2)(viia) of the Act which reads as below:- (via) where a firm or a company not being a company in which the public are substantially interested, receives, in any previous year, from any person or persons, on or after the 1st day of June, 2010 [but before the 1st day of April, 2017], any property, being shares of a company not being a company in which the public are substantially interested,- (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration: Provided that this clause shall not apply to 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); The appellant has erroneously relied on some opinion stating that clause viib will be applicable in its case and the provisions of Section 56(2)(viia) does not apply to the assessee. This submission is not backed by legal position as can be very clearly seen from the section concerned and the relevant sub clauses. i. Applicability of section 56(2)viia ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 7 a. The A.O. held that section 56 (2)viia was applicable as act of allotment of shares resulted in receiving the shares. The A.O. worked out the book value of the shares in respect of M/s Gain E. Commerce consideration of Rs.4,75,00,000/- and 18000 shares of M/s Kanti Commercial (P) Ltd. @Rs.3,000/- per share for total consideration of Rs.5,40,00,000/-. Therefore in the books of the assessee company there was increase in investments to the tune of Rs.4,75,00,000/- for purchase of shares of M/s Gain E Commerce (P) Ltd. and increase in 500.000 for purchase of 5,40,00,000/- crores for purchase of shares of M/s Kanti Commercial (P) Ltd. The A.O. was of the view that the shares purchased were below the market value and therefore was in violation of the provisions of Section 56(2)(viia) of the Act. The assessee filed before the Ao the Valuation certificate as per Rule 11UA in respect of the M/s Gain E Commerce (P) Ltd as on 31.3.2014 and the share was valued at Rs.798.90 per share as against the assessee purchasing the shares at Rs.950/- per share. Further in case of M/s Kanti Commercial (P) Ltd the shares were valued at Rs. 1297.81 per share as against the shares being purchased by the assessee at Rs.3000/- per share. As the shares were purchased at a price higher the market value of the shares as (determined by the chartered accountant the assessee submitted that there was no violation to the provisions of section 56(2)(viiia) of the Act. The A.O. rejected the submissions of the assessee and on the basis of the balance sheet as on 31.3.2014 derived the market value per share of M/s Gain E commerce (P) Ltd. At Rs.966.50 per share and in respect of M/s Kanti Commercial (P) Itd at Rs.3,113,30 per share. On this basis the A.O. made addition of Rs.8,25,000/- on account of 50,000 shares purchased of M/s Gain E c Commerce (P) Ltd considering the market value as on 31.03.2014 at Rs.966.50 per share as against Rs.950/- per share which the assessee paid to purchase the shares. The addition was made u/s 56(2)(viia) of the Act. Further, the A.O. also made addition of Rs.20,39,400/- on account of 18000 shares purchased of M/s Kanti Commercial (P) Ltd. @ Rs.3000/- per share as against the market value adopted by the A.O. of Rs.3,113,30 per share as on 31.03.2014. b. The appellant has submitted that the provisions of Section 56(2)(viia) shall not apply to the facts of the case of the assessee and no addition shall be made on this account. It is proper to refer here to clause viib of section 56(2) which reads as under- Section 56 (2) viib reads as under- "(viib) where a company, not being a company in which the public are substantially interested, receives in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received – (i) by a venture capital undertaking from a venture capital company or a venture capital fund; or ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 8 (ii) by a company from a class or classes of persons as may be notified by the Central Government in this behalf. Explanation - For the purposes of this clause, - (a) the fair market value of the shares shall be the value (i) as may be determined in accordance with such method as may be prescribed; or (ii) as may be substantiated by the company to the satisfaction of the Assessing Officer, based on the value, on the date of issue of such shares, of its assets, including intangible assets being goodwill, know- how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature, A whichever is higher. (b) "venture capital company", "venture capital fund" and "venture capital undertaking" shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to Clause (23FB) of section 10;" c. It is clear from the language of clause viib that it is totally inapplicable on the facts of the case. The same is applicable only in circumstances where the receipt of consideration for issue of shares is involved. The case here is of appellant receiving shares for a consideration reported to be sub- par. I am in agreement with the AO that only clause viia is applicable. The same has to come into play with rule 11 UA to examine the value of such shares obtained by the appellant. d. The Ld AR has confounded the issues by submitting that the shares were allotted to the appellant. Section 56(2) viia deals with the scenario wherein the entity as the appellant in this case, receives certain shares at inadequate consideration. Whereas clause viib is in respect of receipt of inadequate consideration for issue of shares. In this context we may be benefitted by the ruling of Hon'ble SC in case of Khoday Distilleries reported in [2009] 176 Taxman 142 (SC) dated 14/11/2008, where the Hon'ble Supreme Court had the occasion to deal with the aspects of allotment of shares. Though in a different context, this ruling clearly points out that the allotment of shares in similar circumstances is similar to receipt of shares. Section 56 (2)viia has come into effect wef 01/06/2010 and it clearly deals with such scenarios wh6 (2) vila appellant receives shares for inadequate consideration by way of purported allotment, thus amplicitly receiving undue benefit in such structured transaction. The section does not distinguish the allotment or transfer of shares. Both the transactions fall within scope and domain of RECEVING OF SUCH PROPERTY ie SHARES as envisaged in section referred above. In view of the transaction structures in this ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 9 case as seen from the assessment order, there is accrual of income in layered form in non cash format. This is a clear case which falls in the scope of the clause viia as per the scheme so laid down. In the present case, it is also pertinent to refer to section 56 as far its genesis is concerned as follows: "56. Income from other sources (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1). the following incomes, shall be chargeable to income- tax under the head "Income from other sources" It is pertinent also to refer here to the judgment by Hon'ble Delhi High Court in [2018] 97 taxmann.com 150 in W.P. (C) NOS. 8293 & 8482, 8483 OF 2018 C.M. APPL. NOS. 31812-31814, 32580-32582 &32583- 32585 OF 2018 PER JUDGMENT DATED 10/09/2018 "55. Here, by virtue of Section 56 (1) income from any source that is not exempted, "shall be chargeable to income tax.. if it is not chargeable to income tax under any of the heads specified in section 14, items A to E". This is clearly a deeming provision, which specifically creates a fiction that "the following income" (Section 56 (2)) is chargeable to tax. The section then enumerates what is deemed to be income; the relevant part is that "any property", other than immovable property(is acquired)"(ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration". Therefore, the differential between the fair market value and the cost of acquisition, constitutes income. The assessees had relied on Shahrukh Khan v. Dy. CIT [2018] 90 taxmann.com 284/253 Taxman 487 (Bom.) in the compilation of judgments, given at the end of the submissions (not alluded to during hearing) where the revenue sought to re-open the assessment, under Section 147, alleging that there was suppression of the value of shares, which should have been at Rs. 33 per share, and not Rs. 10/- per share. That judgment, in this court's opinion, has no relevance, because the shareholder had, in the original returns, declared the value of the shares acquired. The High Court, quite correctly held that the reassessment was based on a second opinion or a review, which was proscribed in law. The Root of this provision was explained in CIT v. Neelkamal Realtors and Erectors India (P.) Ltd (2017) 79 taxmann.com 238/246 Taxman 274 (Bom.) in the following manner: "So far application of section 56 (2) (vii) (b) (ii) of the Act is concerned, it is self-evident that it only applies to individuals and Hindu Undivided Family. Moreover, it seeks to tax the transferee of the property for having given consideration for which is less than the stamp value by Rs. 50,000/- or more for purchase of the property." ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 10 56. This court notices that the provision was introduced through an amendment to the Income Tax Act with effect from 01.10.2009. No provision of the like kind existed when Mrs. Bacha F. Guzdar (supra), (dealing with "fair market value" being the basis of determination of a deemed income, in the event of acquisition of unquoted shares.) was decided. As a result, it is held that the assessee's arguments on this aspect are unpersuasive, prima facie it cannot be said that in the light of these provisions, there was no merit in its allusion or reference in the reassessment notice." e. It is seen that as per section 56(1), income from any source that is not exempted, 'shall be chargeable to income tax, if the same is not chargeable to Income Tax under the specified heads of the IT Act. This is clearly a deeming provision; specifically creating a fiction that 'the following income' as detailed in (section 56(2)) shall is chargeable to tax. The section then enumerates in details as to what is deemed to be income as per clause viia of 56 (2) and so forth. Therefore, the differential between the fair market value so computed and the cost of acquisition essentially constitutes income. The appellant has also taken a plea that there was a dispute and the conditions for allotment of the shares were not fulfilled and therefore there was breach of contract the share application/allotment of shares were not legally valid. This is not acceptable as the transaction has not been called off. It seems to be a collusive device to hoodwink correct income determination. The issue of the assets remaining under hypothecation with financial institutions is also not tenable, as the assets remain in the name and custody of the appellant entity. There is no loss yet of the assts. Hence these are bound to be considered for the purposes of valuation. Accordingly, I uphold invoking of section 56(2) viia as a correct measure on the facts and as in law. ii. Next issue is about valuation as per rule 11UA. It is pertinent to refer to rule 11UA to better appreciate the computation drawn by the AO. This rule reads as under- a. Determination of fair market value. 11UA.2[(1)] For the purposes of section 56 of the Act, the fair market value of a property, other than immovable property, shall be determined in the following manner, namely,- (a) valuation of jewellery.- (i) the fair market value of jewellery shall be estimated to be the price which such jewellery would fetch if sold in the open market on the valuation date; (ii) in case the jewellery is received by the way of purchase on the valuation date. from a registered dealer, the invoice value of the jewellery shall be the fair market value; (iii) in case the jewellery is received by any other mode and the value of the jewellery exceeds rupees fifty thousand, then assessee may obtain ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 11 the report of registered valuer in respect of the price it would fetch if sold in the open market on the valuation date; (b) valuation of archaeological collections, drawings, paintings, sculptures or any work of art.- (i) the fair market value of archaeological collections, drawings, paintings, sculptures or any work of art (hereinafter referred as artistic work) shall be estimated to be price which it would fetch if sold in the open market on the valuation date, (ii) in case the artistic work is received by the way of purchase on the valuation date, from a registered dealer, the invoice value of the artistic work shall be the fair market value; (iii) in case the artistic work is received by any other mode and the value of the artistic work exceeds rupees fifty thousand, then assessee may obtain the report of registered valuer in respect of the price it would fetch if sold in theopen market on the valuation date: (c) valuation of shares and securities,- (a) the fair market value of quoted shares and securities shall be determined in the following manner, namely,- (i) if the quoted shares and securities are received by way of transaction carried out through any recognized stock exchange, the fair market value of such shares and securities shall be the transaction value as recorded in such stock exchange; (ii) if such quoted shares and securities are received by way of transaction carried out other than through any recognized stock exchange, the fair market value of such shares and securities shall be,- (a) the lowest price of such shares and securities quoted on any recognized stock exchange on the valuation date, and (a) the lowest price of such shares and securities quoted on any recognized stock exchange on the valuation date, and (b) the lowest price of such shares and securities on any recognized stock exchange on a date immediately preceding the valuation date when such shares and securities were traded on such stock exchange, in cases where on the valuation date there is no trading in such shares and securities on any recognized stock.exchange. [(b) the fair market value of unquoted equity shares shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner, namely:- ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 12 the fair market value of unquoted equity shares =(A+B+C+D - L)× (PV)/(PE), where, A= book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) in the balance-sheet as reduced by.- (i) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any, and (ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; B = the price which the jewellery and artistic work would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer; C = fair market value of shares and securities as determined in the manner provided in this rule; D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; L= book value of liabilities shown in the balance sheet, but not including the following amounts, namely:- (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto, (v) any amount representing provisions made for meeting liabilities. other than ascertained liabilities; (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares, PV- the paid up value of such equity shares; PE total amount of paid up equity share capital as shown in the balance- sheet; ] ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 13 (c) the fair market value of unquoted shares and securities other than equity shares in a company which are not listed in any recognized stock exchange shall be estimated to be price it would fetch if sold in the open market on the valuation date and the assessee may obtain a report from a merchant banker or an accountant in respect of which such valuation. 21 (2) Notwithstanding anything contained in sub-clause (b) of clause (c) of sub- rule (1), the fair market value of unquoted equity shares for the purposes of sub-clause (1) of clause (a) of Explanation to clause (viib) of sub-section (2) of section 56 shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner under clause (a) or clause (b), at the option of the assessee, namely:- (a) the fair market value of unquoted equity shares = where, A = book value of the assets in the balance-sheet as reduced by any amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act and any amount shown in the balance- sheet as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; L book value of liabilities shown in the balance-sheet, but not including the following amounts, namely:- (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of tax claimed as refund under the Income-tax Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities, (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PE total amount of paid up equity share capital as shown in the balance- sheet; = ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 14 PV the paid up value of such equity shares; or (b) the fair market value of the unquoted equity shares determined by a merchant banker 10 [***] as per the Discounted Free Cash Flow method. b. In this regard, reliance is placed on the order of Hon'ble ITAT in the case of DCIT vs OzonelandAgro Pvt. Ltd. in ITA No. 4854/Mum/2016: "5. We have heard ground No. 2 of the assessee is not adjudicated and treated as rejected. 7. As regards grounds No. 3 to 5 are concerned, we find that the undisputed facts are that the assessee has purchased the shares of M/s. Optival Health Solutions P. Ltd., at Re.1 on 4/3/2011 and 8/3/2011 while some of the shareholders have sold the shares of the very same company to the assessee on the very same day at Rs. 75.49 per share. It is also not disputed that the assessee company and M/s Optival Health Solutions P. Ltd., are related to each other. The only dispute is whether the provisions of section 56(2)(viia) of the I.T. Act are applicable to the facts of the case before us. For the sake of convenience and ready reference, the relevant provisions are reproduced hereunder : 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);]' 7.1 Further, the Explanation to clause (vii) to 56(2) of the Act reads as under: EXPLANATION: (b) "fair market value" of a property other than an immovable property, means the value determined in accordance with the method as may be prescribed.' 7.2 The prescribed method for valuation of the fair market value is under Rules 11U and 11UA(c)(b) of L.T. Rules. Rule 11UA (c) (b) reads as under: 7.3 From the literal reading of the above provision, it is clear that to apply the above provision, the following conditions have to be satisfied: i. there is transfer of shares a company not being a company in which the public are substantially interested: ii. the purchaser of the shares is a company not being a company in which the public are substantially interested; ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 15 iii. the consideration is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees; and iv. the deemed income in the hands of the transferee shall be the aggregate fair market value of such property as exceeds such consideration. 8. From the facts of the case before us, it is seen that the property i.e., shares which are transferred are the shares of a company in which the public are not substantially interested. Since the transaction of sale and purchase of shares is between related parties and both the companies are companies in which the public are not substantially interested, we are of the opinion that the AO was justified in examining the applicability of the provisions of section 56(2)(viia) of the Act to the transaction of transfer of shares. 9. The next step for application of this provision is to arrive at the fair market value of the shares before comparing it with the consideration at which the shares are purchased by the assessee to examine if it was less than the aggregate fair market value of the property exceeding Rs. 50,000. In the case before us, the AO had adopted the price at which the assessee has purchased the shares from two of the shareholders at a higher price of Rs. 75.49 ps as the fair market value of the share. The question before us is, whether this is valid and as prescribed under the Act? Clause (b) of the explanation to clause (vii) to section 56(2) defines 'fair market value' to be the value as computed under the prescribed rule i.e., rule 11UA. According to the ld counsel for the assessee, where the Act prescribes a rule, it has to be strictly and mandatorily followed and further if the statute has conferred a power to do an act and has laid down the method in which that power is to be exercised, it necessarily prohibits the doing of the act in any other manner than that has been prescribed. In support of this contention, the assessee has relied upon various decisions cited supra. Let us now examine the applicability of the said decisions to the facts of the case before us. Though the facts and circumstances under which the above rulings have been given are distinguishable, we find that the legal principles laid down in the above judgments are clearly applicable to the facts of the case before us. Therefore the question before us is whether the A.O. can adopt the value at which the assessee acquires the shares of the same company on the same day for a higher consideration as the fair market value of the shares or whether FMV is compulsorily to be valued under Rule 11UA of the Act before applying the provisions of Sec. 56(2)(viia) of the Act. 10. From a plain reading of the provisions which are reproduced above and also the precedents discussed above, it is seen that section 56(2)(viia) requires that before application of the said provision, the A.O. has to necessarily compute the fair market value and only then can ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 16 compare the same with the consideration paid by the assessee and apply the said provision only if the conditions set therein are satisfied. In the case before us, undisputedly some of the shareholders have sold the shares at a much higher price than that at which the assessee has purchased the balance of the shares from other shareholders i.e., at Re.1. Though the A.O. has not computed the fair market value in accordance with Rule 11UA of the I.T. Rules, he had evidence before him to be satisfied that the market value of the shares was much higher than the value at which the balance of shares were transferred to the assessee. The AO has observed that “mainly the valuation of any property is based on fact as to what value the property would fetch if sold in open market but generally the details as to how much value an unlisted share would fetch will not be available and hence the formula is given to overcome that deficiency". Since the market price of some of the shares at a higher value than Re.1 was available, the AO has adopted the same as the fair market value. This stand of the AO could have been sustainable had the section provided that the FMV of an unquoted share shall be the value computed in accordance with the rule or the actual market value, if any, whichever is higher. But as can be seen from the Act and the rules provided there under, no such provision has been made. In fact, under the Wealth Tax Act, Section 7(1) defines the expression "value of an asset" as "the price which in the opinion of the WTO it would fetch if sold in the open market on the valuation date" but in the relevant provisions the definition of fair market value is given in the Act and method has also been prescribed there under. 10. On a careful reading of the judgments discussed above, it is seen that the Courts have held that where a method has been prescribed by the legislature, that method alone shall be followed for computation of the fair market value. The A.O. and the Ld. CIT(A) have not followed the relevant provisions for adopting or computing the fair market value of the shares, but have adopted the market value at which some of the shares have been purchased by the assessee as FMV. This, in our opinion, is not correct. As held by the Courts in the above judgments, the A.O. has to compute the fair market value in accordance with the prescribed method but cannot adopt the market value as fair market value under section 56(2)(viia) of the Act. The legislature in its wisdom has also given a formulae for computation of the fair market value which cannot be ignored by the authorities below. 11. We find that at para 4.12 of the assessment order, the AO has recorded that the assessee has furnished the valuation of the shares based on the working given under rule 11UA(c)(b) of the IT Rules, according to which, the fair market value of the shares is Rs. 64.48/- (i.e., the value of Optival share is at a negative figure) whereas the assessee has paid at Re.1 per share. He has also observed that no basis is given by the assessee for adopting the rate of Rs.63.79 per share for purchase of shares by Sri Madhukar Reddy. He observed that there is no basis for transacting in the shares at different rates and that this arrangement has been done to defraud the revenue of its taxes by transacting at abnormally low prices. Having regard to the above ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 17 observations of the AO, we are of the opinion that if the AO was not satisfied with the working given by the assessee, he ought to have computed the FMV himself in the method prescribed under the rules but ought not to have adopted higher of the prices paid by the assessee for purchase of some of the shares of M/s Optival as even when the transactions are between the related parties, the provisions of section 56(2)(viia) can be applied only in accordance with the prescribed method and the difference between the price at which the assessee has purchased the shares and aggregate of the fair market value of the shares as computed can be brought to tax as deemed income in the hands of the assessee... 5.2. Section 56 allows the assessees to adopt one of the methods of their choice. But, the AO held that the assessee should have adopted only one method for determining the value of the shares. In our opinion, it was beyond the jurisdiction of the AO to insist upon a particular system, especially the Act allows to choose one of the two methods. Until and unless the legislature amends the provision of the Act and prescribes only one method for valuation of the shares, the assessees are free to adopt any one of the methods. Therefore, in our opinion the order of the FAA does not suffer from any factual or legal infirmity. 5.3. We also find that in the earlier assessment year, the AO had, while completing scrutiny assessment, accepted the valuation of same shares at Rs.25,500/-.But, during the year under appeal why did he not follow the earlier year's order is not known. As per the basic principles of taxation, the AO.s are not governed by the principles of res judicata and every assessment is a fresh assessment. But, it is also equally accepted that the AO.s should not deviate from the earlier years' decisions without assigning any concrete and justifiable reasons. Tax determination cannot be left to whims and fancies of a person. It is a serious task and has to be accomplished in a disciplined manner. If an assessee has been allowed a certain concession in earlier year/(s),with-out giving any plausible reason it cannot be withdrawn in subsequent years. As early as year 1952, in the case of Tejmal Bhojraj (22 ITR 208) the Hon'ble Nagpur High Court has reiterated the principles of non applicability of res-judicata and consistency in income tax proceedings as under: The principle of estopple by record or res judicata, applicable to decisions of civil Courts, has no application to income-tax proceedings so as to prevent a decision in a prior year from being reopened in the assessment proceedings in a subsequent year because of the nature of enquiry and because the Income-tax Officer is not a Court. A previous finding or decision of such an authority may be reopened and departed from in subsequent years in the following circumstances, namely: (a) the previous decision is not arrived at after due enquiry; (b) the previous decision is arbitrary; or (c) if fresh facts come to light which on investigation would entitle the officer to come to a conclusion different from the one previously reached. In the absence of fresh circumstances, the Income-tax Officer cannot arbitrarily depart from the finding reached after due enquiry by his predecessor in office simply on the ground that ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 18 the succeeding officer does not agree with the preceding officer's findings. 11.2 Apart there from, your goodself have also mentioned about the valuation report of Mail Today Newspapers Pvt. Ltd. prepared by M/s Joy Financial Consulting Pvt. Ltd. for M/s TV Today Network Ltd., who was examined by AO of the assessee appellant in AY 2014-15. In fact, in doing so, the learned AO has exceeded in his jurisdiction wherein he failed to appreciate the fact that the aforesaid report was obtained by M/s TV Today Network Ltd. and is dated 24.05.2013 which report had been prepared on analysis of the value of the equity shares of Mail Today Newspapers Pvt. Ltd. as at 31.03.2013. The aforesaid report was in fact obtained by listed public limited company and as per the report obtained by them since they had acquired shares in Mail Today Newspapers Pvt. Ltd., and even going by the said report the value as adopted was Rs. 44.78/- per share. Thus, here it is submitted that the aforesaid approach of the learned AO to criticize the aforesaid report, is not only without jurisdiction but also erroneous. On one hand the AO in his order has held that the amount had been received in the FY 2012-13 and the fair market value has to be determined on the basis of annual report as at 31.03.2012 and on the other hand while valuing the stake he had adopted the figure as at 31.03.2013 which represents the value analyses of Mail Today Newspapers Pvt. Ltd. 11.3 That further, the valuation of shares of M/s Mail Today is also governed by the fact that a well-known media house listed company M/s TV Today Network Ltd. was an investor in M/s Mail Today, which fact has totally been brushed aside by your goodself and thus, the valuation of shares of M/s Mail Today cannot be solely worked out on the basis of financial statements, and further reliance placed on statement of M/s Joy Kumar Jain in piecemeal is also not justified, as in the said statement, the concerned valuer has also stated that he has not done valuation in the case of assessee appellant and further, nowhere, he has denied the valuation of Rs. 44. 78/- computed by him. Thus, the statement of Mr. Joy Kumar Jain rather supports the case of assessee - appellant and in any case, the same was never provided for rebuttal and has directly come in the order of assessment and as such no adverse inference can be drawn on the basis of said statement or in alternative, if your goodself wants to rely on the said statement, then the statement may be provided for rebuttal and the assessee appellant would also like to cross examine the said valuer. 1. That the assessee appellant furnished its valuation report dated 27.12.2012 (at pages 121 to 28 of paper book) and also valuation report by independent valuer on M/s Mail Today as on 20.07.2012(at pages 46 to 54 of paper book) and to our surprise, instead of commenting on the valuation reports so furnished by assessee or instead of summoning the valuer and asking his basis to give the aforesaid valuation reports, your goodself have relied on the valuation report obtained by M/s TV Today Network Ltd., which report has nothing to do with the assessee appellant. Thus, it is submitted that the valuation reports so furnished by ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 19 assessee as mentioned above, should be considered for valuation and issuance of shares and in case your goodself, has any query then the said valuer can be summoned and enquired about the basis of his valuation. 12. That one important fact that has been lost sight by your goodself is that M/s Living Media India Ltd. has invested in the assessee company and has paid Rs. 72, 25, 00, 000/- to acquire complete stake in the assessee company and to become holding company of the assessee appellant and thus, the valuation of shares so suggested by you need to take into account such additional factor as well, which has been ignored by your goodself. 13. That further and without prejudice to the above, in any case, the value of investment in M/s Mail Today by assessee company cannot be taken less than Rs. 126, 81, 44, 942/- (as on 31.03.2012 at page 103 of paper book), whereas, your goodself have taken the same at Rs. 67, 23, 39, 330/- which in any case, needs to be corrected. 14. In view thereof, it is most respectfully submitted that proposed enhancement vide notice dated 13.09.2018 is uncalled for and wholly untenable both in law as the value of investment in M/s Mail Today as on 31.03.2012 is Rs. 270, 06, 19, 055/- (kindly see page 23 of paper book) and not Rs. 67, 23, 39, 330/- (as computed by your goodself in the captioned show cause notice) and thus, the addition proposed of Rs. 48, 16, 66, 660/- in the captioned show cause notice be dropped at the earliest..." c. The consideration paid by the appellant clearly falls within the scope of section 56 (2) viia for evaluating if the appropriate consideration was indeed transacted as per the provisions of law. The appellant has failed in furnishing a reliable and robust basis of valuation of such equity. The relevant rule in this regard is rule 11 UA(1) cb. The AO has carried out the valuation on NAV method. The appellant assessee is in clear mischief of the same, hence the premium charged by the assessee is to be subjected to the provisions of section 56 (2) viia read with rule 11UA. It is bounden on the assessee to furnish reliable valuation determining such share premium as in its case for the AY 2015-16, from a qualified valuer. The assessee has not done the same, nor has any submission filed before me in this regard. The AO has carried out the exercise of computing the share valuation basis the assets owned by the appellant in absence of appellant discharging its onus. The quantum of consideration determined and accordingly payable on account of rule 11UA clearly falls within scope and zone of understatement of considerations. The same, therefore, to be brought to tax. The relevant addition in case of the assessee is upheld for this period. d. It is also pertinent to refer here to the judgment of Hon'ble Kolkata bench of ITAT in the case of M/s Microfirm Capital (P) Ltd. vs. DCIT, Circle 8(1), Kolkata in ITA No. 513/Kol/2017, dealing with issues pertaining to deficient valuation of shares with significant underlying assets. The ITAT Kolkata has held as below in the judgment quoted above: ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 20 "9. A perusal of Section 56(2)(viib) of the Act, takes us to a conclusion that all types of shares are covered by this Section. The argument of the assessee that RNCPS is a quasi- debt and that it was not the intention of the legislature to bring such instruments within the ambit of this Section, is devoid of merit. We also do not find any merit in the arguments of the ld. Counsel for the assessee that economic consideration that are related to capital formation, employment, industrialisation etc. should lead to purposive and liberal interpretation of the Section. RNCPS cannot be excluded from the ambit of Section 56(2)(viib) of the Act. Hence, we reject these argument of the Id. Counsel for the assessee. 9.1 The second argument of the ld. Counsel for the assessee is that the assessee has categorically followed the prescription of law and taken a valuation report from an independent accountant and that the Assessing Officer is not an expert in I.T.A. No. 513/Kol/2017 Assessment Year: 2013-14 & I.T.A. No. 963/Kol/2017 Assessment Year: 2013-14 M/s. Microfirm Capital Pvt. Ltd this field and hence cannot interfere in this report and arrive at a different valuation. We do not find any merit in this contention. The Hon'ble Supreme Court in the case of Duncans Industries Ltd. vs. State of U.P. and Ors supra), the case-law, which was relied upon by the assessee has at page 9 held as follows:- "These valuers are technical persons who have while valuing the plant and machinery taken into consideration all aspects of valuation including the life of the plant and machinery. The valuations made both by the Enquiry Committee as well as the valuers are mostly based on the documents produced by the appellant itself. Hence, we cannot accept the argument that the valuation accepted by the Collector and confirmed by the revisional authority is either not based on any material or a finding arrived at arbitrarily. Once we are convinced that the method adopted by the authorities for the purpose of valuation is based on relevant materials then this Court will not interfere with such a finding of fact. That apart, as observed above, even the counsel for the appellant before the High Court did not seriously challenge the valuation and as emphasised by the High Court, rightly so. Therefore, we do not find any force in the last contention of the appellant also. 16. For the reasons stated above, this appeal fails and the same is dismissed with costs." 9.1.1. A perusal of the same demonstrates that if the valuation is not based on relevant material, the adjudicating authority can interfere with the same. In the case of Dr. Mrs. Renuka Datla Vs. Solvay Pharmaceutical (supra), relied upon by the ld. Counsel for the assessee, there is no finding that the Assessing Officer cannot interfere with the valuation done by the valuer. In this case valuation was done in a dispute between shareholders holding controlling interests and the minority interest and this valuation report was examined and found to be correct. The Court observed as follows:- ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 21 "We do not think that the valuation in the instant case runs counter to the principles laid down therein. As seen from enclosures 6.1 and 6.2 to the valuation report, the valuer had arrived at market based valuation in addition to the other modes of valuation and observed that the recommended value is the higher of the intrinsic value or the market based value. Thus, the petitioners had the benefit of higher valuation. The first principle laid down in the above decision has been kept in view. Moreover, the profit-earning method which has been referred to in the above decisions in the context of valuation of shares of a public limited company has also been applied, though future earnings based valuation has not been done in the absence of reliable figures. As observed by us earlier, the profit-earning capacity of the company has not been excluded from consideration. Thus, the valuer's mode of valuation does not in any way infringe the principles laid down in the said decisions to the extent they are applicable. In the final analysis, we are of the view that the valuer approached the question of valuation having due regard to the terms of settlement and applying the standard methods of valuation. The LT.A. No. 513/Kol/2017 Assessment Year: 2013-14 & I.T.A. No. 963/Kol/2017 Assessment Year: 2013-14 M/s. Microfirm Capital Pvt. Ltd valuation has been considered from all appropriate angles. No case has been made out that any irrelevant material has been taken into account or relevant material has been eschewed from consideration by the valuer. The plea that the valuation is vitiated by fundamental errors cannot but be rejected. In the result IA Nos. 2 to 4 of 2002 are liable to be rejected. However, there is one direction concerning the interest which we consider appropriate to give in the given facts and circumstances of the case. Though the grant of interest, as prayed for by the petitioners, from 31st May, 2002-the stipulated date of submission of valuation report is not called for, we feel that the ends of justice would be adequately met if the respondents concerned are directed to pay the interest at the rate of 9 per cent, on Rs. 8.24 crores, which is the value of shares fixed by the valuer, for a period of 12 months. True, the petitioners contested the valuation and thereby delayed the implementation of settlement. However, having regard to the bona fide nature of the dispute and the fact that the respondents have, retained the money otherwise payable to the petitioners during this period of 12 months and could have profitably utilized the same, we have given this direction taking an overall view. In the result I.As. Nos. 2, 3 and 4 of 2002 are dismissed subject to the above direction as to payment of interest. The SLP(C). Nos. 18035, 18041- 18042 of 2002 shall stand disposed of in terms of the settlement on record coupled with the direction to pay the sum of Rs. 8.24 crores representing the value of 4.91 per cent, shares together with interest at 9 per cent, for a period of 12 months within a period of four weeks from today subject to the receipt of share transfer forms and the fulfilment of other formalities by the petitioners. The suits which have given rise to these SLPs, and other suits and proceedings mentioned in the memorandum of settlement shall stand dismissed as withdrawn. Accordingly, the SLPs are disposed of. No order as to costs." 9.1.2. The above shows that the valuation done by an expert was upheld on merits. A specific observation is made that the Principles of valuation ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 22 have been followed and relevant material considered. Hence, this argument is rejected as devoid of merit. The contention of the ld. Counsel for the assessee that in case the Assessing Officer is not satisfied with the value determined by the expert valuer then the only option is to get it done by another expert valuer is also devoid of merit. The Assessing Officer can replace the irrelevant material, if any, considered by the valuer with relevant material and modified the value in a fictitious manner. Thus this argument is hereby rejected. In our view the Assessing Officer has not only a right but he is also duty bound to examine the valuation report evaluate it and record his findings on the same. Such finding should be based on relevant material and rational view taken in a judicious manner." e. Though the ruling is in context of clause viib, but is helpful in determining the contours of income in present appeal also. The value-weightage of the assets belonging to the entity issuing capital, has to be duly incorporated and the appellant cannot hide behind the facade of some ns which are themselves subject to litigation and some kind of loan restructuring. The hypothecation of prime real estate assets in this case does not obviate the robustness of asset, hence financial heft of the company. In such a scenario the prime real estate as in the case of the appellant has to be weighed in to determine proper share valuation. Such shares will not be at throw away prices by any entity just like that unless there is some mechanism of consideration. This is more so, when the appellant has not entered into a distress fransaction also though the same is not recognized in the extant schema of section 56(2) read with rule 11UA. Thus, the AO was well within his rights to question the valuation reports as they were not in line with the method of valuation adopted basis the assets valuation owned by the concerned entity, as detailed above. The addition by the AO on share issued valuation basis on account of share premium component is confirmed as upheld based on the position of the law and relevant rule in this regard on basis of recognition of the receipts in particular specific head. The action of the AO is upheld in this respect. C. Grounds 4&5- That on the facts and in the circumstances of the case the action of the AO to make addition of Rs. 98,56,165/- as unexplained investments by partly treating the bogus Sundry Debtors of AY 2014-15 is against the settled principles of law and the addition is arbitrary, excessive and illegal. a. The AO had concluded while framing assessment for AY 2014-15 that the assessee was not doing any actual purchase or sale and are the mere name lender. The AO sought to follow the same in this period also. The appellant has just stated that - "All the purchases and sale were genuine. It was submitted that the sale was out of the opening stock and there was no fresh purchase during the year. Therefore the entire transaction was genuine." b. The A.O. rejected the same as it was found to be a case of collusive transactions because – ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 23 ➤ the sale and purchase involved only a select set of selected parties, ➤ the expenses did not commensurate with the business and ➤ there was no transportation cost despite sales during the year. c. The AO, accordingly, concluded basis above factors that since Sundry Debtors of A.Y. 2014- 15 had already been found to be fictitious and the current year's sale are also not genuine as the very basic features of commercial activities are absent. Therefore the Sundry Debtors for of the current year were also treated as non- genuine. Thus the AO made addition of Rs. 98,56,165/- under the head of investments made during the year on account of bogus Sundry Debtors for Α.Υ. 2014-15 & 2015-16. d. The action of AO is quite agreeable in view of peculiar facts where very basic features of any commercial activity are simply missing and the appellant has no justification for the same. The AO need not go into other features of basic accounts as such all transactions are prima facie sham. The rejection of the accounts is plain and simple implicit and it is clearly writ large on the entire factual matrix built up by the AO. The action of the AO is upheld accordingly. D. Grounds 6 and 7 are non specific and general in nature. The specific issues raised by the appellant have been dealt with above. E. In the end, the appeal is dismissed.” 10. We find that the ld. CIT(A) had elaborately addressed the issues in dispute in his order by giving certain categorical findings thereon and also by placing reliance on various case laws. None of the aforesaid factual and legal findings given by the ld. CIT(A) were controverted by the assessee before us. Hence we do not deem it fit to interfere with the said order of the ld. CIT(A). Accordingly, the grounds raised by the assessee are dismissed. 11. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 09/05/2024. -Sd/- -Sd/- (ANUBHAV SHARMA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09/05/2024 A K Keot Copy forwarded to 1. Applicant ITA No. 571/Del/2019 M/s. Brawny Nivesh Pvt. Ltd Page | 24 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi