M/S. VISION HABITATE & SERVICES PVT. LTD.,SAMBALPUR vs. PR. CIT, SAMBALPUR

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.

appeal before the Income Tax Appellate Tribunal.

which reads as under :-

4 ITA No.214/CTK/2019

Brief note of submissions of the Appellant Revision Order is ante dated and barred bv limitation (Ground No.2)

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 purporting 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 so 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. 407H) b. Chandrika Sao v. STO (2015) Bl WST 8€ (Orissa)(Page 11 to 13)

Head Note

5 ITA No.214/CTK/2019

Value Added Tax - Assessment - Limitation - Six months from date of receipt of Audit Visit Report - No permission 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 Orissa Stevedores ltd, ITA Nos. 409 to 411/CTK/2011 and CO Nos 30 to 32/201 1, Order dated 22,12.2011. (Page 14 to19)

d. ACIT v. Dn Tulsi Prasad Mohapatra & Dr. (Smt.) Debadutta Mallick ITA NOS. 412 & 413/CTK/2011 and CO. Nos. 27 & 2B/CTK/2011, Order dated 17.02.2012. (Page 20 to 24)

e. Sri Trinath 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*2015, after expiry of period of limitation on 31.03.2015, held barred by limitation,

Pankaj Sharma v. DOT ITA MOS. 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 on 31.03.2013, held barred by limitation and thus, null and void.

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)

(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 Audit Report and ITR.

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.

6 ITA No.214/CTK/2019

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 exhaustively been discussed {ft the assessment order at page 2 and 3.

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 Late 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 Infrastructure & Technology ltd, v. CZT (2004) 271 ITR £5 (Demi) (Page 64),

Revision on mere chancre of opinion or possibility of a second view f Ground No.7

7 ITA No.214/CTK/2019

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)(viib). Kindly refer to Appellant's written submission reproduced in para 2 of page 9 of the revision order.

Non-applicability 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 provision 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 garb of share premium where as nowhere it is case of revenue that stated money is not clean money, Reliance is placed upon

8 ITA No.214/CTK/2019 the ITATr Delhi Bench order dated 03.01.2020 in the case of M/s, Clearview Healthcare Pvt Ltd, v. ITO m ITA No. 2222/Del/2019 (Page ). 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, order dated 20.11.2019.

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 liabilities shown in the balance sheet for

particular date, which has been rectified by the Pr.CIT.

perusing the entire material available on record and orders of

authorities below, we noticed from 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

9 ITA No.214/CTK/2019 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.708/- 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 (Karnataka) 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

10 ITA No.214/CTK/2019 exercise his jurisdictional power u/s.263 of the Act, if the assessee’s

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.

Further 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 ITA No.214/CTK/2019

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 in terms of clause (c) to Explanation 1 to Section 263 of the Act.”

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 directed 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 noted 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 raised 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 115JB, following stand taken by AO in assessment for the previous year”.

12 ITA No.214/CTK/2019 of the AO would merged with the order of CIT(A) in view of the decision of the Hon’ble 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 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 in terms of clause (c) to Explanation 1 to Section 263 of the Act.

16.In view of the aforesaid 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 assessment 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 may 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.

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 jurisdiction if the issue was a subject

matter of an appeal before the CIT(A), hence, the ld. Pr.CIT is not

13 ITA No.214/CTK/2019 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.

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.

(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack