GENESIS DEVELOPERS AND HOLDINGS LIMITED,NEW DELHI vs. ITO, WARD-1(4), NEW DELHI

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ITA 3663/DEL/2023Status: DisposedITAT Delhi16 May 2025AY 2015-163 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the assessee had raised a legal argument before the CIT(A)/NFAC, claiming to be a public limited company in which public is substantially interested, thereby contending that the addition under section 56(2)(viib) was wrongly made. The Tribunal also observed that the revenue did not dispute that this plea was not specifically discussed or rejected in the assessment order or the lower appellate discussion. In the interest of justice, the Tribunal deemed it appropriate to restore the issue back to the Assessing Officer for fresh adjudication. The Assessing Officer is directed to consider the assessee's plea afresh in light of all relevant facts. The taxpayer is to plead and prove its case at its own risk and responsibility. The appeal is allowed for statistical purposes.

What were the facts?

The assessee, Genesis Developers and Holdings Limited, is in appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2015-16. The dispute arises from an addition of Rs. 29,05,01,000/- made under section 56(2)(viib) of the Income-tax Act, 1961. This addition was made by the Assessing Officer in an assessment order dated 26.12.2017, and subsequently upheld by the CIT(A)/NFAC. The addition was based on the finding that the assessee failed to justify an alleged extraordinary premium of Rs. 90 per unit. The assessee contended before the CIT(A)/NFAC that it is a public limited company in which public is substantially interested, and therefore, section 56(2)(viib) is not applicable. The revenue did not dispute that this plea was not specifically discussed or rejected in the assessment order or the lower appellate proceedings.

What were the issues?

1. Whether the addition of Rs. 29,05,01,000/- under section 56(2)(viib) of the Income-tax Act, 1961, is valid, considering the assessee's claim of being a public limited company in which public is substantially interested? Assessee's Contentions: The assessee argued that it is a public limited company in which public is substantially interested. Therefore, the provisions of section 56(2)(viib) of the Act, which apply to private companies or closely held companies receiving share premium exceeding fair market value, are not applicable to its case. The impugned addition has been wrongly made. Revenue's Contentions: The revenue did not dispute the fact that the assessee's plea regarding its status as a public limited company was not specifically discussed or rejected by the Assessing Officer in the assessment order, nor by the CIT(A)/NFAC in the lower appellate proceedings. No specific arguments were recorded for the revenue on the merits of the section 56(2)(viib) addition.

Which sections of the Income-tax Act were involved?

Section 56(2)(viib),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

For Appellant: Adv. Sh. Ankit Kumar, Adv
For Respondent: DR Ms. Neha Chaudhary, CIT(DR)
Hearing: 24.04.2025Pronounced: 16.05.2025
1.

This assessee’s appeal for assessment year 2015-16, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1056264034(1), dated 19.09.2023 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Heard both the parties. Case file perused.

3.

It emerges during the course of hearing that both the learned lower authorities have made section 56(2)(viib) addition of Rs.29,05,01,000/- in the assessee’s hands thereby holding it to have failed in supporting the alleged extraordinary premium of Rs.90 per unit; in the course of assessment framed on 26.12.2017 and upheld in the lower appellate discussion.

4.

It is at this stage that the assessee has invited our attention to its written submissions filed before the CIT(A)/NFAC claiming itself as the public limited company in which public is substantially interested than a private company under section 56(2)(viib) to buttress the point that the impugned addition has been wrongly made in its hands. The Revenue is equally fair in not disputing the clinching fact that there is no discussion in the assessment order to this effect nor the assessee’s plea has been rejected in specific terms in the lower appellate discussion. 5. Be that as it may, we are of the considered view that once the assessee has raised the instant legal argument, it is deemed appropriate in the larger interest of justice to restore the same back to the Assessing Officer for his afresh appropriate adjudication

2 | P a g e thereof in light of all the relevant facts within three effective opportunities subject to a rider that the taxpayer shall plead and prove the case at his own risk and responsibility, in consequential proceedings. Ordered accordingly.

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