SAB DEVELOPERS PRIVATE LIMITED,CHANDIGARH vs. INCOME TAX OFFICER, WARD-5(1), CHANDIGARH, CHANDIGARH

Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 08-07-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 147 of the Act on 20-12-2016. The sole issue that fall for our consideration is addition of Rs.129.11 Lacs as made by Ld. AO invoking the provisions of Sec.56(2)(viia).

The Ld. AR advanced arguments supporting the case of the assessee and stated that the transactions have happened prior to the said provisions coming into force. For the same, our attention has been drawn to various documents as submitted by the assessee to lower authorities. The copy of the same has also been placed on record before us. The Ld. Sr. DR also advanced arguments supporting the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 3.1 The assessee’s return of income was processed u/s 143(1). However, the case was reopened and notice u/s 148 was issued on 12- 10-2015. The reasons for reopening were furnished to the assessee. It transpired that the assessee purchased 6,45,559 unquoted shares of M/s Bharatnet Technology Ltd. @Re.1/- per share from various persons. However, the market value of such shares as per Net Asset Value (NAV) of investee-company as computed u/r 11UA was approx. Rs.21/- per share. Therefore, Ld. AO formed an opinion that the differential of the two valuation attracted the provisions of Sec. 56(2)(viia) and required addition thereof. 3.2 The assessee refuted the allegations of Ld. AO and stated that the said shares were acquired by the assessee on 10-05-2010 whereas the said provisions of Sec. 56(2)(viia) came into effect only on 01-06-2010. A confirmation certificate from Practicing Company Secretary was placed on record to support the same. As per the provisions of Sec.113 of the Companies Act, the assessee was duly issued endorsed transfer deed and share certificates by Investee Company. Therefore, the assessee holds the ownership of said shares from 10-05-2010 only. The share certificates would be conclusive, authentic and legally registered documents which confirm the date of transfer as 10-05-2010. The copies of share certificates were also furnished to Ld. AO. Further, as required u/s 159 of the Companies Act, all the transfers of shares that has taken place during the year was to be intimated to