M/S AMITA PROPERTIES PVT. LTD.,KOLKATA vs. I.T.O.,WARD-11(1), KOLKATA

The assessee in the present case is a Company, which filed its return of income for the year under consideration on 24.09.2015 declaring total income of Rs.3,28,094/-. During the year under consideration, the assessee-company had allotted 75,833 equity shares of the face value of Rs.10/- each to M/s. Amita Agarwal Beneficiary Trust for Assessment Year: 2015-2016 M/s. Amita Properties Pvt. Limited Rs.200/- each including a premium of Rs.190/- per share. During the assessment proceedings, a valuation report certified by a Chartered Accountant was furnished by the assessee as per Rule 11UA of the Income Tax Rules, 1962 showing the fair market value of its shares at Rs.180.68 per share. The Assessing Officer, therefore, required the assessee to explain the difference of Rs.19.32 in the value of shares and also asked the assessee to show-cause as to why the difference in value of shares allotted to M/s. Amita Agarwal Beneficiary Trust should not be added to its total income under section 56(2)(viib) of the Act. The assessee, however, failed to comply with this requirement and accordingly the difference of Rs.14,65,094/- (75,833 shares multiplied by Rs.19.32) was added by the Assessing Officer to the total income of the assessee under section 56(2)(viib) of the Act in the assessment completed under section 143(3) vide his order dated 07.08.2017.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) and the following submission, inter alia, was filed by the assessee in writing to support and substantiate the price of Rs.200/- per share charged by it to M/s. Amita Agarwal Beneficiary Trust:- “Under these facts, it is submitted that the underlying asset in the appellant company is an office space aqt ECP Space Business Park, Block-4B, Unit No. ESNT 4B 0804, Plot No. 11F/10, Action Area-II, New Town, Rajarhat, Kolkata which is a commercial property having super built area of 5890 sq.ft. and six nos. of car parking space. The said commercial space was allotted to the company during FY 2010-11 at a total consideration of Rs.3,04,54,363/- and payments were made during FYs 2010-11 to 2012-13. Apart from the said space, the appellant was also having other assets like cash and bank balance. The appellant had got its said property valued by a registered valuer M/s. Ideal Consultancy Services, who had vide their report dated 15.03.2015 determined the FMV of the impugned property at Rs.324.96 lacs and the guideline value of this commercial space as per Govt. Valuation at Rs.381.23 lacs. On the above premise, the appellant had determined the issue price of shares as per clause (a)(ii) of Explanation to s. 56(2)(viib) of the Act by Assessment Year: 2015-2016 M/s. Amita Properties Pvt. Limited

Not satisfied with the submission of the assessee, the ld. CIT(Appeals) confirmed the addition made by the Assessing Officer under Assessment Year: 2015-2016 M/s. Amita Properties Pvt. Limited section 56(2)(viib) of the Act for the following reason given in paragraph no. 4 of his impugned order:- “I have considered the submissions made by the appellant. As there is no merit in the submission of the appellant and based on the facts and findings narrated by the ld. AO in the assessment order, the appeal of the appellant is hereby dismissed. The AO is justified in disallowance u/s 56(2)(viib) of Rs.14,65,094/- and therefore, the addition made by the ld. AO in this regard is hereby confirmed”.

I have heard the arguments of both the sides and also perused the relevant material available on record. The main grievance of the assesee as highlighted by the ld. Counsel for the assessee at the time of hearing before the Tribunal is that the additional evidence filed by the assessee in the form of valuation report of asset as well as the case made out by the assessee on the basis of the same was not at all considered by the ld. CIT(Appeals) and without giving any finding or recording observation thereon, he decided the issue against the assessee by passing a cryptic order.

The ld. D.R. has not disputed this position, which is clearly evident from the impugned order of the ld. CIT(Appeals). He, however, has contended that there being no explanation offered by the assessee in support of the difference of valuation during the course of assessment proceedings before the Assessing Officer and the valuation report of asset having been filed by the assessee for the first time before the ld. CIT(Appeals) to explain the said difference, the matter may be sent back to the Assessing Officer for giving him an opportunity to examine/verify the explanation of the assessee in the light of the said valuation report. I find merit in the contention of the ld. D.R. and since the ld. Counsel for the assessee has also not raised any objection for sending the matter back Assessment Year: 2015-2016 M/s. Amita Properties Pvt. Limited to the Assessing Officer for proper verification/examination, I set aside the impugned order passed by the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after examining/verifying the explanation of the assessee regarding the difference in valuation of shares in the light of the valuation report of asset filed by the assessee for the first time before the ld. CIT(Appeals).

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on June 01, 2020.