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Facts
The assessee company, engaged in manufacturing aluminum caps, filed its return showing nil income. The Assessing Officer (AO) noted that the company received share capital and premium for unquoted equity shares. The AO required the assessee to furnish the Fair Market Value (FMV) of shares as per Rule 11UA r.w.s 56(2)(viib) of the IT Act. The assessee's valuation report determined the FMV at Rs. 100/- per share. However, the AO found that the land's value in the balance sheet was re-valued using the circle rate instead of its book value, and calculated the FMV at Rs. 67.79 per share. Consequently, the AO added the excess consideration of Rs. 35,43,100/- to the assessee's income.
Held
The Tribunal condoned the delay in filing the appeal, stating that the illness of the accountant constituted a reasonable cause. Regarding the merits, the Tribunal noted that the CIT(A) had issued multiple notices to the assessee which went unanswered, leading to the confirmation of the AO's addition. However, to provide an opportunity for natural justice, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the CIT(A) with a direction to provide one more opportunity to the assessee to be heard. The assessee was cautioned to cooperate with the proceedings.
Key Issues
Whether the delay in filing the appeal is to be condoned and whether the matter should be remitted back to the CIT(A) for a fresh hearing due to non-compliance with notices.
Sections Cited
56(2)(viib), 11UA, 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA ‘SMC’ BENCH, PATNA
Before: SHRI DUVVURU RL REDDY(KZ)
Assessment Year : 2015-16 Protech Packaging Pvt Ltd., 3A, Vs. ITO, Ward 2(2), Patna Ground floor, Pushpanjali Venkatesh, Budh Marg, Patna- 80000 PAN/GIR No. AAGCP 1473 K (Appellant) .. ( Respondent) Assessee by : None Revenue by : Shri Ashwani Kumar Singhal, JCIT Date of Hearing : 28/08/2025 Date of Pronouncement : 30/09/2025 O R D E R The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NAFC), New Delhi NFAC), Delhi dated 23.06.2023 in Appeal No.CIT(A), Patna -1/10147/2017-18 passed for Assessment Year 2015-16.
The appeal is time barred by 607 days. The assessee has filed condonation petition stating that the order of ld CIT(A) was passed on 23.6.2023 and the appeal was required to be filed within 60 days, however, due to serious illness of the accountant who was entrusted to take steps in P a g e 1 | 5 the income tax matters, advised by the Doctor complete bed rest. It is stated that the said accountant did not inform the assessee on account of his illness regarding the dismissal of the appeal by the ld CIT(A). Hence, there was delay in filing the appeal before the Tribunal causing 607 days. It is the submission that the assessee would not get any benefit not filing the appeal rather there will be his huge loss of revenue. In these circumstances, it is prayed to condone the delay. Ld Sr DR opposed the condonation petition and stated that no reasonable cause has been shown by the assessee to condone the delay.
After considering the condonation petition, I am satisfied that there was reasonable cause in not filing the appeal within the prescribed time. Even otherwise, the assessee would not get benefit if not filing the appeal. Hence, I condone the delay and admit the appeal for adjudication.
Facts as emerged from the orders of lower authorities are that the assessee company is engaged in the business of manufacturing of aluminium caps. Return of income was filed on 30.09.2015 showing total income of Rs. Nil. The case was selected for scrutiny assessment. Accordingly, notices u/s 143(2) and 142(1) of the Income tax Act, 1961 were issued and served upon the assessee. In response to the notices, Shri Ankur Tekriwal, FCA and AR of the assessee appeared from time to time. Written submissions on queries with requisite documents were submitted. During the course of assessment proceedings, the Assessing officer noticed that the assessee company has P a g e 2 | 5 received share capital of Rs. 11,00,000/- for issue of 110000 unquoted equity shares with face value of Rs. 10/- each. In addition to it, the company has received share premium of Rs. 99 lakhs @ Rs. 90/- per share on allotment of shares. Thus, the aggregate consideration the assessee company has received comes to Rs. 1,10,00,000/-. The AO required the assessee to furnish valuation of FMV of shares before allotment as provided in rule 11UA r.w.s 56(2)(viib) of the IT Act, 1961. In compliance, the assessee filed computation of fair market value of shares with valuation report of Chartered Accountant dated 17.11.2017 whereby the F.M.V per share of the company was worked out at Rs. 100/- per share. On perusal of the computation, the AO found that the value of land being an asset in the balance sheet has been taken at Rs. 1919956/- as against its book value shown at Rs. 755822/-. It was found that the assessee has re-valued the land as per valuation report and has taken fair market value of the land based on the circle rate. However, as per rule 11UA(2), the book value of the assets in the balance sheet is to be taken while computing FMV. Accordingly, the assessee was apprised of the above deficiency and a revised computation of FMV of share taking into account the book value of land of Rs.7,55,822/- was sent to the assessee as per which the FMV of the share of the company has been worked out at Rs.67.79 per shares. As the assessee failed to substantiate the price received over the determined FMV of shares, the AO added the excess consideration of Rs.3543,100/- added to the income of the assessee under the head “income
P a g e 3 | 5 from other sources” under the provisions of section 56 (2)(viib) of the Act.Being aggrieved, the assessee carried the matter in appeal but without any success, as the appeal was dismissed due to non-compliance. Hence, the assessee is in appeal before the Tribunal.
I have heard ld Sr DR and perused the material available on record. A perusal of the impugned order clearly shows that the ld CIT(A) has given five notices to the assessee as is evident from page 7 of the order to represent his case with documentary evidence, but there was no response to the notices to substantiate the claim with documentary evidences and submissions by the assessee, therefore, ld CIT(A) confirmed the addition made by the AO. In the grounds of appeal, the only issue is with regard to the consideration received by the aassessee on account of unquoted equity shares over the fair market value of shares. The assessee has stated that on merits, the assessee has a good case. Considering the facts and circumstances of the case, I am inclined to set aside the order passed by the ld. CIT(Appeals) and in order to meet the principle of natural justice, and remit the matter back to the file of the ld CIT(A) with a direction to provide one more opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the CIT(A) failing which the ld CIT(A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials
P a g e 4 | 5 available on the record. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee stands partly allowed for statistical purposes.
Order dictated and pronounced in the open court on 30/ 09/2025.