2020 (11) TMI 377 - AT - Income Tax

Rectification u/s 254 - Rejecting the claim of the assessee about payment of share premium - HELD THAT - Tribunal has noted this aspect also that both the AO and CIT(A) has given several reasons for rejecting the claim of the assessee about payment of share premium. It is also stated by the Tribunal in the same para that in the opinion of the Tribunal and in the light of various facts and reasons noted by both the lower authorities which could not be controverted by the learned AR of the assessee, no interference is called for. Hence, it is seen that the primary decision of the Tribunal is on the same basis on which claim of the assessee was rejected by the lower authorities. Tribunal has proceeded further to deal with this argument of the learned AR of the assessee that the sale of shares by the assessee for a partly sum of ₹ 10,000/- as against the cost of acquisition of ₹ 300 lakhs was for this reason that the assessee wanted to stop loss and on this aspect also, the Tribunal held that the sale itself is not beyond doubt but even after observing this, the Tribunal observed that the assessee cannot be worse of at the Tribunal and hence, the Tribunal cannot reduce the amount of loss allowed by the AO. This is not the basis of the Tribunal order in the present case that the sale is in doubt. The primary basis of the Tribunal order is this that in the light of various facts and reasons noted by both the lower authorities which could not be controverted by assessee, no interference is called for in the order of CIT(A). - no apparent mistake in the impugned Tribunal order - Decided against assessee.

Summary

Issues involved:
1. Whether there was an apparent mistake in the Tribunal order justifying rectification under section 254(2) of the Income Tax Act, 1961.

Detailed Analysis:
1. The Miscellaneous Petition (MP) filed by the assessee contended that the AO and CIT(A) did not doubt the genuineness of the sale of shares but only questioned the claim of share premium paid for acquiring the shares. The basis for doubt was the statement of the Managing Director of the company and the absence of a valuation report. The assessee argued that the Tribunal did not consider this aspect, leading to an apparent mistake in the order that needed rectification under section 254(2) of the Income Tax Act, 1961.

2. During the hearing of the MP, the assessee's representative reiterated the contentions raised in the petition. In contrast, the Departmental Representative argued that there was no apparent mistake in the Tribunal order, urging the dismissal of the assessee's petition.

3. The Tribunal reviewed the submissions and the record, noting that both the AO and CIT(A) had provided reasons for rejecting the claim of the assessee regarding the payment of share premium. The Tribunal highlighted that the Managing Director's statement indicated shares were allotted at a nominal value when the company's net worth was negative. It further emphasized that the sale of shares for a significantly lower amount within a short period raised doubts. The Tribunal concluded that based on the facts and reasons presented by the lower authorities, which were not refuted by the assessee's representative, no interference was warranted. The Tribunal also addressed the argument that the sale was to prevent further losses but maintained that the sale itself was questionable. Despite this, the Tribunal declined to reduce the loss amount allowed by the AO, indicating that the assessee could not be in a worse position at the Tribunal level.

4. The Tribunal ultimately dismissed the assessee's miscellaneous petition, finding no apparent mistake in the impugned order based on the comprehensive analysis of the issues and facts presented during the proceedings.