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TMI Blog2019 (12) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... of the project. Thus, the projection was drawn as per the assessee after stating various aspects of the whole nature and other factors related to project. The actual figures may differ from the projections due to various factors and circumstances of the market in real time. On the entirety of the aspects, we rely upon the decision of Shree Salasar Overseas Pvt. Ltd., [ 2011 (11) TMI 686 - ITAT JAIPUR] it was held as that details were filed before the Assessing Officer vide a letter in which, it was mentioned that such expenses were being allowed in earlier year. Hence, this was not a case where there was no enquiry. AO had called for explanation on both the ground by issuance of notice and subsequently, the assessee had also submitted all the details in order to satisfy the queries raised during the investigations done by the AO which clearly shows that the AO had undertaken the exercise of examining of both the above issues. It appears that since the AO was satisfied with the assessee s explanation, he accepted the same. Even the commissioner conceded the position that AO made the enquiries, but the grievances of the commissioner was that the AO should have made further enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate was filed during the course of assessment proceedings. 4. On the other hand, the ld.Authorised Representative(AR) submitted before this Tribunal that all supporting details in respect of source of cash deposits by the investors were submitted by the assesse during the course of assessment proceedings, which were duly verified by the AO concern. It was also submitted that the premium of ₹ 4,60,76,000/- was accepted as per the valuation of share as per DCF Method which is widely followed method for valuation of unquoted equity shares. As per the ld.AR this method involves projection of future cash flows. Techno and economic viability stating report were obtained from SBI who after thorough verification of projections issued report. It was further submitted that the finance of ₹ 26.72 crore from SBI was obtained based on the said projection and considering the profitability of the project. Therefore, the projection was drawn after studying various aspects of the whole nature and other factors related to the project. However, the actual figures may differ from the projections issue to various factors and circumstances of the market in real time. As per the ld.AR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod. Valuation report for the same has been taken from the respected CA. Rule 11UA of The Income Tax Rules, accepts the fair market value of the unquoted equity shares determined by a CA. as per Discounted Free Cash Flow Method. DCF method is widely followed method for valuation of unquoted equity shares. This method involves projection of future cash flows. The assessee has obtained Techno- Economic Viabilty Study Report from Sate Bank of India. The banks after thorough verification of projections drawn on the basis of analysis of industry and other related aspects issued the said report and accordingly projections were drawn. The assessee also obtained finance of ₹ 26.72 Crores from SBI based on the said projections and considering the profitability of the project which were carefully studied by the bank. Copy of sanction letter and viability report is enclosed for your kind reference. (Annexure-2). Projections are drawn after studying various aspects of the whole industry and other factors related to the project. However actual figures may differ from the projections due to various factors and circumstances of the market in real time. The company is however in strong posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive(DR) relied upon the written submissions submitted by him and the judicial pronouncements and supporting order passed by the ld.Pr.CIT. It was also submitted that both the twin conditions contain in section 263 of the Act are co-jointly present as per the facts of the present case. Thus, it was requested that order of ld.Pr.CIT may kindly be upheld. 8. We have heard Counsels for both the parties and we have also perused the material placed on record and orders passed by the Revenue Authorities as well as the judgments cited by respective parties. As per facts of the present case, the assessee had filed its Return of Income, subsequently the case of the assessee was selected for limited scrutiny as per notice u/s.143(2) of the I.T.Act which is at page no.8 of the paper book and the assessment u/s.143(3) was finalized on 16.12.2016. The ld.Pr.CIT observed that 30 shareholders had deposited cash of ₹ 2,94,89,700/- in that bank accounts before making payments to the assessee company for purchasing shares. But the AO not examined during the course of assessment proceedings regarding the source of the said cash deposits. In this respect, we have perused the that assessee had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to various factors and circumstances of the market in real time. On the entirety of the aspects, we rely upon the decision of the Co-ordinate Bench of ITAT in the case of Shree Salasar Overseas Pvt. Ltd., Vs. CIT [2012] 27 taxmann.com 129 (Jaipur Trib.) it was held as "that details were filed before the Assessing Officer vide a letter in which, it was mentioned that such expenses were being allowed in earlier year. Hence, this was not a case where there was no enquiry. Action under section 263 cannot be taken on account of inadequate enquiry. Hence, the Commissioner was not justified in setting aside the order under section 263. In the case of Kamal Kumar Gupta Vs. CIT [2012] 23 taxmann.com 280 (Jaipur - Trib.) it was held "that the assessee asked by the Assessing Officer to file the details of trade creditors which were shown in the names of agriculturists. The assessee was also asked to give the complete names and addresses of these persons. Accordingly, the assessee had enclosed the list of sundry creditors - agriculturists. After receipt of those details, the Assessing Officer had not made any further enquiry. Thus, the Assessing officer made the enquiry and it was not a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that enquiries should have been made more elaborate. We have also considered the decision in the case of Cinestaan Entertaiment Pvt. Ltd., Vs. ITO [2019] 106 taxmann.com 300 (Del) wherein it was held as "as per section 56(2)(viib) read with rule IIUA assessee has an option to do valuation of shares and determine fair market value either on DCF Method or NAV method, and Assessing Officer cannot examine or substitute his own value in place of value so determined. In the case of India Today Online (P.) Ltd. s. ITO [2019] 104 taxmann.com 385 (Delhi Tribunal) wherein it was held as "where assessee allotted shares of a company held by it on premium and substantiate valuation of shares to satisfaction of Assessing Officer that same was on basis of valuation report provided by valuer of said company whose share were held by it wherein valuer had applied Direct Cash Flow (DCF) method and said report was certified by an independent Chartered Accountant and Assessing Officer accepted such valuation, Commissioner (Appeals) was unjustified in rejecting impugned valuation or valuation method. We have also gone through the notices issued by ITO dated 07.11.2016 wherein all the details were so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d-1(1)(4), Surat" Reply/Submission of details from the Assessee to AO: "N.J.ECO-BUILD PVT.LTD. S-42, BELGIUMSQUARE OPP.LINEAR BUS STOP RING ROAD, SURAT. DATE: 12/12/2016 To, Income Tax Officer, Ward-1(1)(4), Room No.110, Aaykar Bhavan, Majura Gate, Surat. Respected Sir, Sub: Submission of details in case of N.J.ECO-BUILD PVT. LTD. for A.Y. 2014-15. (PAN: AAECN1584H) Ref: Your notice under section 142(1) dated 07/11/2016 received on 09/12/2016. ---------------------------------------------------------------------------------------------------------------------- With reference to above, we humbly submit the details as under. 1. Bank book of all bank accounts maintained by us are enclosed. (Annexure-1) 2. Details in respect of Share Capital/Premium received during the year under assessment are as follows: i. Shares prices were determined at discount free cash flows method and on the basis of projection, Calculation sheet of valuation of shares prices have already been submitted vide annexure 4 to submission dated 25/04/2016. ii. All investing parties are relatives of company and their director as per sec. 2(41) of Income Tax Act. iii. 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