9911796707
TMI Blog2024 (1) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT were not dealt with by him while holding the assessment order to be erroneous. He has specifically referred to the contentions made regarding non-applicability of section 56(2)(viib) to the Right Issue issued, that there is no mala fide intention involved in the Right shares which is said to be brought in the ambit and scope of the deeming provision of section 56(2)(viib) of the Act. As for the decision cited in the case of Sudhir Menon HUF [ 2014 (3) TMI 534 - ITAT MUMBAI] we have noted from the ld. Pr. CIT order, that the issue in the said case related to the invocation of the provisions of 56(2)(vii) which relates to the receipt of any money or property without any consideration or without adequate consideration. While in the present case, the issue relates to the provisions of section 56(2)(viib) of the Act which deems the amounts received in lieu of the issue of shares in excess of their FMV as income of the assessee. CIT, therefore, has rightly found the facts of the case to be different and distinguishable from that in the present case before us. Therefore, we do not agree with the assessee that the ld. Pr. CIT has held the assessment order erroneous without dealing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caused. It is therefore prayed that the impugned delay being unintentional, the same be condoned, and the appeal may be taken for adjudication on merits. The relevant contents of the letter dated 29.9.2023 are extracted as under: 3. The order of the PCIT u/s. 263 was sent to the Finance Department of the Company. The Finance Department of the Company was pre-occupied with the closing of accounts for financial reporting for the year ending 31-3- 2019. The Company was required to complete several formalities pertaining to closing of books of accounts as well as GST compliances. The Finance department was under pressure for collecting various data for closing the accounts. Since the order of the PCIT was received just few days before the year end and the Finance department being busy with closing of accounts the order was inadvertently not sent to the Top Management for review. It may also be mentioned that the Top Management was not aware about the receipt of the order of the PCIT u/s. 263. 4. It is also submitted that the Company was under the process of finalizing a Joint Venture agreement with a foreign company. For the same, the Top Management of the Company was engaged in vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for the delay. 5. We have heard contentions of both the parties; gone through the facts relating to delay in filing of the appeal as presented before us, and have also gone through various settled decisions of higher Courts on the issue of condonation of delay. Section 5 of the Limitation Act and section 253(5) of the Act provides power to condone delay on demonstrating sufficient cause to the satisfaction of the courts. This satisfaction accordingly has been held by Courts to be interpreted liberally, for advancement of substantial justice. The Hon ble Apex Court in the case of Collector, Land Acquisition Vs. Mst.Katiji Others, 167 ITR 471 (SC) exhaustively dealt with power conferred by the Legislature to condone the delay by enacting section 5 in the Limitation Act, holding that purpose for the same was to enable Courts to advance substantial justice to the party by disposing of the matters on merit.The Hon ble Court in the said case held that expression sufficient cause for section 5 of Limitation Act was to be applied in a manner to sub-serve the ends of justice and therefore a justifiable liberal approach had to be adopted on principle. The Hon ble Court has given re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the 'State' which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even handed manner. There is no warrant for according a step-motherly treatment when the 'State' is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non- grata status. The Courts therefore have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of the Revenue. Our discussions for adjudication of this issue as follows. 10. The error noted by the ld. Pr. CIT in the assessment order framed in the case of the assessee under section 143(3) of the Act was to the effect that the AO had failed to make proper inquiries regarding valuation of fair market value of shares issued by the assessee during the year at a premium, which valuation as per the ld. Pr. CIT was not in accordance with law as done by the assessee. As per the ld. Pr. CIT, the fair market value of the shares was below premium at which the shares were issued, accordingly the provisions of section 56(2)(viib) of the Act were invocable in the present case, and addition of Rs. 64,65,000/- was warranted on account of the shares being issued at a value less than its fair market value. The assessee had issued 5,00,000 equity shares, having face value of Rs. 10/- at premium of Rs. 50/- per equity share. As a consequence it had received Rs. 2,50,00,000/- as premium. The assessee had justified the premium received by calculating the fair market value of the shares under Rule 11UA of the Income Tax Rules as per the formula prescribed therein. The ld. Pr. CIT noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held the assessment order erroneous causing prejudice to the Revenue without dealing with the contention raised by the assessee, and without dealing with and/or distinguishing the case laws referred by the assessee in support of its contention before him. 12. The ld.counsel for the assessee, in this regard, pointed out that during revisionary proceedings, the assesseehad contended to the ld. Pr. CIT that these 5,00,000 shares issued by the assessee were Rights Issue, which was given to the existing shareholders in their existing shareholding ratio against unsecured loanswhich were given by them to the assessee-company; that there was no change in the shareholding ratio after the issue of these Right shares, no new or outside shareholders were introduced in the company, the shares were not issued against any cash consideration. That in the light of these facts, it was contended to the ld. Pr. CIT, that the provisions of section 56(2)(viib) of the Act could not be invoked since it was a deeming provision brought on the statute with specific purpose of deterring the generation and use of unaccounted money through infusion of fund from unconnected persons or shareholders at a substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Vaani Estates. In the instant case, the fact are totally different from the facts present in the case of the assessee company. The ITAT has held in that case as the shares have been transferred from the mother to her daughter and no fresh money has been introduced in the balance sheet, the provisions of section 52(2)(vii) are not attracted in this case. He therefore stated that the argument of the ld.counsel for the assessee that his contention wasnot considered by the ld. Pr. CIT, was not correct. 17. We have heard boththe parties and have carefully gone through the orders of the authorities below. As noted above, the error noted by the ld. Pr. CIT in the assessment order was the acceptance by the AO of the calculation of the fair market value of the shares submitted by the assessee in terms of Rule 11UA of the Act to justify the premium at which the shares were issued by it during theyear, which calculation, as per the ld. Pr. CIT was incorrect resulting in fair market value of shares being less i.e Rs. 47.07 per share as opposed to the value at which they were issued by the assessee at Rs. 60/- per equity shares (Rs.10 face value plus Rs. 50/- premium); which resulted in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the ld.counsel for the assessee was unable to point out any infirmity in distinction so made by the ld. Pr. CIT. 21. As for the decision cited by the ld.counsel in the case of Sudhir Menon HUF (supra), we have noted from the ld. Pr. CIT order, from where gist of the case is reproduced at page no.7 of the order that the issue in the said case related to the invocation of the provisions of 56(2)(vii) of the Act which relates to the receipt of any money or property without any consideration or without adequate consideration. While in the present case, the issue relates to the provisions of section 56(2)(viib) of the Act which deems the amounts received in lieu of the issue of shares in excess of their FMV as income of the assessee. The ld. Pr. CIT, therefore, has rightly found the facts of the case to be different and distinguishable from that in the present case before us. Therefore, we do not agree with the ld.counsel for the assessee that the ld. Pr. CIT has held the assessment order erroneous without dealing with averments made by the assessee before it. 22. Now coming to the aspect of the decision of the ITAT, Raipur Bench in the case of Chhatisgarh Metaliks and Alloys P.Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
