Balgopal Cold Storages (P) Ltd. v. ITO

Case Laws Analysis
REFERRED ACIT v. Gamma Pizzakraft (Overseas) (P) Ltd. 2023 TaxPub(DT) 3465 (Del-Trib)
REFERRED Agro Portfolio Private Ltd. v. ITO 2018 TaxPub(DT) 2615 (Del-Trib)

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The Tax Publishers2023 TaxPub(DT) 3837 (Del-Trib) : (2023) 202 ITD 0362 IN THE ITAT DELHI SAKTIJIT DEY, J.M. & DR. B. R. R. KUMAR, A.M. Balgopal Cold Storages (P) Ltd. v. ITO ITA No. 6176/Del/2019 And ITA No. 6177/Del/2019 27 June, 2023 Assessee by: Rajeev Saxena, Adv. Revenue by: Kanv Bali, Sr. DR ORDER *DR. B. R. R. Kumar, A. M.:* The present appeals have been filed by the assessees against the orders of learned Commissioner (Appeals), Faridabad dated 29-3-2019. 2. Delay condoned. 3. The assessee has raised six grounds of appeal. The learned AR has not pressed ground nos. 1, 4, 5 & 6. 4. Ground No. 2 relates to addition of Rs. 9,00,000 under section 68 of the Income Tax Act, 1961. 5. Ground No. 3 relates to enhancement of income by Rs. 70,50,000 under section. 6. Heard the arguments of both the parties and perused the material available on record. 7. The Assessiong Officer made addition of the entire share application money of Rs. 94,00,000 under section 68 of the Income Tax Act, 1961 based on the bank statements and lack of creditworthiness of the applicant parties. The Assessiong Officer treated entire receipt as bogus transaction and unexplained credit. The learned Commissioner (Appeals) held that the assessee has received Rs. 85,00,000 in the earlier years and held that no addition under section 68 called for in the current year. At the same time, the learned Commissioner (Appeals) held that an amount of Rs. 70,50,000 be treated under section 56(2)(viib). Arguments of the learned AR against the issue of Section 56(2)(viib): 8. The assessee justified the value of the shares based on the report of the valuer. It was argued that the report for the DCF has considered the cash flow from the equity for Rs. 90,00,000. On this basis, value of each shares has been determined @ Rs. 40 per share. The assessee has submitted the valuation report and argued that no mistake in the valuation report has been found by the revenue. It was argued that the revenue cannot change the method of valuation and also cannot reject the valuation done without bringing on record any cogent reasoning. Arguments of the learned DR in support of the issue of Section 56(2)(viib): 9. It was argued that no corroborative details have been furnished to substantiate the cash flow of Rs. 90,00,000 from the equity. The assessee has no business worth and no tangible business activity was carried out by the assessee since incorporation. Further, there were no fixed asset or any intangible asset in position of the company to justify such kind of cash flow in the future years. In the absence of any business worth of the assessee, the reliance of the appellant on the valuation report for the premium charged of Rs. 30 on each share under Rule 11UA(2) does not carry any force. Such valuation report has been found without any basis and thus needs to be rejected. Reliance was placed upon the decision of ITAT Delhi in the case of Agro Portfolio Pvt. Ltd. v. ITO (2018) 171 ITD 74 (Del) : 2018 TaxPub(DT) 2615 (Del-Trib). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2023 TaxPub(DT) 3837 (Del-Trib) : (2023) 202 ITD 0362

IN THE ITAT DELHI

SAKTIJIT DEY, J.M. & DR. B. R. R. KUMAR, A.M.

Balgopal Cold Storages (P) Ltd. v. ITO

ITA No. 6176/Del/2019 And ITA No. 6177/Del/2019

27 June, 2023

Assessee by: Rajeev Saxena, Adv.

Revenue by: Kanv Bali, Sr. DR

ORDER

DR. B. R. R. Kumar, A. M.:

The present appeals have been filed by the assessees against the orders of learned Commissioner (Appeals), Faridabad dated 29-3-2019.

2. Delay condoned.

3. The assessee has raised six grounds of appeal. The learned AR has not pressed ground nos. 1, 4, 5 & 6.

4. Ground No. 2 relates to addition of Rs. 9,00,000 under section 68 of the Income Tax Act, 1961.

5. Ground No. 3 relates to enhancement of income by Rs. 70,50,000 under section.

6. Heard the arguments of both the parties and perused the material available on record.

7. The Assessiong Officer made addition of the entire share application money of Rs. 94,00,000 under section 68 of the Income Tax Act, 1961 based on the bank statements and lack of creditworthiness of the applicant parties. The Assessiong Officer treated entire receipt as bogus transaction and unexplained credit. The learned Commissioner (Appeals) held that the assessee has received Rs. 85,00,000 in the earlier years and held that no addition under section 68 called for in the current year. At the same time, the learned Commissioner (Appeals) held that an amount of Rs. 70,50,000 be treated under section 56(2)(viib).

Arguments of the learned AR against the issue of Section 56(2)(viib):

8. The assessee justified the value of the shares based on the report of the valuer. It was argued that the report for the DCF has considered the cash flow from the equity for Rs. 90,00,000. On this basis, value of each shares has been determined @ Rs. 40 per share. The assessee has submitted the valuation report and argued that no mistake in the valuation report has been found by the revenue. It was argued that the revenue cannot change the method of valuation and also cannot reject the valuation done without bringing on record any cogent reasoning.

Arguments of the learned DR in support of the issue of Section 56(2)(viib):

9. It was argued that no corroborative details have been furnished to substantiate the cash flow of Rs. 90,00,000 from the equity. The assessee has no business worth and no tangible business activity was carried out by the assessee since incorporation. Further, there were no fixed asset or any intangible asset in position of the company to justify such kind of cash flow in the future years. In the absence of any business worth of the assessee, the reliance of the appellant on the valuation report for the premium charged of Rs. 30 on each share under Rule 11UA(2) does not carry any force. Such valuation report has been found without any basis and thus needs to be rejected. Reliance was placed upon the decision of ITAT Delhi in the case of Agro Portfolio Pvt. Ltd. v. ITO (2018) 171 ITD 74 (Del) : 2018 TaxPub(DT) 2615 (Del-Trib).