The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Addition of income u/s 56(2)(viib) read with Rule 11UA (2) of the Income Tax Rules without verifying Valuation report is not permissible.
Eduwizards Info Solutions P. Ltd., the assessee company was engaged in the business of providing foreign education, and online testing solutions for students, schools and institutions. The assessee has filed the return of income declaring a loss of Rs. (-) 3,46,09,119/-.
An assessment order came to be passed on 25/12/2018 by making an addition of Rs. 5,56,24,843/- on the ground that the credits of Rs. 6,00,00,942/- are directly hit by Section 56(2) (viib) of the Act, the assessee has failed to discharge its onus on the genuineness of the transaction. The CIT(A) dismissed the appeal filed by the assessee.
The assessee contended that CIT(A) has erroneously rejected the valuation report of the Charted Accountant and upheld the addition.
The valuation report of the Chartered Accountant submitted by the assessee is claimed to be in conformity with Rules 11U(b) of the Rules. It was contended that the A.O. and the CIT (A) did not examine the valuation report or carried out any objective valuation thereof and erroneously rejected the valuation report of the Chartered Accountant submitted by the assessee and applied provisions of Rule 11UA (1) (c)(b) of the Rules and computed the fair market value based onthe value of assets.
The Coordinate Bench of the Tribunal in ITA No. 5982/Del/2018, held that “the evaluation report which is prepared by the professional such as chartered accounts or mercantile banks for which their respective professional bodies have laid down specific disclosure requirements those disclosure requirements are binding on them.
The Coram consists of Shri Shamim Yahya, accountant member and Shri Yogesh Kumar U S, judicial member observed that the A.O. and the CIT(A) have rejected the valuation report in threshold without verifying.
The ITAT viewed that the Lower Authorities ought to have considered the valuation report of the Chartered Accountant submitted by the assessee and should have verified whether the said valuation report is in conformity with Section 56(2) (viib) of the Act read with Rule 11UA (2) of the Income Tax Rules or not.
While allowing, the bench remanded the matter to the file of A.O. to verify and decide the matter by law.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
