AO cannot reject Valuation report for non-filing of the same during Original or Revision Proceedings

Sakthi Textiles Ltd Vs DCIT (ITAT Chennai)

Coming back to observations of the Assessing Officer regarding valuation report. The Assessing Officer never stated that assessee has not filed valuation report in support of fair market value of shares. In fact, Assessing Officer has categorically admitted that assessee has filed valuation report from independent Chartered Accountant as well as statutory auditor of Assessee Company. But, he has ignored valuation report filed by assessee only for the reason that such reports were not filed during original assessment proceedings or even during revision proceedings. We have gone through reasons given by the Assessing Officer for rejection of valuation report and we do not ourselves subscribe to the findings recorded by Assessing Officer, because he cannot reject valuation report merely for the reason such valuation report was not filed at the time of assessment proceedings. Further, timing of filing valuation report at the time of original assessment proceedings u/s.143(3) or during revision proceedings u/s.263 of the Act is not a relevant criteria to decide whether fair market value of shares issued by assessee is substantiated to the satisfaction of Assessing Officer or not. But, what is relevant is whether valuation report supports share price determined by the assessee or not. In this case, valuation report obtained by the assessee from independent Chartered Accountant supports share price. Therefore, when the assessee has substantiated share price to the satisfaction of the AO with the help of valuation report, even if, such valuation report is obtained subsequent to the date of issue of shares, it does not alter the situation. Therefore, we are of the considered view that Assessing Officer as well as learned CIT(A) were erred in rejecting valuation report filed by assessee on this count.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal filed by the assessee is directed against order of the learned CIT(A)-1, Coimbatore dated 15.03.2019 and pertains to assessment year 2013-14.

2. The assessee has raised the following grounds of appeal:-

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