ORDER

PER VIJAY PAL RAO, JM :

This appeal by the assessee is directed against the order dated 28^th December, 2017 of ld. CIT (A)-1, Jaipur for the assessment year 2014-15. The assessee has raised the following grounds :-

“ 1. On the facts and in the circumstances of the case and in law, ld.CIT (A) has grossly erred in confirming addition of Rs. 71,25,000/- made by ld. AO u/s 56(2)(viib) of the Income Tax Act, 1961 on the allegation of Share premium received by assessee was in excess of Fair Market Value of shares. Appellant prays addition so made deserves to be deleted.

1.1 That ld. CIT (A) has further erred in confirming the addition made by ld. AO by completely disregarding the submission made and documentary evidences in support of contention that Fair Market Value as determined in accordance with Rule 11U and 11UA was even more than issue price of shares. Appellant prays addition so made deserves to be deleted.

1.2 That the ld. CIT (A) has further erred in confirming addition of Rs 71,25,000/- made by ld. AO u/s 56(2)(viib) of the Income Tax Act 1961 without considering the submission filed and further without considering the additional evidences for the sole reason that the same were not filed alongwith prayer u/r 46 of Income Tax Rules, 1962. It is thus prayed that addition so made deserves to be deleted.

2. That the appellant craves the right to add, delete, amend or abandon the ground of this appeal at the time or before the actual hearing of the case.”

The hearing of the appeal is concluded through Video Conference due to prevailing condition of COVID 19 pandemic.

2. The assessee is a private limited company and engaged in the business of construction of flats and trading in shares. The assessee filed its return of income on 30^th September, 2014 declaring Nil income. During the course of assessment proceedings the AO noted that the assessee has issued 37,500 shares of Rs. 10/- each for a price of Rs. 200/- per share which included a premium of Rs. 190/- per share. In order to substantiate the value of its equity shares and premium thereon, the assessee submitted Valuation Report dated 17.02.2014 of Registered Valuer as per Rule 11UA of the IT Rules. The AO noted that the Valuer has estimated the fair market value of vacant piece of land at Rs. 2,93,00,000/- as on 17^th February, 2014 whereas as per the Balance Sheet the assessee has shown the value of the said land no. 142, Ram Gali No. 3, Raja Park, Jaipur at Rs. 1,30,00,000/- being the cost of acquisition of the land as on 16.03.2013. The AO was of the view that the Registered Valuer has not substantiated the value of the property on any documentary evidence of any kind and consequently the AO declined to accept the fair market value of the assets of the assessee to substantiate the value of the equity shares issued at premium. The AO though referred the valuation of the assets to Valuation Cell of the Department, however, till the date of assessment order no Valuation Report was received by the AO from the DVO and consequently the AO made the addition of the entire share premium amount of Rs. 17,25,000/- under section 56(2)(viib) of the IT Act. The assessee challenged the action of the AO before the ld. CIT (A) and contended that the value of the shares and issue price has been substantiated by the assessee with the fair market value of the assets of the assessee in terms of section 56(2)(viib) of the IT Act. The assessee has also filed the Valuation Report as per the Discounted Free Cash Flow method provided under Rule 11UA of the IT Rules. The fair market value was determined by the Registered Valuer at Rs. 230/- per share based on market value of the assets of the assessee company which was higher than the issue price whereas the value as per the Discounted Free Cash Flow method was determined at Rs. 178/- per share. The ld. CIT (A) though held that the provisions of section 68 and section 115BBE are not applicable in this case being the addition made under section 56(2)