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2023 (4) TMI 947 - AT - Income TaxRevision u/s 263 - assessment u/s 153A completed - Deemed dividend addition u/s 2(22)(e) - assessee is a beneficial owner of shares holding 12% of the voting power in company granting loan - contradictory views - HELD THAT - There is also no dispute that nothing incriminating was found to suggest the applicability of the provisions of section 2(22)(e) of the Act. Since no incriminating material was found in relation to the deeming provisions of section 2(22)(e) of the Act, the ratio laid down by the Hon ble Delhi High Court in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT squarely apply We are of the considered view that there are several decisions of the Hon ble High Courts which are in favour of the assessee and some decisions may be in favour of the revenue. This shows that multiple views are possible on the same set of facts. The AO has followed one plausible view and the Pr. CIT is of different view. When two views are possible assumption of jurisdiction u/s. 263 of the Act is unwarranted and bad in law as held by the Hon ble Supreme court in Malabar Industries Company 2000 (2) TMI 10 - SUPREME COURT Respectfully following the ratio laid down by the Hon ble Supreme Court (supra) on the facts of the case in hand we set aside the order of the Pr. CIT framed u/s. 263 of the Act and restore that of the assessing officer dated framed u/s.153A r.w.s. 143 (3) of the Act. Decided in favour of assessee.
Issues:
The judgment involves the assumption of jurisdiction under section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (Pr. CIT) based on the contention that the assessment orders were erroneous and prejudicial to the interest of the revenue. Issue 1: Jurisdiction under Section 263 of the Act The primary issue in the case was the assumption of jurisdiction by the Pr. CIT under section 263 of the Act. The assessee argued that the Pr. CIT wrongly assumed jurisdiction and erred in holding the assessment orders as erroneous and prejudicial to revenue. The Pr. CIT invoked section 2(22)(e) of the Act based on the assessee's shareholding in a company, alleging that certain financial transactions constituted deemed dividends. The Pr. CIT's decision was based on the interpretation of various judicial decisions and the presence of undisclosed income and business transactions. Issue 2: Application of Section 2(22)(e) of the Act The Pr. CIT issued a show cause notice to the assessee alleging that the provisions of section 2(22)(e) applied to the case due to the assessee's shareholding in a company. The Pr. CIT dismissed the assessee's contentions regarding the nature of the transactions as business-related and the absence of incriminating material. The Pr. CIT relied on judicial decisions and the assessee's history of undisclosed income to conclude that the provisions of section 2(22)(e) were applicable, leading to an enhancement in the assessee's income. Issue 3: Judicial Interpretation and Assessment Order In analyzing the case, the Tribunal considered the assessment order framed under section 153A r.w.s. 143(3) of the Act, which did not reveal any incriminating material related to section 2(22)(e). The Tribunal referred to decisions by the Delhi High Court and the Supreme Court, emphasizing that when multiple views are possible on the same set of facts, the assumption of jurisdiction under section 263 is unwarranted. Relying on the principle established by the Supreme Court, the Tribunal set aside the Pr. CIT's order and restored that of the assessing officer, ultimately allowing all the appeals in favor of the assessee. This comprehensive summary provides an overview of the issues involved in the legal judgment and the Tribunal's detailed analysis and decision on each issue.
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