9911796707
TMI Blog2008 (5) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1999-2000 and Rs. 3,93,379 in assessment year 2000-01 as the provisions of section 2(22)(e ) were clearly attracted in this case. The reopening was challenged before the CIT(A) by the assessee with the submissions that return of income was accompanied with all the details and the notices issued is beyond the time-limit as per proviso to section 149 and no sanction is obtained from the higher authorities for initiation of reassessment proceedings. The assessee has made full disclosure of its transactions and amount payable to M/s. Sinar Engineering Co. Pvt. Ltd. Therefore, the proviso to section 148 is squarely applicable which bars issue of notice under section 148 after expiry of 4 years. 2.1 The CIT(A) re-examined the issue in the light of legal provisions and the judgments referred to before him and he was of the view that where assessment is reopened within 4 years or the original assessment has not been completed under section 143(3), the Assessing Officer need not satisfy the conditions that income had escaped assessment on account of failure on the part of the assessee to disclose truly and fully particulars and material facts. He placed a reliance upon the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. But, after the 4 years, the assessment can only be reopened if it is established that income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to make return under section 139 or in response to notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. There is no reference of the assessment framed under section 143(1) of the Act. The reason for not making the reference of this sub-section (1) of section 143 is obvious as that while issuing intimation under section 143(1)(a), there is no application of mind of the Assessing Officer on the evidence or the material furnished along with the return of income. Under section 143(1) only adjustments are made. Since there is no reference of section 143(1) in proviso to section 147 of the Act, the conditions laid down in proviso for reopening the assessment after 4 years, cannot be imposed for reopening the assessment framed under section 143(1) of the Act. We, therefore, of the view that CIT(A) has rightly adjudicated the issue in the light of given fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1999-2000 and the amount has not been paid during the year. The assessee's representative was further asked to explain why deemed dividend under section 2(22)(e ) of the Income-tax Act consisting of amount of Rs. 10,000 an amount of transfer of assets at Rs. 3,87,471 should not be taxed in the hands of the assessee as Shri Ramesh G. Chabria holds 59 shares out of 60 shares of the assessee-company and also holds 5,400 out of 5,500 shares of M/s. Sinar Engineering Co. Pvt. Ltd. which is given loan of Rs. 3,91,471 to assessee-company during the year. 7. In response thereto, the assessee has furnished a reply vide letter dated 24-7-2006 stating therein that in the course of business assessee had unsecured loan transactions with another private limited company namely M/s. Sinar Engineering Co. Pvt. Ltd. The lendor company i.e., M/s. Sinar Engineering Co. Pvt. Ltd. does not have any shareholdings directly or indirectly in the assessee-company. Similarly, the assessee-company does not have any shareholdings in lendor company i.e., M/s. Sinar Engineering Co. Pvt. Ltd. The assessee has also contended that provisions of section 2(22)(e ) cannot be invoked in the given facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Sinar Engineering Co. Pvt. Ltd., it can be seen that there has been issue subscribe and paid-up capital of Rs. 6,000 for 60 equity shares of Rs. 100 in the assessee's case. Out of these, Shri Ramesh G. Chabria holds 59 shares. From the sale holding pattern of M/s. Sinar Engineering Co. Pvt. Ltd. that there has been issue subscribe and paid-up capital of Rs. 55,000 divided 5,500 shares of Rs. 10 each. Out of these 5,400 shares are held by Shri Ramesh G. Chabria. The confirmation from M/s. Sinar Engineering Co. Pvt. Ltd. shows opening balance of Rs. 70,000 and the loan amount of Rs. 10,000 taken during the year, which has been repaid to M/s. Sinar Engineering Co. Pvt. Ltd. during the year. It is also found that the assessee-company has purchased various assets amounting to Rs. 3,81,471. This amount is shown as receipt from M/s. Sinar Engineering Co. Pvt. Ltd. and outstanding as on 31-3-1999. Thus, considering the totality of the facts, I agree with the stand taken by the Assessing Officer that in the appellant's case, proviso to section 2(22)( e) are clearly attracted as the deemed dividend consisting of the amount of loan of Rs. 10,000 and amount of transfer of assets i.e., Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments placed on record. No doubt, the assessee has purchased the assets from M/s. Sinar Engineering Co. Pvt. Ltd. for a sum of Rs. 3,81,471. But, nothing was paid to them. Only a general entry was passed as on 1-4-1999. It is also evident from the record that this amount was shown as loan and advances given to the assessee-company in the books of account of M/s. Sinar Engineering Co. Pvt. Ltd. for assessment year 1999-2000 and this liability remains outstanding in the next year as on 31-3-2000. This amount was also shown in the assessee's books of account as receipts from M/s. Sinar Engineering Co. Pvt. Ltd. and remain outstanding as on 31-3-1999. Though the assets were purchased by the assessee, but the cost of it was shown to be as loan and advances in the books of account in both the companies. Since the assessee itself has given a colour of this transaction as loan advances, he cannot take a contrary stand before the revenue authorities. Now the question comes whether assessee's case falls within the purview of section 2(22)(e ) of the Act, we are of the view that it is not necessary that the payer or the payee must have shareholdings in other company. If the loans and advances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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