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TMI Blog2011 (3) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... h less than 10% herefore, by no stretch of imagination can qualify as deemed income - Decided in favor of the assessee - IT Appeal No. 610 of 2009 - - - Dated:- 17-3-2011 - A.K. Sikri and M.L. Mehta, JJ. Ms. Prem Lata Bansal and Deepak Anand for the Appellant. Satyen Sethi for the Respondent. JUDGMENT A.K. Sikri, J This case pertains to the assessment year 1998-99. For this year, the assessee had filed the return declaring income of Rs. 1,14,000/-. This return was processed and accepted by the Assessing Officer vide order dated 29th October, 1998. 2. The assessee, at that time, was the Director of M/s Pearey Lall Sons (EP) Ltd., and was also having the shares in the Company, which were, admittedly, much less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on 18th October, 2006 seeking to reopen the assessment in respect of the assessment year 1998-99 in the light of the aforesaid. The assessee objected to this assessment on the ground that a notice was issued after the expiry of six years from the end of the assessment year, and thereafter, was clearly barred by limitation. Even on merits, the assessee contended that provisions of Section 2(22)(e) had not been attracted and therefore, no such addition can be made. The Assessing Officer repelled both the contentions of the assessee and passed an assessment order dated 30th October, 2006 thereby making an addition of Rs.75 lakhs as deemed dividend in the hands of the assessee under Section 2(22)(e) of the Act. Against this order of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the company M/s. Pearey Lall Sons, for the asst. year 2002-03, and not in the case of this assessee. Further "Directions" can be given only for the same assessment year and for the same assessee. This is the law laid down in the case of Consolidated Coffee Ltd. v. ITO 155 ITR 729 (Kerela) and in the case of CIT v. Raghubur Singh Trust 123 ITR 438 (SC). 4.2 It is also a moot point as to whether the assessee's case can be reopened beyond the period of six years in view of the specific provisions of section 149. In my opinion it cannot be reopened." 4. As mentioned above, the CIT(A) did not rest its decision on the question of limitation and went into the merits of the case as well. The assessee, in this aspect, had argued tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of six years and thus time barred, but Revenue had not challenged these findings of the CIT(A). 6. Based on this reason, the Tribunal dismissed the appeal holding that when the notice under Section 148 of the Act, after a period of six years was held to be time barred and instead challenge was allowed thereto, question of deciding the addition on merit did not arise. 7. Challenging the aforesaid order of the Tribunal, Ms. Prem Lata Bansal, learned senior counsel for the Revenue made strenuous plea that the ground taken by the Revenue challenging the deletion of the addition of Rs.75 lakhs made by the Assessing Officer was wide enough to include challenge to the finding of the CIT(A) holding the reassessment proceedings as time barr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds to be emphasized that Section 2(22)(e) of the Act creates a legal fiction and therefore, such a provision is to be strictly construed. Rigor of Clause (e) of Section 2(22) has to be strictly complied with before the receipt at the hands of the assessee is to be treated as deemed income. On that date, i.e., 16th March, 1998, the assessee had less than 10% beneficial interest in the Company. This amount, therefore, by no stretch of imagination can qualify as deemed income under the aforesaid provision. We are therefore, in agreement with the approach taken by CIT(A) in deleting the aforesaid addition made by the Assessing Officer. 10. We may record that since the assessee has succeeded on merits, having not gone into the issue of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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