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TMI Blog2014 (6) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... d., M/s Aricon Developers Pvt. Ltd. and M/s B.R. Arora & Associates Pvt. Ltd. and as such it is not relevant for consideration in the case of appellant." 2. The assessee has filed an application for admitting additional ground and proceeding sheet of assessment as additional evidence to the following effect: "1. That following ground be please admitted as additional ground of appeal Additional Ground: "That in the absence of notice issued u/s 143(2) the reassessment proceedings and consequential assessment order is without jurisdiction and unsustainable in law as well as on merits." 2. That it is a pure legal ground which goes to the root of the matter and no new facts are required to be investigated or placed on records for adjudicating the same. Under these circumstances, as per the following authorities, the additional ground deserves to be admitted:- National Thermal Power Company Ltd. 229 ITR 383 (SC) Gedore Tools Pvt. Ltd. 238 ITR 268 (Del.)" 2.1. Ld. DR is heard who objects the admission of additional ground. 2.2. Since the additional ground sought to be admitted is legal in nature and goes to the root of the matter, in view of Hon'ble Supreme Court judgment in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying the provisions of Sec. 2(22)(e) of the Income Tax Act, 1961 to add the entire advance received by M/s Navyug Promoters Pvt. Ltd. during the course of business is not justifiable and is very harsh on my part. Further I wish to submit that I was one of the shareholders of M/s Navyug Promoters Pvt. Ltd. and holding 39.27% shares in that company along with other shareholders and making the entire deemed dividend taxable in my hands alone is also not justifiable/ therefore I am requesting to your honour to consider the matter in the light of above submission and oblige." 3.5. Assessing officer, however, upheld the addition by following observations: The reply of the assessee has been considered but found not tenable. The assessee is a substantial share holder in all the three companies, namely, M/s B.R. Arora & Associates Pvt. Ltd., M/s Aricon Developers Pvt. Ltd., & M/s Navyug Promoters Pvt. Ltd. as defined under the provisions of sec. 2(22)(e) of the Income-tax Act, 1961. the payment received by M/s Navyug Promoters Pvt. Ltd. on account of so called agreement to sell with one company is either diverted to Shri B.R. Arora or to the family members or to the other company with w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the money has been rotated among the three i/.e. the payer companies and M/s Navyug Promoters Pvt. Ltd. and the appellant Sh. B.R. Arora and his relatives in such a manner so as to give it a colour of business transaction. Therefore, ld. CIT(A) held that the provisions of section 2(22)(e) of the I.T. act, 1961 (deemed dividend) are applicable in the hands of the appellant. 3.8. Thus by observing that the transactions were routed so as to ultimately benefit the assessee, the addition u/s 2(22)(e) was confirmed in the hands of the assessee. 3.9. Aggrieved, assessee is before us. 4. Taking the additional ground first, ld. Counsel for the assessee contends that the reassessment proceedings are bad in law as no mandatory notice u/s 143(2) was served on the assessee. Ld. Counsel filed proceeding sheets from the assessment record as additional evidence which gives following inscriptions: 18-11-2011. Issued notice u/s 142(1) Sd/- 14-11-11 18/11/2011: Attended Sh. Rakesh Bobal and submitted details. Case adj. for 2 Dec. Show cause why deemed dividend of Rs. 6,05,29,778/- u/s 2(22)(e) not be added to your income. Sd/- 18/11/11. 2/12/11: Attended Sh. Rakesh Bobal and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority having acted on the dictates of the CIT who had directed him to reopen the Asstt. And the Tribunal having recorded finding that there was no application of mind on the facts of the assessing authority, the reopening of Asstt. Was bad in law. - CIT Vs. Shree Rajasthan Syntex Ltd. 313 ITR 231 (Raj.) (SLP filed by the department was dismissed in 313 ITR (Statute) 27. Held that - The reassessment proceedings initiated only on account of the opinion of the AO of the lessee and the Tribunal was right in finding that it was 'borrowed satisfaction' which was not sufficient to confer power on the AO to initiate re-asstt. Proceedings against the assessee. - Surender Kumar Jain Vs. DCIT 85 TTJ (Nag) 285 Held that AO made reassessment on the dictates of his superiors, the same is a nullity. - ITO Vs. Vijendra Kumar in ITA no. 1202/Del/2009 order dtd. 19- 08-2011. 4.3. Ld. Counsel further assailed the reopening of assessment proceedings u/s 148 on the ground that the action of the assessing officer amounts to change of opinion in as much as in the original assessment the assessee's stand was accepted and addition in the case of Nayug was made u/s 143(3). Thus, the exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend. - Ambassador Travel(P) Ltd. 220 CTR (Del.) 475 - ACIT Vs. Smt. C. Rajini 140 TTJ (Che.) 218. 4.5. Learned counsel thus contends that: (i) lower authorities have not correctly appreciated the facts of the case and provisions of sec. 2(22)(e) of the I.T. Act. It is not the revenue's case that assessee is a beneficiary of such loan. No loan or advance was received by the assessee from M/s B.R. Arora & Associates Pvt. Ltd. and M/s Aricon Developers Pvt. Ltd. and as such the case is not covered under the provisions of sec. 2(22)(e). (ii) As per ITAT Spl. Bench decision in the case of ACIT Vs. Bhaumik Colours Pvt. Ltd. 314 ITR 80, both the conditions of being shareholder and beneficiary of such loans and advances should be satisfied. The same principle has been followed by Hon'ble Delhi High Court in the case of CIT Vs. Ankitech Pvt. Ltd. 340 ITR 14. (iii) In the light of above said principle, it is self evident that merely because director is holding share in the lender company and receiving company, the provisions of sec. 2(22)(e) could not be applied in the absence of any loan or advance to the shareholder. The company and shareholder are separate and distinct entity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for framing the assessment was served on the assessee. On this ground alone the assessment needs to be quashed being without valid jurisdiction. Reliance is placed on following case laws: - Mohinder Kumar Chabra Vs. ITO (ITA no. 3523/D/2013) ITAT Delhi order dated 13-12-2013. - DIT Vs. V.R. Educational Trust (ITA no. 510/2011) (Delhi High Court order dtd. 10-2-2011) - Alpine Electronics Asia Pte Ltd. Vs. DGIT & Ors. 341 ITR 247 (Del.) 5. Ld. DR relied on the orders of lower authorites. 6. We have heard rival contentions and perused the material available on record. Apropos the issue of notice u/s 143(2) u/s 143(2) from the assessment order and the proceedings sheets filed by the assessee it is clear that no notice u/s 143(2) was either issued or served on the assessee. In view of these facts, respectfully following Hon'ble Delhi High Court judgment in the case of Alpine Electronics Asia Pte. Ltd. (supra) and V.R. Educational Trust (supra), we hold the reassessment invalid for not serving mandatory notice u/s 143(2) on the assessee. The reassessment is quashed accordingly. 6.1. Coming to the other issues, in our considered opinion CIT(A) while deciding the third party's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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