9911796707
TMI Blog2019 (3) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... as deemed dividend in hands of the assessee. AO in the reasons recorded, has proceeded entirely on the material already brought on record, during original assessment. No additional material available with the Assessing Officer, on the basis of which, he could have formed a belief that income chargeable to tax has escaped assessment. There was no failure on the part of the assessee to disclose true and full material facts. AO in the reasons recorded, has not demonstrated in any manner, how this important requirement of section 147 was satisfied. In the reasons, he agrees that the assessee had produced Books of Accounts, Annual Reports and Audited Profit and Loss Accounts and Balance Sheets and other documents. One more ground on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the petition of reopening of assessment dated 26.3.2018 issued by the respondent no.1Assessing Officer. Brief facts are as under: 3. The petitioner is a private limited company. The petitioner had filed a return of income for Assessment year 201213 which was taken in scrutiny, by the Assessing Officer who passed an order of assessment under section 143 (3) of the Income Tax Act, 1961 (for short,' the Act') on 27.10.2014. In order to reopen such assessment, he issued the impugned notice which as can be seen, was done beyond the period of four years from the end of the relevant Assessment year. In order to do so, he had recorded the following reasons: Relevant portion of which read thus: Your case has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Rupani Spinning Mills Pvt.Ltd was having accumulated profit of ₹ 1,94,09,682/( including profit). Hence, all the condition mentioned in section 2(22) w.e.f. current year applicable in this case and deemed dividend to the extent of accumulated loan received whichever is less was required to be taxed. 3. Analysis of information collected/received: The perusal of the details available on records revealed that the asset received ₹ 3,09,40,000/as loan from Rupani Spinning Mills Ltd in which the share holder of assess company Shri Ajay D.Vadhani having 16 % voting rights, Shri Ajay Rupani was also having substantial interest of more than 20% in the share capital of the assessee compare (20.02%). Further, Spinning M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it). Hence, all the condition mentioned in Section 2(22) (e) were applicable in this case and the assessee was liable to be taxed on the deemed dividend to the extent of accumulated profits or loan received whichever is less. Also, assessee's case is not covered by the exception clause (ii) to S.2(22) of the Act, as the substantial part of the assessee's business was not lending of loans but business centre income. 4. Upon being supplied such reasons, the petitioner raised objections to the notice of reopening of assessment under a communication dated 13.11.2018. Such objections were disposed of by the Assessing Officer by an order dated 19.11.2018 upon which, this Petition is filed. 5. Learned counsel for the petitioner too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There was thus, no additional material available with the Assessing Officer, on the basis of which, he could have formed a belief that income chargeable to tax has escaped assessment. In clear terms, there was no failure on the part of the assessee to disclose true and full material facts. Even the Assessing Officer in the reasons recorded, has not demonstrated in any manner, how this important requirement of section 147 of the Act, was satisfied. In the reasons, he agrees that the assessee had produced Books of Accounts, Annual Reports and Audited Profit and Loss Accounts and Balance Sheets and other documents. 9. One more ground on which the impugned notice cannot sustain is that, during scrutiny assessment, the Assessing Officer had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 2 (22) (e) of the Act ?. The petitioner's contentions in this respect, were as under : f) Justification with regards to Non-applicability of Deemed Dividend to Loans taken from Rupani Spinning Mills Private Limited (RSMPL) In respect of the loans taken from RSMPL, we would like to submit before your good-self that there are Common Shareholders in the two Companies and such shareholders have substantial interest of more than 20% in the share capital of the Assessee Company and also hold more than 10% of the voting power in HCPL. However, the provisions of Deemed Dividend u/s 2 (22) (e) of the Act shall not be applicable under S. 2(22) (ii) of the Act it has been stated that Dividend does not includes any ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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