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TMI Blog2019 (1) TMI 1765X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said to a deemed dividend within the meaning of the Act. Therefore, we do not find any infirmity in the order of ld CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition. Reopening of assessment u/s 147 - validity of reopening of assessment - HELD THAT:- Reassessment proceedings were initiated by AO after four years without bringing and tangible material on record. The issue on which the reassessment proceedings were initiated by AO was already existed during the original assessment. Loan interest was paid by assessee and the said interest was claimed and during the original assessment the same was disallowed by AO while passing the original assessment under section 143(3) - in the assessee's case under consideration the reassessment proceedings was based on review of the same set of facts/details which were already on record before AO at the time of completion of original assessment under section 143(3) - AO has merely reviewed the same set of documents and concluded that that there was escapement of tax which is not tenable. AO cannot reopen a concluded assessment merely on reviewing the documents which are alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paid up equity shares of that company by holding 18,36,440 shares out of 90,28,216 paid up equity shares. Besides, M/s Patton International Ltd, had been a closely held company,whose nature of Business was manufacturing and export in the FY 2005- 06. Besides, it wasnoted by AO from the balance sheet of Patton International Ltd, as on 31-03-2006, that as on that date it had ₹ 38,37,82,331/- of accumulated profits and as on 31-03-2005 accumulated profit was ₹ 16,56,62,369/-.Therefore, ld AO concluded that the advance of ₹ 2,00,00,000/- given to Sri Sanjay Budhia, satisfied all the necessary conditions for attracting the provisions of section 2(22)(e) of the Income Tax Act,1961 and should have been assessed as deemed dividend in the assessment completed u/s 143(3) of the Act. Therefore, the AO had reason to believe that taxable income had escaped assessment in the case of the assessee to the extent of ₹ 2,00,00,000/- and notice u/s 148 was issued to the assessee. In response to the notice u/s 148 of the Act, the assessee replied to the AO that the return of income filedu/s 139 on 19-06-2006 may be treated as return filed u/s 148 of the IT Act,1961. Subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be sustained. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 6. We have given a careful consideration to the rival submissions and perused the material available on record, we note that the assessee is having 20.34% shares in the company, M/s Patton International Ltd. During the year under consideration this company wanted to increase its credit facility limit from 14.5 crore to 25 crores. The company approached the State Bank of Mysore for the same. The bank agreed to increase the credit facility on the condition that its directors would have to give personal guarantee for the same. The assessee being a director of the company gave his personal guarantee on the ground that in case directors needed any money in future then they could take advance upto ₹ 2 crore from the company as and when required. A board resolution for the same was passed on 10.06.20005. During the year, the assessee took an advance of ₹ 2 crore and later on paid it back with interest to the company as per his entitlement (according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was not to give gratuitous advance to its shareholder but to protect the business interest of the company. That is, if such loan or advance is given to such share holder as a consequence of any further consideration which is beneficial to the company received from such a shareholder, in such case, such advance or loan cannot be said to a deemed dividend within the meaning of the Act. Therefore, considering the entirety of facts and circumstances of the case and respectfully following the ratio decided by the Hon ble Kolkata High Court in the case of Pradip Kumar Malhotra (supra) on identical facts, we do not find any infirmity in the order of ld CIT(A).That being so, we decline to interfere with the order of Id. C.I T.(A) deleting the aforesaid addition. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 8. Now we deal with assessee's cross objection No.41/Kol/2016, for A.Y. 2006-07. The assessee in his cross objections, has challenged the validity of reopening of assessment under sections 147/148 of the Act. 9. The ld Counsel for the assessee begins by pointing out that in assessee's case under consideration the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, AO has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a link with the formation of the belief........ Hence, based on the above findings, the reassessment proceedings shall not be sustainable in the eyes of law, and therefore we allow the cross objection filed by the assessee. We further quote section 147 1st proviso to conclude that the Revenue has not made out a case of the assessee having not fully and truly disclosed all particulars at the first instance as per Hindusthan Lever Ltd. vs. R.B. Wadker [2004] 268 ITR 331 (Bom) 12. In the result, the appeal filed by the Revenue is dismissed and cross objections filed by the assessee are allowed. Order is pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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