The High Court examined the validity of reopening an assessment ...

Property purchase from company treated as dividend? Tax dept overreach reversed by court.

November 30, 2024

Case Laws     Income Tax     HC

The High Court examined the validity of reopening an assessment and invoking the extended period of limitation to add deemed dividend u/s 2(22)(e) of the Income Tax Act. The assessee had purchased a property, receiving the entire amount from a company where the assessee held 29% shares. The court held that the revenue authorities sought to add a sum as "deemed income" through the reassessment order, which was unsuccessfully challenged by the assessee. However, the Tribunal reversed the Commissioner's order affirming the reassessment. The court observed that the department's attempt was to merely include an additional amount over the sum subject to the earlier assessment order, which stood deleted. Considering the appeal's withdrawal, the issue was construed as answered against the revenue and in favor of the assessee, implying a lack of tangible material for reopening the assessment.

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