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2014 (6) TMI 642 - AT - Income TaxReopening of assessment u/s 148 of the Act – Bar of limitation – Mere change of opinion - Held that:- No action can be taken under the section after the expiry of four years unless income chargeable to tax has escaped assessment for the failure on the part of the assessee either to file return u/s 139 or in response to the notice issued u/s 142(1) /148 or to disclose fully and truly all material facts necessary for that AY - the re-assessment proceedings have been initiated beyond the period of four years in both the AYs AY.2003-04 and 2004-05. Relying upon Sri Sakthi Textiles Ltd. Vs. JCIT [2010 (8) TMI 449 - MADRAS HIGH COURT] - in order to fall within the proviso to section 147 of the Act, apart from stating that there were reasons for the authority to believe that there had been escapement of chargeable income, it should have also been recorded that such escapement was due to the failure of the assessee to disclose fully and truly all material particulars necessary for that AY - such recording is absolutely mandatory - the AO cannot travel beyond his jurisdiction and invoke the provisions of section 147 by ignoring mandatory conditions set out in proviso to the section - the action of AO clearly amounts to review of the assessment order which is not permissible under the Act - the re-assessment proceedings initiated against the assessee in both the AYs are without jurisdiction and are thus liable to be set aside. Deemed dividend u/s 2(22)(e) of the Act – Loans received – Held that:- The assessee is having substantial interest in both the companies – assessee contended that the amounts have been advanced by CEPL to CIPL in the normal course of business - there is no question of invoking provisions of section 2(22)(e) - both the companies are in the same line of business and are complementing the business of each other - CEPL apart from the fact, it has advanced loan to CIPL is also the holding company of CIPL - It has interest in the business of its subsidiary – Relying upon Farida Holdings P. Ltd. Vs. DCIT [2012 (6) TMI 235 - ITAT CHENNAI] - where regular business transactions are carried on by an assessee in its ordinary course of business with its subsidiary, they cannot be treated as deemed dividend for the purpose of section 2(22)(e) of the Act – Decided in favour of Assessee.
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