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2008 (5) TMI 456 - AT - Income TaxValidity of the reopening of the assessment u/s 147 - notice u/s 148 was issued after the expiry of 4 years - Borrowed in the course of business between two corporate companies - unsecured loan transactions - loans and advances - Addition made in the income as deemed dividend u/s 2(22)(e). Validity of the reopening of the assessment u/s 147 - notice u/s 148 was issued after the expiry of 4 years - Income escaping assessment - Whether reopening of the assessment is hit by proviso to section 148? - HELD THAT:- We find that whatever conditions are imposed for reopening of the assessment u/s 147 it is with regard to assessment framed under section 143(3) or u/s 147 of the Act. Under section 147, if the assessments are framed within 4 years from the end of the relevant assessment year, it is immaterial whether the assessee has disclosed fully and truly all material facts necessary for his assessment. Assessment can be reopened if the AO has reason to believe that any income chargeable to tax, has escaped assessment. But, after the 4 years, the assessment can only be reopened if it is established that income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to make return u/s 139 or in response to notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Since there is no reference of section 143(1) in proviso to section 147 of the Act, the conditions laid down in proviso for reopening the assessment after 4 years, cannot be imposed for reopening the assessment framed u/s 143(1) of the Act. We, therefore, of the view that CIT(A) has rightly adjudicated the issue in the light of given facts and the judgments referred to before him. Accordingly, confirm the order of the CIT(A) on this issue. Addition in AY 1999-2000 and AY 2000-01 u/s 2(22)( e) - Deemed dividend - loan and advances - HELD THAT:- No doubt, the assessee has purchased the assets from M/s. Sinar Engineering Co. Pvt. Ltd. But, nothing was paid to them. Only a general entry was passed as on 1-4-1999. It is also evident from the record that this amount was shown as loan and advances given to the assessee-company in the books of account of M/s. Sinar Engineering Co. Pvt. Ltd. for AY 1999-2000 and this liability remains outstanding in the next year as on 31-3-2000. This amount was also shown in the assessee’s books of account as receipts from M/s. Sinar Engineering Co. Pvt. Ltd. and remain outstanding as on 31-3-1999. Though the assets were purchased by the assessee, but the cost of it was shown to be as loan and advances in the books of account in both the companies. Since the assessee itself has given a colour of this transaction as loan advances, he cannot take a contrary stand before the revenue authorities. We are of the view that it is not necessary that the payer or the payee must have shareholdings in other company. If the loans and advances are given by one company to other company in which the shareholder is common having sufficient holding or has a beneficial interest in both the companies, provisions of section 2(22)( e) can be invoked. Undisputedly, Mr. Ramesh G. Chabria has 59 shares out of total equity shares of the assessee-company besides having a shareholding of 5,400 shares out of 5,500 equity shares of M/s. Sinar Engineering Co. Pvt. Ltd. Meaning thereby Mr. Ramesh G. Chabria has a beneficial interest in both the companies. We have also carefully examined the order of the Tribunal in the case of Seamist Properties (P.) Ltd.[2004 (8) TMI 323 - ITAT BOMBAY-G], but it was rendered on different set of facts, as such ratio laid down in that case, cannot be applicable to the present facts of the case. In the light of this legal proposition, we are of the view that the CIT(A) has rightly adjudicated the issue in both the appeals. We, therefore, confirm his order. In the result, appeals of the assessee are dismissed.
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