TMI Blog2014 (1) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Act. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue - If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue - The phrase ''prejudicial to the interests of the Revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer - Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law – the order of Revision u/s 263 set aside – Decided in favour of Assessee. - IT Appeal Nos. 821 to 830 (Kol.) of 2011 - - - Dated:- 11-7-2013 - N. S. Saini Mahavir Singh , JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the same set of facts had arisen in course of the orig nal assessment long before the completion of the S S assessment u/s 143(3)/153A on 30.12.2008. The notice as well as the order u/s 263, being illegal and barred by limitation are liable to be quashed/cancelled. 3. For that in view of the facts and circumstances of the case the Hon'ble CIT was wholly wrong and unjustified in passing the said order u/s 263 on 28.03.2011 for revision of the order u/s 143(3)/153A before taking up such course of action u/s 263 against the earlier assessment. The action of the Hon'ble CIT was wholly arbitrary, unjustified, uncalled for, bad in law and barred by limitation. 4. For that in view of the facts and circumstances of the case the Hon'ble CIT was wholly wrong and unjustified in initiating the proceeding u/s 263 of the Act on a mere change of opinion and subsequently passing the said order u/s 263 without considering the facts that the order u/s 143(3)/153A were completed by the A.O after the due process of scrutiny and examination of the records. 5. Without prejudice to the Ground Nos. 1 to 4 above and even otherwise, the Hon'ble CIT was wholly wrong and unjustified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the said concern)] or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company in either case possesses accumulated profits; (iv) It is seen from the records that the I.T.O., Ward-7 (1), Kolkata has informed that M/s. Ajanta Rubber India Pvt. Ltd. has accumulated profit for different assessment years as under: Asstt. Year Accummulated profits as per Balance Sheets 2001-02 Rs. 82,76,749/- 2002-03 Rs. 82,35,260/- 2003-04 Rs. 81,89,729/- 2004-05 Rs. 81,91,953/- 2005-06 Rs. 92,48,568/- 2006-07 Rs. 92,25,735/- In view of above facts Rs.5,00,000/- and Rs.25,00,000/- given by M/s. Ajanta Rubber India Pvt. Ltd. to M/s. Makso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the hands of the assessee by observing in paras 26 27 as under: "26. I have gone through the details of loans given by M/s. Ajanta Rubber India Pvt Ltd. to M/s Makson Developers and to M/s Ajanta Footare (India) Pvt. Ltd. I have also gone through the details of shareholding of the assessee in the companies. On the basis of the Financial Statements filed by M/s. Ajanta Rubber India Pvt. Ltd. working of accumulated profits has also been done. After considering all these details and workings, computation of dividend as per the provisions of section 2(22)(e) of the I.T. Act, 1961 has also been done. All these details and workings are made a part of this order as Annexure-1, Annexure-2 and Annexure-3. As per the workings, the amount of dividend that has to be added in the hands of the assessee in the Assessment Year 2001-02 comes to Rs.11,73,913/-. 27. From the above discussion it is amply clear that the impugned assessment is completed without requisite verification on the issue as discussed .above. Therefore, the assessment order is erroneous insofaras it is prejudicial to the interest of revenue. The invoking of provisions of Section 263 of the I.T. Act has corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accumulated profits is treated as dividend. The shareholders having substantial interest are those who have a shareholding carrying not less than 20 per cent voting power as per the provisions of cl. (32) of s. 2. The amendment of the definition extends its application to payments made (i) to a shareholders holding not less than 10 per cent of the voting power, or (ii) to a concern in which the shareholder has substantial interest. "Concern" as per the newly inserted Explanation 3(a) to s. 2 (22) means an HUF or a firm or an association of persons or a body of ind viduals or a company. A shareholders having a substantial interest in a concern as per part (b) of Explanation 3 is deemed to be one who is beneficially entitled to not less than 20 per cent of the ncome of such concern. 10.3 The new provision would therefore, be applicable in a case where a shareholder has 10 per cent or more of the equity capital. Further, deemed dividend would be taxed in the hands of a concern where all the following conditions are satisfied: (i) where the company makes the payment by way of loans or advances to a concern; (ii) where a member or a partner of the concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has given the details of assessments framed as under: Assessment Year Date of filing of return Abatement u/s. 143(3) Assessment u/s. 143(1)/143(3) made on 2001-02 02.10.01 31.03.04 15.01.03 u/s. 143(1) 2002-03 25.10.02 31.03.05 29.03.05 u/s. 143(3) 2003-04 31.10.03 31.03.06 08.06.04 u/s. 143(1) 2005-06 29.10.05 Search on 06.11.06 barred on 31.12.08 153A/143(3) According to the ld. counsel for the assessee, the original assessments u/s. 143(3) or 143(1) of the Act were completed much before the date of search and seizure and these assessments have never been abated. Complete details i.e. Balance Sheet, P L Account and audited accounts were available in those assessments. The Ld. counsel for the assessee pointed out that assessments framed u/s. 153A of the Act stand abated only in respect of assessment years for which no assessment has been completed u/s. 143(3) or 143(1) of the Act. In respect to this issue no incriminating paper regarding deemed dividend u/s. 2(22)(e) of the Act having been found during the search, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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