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TMI Blog2014 (6) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (herein after referred to as 'the Act') on 24-02-2006 and 26-09-2006 respectively. The assessment proceedings for both the AYs i.e., 2003-04 & 2004-05 were re-opened after four years. Notice u/s.148 for re-opening assessment for the AY.2003-04 was issued to the assessee on 31-03-2010 and for AY.2004-05 notice was issued on 25-03-2011. The reasons for re-opening as mentioned in the notice dt.31-03-2010 is as under: 'Loan of Rs.50,00,000/- Lakhs received by CIPL from CEPL is to be taxed protectively in the hands of the Director as deemed dividend u/s.2(22)(e)'. However, no such reason has been mentioned in notice dt.25-03- 2011 u/s.148 for AY.2004-05. The assessee is having 90% shareholding in CEPL and 54% in CIPL. CEPL is having 35% shareholding in CIPL. During the period relevant to the AY.2003- 04, CEPL had advanced loan of Rs.50.00 Lakhs to CIPL. The Assessing Officer initiated re-assessment proceedings against assessee for the reasons that the assessee is having substantial interest in CIPL, the provisions of section 2(22)(e) are attracted. The Assessing Officer treated loan of Rs.50.00 Lakhs in AY.2003-04 and Rs.120.00 Lakhs in AY.2004-05 advanced by the CEPL to CIPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order and prayed for dismissal of appeal of the assessee. 5. We have heard the submissions made by the representatives of both the sides. We have also perused the orders of the authorities below as well as the decisions on which ld.Counsel for the assessee has placed reliance. The first ground raised in the appeal by the assessee is in respect of validity of assessment u/s.147 after the period of four years. The second ground in the appeal of the assessee is with regard to addition made u/s.2(22)(e) by treating un-secured loan advanced by CEPL to CIPL as deemed dividend in the hands of the assessee. Before proceeding with the appeal on merits, we first decide the issue of re-opening u/s.147 beyond the period of four years. Here, it is necessary to re-produce the relevant provisions of section 147 of the Act: "Section 147. If the [Assessing] Officer [has reason to believe] that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has categorically stated that it was during the scrutiny of the return of income of CEPL for AY.2006-07 & 2007-08 it transpired that during Financial Year 2002-03 CEPL had granted a loan of Rs.50.00 Lakhs to CIPL. For AY.2004-05, the notice u/s.148 reads as under: "Where as I have reason to believe that your income chargeable to tax for the Assessment Year 2004-05 has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961. I, therefore, propose to re-assess the income for the said assessment year and I hereby require you to deliver to me within 30 days from receipt of this notice, a return in the prescribed form of your income in respect of which you are assessable for the said assessment year". In AY.2004-05 as well the Revenue has not alleged that there is escapement of income on account of non-disclosure or concealment of full and true facts necessary for assessment. 7. The Hon'ble Madras High Court in the case of Sri Sakthi Textiles Ltd., Vs. JCIT reported as 340 ITR 144 (Madras) has held that, 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed after full scrutiny and formation of opinion in points raised in the return of income in the assessment proceedings. Thus, the Act does not permit to initiate reassessment proceedings beyond the period of four years from the end of the relevant AY unless the assessee has failed to disclose fully and truly all material facts necessary for the assessment. Here it is not the case of the Revenue that the assessee has failed to furnish full and true particulars at the time of assessment. Therefore, the Assessing Officer cannot travel beyond his jurisdiction and invoke the provisions of section 147 by ignoring mandatory conditions set out in proviso to the section. In our considered opinion, in the present case the action of Assessing Officer clearly amounts to review of the assessment order which is not permissible under the Act. Thus, the re-assessment proceedings initiated against the assessee in both the AYs are without jurisdiction and are thus liable to be set aside. 9. The assessee had assailed the findings of CIT(Appeals) with respect to addition made u/s.2(22)(e) on account of treating un-secured loan of Rs.50.00 lakhs in AY.2003-04 and Rs.120.00 Lakhs in AY.2004-05 mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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