TMI Blog2014 (9) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that the Assessing Officer has no reason to believe that the income chargeable to tax has escaped assessment once it is held that the assessment u/s 143(3) is not valid because notice u/s 143(2) of the Act was not issued and served in time - No further finding was required to be given by CIT(A) and whether this income is actually taxable or not will be determined in the assessment to be completed by the Assessing Officer u/s 147 and this question is premature at this stage – Decided against assessee. - ITA No. 544/LKW/2011, ITA No. 647/LKW/2011 - - - Dated:- 5-9-2014 - Shri Sunil Kumar Yadav And Shri A. K. Garodia,JJ. For the Petitioner : Shri Amit Nigam, D.R. For the Respondent : Shri P. K. Kapoor ORDER Per A. K. Garodia, A.M. These are cross appeals filed by the assessee and the Revenue, which are directed against the order of CIT(A)-I, Kanpur dated 09/06/2011 for assessment year 2004-2005. 2. First we take up the appeal of the Revenue i.e. I.T.A. No.544/Lkw/2011 for assessment year 2004-2005. In this appeal, the Revenue has raised the following grounds: 2 1. The Ld. CIT(A)-I, Kanpur is erroneous in law and on facts as he has acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he found that there is a notice u/s 143(2) dated 18/05/2005 but it has not been served on the assessee or on any person, who has been authorized by him to receive such notice. In spite of this clear finding given by CIT(A), nothing has been produced by Learned D.R. of the Revenue before us to controvert this clear finding of CIT(A) given by him after examination of case records. Hence, we do not find any reason to interfere in the order of CIT(A) on this issue. 5. In the result, the appeal of the Revenue stands dismissed. 6. Now we will take up the appeal of the assessee i.e. I.T.A. No.647/Lkw/2011 for assessment year 2004-05. In this appeal the assessee has taken the following grounds: 1. BECAUSE the CIT(A) has erred in law and on facts in invoking the provisions of section 150 of the Act and in directing the Assessing Officer to take recourse to the provisions of sections 147/148 of the Act . He would record proper reasons and also seek approval of his superiors (as the case may be) before issuing such notice. 2. BECAUSE the directions given to the Assessing Officer for initiating proceedings under section 147/148 as also text thereof are beyond the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the present case and after deleting the addition (which was subject matter of appeal before him) on legal ground, could have given direction to the Assessing Office reading as however in order to bring the escaped income to tax, the Assessing Officer is directed to take recourse the provision of section 147/148 of the Act. He would record proper reason and also seek approval of his superiors (as the case may be) before issuing such notice. This is direction u/s 150 of the IT. Act . 4. Looking to the substance of the issue involved in the appeal, the delay of nearly 60 days in filing the appeal deserves to be condoned as per the principles laid down by the Hon'ble Supreme Court in the following case laws:- (i) Collector Land Acquisition vs. MST. Katiji Ors. Reported in (1987); 167 ITR 471 (ii) Improvement Trust Ludhiyana vs. Ujagar Singh Ors reported in (2010) 6 SCC 786 Copies of the above referred judgments are enclosed at pages 8 to 10 11 to 15 hereto. 5. In view of the facts of the present case and law applicable thereto, as has been submitted in the foregoing paragraph, it is respectfully prayed that your honours be pleased to condone the del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide the matter before them. Some such case laws dealing with the meaning of the terms finding and direction are cited herein below:- (i) Rajinder Nath vs. CIT reported in (1979) 120 ITR 14 kind attention is invited to pages 18 towards bottom, 19 and 20 thereof. (ii) ITO vs. Murlidhar Bhagwan Das reported in (1964) 52 ITR 335 (SC), kind attention is invited to pages 344 and 345 (iii) CIT vs. Moduri Rajaiah Gari Kishtaiah reported in (1980) 123 ITR 494 (AP), kind attention is invited to page 499 (iv) Consolidated Coffee Ltd. vs. ITO reported in (1985) 155 ITR 729, kind attention is invited to page 737. Copies of the above referred judgments are enclosed at pages 16 to 23, 24 to 44, 45 to 52 53to 62 hereto. 10. It is further submitted that during the course of hearing of appeal the appellant has made detailed submissions on the issue of addition of ₹ 25,50,000/- as had been made in the assessment on account of deemed dividend under section 2(22)(e) of the Act vide Para 16 thereof reading as under:- 16. As regards merits of the addition, the only issue involved as to whether an addition of ₹ 25,50,000 as had been made to the returned income by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 381 their lordships have observed and held as under: Now, the assessee's account for 1 st April, 1957, to 31st March, 1958, shows that there are credits as well as debits. What has to be ascertained is whether the debits are loans , so that they can be deemed as dividends. The account is a mutual, open, and current account. Every debit, i.e. every payment by the company to the assessee, may not be a loan. To be treated as a loan, every amount paid must make the company a creditor of the assessee for that amount. If, however, at the time when the payment is made the company is already a debtor of the assessee, the payment would be merely a repayment by the company towards its already existing debt. It would be a loan by the company only if the payment exceeds the amount of its already existing debt and that too only to the extent of the excess. Therefore, the position as regards each debit will have to be individually considered, because it may or may not be a loan. The two basic principles are, that only a loan, which would include the other payments mention in section 2(6A)(e), can be deemed to be dividend and that too only to the extent that the company has at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the same are not hit by the provision of section 2(22)(e). 33. In view of the discussions made in the foregoing paragraphs, we hold that the debits aggregating ₹ 11,10,797/- as appearing in the assessee's account with KPL are not in the nature of loans or advances and no part of the same could have been treated as assessee's income, by way of deemed dividend . This is the basis, in addition to the view expressed by us in the earlier part of this order to the effect that there were no accumulated profits with KPL in real sense, for coming to the conclusion that provisions of section 2(22) (e) are not applicable and the addition as a whole of the sum aggregating ₹ 11,10,797/- was not called for, either on facts in law. The Id. CIT(A) has already allowed relief to the extent of ₹ 60,757/- (for which the Department is in appeal which shall be taken up, infra) and the balance sum of ₹ 10,50,040/- is deleted by us. The appeal filed by the assessee is, therefore, allowed. which remain unadjudicated upon. Copy of written submissions as a whole is enclosed at pages 63 to 78. 11. It is the plea of the assessee that without adjudicating upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income for the same assessment year and therefore, this judgment is also not applicable in the facts of the present case. 10.3 The third judgment cited by Learned A.R. of the assessee is the judgment of Hon'ble Andhra Pradesh High Court rendered in the case of Moduri Rajaiah Gari Kishtaiah (supra). In this case, it was held by Hon'ble Andhra Pradesh High Court that when as per the appellate order, relief was allowed in respect of certain income for assessment year 1960-61 on the ground that it relates to the preceding assessment year, reassessment of income for assessment year 1959-60 u/s 150 should be confined to that income only and assessment in entirety is not set at large. The Income Tax Officer cannot make other addition. In the present case, no direction is given by CIT(A) to make other additions in addition to the issue in dispute and therefore, this judgment is also not rendering any help to the assessee in the present case. 10.4 The last judgment cited by Learned A.R. of the assessee is the judgment of Hon'ble Karnataka High Court rendered in the case of Consolidated Coffee Ltd. (supra). In this case, it was held that the direction or finding by app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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