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2016 (6) TMI 803 - ITAT DELHI

2016 (6) TMI 803 - ITAT DELHI - TMI - Revision u/s 263 - taxability of deemed dividend under Section 2(22)(e) of the Act in the proceedings u/s 153A - Held that:- In present case the issue of deemed dividend does not arise from the provisions of Section 153A of the Act and there is no seized material unearthed at the relevant time. Thus it is beyond Assessing Officer’s power to address the said issue in proceedings initiated under Section 143(3) read with Section 153A of the Act. The CIT was wro .....

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essment proceedings. - Decided in favour of assessee - I.T.A. No. 1347/DEL/2014 - Dated:- 8-6-2016 - Shri G. D. Agrawal, Vice President And Smt. Suchitra Kamble, Judicial Member For the Appellant : Sh. Niren Gupta, CA For the Respondent : Ms. Sulekha Verma, CIT DR ORDER Per Suchitra Kamble, JM This appeal is filed by the assessee against the order dated 17/02/2014 passed by CIT(A)- New Delhi. 2. The grounds of appeal are as under :- 1. (i) That the CIT has wrongly assumed jurisdiction u/s 263 as .....

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was not a material found on the basis of search. The direction be quashed. 3. (i) That the CIT was wrong to treat the comments of the Hon'ble High Court which Assessment Year in the nature of obiter as binding precedent. The CIT was wrong to make it as a basis for passing the order u/s 263. (ii) That the CIT has wrongly relied on 20,000/- Sec 263 proceedings of Jakson Generators (P) Ltd. which is not a part of the records of the assessee. The same be excluded from consideration. 4. That the .....

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, undisclosed income of ₹ 19.94 crore was found which was surrendered by Shri S. K. Gupta. Assessment Proceedings in the case were initiated by issuing notice u/s. 153A dated 12.11.2010 which was duly served on the assessee. In response to notice u/s. 153A return declaring income of ₹ 6,09,677 was filed on 9.2.2011. During the year under consideration the assessee was a director in the Company Jackson Generators (P) Ltd. The company is engaged in the manufacture and sale of Gen Sets. .....

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-. 4. The Commissioner of Income Tax, Central - I, New Delhi observed that the assessee, Shri Mahesh Kumar Gupta is shareholder/director of M/s Jakson Generator (P) Ltd., holding substantial shareholding of more than 43.19% in the company and he is also partner in M/s. Jakson & Co. having sharing profit of 30% in the firm. Further, the CIT observed that M/s Jakson & Co. has taken loan of ₹ 1,72,15,824/- from M/s Jakson Generator Pvt..Ltd.- which ought to be fixed as deemed dividend .....

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.w.s 153A of the Act on 9/12/2011, the assessment order for the Assessment Year 2004-05 is found to be erroneous in so far as prejudicial to the interest of revenue being the Assessing Officer has made omission of ignoring the provisions of deemed dividend amounting to ₹ 1,72,15824/-. 5. Accordingly, notice u/s 263 of the I.T. Act, 1961 was issued to the assessee on 5/8/2013 apprising him of the issue relating to the transaction of loan/advance received by M/s Jakson & Co. of ₹ 1 .....

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shall not be invoked in the case. 6. In response to the show cause notice u/s 263 of the I.T Act the assessee filed replies raising objections that copy of account of M/s Jakson Generators Pvt. Ltd in the books of Jakson & Co. was not filed in the case of the assessee Sh. M. K. Gupta and it cannot form part of assessment record of the assessee. The assessee also stated that when he has not taken loan/advances, loan taken by M/s Jakson & Co. from M/s Jakson Generators Pvt. Ltd has been s .....

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IT directed the Assessing Officer to examine the taxability of the amount of ₹ 1,72,15,824/- in the hands of the assessee u/s 2(22)(e) of the I. T. Act, 1961. 8. The assessee is before us in the present appeal. 9. The Ld. AR has not pressed Ground No. 1, 3, 4 & 5 and only contested Ground No. 2 of the appeal. Hence Ground No. 1, 3, 4 and 5 are dismissed. 10. The Ld. AR submitted that the CIT was wrong to direct the examination of taxability of the deemed dividend in the proceedings u/s .....

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Delhi) as well as the Hon ble Delhi High Court decision in case of CIT Vs. Ankitech Pvt. Ltd. 340 ITR 14. The said case laws dealt with the issue that where loans and advances are given in normal course of business and transaction in question benefits both payer and payee companies, provisions of Section 2(22)(e) cannot be invoked. 12. We have perused all the records and heard both the parties. The search under Section 132(1) took place in Jaksons Group of cases and the Assessment Order was pass .....

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to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the total income of the afor .....

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does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word assesss in Section 153A is relatable to abated proceedings (i.e. those pending on the date of search and the word reassess to comple .....

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erial unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the inc .....

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