TMI Blog2018 (10) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... id not disclose fully and truly the material facts necessary for the assessment. In the light of the above, substantial question of law answered against the assessee and in favour of the Revenue. Deemed dividend addition u/s 2(22)(e) - contention of the assessee is that the amounts were received for the purposes of advances for the purchase of mining land and for supply of material - Held that:- After referring to the decision of the Hon'ble Supreme Court in the case of Smt.Tarulata Shyam Vs. CIT [1977 (4) TMI 3 - SUPREME COURT], the Tribunal held that the amount that was advanced during the year was to be considered as deemed dividend and not the balance outstanding at the end of the accounting year. It was also held that there was no infirmity in the order passed by the CIT (A) for the assessment year 1998-99, as no part of the advance given had been treated as deemed dividend before this assessment year and accordingly, the finding was confirmed. As regards the assessment year 1999-2000, it held that it did not agree with the view taken by the CIT (A) that the deemed dividend for the assessment year 1998-2000 should not be adjusted from the balance of accumulated profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as Mr.M.Swaminathan and Mrs.V.Pushpa, learned Standing Counsel for the Revenue. Substantial Question of Law No.3 : 4. First, we take up for up for consideration the third substantial question of law namely as to whether the Department was correct in reopening assessment completed for the assessment year 1998-99 on a mere change of opinion. 5. According to the learned counsel for the assessee, the reopening of the assessment was on the ground that there was no new material or information brought to the knowledge of the Assessing Officer enabling him to reopen the assessment in a valid manner and that the reopening based on the information, which was already within the knowledge of the Assessing Officer from the details filed with the return of income, would clearly amount to mere change of opinion. 6. In support of his contention, the learned counsel for the assessee has placed reliance on the decisions of (i) the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. [reported in (2010) 320 ITR 0561]; (ii) the Division Bench of this Court in the case of CIT Vs. ELGI Ultra Industries Ltd. [reported in (2008) 296 ITR 0573]; and (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The Assessing Officer of the appellant pointed out that since the two partners of the assessee firm were the shareholders in the PGIIPL holding 46.35% and 43.02% respectively in the share capital of the PGIIPL and since the PGIIPL made advances to the assessee, in which, the two shareholders had substantial interest, the liability of the assessee for treating the receipt of advance from the PGIIPL as 'deemed dividend' within the meaning of Section 2(22)(e) of the Act was required to be considered for the relevant assessment years. 11. The assessee's contention was that they received advances as trade advances and also purchase of mining land by the PGIIPL from time to time and that those were continued to be disclosed as 'advances' in the assessee's financial statements as the transfer formalities were to be completed, which involved transfer of mining licence and other regulatory approvals. The assessee further contended that those advances were made pursuant to agreements for sale. However, it appears that those agreements were not placed before the Assessing Officer as recorded by the Assessing Officer in paragraph 11.3 of the assessment order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished except the PAN and G.I.No. Of Pallava Granites Industries (India) Limited and other companies in the group. It is significant to note here that it was not stated anywhere in the statements filed at the time of assessment that both the partners are even shareholders holding substantial interest in the company, Pallava Granites Industries (India) Ltd., and also no information regarding the company possessing accumulated profits during the relevant accounting periods were given. That is, the appellant firm had not furnished complete details regarding any of the loans taken or advances received by it from the connected concerns including the company, Pallava Granites Industries (India) Ltd. It is further seen from the ITMR that it is only in a letter dated 28.2.2005 addressed to the Addl. CIT, Business Range XV, the DCIT, Co. Cir. V(1), Chennai, complete details regarding the shares held by the two partners Shri.K.Subba Reddy and Smt.K.Sailaja in the company Pallava Granites Industries (India) P. Ltd. For the different accounting periods and the details of accumulated profits and the advances made by that company to its sister concerns for the different accounting periods beginn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of accumulated profits of the company nor the different accounting periods were filed at the time of original assessment. 18. The learned counsel for the assessee has vehemently contended that what was not called for could not be a reason for reopening the assessment, which would clearly show that it was a case of change of opinion. 19. We are unable to countenance the said submission on account of the factual details as recorded by the CIT (A). The version of the assessee that relevant documents were filed along with the returns was found to be incorrect. The following findings were recorded by the CIT (A) in this regard : 6.2 : The return for this assessment year was filed on 02.11.1998, which was accompanied by a tax audit report in Form No.3CB and 3CD along with annexures 1, 2 and along with the statements of profit and loss account and balance sheet with their schedules as on 31.3.1998. 6.3 : The balance sheet as at 31.3.1998 filed along with the original return shows unsecured loans and advances to the extent of ₹ 6,23,93,950/-. Further, from the break up details given, it is seen that there is a credit balance of ₹ 5,37,77,744.05 Ps in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the above factual matrix, we are fully satisfied that the reopening of assessment was not a case of change of opinion, but it was a case where the assessee did not disclose fully and truly the material facts necessary for the assessment. In the light of the above, substantial question of law No.3 is answered against the assessee and in favour of the Revenue. Substantial Question of Law Nos.1 and 2 : 23. Both the questions overlap, as they are on the same point. 24. The contention of the assessee is that the amounts were received for the purposes of advances for the purchase of mining land and for supply of material. In other words, the assessee has contended that there was a business transaction between the assessee and the PGIIPL and that there was an arrangement whereby the firm would sell the quarry land to the Government for a price and the advances were made towards such a deal. The CIT (A), while examining the correctness of the findings recorded by the Assessing Officer, pointed out that there was no evidence furnished to the effect that the activities were stated to have been carried on pursuant to the agreement, that if no evidence was filed, the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o NIL as on 31.3.1997, 31.3.1998 and 31.3.1999 and that no portion of the amounts drawn by the assessee from the company could be taxed as deemed dividend for the assessment years 1998-99 and 1999-2000. In support of such a contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs. G.Narasimhan (died) [reported in (1999) 236 ITR 0327]. 31. The CIT (A) elaborately discussed the factual position in the decision in the case of G.Narasimhan and then proceeded to examine as to whether the arguments made by the assessee were acceptable or not. The above argument was elaborately examined by the CIT (A) and it would suffice to note the findings recorded by the CIT (A) for the assessment year 1999-2000, which are as follows : Now, coming to the assessment year 1999, as seen earlier, the appellant had not paid any tax on the amounts of advance received by it from the company for any of the accounting periods. So, there is no question of applying the decision rendered by the Supreme Court in the case of G.Narasimhan Vs. CIT [236 ITR 327]. More over, on going through Explanation (2) appended to Section 2(22)(e), it is seen that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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