TMI Blog2019 (3) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... tiny assessment. The perusal of the original file would clearly show that the audit party had brought to the notice of the Assessing Officer the possibility of invoking Section 2(22)(e) of the Act in relation to the loan transaction in question. The AO under a detailed reply dated 9th June, 2015 had opposed any such invocation of Section 2(22)(e) of the Act. He had given reasons why in his opinion Section 2(22) (e) of the Act was inapplicable. Despite this, upon further insistence by the audit party, impugned notice came to be issued. It is well settled through series of judgments that the decision to reopen the assessment must be on the basis of the belief found by the Assessing Officer. It may be open for the audit party to bring the relevant aspect to the notice of the Assessing Officer. However, thereafter it must be the independent decision of the Assessing Officer to reopen the assessment upon formation of his belief that income chargeable to tax had escaped assessment. See CIT Vs. Ranjan N. Aswani (2018 (3) TMI 315 - BOMBAY HIGH COURT) - decided in favour of assessee. - WRIT PETITION NO.3491 OF 2018 - - - Dated:- 1-3-2019 - AKIL KURESHI AND M.S. SANKLECHA, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholder of the assessee company, Shri Ajay D.Vaghani, was having 16% voting rights. Shri Ajay Rupani was also having substantial interest of more than 20% in the share capital of the assessee company (20.02%). Hence, the deemed dividend of ₹ 1,02,00,000/was required to be taxed. 4. Enquiries made by the AO as sequel to information collected/received:- 5. Findings of the AO:- It is seen from the above that the assessee received ₹ 1,02,00,000/as loan from Rupani Spinning Mills Private Limited in which the shareholder (Shri Ajay D. Vaghani) was having 16% voting rights and was also having substantial interest of more than 20% in the share capital of assessee company (20.02%) . Hence, all the condition mentioned in section 2(22)(e) were applicable in this case and the assessee was liable to be taxed on the deemed dividend to the extent of accumulated profits or loan received whichever is less. Also, assessee's case is not covered by the exception clause (ii) to S.2(22) of the Act, as the substantial part of assessee's business was not lending of loans but business centre income. 6. Basis of forming reason to believe and details of escapeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant accounting period from one M/s Rupani Spinning Mills Private Limited. The Assessing Officer has referred to the shareholding patterns of the two companies in this context. 7. With this background, we may refer to the exchange between the Assessing Officer and the Petitioner during the scrutiny assessment. In response to the queries raised by the Assessing Officer, the petitioner had in a communication dated 24th November, 2015, besides others supplied following details: Sr.No. Para No. of your Notice Particulars 5 13 Details of Unsecured Loans Outstanding as on 31st March 2013 alongwith Name Address and Pan No. In this regard, we request your goodself to kindly refer Annexure # 5 to this Submission, wherein the Name, Address and PAN No. of the parties from whom Unsecured Loan has been taken by the Assessee Company has been given. Confirmation from the parties has also been attached herewith. With respect to the details of the new loans taken during the year, we request your goodself to kindly allow us some further time to submit the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission for your kind perusal. 3. Q #30Please furnish the share holdings pattern as on 01.04.2012 to 31.03.2013 name and address of shareholders and furnish the name and address of the directors copies of ledger accounts of all the directors and shareholders alngwith narration of each transactions and copies of I.T. return alongwith annexure and bank account details for the considering year. We request your goodself to refer Annexure #10(for the names, address of shareholders and shareholding pattern) and Annexure #11 (for names and address of directors) to Submission #2 dated 24th November, 2015, along with it your goodself has asked for the copies of ledger accounts and bank details. We request your goodself to also refer annexure #5 to Submission #4 dated 25th February, 2016, in the cases of directors and /or shareholders where the assessee company has entered into any transaction viz. loan, interest, remuneration and other expenses, and a statement showing bank details. Further as required by your goodself the ledger copies of the shareholders along with the acknowledgement of Return of Income and a statement showing bank details is attached and marked as Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, we had permitted the petitioner to raise the same in the rejoinder and provided sufficient time to the revenue to respond. This being a pure question of examination of contemporaneous documents, we had requested the counsel for the revenue to make available for our perusal the original file of the department, which he had so done. The perusal of the file would clearly show that the audit party had brought to the notice of the Assessing Officer the possibility of invoking Section 2(22)(e) of the Act in relation to the loan transaction in question. The Assessing Officer under a detailed reply dated 9th June, 2015 had opposed any such invocation of Section 2(22)(e) of the Act. He had given reasons why in his opinion Section 2(22) (e) of the Act was inapplicable. Despite this, upon further insistence by the audit party, impugned notice came to be issued. It is well settled through series of judgments that the decision to reopen the assessment must be on the basis of the belief found by the Assessing Officer. It may be open for the audit party to bring the relevant aspect to the notice of the Assessing Officer. However, thereafter it must be the independent decision of the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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