TMI Blog2019 (4) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the addition was already made in the hands of recipient of loan, though the assessee was major shareholder of the concern giving loan and concern taking the loan. Hence, the re-assessment order passed under section 143(3) r.w.s. 147 of the Act is annulled. The additional ground of appeal raised by assessee is thus, allowed. - ITA No.1992/PUN/2016 - - - Dated:- 27-3-2019 - Ms. Sushma Chowla, JM And Shri Anil Chaturvedi, AM For the Appellant : Shri Nikhil Pathak For the Respondent : Shri Pankaj Garg ORDER PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against order of CIT(A)-1, Nashik, dated 23.06.2016 relating to assessment year 2010-11 against order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short the Act ). 2. The assessee has raised the following grounds of appeal:- On facts and in law, 1] The reasst. u/s 147 be held bad in law as reopening is based on the decision of CIT(A) in the case of Zetex Engineers Pvt. Ltd. and which is not accepted by the dept. 2] The learned CIT(A) erred in confirming the addition of ₹ 1,41,34,381/- as deemed dividend in the hands of the appellant on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the said issue before referring to the issues raised on merits. 5. Briefly, in the facts of the case, the assessee had furnished return of income on 05.10.2010 declaring total income of ₹ 53,37,829/-. The said return was processed on 22.02.2013 under section 143(1) of the Act. The Assessing Officer on verification of records available noted that the assessee was Director in M/s. Hextech Engineers India Pvt. Ltd. (in short Hextech ) and was holding 97.10% of shares in the said company. He was also shareholder of M/s. Zetex Engineers Pvt. Ltd. (in short Zetex ) holding 99.95% shares of the company. Hextech had given loan of ₹ 1.41 crores to Zetex. Since the assessee was common shareholder with more than 90% of shareholding in both the companies, hence loan taken by Zetex from Hextech was considered as deemed dividend under the purview of section 2(22)(e) of the Act. The Assessing Officer also noted some variation in the receipts, which were reflected in 26AS statement and declared by the assessee. However, we are not concerned with the said issue as no ground of appeal is raised against such addition before us. The Assessing Officer on the basis of aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, referred to assessment order passed in the case of Zetex under section 143(3) of the Act, relating to assessment year 2010-11, dated 20.12.2012. The learned Authorized Representative for the assessee pointed out that the factum of loan received from Hextech by Zetex was considered at length in the assessment order and addition under section 2(22)(e) of the Act was made at ₹ 25,49,919/- i.e. to the extent of profits available as per section. He further drew our attention to the assessment order passed under section 143(3) r.w.s. 147 of the Act and 143(3) of the Act, relating to assessment years 2008-09 and 2009-10, which are placed at pages 6 to 19 of Paper Book, wherein also addition under section 2(22)(e) of the Act was made to the extent of profits available. He then referred to the order of CIT(A), which is placed at pages 27 to 44 of Paper Book for the respective assessment years i.e. 2008-09 to 2010-11 and vide order dated 05.02.2014 for assessment year 2010-11, the CIT(A) deletes the addition in the hands of Zetex. However, it directs that addition needs to be made in the hands of Shri Ravi Pichaya, the substantial shareholder i.e. assessee before us. The learned Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escapement of income in the hands of assessee, since the amount in question had already been taxed in the hands of concern Zetex, which had taken the loan from Hextech. The assessee was major shareholder in Hextech, which had advanced sum of ₹ 1.41 crores to Zetex in which also the assessee had major shareholding. The assessee had filed its return of income within due date of filing the same under section 139(1) of the Act i.e. on 05.09.2010, declaring total income of ₹ 53,37,829/-, the said return of income was processed under section 143(1) of the Act on 22.02.2013. The Assessing Officer for the first time issued notice under section 148 of the Act to the assessee on 04.09.2013. In response to the said notice, the assessee replied that original return of income may be treated as filed in response to the said notice under section 148 of the Act. Thereafter, the assessee sought reasons for reopening the assessment and it transpired that the sole reason for reopening the assessment was the assessability of deemed dividend in the hands of assessee within purview of section 2(22)(e) of the Act. 10. Without going into merits of applicability of said section, the issue w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(3) of the Act and the copy of said order is placed at pages 20 to 25 of Paper Book and similar deliberations were made by the Assessing Officer In-charge of assessment proceedings of Zetex, after noting the loan transaction, shareholding of Shri Ravi Pichaya, the addition was made on account of deemed dividend under section 2(22)(e) of the Act at ₹ 25,49,919/- in the hands of Zetex. The appellate proceedings for assessment years 2008-09 and 2009-10 vide separate orders were adjudicated by the CIT(A) in the case of Zetex and addition was deleted on the ground that loan taken by assessee was interest bearing loan and not hit by provisions of section 2(22)(e) of the Act. The copies of said orders are placed at pages 27 to 32 of Paper Book. Thereafter, on 05.02.2014, the CIT(A) decided the appeal of Zetex relating to assessment year 2010-11 and it takes note of the decision of Tribunal in ITA Nos.1570 1571/PN/2012, relating to assessment years 2008-09 and 2009-10, decided on 21.11.2013, by which the Tribunal had upheld the order of CIT(A) in holding that no payment as contemplated under section 2(22)(e) of the Act had been made by closely held assessee company, since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same on 27.01.2017. For assessment year 2010-11 i.e. relevant assessment year, the addition was made in the hands of Zetex vide order passed on 22.12.2012 and that addition was sustaining as on 04.09.2013, i.e. date on which re-assessment proceedings were initiated against Shri Ravi Pichaya. The CIT(A) had deleted addition in the hands of Zetex for assessment year 2010-11 on 05.02.2014 and he has directed the Assessing Officer to take measures of assessing the said income in the hands of Shri Ravi Pichaya, the major shareholder. However, the Assessing Officer before that order of CIT(A), had already initiated re-assessment proceedings on 04.09.2013 and completed the same on 23.03.2015. In such scenario, the question which arises is the date on which reasons were recorded for escapement of income, was there in fact any escapement of income? The transaction was between Hextech and Zetex and on account of aforesaid transaction, addition was already made in the hands of Zetex by an order passed under section 143(3) of the Act. The Assessing Officer while passing that order had clearly noted the shareholding of assessee in the two concerns and had come to a finding that the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular outcome. The statute does not contemplate the reopening of an assessment u/s 148 on such a hypothesis or a contingency which may emerge in the future. 16. The basis on which the AO has purported to reopen the assessment is placed beyond any doubt by the affidavit which has been filed in reply to the Petition. There is no ambiguity whatsoever in the reasons which have been communicated to the assessee in the order dated 18 May 2012, but in the affidavit in reply, it has been stated that the income of ₹ 32.83 Crores arising from the investment of contributions of the contributors to the Venture Capital Fund which has been claimed as exempt in the hands of the Assessee should be assessed as income in the hands of the AOP of the contributors of the Assessee on a protective basis . Again it has been stated that the issue of taxing the AOP of the contributors of the Assessee has arisen from the submission of the Assessee before the appellate authorities where the Assessee has contended that the transactions amount to a revocable transfer and that the income which would arise should be taxed in the hands of the individual contributors. The reopening of an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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