TMI Blog1984 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany to the firm during the period October 1, 1955, to September 30, 1956 ? " These questions have been referred as a result of separate applications by the assessee and the Additional Commissioner of Income-tax. Question No. (1) is at the instance of the assessee and question No. (2) at the instance of the Department. It is convenient to deal with question No. (2) first. There was an account in the books of M/s. Lakshmiji Sugar Mills Co. (P.) Ltd. during the period October 1, 1955, to September 30, 1956, in the name of M/s. Ajudhiya Pershad Sons, which showed a total debit during the period October 1, 1955, to September 30, 1956, amounting to Rs. 5,09,764. After the assessment of the assessee had been completed for the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some facts. The company, M/s. Lakshmiji Sugar Mills Co. (P.) Ltd., includes, amongst its shareholders, R. B. Seth Ram Rattan and other persons who appeared to be his relations. But, according to what is stated in the analysis of facts contained in the original assessment order in the present assessee's case, these shares were originally held by a Hindu undivided family and came to the assessee during the accounting period March 31, 1956, to March 31, 1957. The exact date is not specified. So, it means that the assessee was a shareholder of M/s. Lakshmiji Sugar Mills Co. (P.) Ltd. The loan was advanced to a firm known as R. B. Seth Ajudhiya Pershad and Sons, which was dissolved as per dissolution deed dated June 16, 1960, with effect from Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned that on September 3, 1956, a loan was advanced to Pt. Gobind Ram on the personal guarantee of M/s. R. B. Seth Ajudhiya Pershad and Sons and so it has been treated as in advance to the assessee. It seems that the present question can be answered by reference to section 2(6A)(e) of the Act of 1922, which states that any advance or loan to a shareholder by a company in which the public is not substantially interested is to be treated as a dividend to the extent to which the company possesses accumulated profits. Assuming that there were accumulated profits with M/s. Lakshmiji Sugar Mills Co. (P) Ltd. amounting to Rs. 1,56,750 on September 3, 1956, this amount could have been treated as dividend. There is no finding by any one when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deemed to be advanced to the assessee because it was under the guarantee of M/s. R. B. Seth Ajudhiya Pershad Sons. Assuming that the latter firm had been dissolved and the assets and liabilities had come to the Hindu undivided family of which the assessee was the karta, even then this judgment of the Supreme Court will apply with full force. The karta would be the registered shareholder and the advance would be to the Hindu undivided family. We have examined the facts in some detail to see if the advance was to the assessee personally and we have not been able to find any fact suggesting the same. The period of advance was, admittedly, from September 1, 1955, to October 1, 1956. This means that there was no advance to the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the view that the provisions of section 147(a) were attracted as, prima facie, the Income-tax Officer could conclude that the full facts had not been disclosed. This would him the authority to reopen the assessment. However, after the return was filed and a more detailed picture of the nature of the transaction became available to the Income-tax Officer, it would appear that the initial presumption or conclusion regarding, nondisclosure might disappear because of the facts detailed above which go to show that the advance was not made to the registered shareholder, but either to Pt. Gobind Ram, who was not a shareholder but an outsider or to the Hindu undivided family who was the beneficial owner of the shares in question. As the infere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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