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TMI Blog2022 (1) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and in law that the re-assessment 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 Rs. 1,00,28,347/- as deemed dividend in the hands of the appellant on the ground that Hextech Engineering Pvt. Ltd. ( Hextech) had given a loan to Zetex Engineers Pvt. Ltd. (Zetex) and the appellant is a common shareholder in both the companies with more than 90% shareholding. 3) The learned CIT(A) was not justified in taxing the above amount of Rs. 1,00,28,347/- as deemed dividend in the hands of the appellant as the funds given by the Hextech to Zetex were for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round which reads as follows: "Additional Ground: On the facts and in the circumstances of the case and in law, the assessee submits that notice of reopening u/s.148 dated 03.03.2015 is invalid in law since at that point of time, the addition on account of deemed dividend was already made in the case of Zetex Engineers Pvt. Ltd. and therefore, there was no reason to believe that the income on account of deemed dividend has escaped addition in the hands of assessee. The appellant craves to leave, add, amend, alter, modify and delete any or all the above grounds of appeal before or during the course of hearing." We would take up grounds of appeal memo as well as additional grounds raised and take up ITA No.73/PUN/2017 for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2012 dated 14th June, 2013 reported in [2013] 34 taxmann.com 300 (Bombay). In this case, the Hon‟ble Jurisdictional High Court addressing the issue of reopening of assessment u/s.147/148 of the Act, question was whether where Assessing Officer sought to make protective assessment by reopening an assessment on ground that a contingency may arise in future resulting in escapement of income whether that would be wholly impermissible and would amount to rewriting statutory provisions and it was held as yes and the issue answered in favour of the assessee. 6. The entire crux of the decision of the Hon‟ble Jurisdictional High Court in this case was that such exercise of reopening of assessment based on some hypothetical situation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y taxed the same as deemed dividend to the extent of accumulated profit of Rs. 1,00,28,347/- in the hands of the assessee. The Ld. CIT(Appeals) on this issue has held and observed as follows: "5.14. Any advance or loan given including a running account can be treated as "Deemed Dividend" except in a case where loan/advance made to a shareholder or the said concern by a company in the course of business of money lending. The company is not a money lending company so such advance cannot be considered under exception provided under section 2(22)(e). The argument of the ld. A.R that loans and advances should be treated as normal business transactions cannot come to its rescue, in absence of any documentary evidence to corroborate or substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court has held that the deemed dividend can assessed only in the hands of shareholders only. In the instant case it is an established fact that M/s Zetex Engineers Pvt. Ltd. has taken a loan of Rs. 2,14,60,905/- from M/s Hextech Engineering (I), Pvt. Ltd. And Mr. Ravi Pichaya is the ,common shareholder holding 99.95% and 97.10% shares respectively and at the end of the year M/s Zetex Engineers Pvt. Ltd. has a debit balance of Rs. 2,14,60,905/-with M/s.Hextech Engineering (I) Pvt. Ltd. The assessee has not been able to demonstrate through any cogent or credible evidence that this transaction that he had with the M/s. Hextech Engineering Pvt. Ltd. was commercial in nature. The AO has rightly taxed the same as deemed dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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