TMI Blog2022 (3) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings. Thus, during the original assessment proceedings, the AO was having knowledge that assessee company has taken loans from J.M.Cotton Ginning Pressing Co. Pvt. Ltd., and Krishi Dhan Cattle Feeds Pvt. Ltd. AO was also having knowledge about shareholding of the assessee company in these lender companies. During the original assessment proceedings, the appellant had submitted the Balance Sheets of the lenders companies. AO had specifically asked the questions about the unsecured loans. Thus, after considering the submission AO arrived at the decision. Therefore, in this scenario it will be inappropriate to say that the AO has not considered the applicability of Section 2(22)(e) As observed that all the facts, which are required to decide applicability of section 2(22)(e)were in the knowledge of the AO. Therefore, initiating reopening proceedings on the same facts, is nothing but change of opinion. Thus, we are of the considered opinion that in this case the reopening proceeding was merely based on the change of opinion. Therefore, the notice u/s 148 dated 29/10/2012 is without jurisdiction and we set aside the same. - Decided in favour of assessee. - ITA No.268/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als-II, Nashik erred in holding that the original assessment was completed by the Assessing Officer in the routine manner. 8) In the facts, circumstances position of law learned CIT Appeals-II, Nashik erred in confirming initiation of the reassessment proceedings for reasons recorded by the Assessing Officer for the year under appeal. 9) In the facts, circumstances position of law learned CIT Appeals-II, Nashik erred in confirming the amount of ₹ 1,34,39,587/- as deemed dividend U/s.2(22)(e) on account of amount received by appellant company from its subsidiary company for the purpose of business of holding appellant company appellant company is having a running account with its subsidiary company viz. J.M. Cotton Ginning Pressing Co. Pvt. Ltd. the credit amounts are utilized by the appellant company for its business for discharging its trading liabilities. 10) In the facts, circumstances position of law learned CIT Appeals-II, Nashik erred in holding that provisions of section 234B, 244A 234D are applicable in the appellant s case as the demand has arisen as a result of reassessment U/s.147 of the Act for the first time the refund has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Cotton ginning Pressing Co Pvt. As on 31/03/2008 was ₹ 1,34,39,587.00 and the assessee obtained loan of ₹ 7,87,40,676.00 on 31/03/2008 The learned assessing officer has further observed that M/s Krishi Dhan cattle Feeds Pvt Ltd is subsidiary of the assessee company in which the assessee company held 81.45% shareholding as on 31/03/2008. It is further observed that reserves and surplus of M/s Krishi Dhan cattle Feeds Pvt Ltd was ₹ 3,82,78,742.00 and the assessee obtained loan of ₹ 16,19,000.00 as on 31/03/2008. Please refer Page No.56 of Paper Book filed which discloses loans obtained by assessee company as on 31/03/2008 Please refer Page No.94 of Paper Book which discloses reserves and surplus as on 31/03/2008 of J.M. Cotton Ginning Pressing Co Pvt Ltd and Page No.95 discloses loans and advances receivable on 31/03/2008 by J .M. Cotton Ginning Pressing Co Pvt Ltd. Please refer Page No.100 of Paper Book which discloses reserves and surplus as on 31/03/2008 of Krishi Dhan Cattle Feeds Pvt Ltd and Page No.l0l discloses loans and advances receivable as on 31/03/2008 by Krishi Dhan Cattle Feeds Pvt Ltd 10. It is most respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account in our books of accounts is enclosed at Sr. Page No.95. Further contra extract in the books of Krishin Dhan Cattle Feeds is enclosed herewith at Sr. Page No.96, with confirmation PAN 7 the Ward in which it is assessed. Copy of acknowledgment of return filed by Krishi Dhan Cattle assessed. Copy of acknowledgment of return filed by Krishi Dhan Cattle Feeds and the balance sheet in which I am appearing as debtor are enclosed at Sr. Page No.97 to 99 respectively. d) Shri Rajesh Suresh Jain of ₹ 22,00,000/-:- Extract of account in our books of accounts is enclosed at Sr.Page No.100. Further contra extract in the books of Rajesh s. Jain is enclosed herewith at Sr. Page No.101. e) Mrs. Ratna Suresh Jain of ₹ 31,30,711/-:- Extract of account in our books of account enclosed at Sr. Page No.102. Further contra extract in the books of Mrs. Ratna S.Jain is enclosed herewith at Sr. Page No.103, with confirmation PAN the Ward in which it is assessed. Copy of acknowledgment of return filed by Mrs. Ratna S. Jain is enclosed at Sr. Page No. 105 to 108. f) Mrs. Tripti Rajesh Jain of ₹ 3,36,56,000/-:- Extract of account in our books of accounts is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1 The assessee has in the original ground No.1 stated that the Ld. CIT(A) should have annulled the re-assessment order in view of the decision of the Hon'ble Delhi Court in the case of Atma Ram Properties Pvt. Ltd. v. DC IT (2012) 343 ITR 143 which was on identical facts. In the case of Atma Ram Properties Pvt Ltd. which had come up before the Hon'ble Delhi High Court, the assessment for the A. Y. 1999-2000 was completed on 15.02.2002 making additions to the returned income which did not include any additions on account of deemed dividend ₹ 19,51,7251- in A.Y. 2001-2002 and holding that addition of deemed dividend of ₹ 1,36,99,8451- was required to be made in the earlier assessment years of A. Y. 1999-2000 2000-2001. In the light of the said finding of the Ld. CIT(A), the AO recorded the reasons for the belief that income chargeable to tax had escaped assessment for the A. Y.'s 1999-2000 2000-2001 and issued notice U/S 148 for the said A.Y.'s. The Hon'ble Delhi High Court held that the reasons recorded by the AO for A. Y. 1999-2000 did not indicate how the assessee had failed to make full and true disclosure of the material facts and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO issued letter dated 17.10.2013 to the assessee communicating that no compliance had been made to the notice u/s 148 dated 29.10.2012 and if proper compliance was not made within a week of receipt of the letter, the proceedings would be completed exparte. The assessee vide letter dated 21.10.2013 communicated that the return of income already filed on 29.08.2008 be treated as a return filed in response to the notice u/s 148. The assessee vide separate letter dated .21.10.2013 sought the reasons recorded for issue of notice uls 148 in the light of the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts v CIT (259 ITR 19). The reasons recorded for reopening the assessee was communicated to the assessee vide letter dated 29.10.2013. The assessee vide letter dated 10.02.2014 filed on 14.02.2014 filed objections against the reasons recorded for issue of notice uls 148. In response to the said letter, the AO vide letter dated 24.03.2014 communicated to the assessee that the objections have been raised after more than 3 months and reply to the notice U/S 148 was done after almost 12 months from the date of issue and service of notice. The AO in Para 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) to emphasize the point that in the said case the Hon ble Apex Court after analyzing the facts has mentioned that the notice dated 09.03.2004 issued during the original assessment makes it clear that the point on which, the re-assessment proceedings were initiated was well-considered in the original proceedings. The Hon ble Supreme Court after analyzing the fact, came to the conclusion that the Assessing Officer s view that the deduction under section 10A of the Act was allowed in excess, was based on nothing but a change of opinion on the same facts and circumstances which were already in his knowledge even during original assessment proceedings. The ld.AR of the assessee submitted that in the case of appellant company also the facts were in the knowledge of the Assessing Officer during the original assessment proceedings, hence, it is nothing but a case of change of opinion. 14. We have heard both the parties and have gone through the material available on record and perused the orders of the Lower Authorities carefully. 14.1 The reasons recorded by the Assessing Officer for reopening are as under: In this case, scrutiny assessment U/s.143(3) was complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are essential: - Loan taken from a company in which the person is shareholder. - Shareholding - Accumulated Profit in the Balance Sheet of the lender. - Closely held company in which public are not substantially interested. 14.3 On perusal of the paper book submitted by the appellant, it is observed that the Assessing Officer vide notice dated 23.06.2010 during the original assessment proceedings had asked the appellant to submit confirmation of unsecured loans, details of liabilities outstanding as on 31.03.2008. It is also observed that appellant assessee during the original assessment proceedings submitted extract of account in the books of appellant of the lender. Contra extract in the books of lender of the appellant s account along with confirmation. The appellant also filed copies of acknowledgement of return of income of the lenders. It is also observed that in the Audit Report, Schedule-D following unsecured loans have been mentioned J.M.Cotton Ginning Pressing Co. Pvt. Ltd, ₹ 7,87,40,676/- Krishin Dhan Cattle Feeds Pvt. Ltd. ₹ 16,19,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the decision. Therefore, in this scenario it will be inappropriate to say that the AO has not considered the applicability of Section 2(22)(e) of the Act. E . Hon ble SC in the case of ITO v/s TechSpan India Private ltd has observed as under : Quote, 9) Section 147 of the IT Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to reassess and not the power to review 13) The fact in controversy in this case is with regard to the deduction under Section 10A of the IT Act which was allegedly allowed in excess. The show cause notice dated 10.02.2005 reflects the ground for reassessment in the present case, that 10 is, the deduction allowed in excess under Section 10A and, therefore, the income has escaped assessment to the tune of ₹ 57,36,811. In the order in question dated 17.08.2005, the reason purportedly given for rejecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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