TMI Blog2023 (2) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... panies - Tribunal cancelled CIT order of revision - HELD THAT:- Tribunal called for the assessment records and found that a note not for assessee prepared by the assessing officer regarding various issues involved in the block assessment proceedings. The said note not for assessee has been extracted in full wherein there is also a specific observation stating that the matter was discussed with the Additional CIT, Range-III(C), Kolkata along with the submission of the assessee dated 25.03.2004 and in view of the specific methodology of calculating deemed dividend at the time of advancing the loan by the company to the assessee, reference was made to the decision of K. K. Sen [ 1964 (10) TMI 16 - SUPREME COURT] wherein it was held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Adv. The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act for brevity) is directed against the order dated 30th September, 2008 passed by the Income Tax Appellate Tribunal, B Bench, Kolkata (the Tribunal) in IT(SS)A No.68/Kol/2006 for the block period from 01.04.1990 to 24.08.2000. The appeal was admitted on the following substantial questions of law: (a) Whether in the facts and circumstances of the case the Tribunal was justified in law to cancel the order of CIT by holding that the order of the assessment was not erroneous and prejudicial to the interest of the revenue despite the fact that the assessing officer failed to include the reserves and surplus of M/s. M.K. Shah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.07.2001. It was stated that while calculating the deemed dividend income, the assessee had not taken into consideration the reserves and surpluses of M. K. Shah Exports Ltd. as on the dates of loan i.e. 23.02.1999 and 04.03.1999 for quantification of deemed dividend income even though this Court had ordered amalgamation to take effect from 18.05.1998. It was stated that the assessing officer failed to include the reserve and surplus of M. K. Shah Exports Ltd. with that of Safari Capitals Pvt. Ltd. for the aforesaid quantification of deemed dividend income and owing to short computation of income under Section 2(22)(e), the block assessment order has been rendered erroneous and has resulted in under charge of tax thereby causing prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being aggrieved by such order, preferred appeal before the learned Tribunal questioning the jurisdiction of CIT to invoke its power under Section 263 of the Act. The learned Tribunal has elaborately referred to the submissions made by the assessee before it as well as the stand taken by the revenue. It was contended by the assessee that the assessing officer was fully aware of the issue raised by the CIT in the proceedings under Section 263 of the Act. The assessing officer has taken a conscious decision after going through all the details and particulars filed before him in the original block assessment proceedings. He was also aware of the relevant provisions as well as the case law. Therefore, it was submitted that only because the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider as to how a deeming provision should be construed and by relying upon the decision of the Hon ble Supreme Court in CIT vs. C.P. Sarathy Mudaliar reported in (1972) 83 ITR 170 (SC) it held that deeming provision must receive strict interpretation. After such an observation the learned Tribunal has noted the facts that the assessing officer while completing the original block assessment, was fully aware of the matter in dispute. The assessee had clarified before the assessing officer regarding the quantification of deemed dividend under Section 2(22)(e) and also set out the reasons for the same. Furthermore, the Tribunal noted that the assessing officer vide letter dated 19.03.2004 raised specific queries on this aspect in course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view rightly, that the assessing officer was very well aware of the issue and has taken a consistent decision after examining the issue on hand and also after taking note of various decisions of the Hon ble Supreme Court. With regard to the decision in the case of M. K. Shah vs. CIT reported in 277 ITR 128(Cal), the Tribunal observed that on the date when the CIT assumed jurisdiction under Section 263 of the Act, the decision of this Court was in force and would bind the Department and subsequent reversal of the decision of the Hon ble Supreme Court can have no impact in this regard. The learned Tribunal rightly referred to the decision of the Hon ble Supreme Court in CIT v. G.M. Mittal Stainless Steel Pvt. Ltd. reported in 263 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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