Assessment Jurisdiction Upheld, Deemed Dividend Denied, CIT Order Confirmed, Revenue Appeals Dismissed

The Tribunal dismissed the grounds assailing the jurisdiction of the Assessing Officer due to delayed objections. The reopening of assessments was deemed valid as the reasons were communicated and addressed by the Assessing Officer. The Tribunal ruled that the assessee did not qualify as a beneficial shareholder for deemed dividend under Section 2(22)(e) due to share transfers to minors. The CIT's order under Section 263 was upheld for errors in assessing agricultural and notional income but quashed regarding investment in ITCOT Ltd. Appeals of the Revenue were dismissed, while cross-objections of the assessees were also dismissed. The order was pronounced on 29th July 2011.

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Issues Involved:
1. Jurisdiction of the Assessing Officer.
2. Validity of reopening of assessments.
3. Applicability of Section 2(22)(e) of the Income Tax Act regarding deemed dividend.
4. Invocation of revisional power under Section 263 of the Income Tax Act.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer:
The primary issue raised was whether the assessments completed by an officer who did not have jurisdiction over the assessee were valid. The assessee argued that the original notice was issued by ITO, Company Circle IV(2), but the assessments were completed by ITO, Company Circle V(2), who did not have jurisdiction. The Tribunal held that under Section 124(3) of the Act, the assessee should have objected to the jurisdiction within one month from the notice under Section 142(1). Since the objections were raised eleven months after the notice, they were not valid. Therefore, the grounds assailing the jurisdiction of the A.O. were dismissed.

2. Validity of Reopening of Assessments:
The assessee contended that the reopening of assessments was invalid as the objections to the reasons for reopening were not disposed of through a separate order. The Tribunal referred to the CIT(Appeals) decision, which stated that the returns were only processed and not assessed, and the reassessment proceedings were initiated within four years. The Tribunal found that the reasons for reopening were communicated and dealt with by the Assessing Officer, and the reopening was valid as per the decision in Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers Private Ltd. Thus, the grounds assailing the reopening were dismissed.

3. Applicability of Section 2(22)(e) - Deemed Dividend:
The Revenue argued that advances received by the assessee from M/s Prakash Gold Palace (P) Ltd. should be treated as deemed dividends under Section 2(22)(e) since the assessee held substantial shares in the company. The assessee transferred shares to minor grandchildren, reducing her holding below 10%. The Tribunal held that for deemed dividend under Section 2(22)(e), the assessee must be both a registered and beneficial shareholder. Since the shares were transferred to minors, the assessee was not the beneficial owner. The Tribunal relied on the Special Bench decision in ACIT v. Bhaumik Colour (P) Ltd., which stated that both registered and beneficial ownership are required for Section 2(22)(e) to apply. Thus, the Tribunal upheld the CIT(Appeals) decision, deleting the additions made for deemed dividend.

4. Invocation of Revisional Power under Section 263:
The Commissioner of Income Tax (CIT) invoked revisional power under Section 263, citing errors in the assessment orders, such as verification of agricultural income, investment in ITCOT Ltd., and notional income from properties. The Tribunal found that the Assessing Officer had made proper inquiries regarding the investment in ITCOT Ltd. and considered it as deemed dividend. However, the Assessing Officer did not make proper inquiries regarding agricultural income and notional income from properties. Therefore, the Tribunal upheld the CIT's order under Section 263 for these aspects but quashed it regarding the investment in ITCOT Ltd.

Conclusion:
- Appeals of the Revenue were dismissed.
- Cross-objections of the assessees were dismissed.
- Appeals of the assessees were partly allowed, quashing the CIT's order under Section 263 regarding investment in ITCOT Ltd. but upholding it for other aspects.

Order Pronounced:
The consolidated order was pronounced in the Court on 29th July 2011.

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