TaxTMI 
TaxTMI 
TaxTMI 
2008 (3) TMI 374
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.... original assessment was processed under section 143(1). The hon'ble apex court in the case of Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 has held that an intimation under section 143(1)(a) cannot be treated as an assessment order and hence reopening matter cannot be agitated on that account. Hence, the assessee's plea regarding reopening of assessment for the assessment year 1999-2000 is liable to be dismissed and the same is dismissed as such. 4. Before adjudicating upon the reopening issue for the assessment year 1998-99, it will be appropriate to deal with the facts leading to reopening and addition in this case. After the processing of the return under section 143(1) for the assessment year 1999-2000 and assessment under section 143(3) for the assessment year 1998-99, the Assessing Officer found that the assessee-firm had received huge amounts as advances from the company Pallava Granite Industries (India) P. Ltd. (PGIIPL) during the accounting periods ended on March 31, 1998 and March 31, 1999, in which the two partners of the assessee-firm are shareholders and are having substantial interest. He also found that the company possessed accumul....
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....th counsel and perused the relevant records on this issue. We find that the learned Commissioner of Income-tax (Appeals) has taken a correct view of the matter and the same does not need any interference on our part. When there was no information before the Assessing Officer regarding the shareholding pattern of the company or its accumulated profits, it cannot be said that the assessee has disclosed all the necessary materials for assessment in this regard. Hence the Assessing Officer has no occasion to examine the advances received from the company from the angle of taxability of the sum under section 2(22)(e). There can also not be said to have been any change of opinion. Hence, we affirm the order of the learned Commissioner of Income-tax (Appeals) on this issue. Hence, the first issue raised regarding reopening of assessment is dismissed for both the appeals. 7. On merits, the issue raised is that the Commissioner of Income-tax (Appeals) erred in confirming and enhancing the assessment with regard to advances received by the firm/assessee from the company to the extent of accumulated profits in terms of section 2(22) of the Income-tax Act. 8. Before adjudicating this issue a....
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....ged company)." 9. As regards the assessee's plea that this was a normal business transaction so as to escape from the provisions of section 2(22)(e), the learned Commissioner of Income-tax (Appeals) observed that : "On going through the purchase agreement between the firm and the company, it is seen that however the sale was to take place only after the lease period was over. There is also a condition imposed in this agreement that the vendor i.e., the assessee-firm will not take steps to view its quarry lease with the Government authorities, but this agreement had not been implemented and the sale had not been effected till date. Further it is seen that there are no witnesses' signatures in this agreement. So, it is clear that seemingly there is an agreement entered into between the company and the firm as early as in April 1, 1996, but the firm had never taken steps to carry this agreement to its logical end and executed the same. So, there seems to be a business deal on paper between these two concerns, for which advances are purported to have been received by the firm, but in actuality, there is no such deal. Nothing had taken place. The copy of the agreement as file....
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....han [1999] 236 ITR 327 cannot be applied. (ii) Actual amounts of advances received by the firm from PGIIPL during the two accounting periods are to be considered and not the balances outstanding as at the end of the accounting periods and also the accumulated profits as at the beginning of the accounting periods are to be taken into account according to the Supreme Court's decision in the case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345. Thus, the amount to be taxed as deemed dividend for the assessment year 1998-99 should be Rs. 2,28,92,408 and the amount to be considered for the assessment year 1999-2000 should be Rs.1,75,05,871." 12. Against this order of the Commissioner of Income-tax (Appeals), the assessee is in appeal before us. 13. Before us learned counsel for the assessee submitted that, inasmuch as the company PGIIPL had been granting advances to the assessee-firm during the earlier accounting periods also, the amounts so advanced should also be taken into consideration and the accumulated profits must be reduced by such advances since they were to be treated as deemed dividend for those years. Learned counsel for the assessee further argued that if this e....