TaxTMI 
TaxTMI 
2016 (3) TMI 741
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....ommissioner of Income-tax (Appeals) - 5, Mumbai, hereinafter referred to as "the CIT(A)"has erred in holding that the reopening of the assessment proceedings under section 147 r.w.s. 148 of the Act was validly initiated. b) Your appellant respectfully submits all the relevant details/particulars were available with the assessing officer at the time of framing of original assessment order under section 143(3) of the Act. As such, the reopening of assessment under section 147 r.w.s. 148 of the Act was not justified. c) Your appellant, therefore, prays that the assessment made under section 143(3) r.w.s. 147 of the Act be cancelled." Apart from the aforesaid grounds, the Assessee had also filed petition for admission of additional grounds v....
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....g 49,99,970/- shares out of 50,00,000/- shares which comes to 99.99% share holding in M/s PRTL. M/s Pantaloon Technologies P. Ltd. had a reserve and surplus of Rs. 65,36,884 as on 31.3.2006. Therefore all the conditions stipulated in sec. 2(22)(e) have been satisfied i.e. loan or advance has been given to a shareholder holding 99.99% shares in the company and the company who has given loan and the company who has taken loan are Private Limited companies in which public are not substantially interested. M/s. PRTL is not engaged in the business of giving loans and advances. Therefore such loan/advance given are not under the normal course of business. M/s. PRTL is having a reserve and surplus of Rs. 65,35,884/- as on 31.3.06 and loan and adva....
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.... it was also submitted that no new information or material has come to the notice of the AO after completion of the original assessment, hence based on some material, reopening u/s 147 cannot be resorted to. However, the AO rejected the Assessee's objection and noted that the Assessee being one of the shareholders of M/s. PRTL Enterprises holding 99.99% shares of the Assessee-company, therefore, the loan taken for Rs. 5,50,00,000/- is clearly covered by the provisions of deemed dividend u/s 2(22)(e) of the Act. This aspect was not examined at all. Thereafter, he noted that on the perusal of the balance-sheet as on 31.3.2006 of M/s. PRTL Enterprises it is seen that it had 'reserves and surplus' of Rs. 65,36,884/-, therefore, the ....
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....e was no accumulated profits. It was only during the current year that the 'reserves and surplus' was to the extent of Rs. 65,36,884/-. Thus, no addition on account of deemed dividend can be made. In support of his contention, he strongly relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. V. Damodaran reported in [1980] 121 ITR 572 (SC), wherein the Hon'ble Supreme Court held that accumulated profits will not include current profits. Thus, on merits also no addition can be made. 4. On the other hand, the ld. DR submitted that during the course of original assessment proceedings, the AO did not examine the issue regarding the applicability of deemed dividend u/s 2(22)(e) of the Act. Thus, there was ....