2015 (5) TMI 1085

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.... time. That thereafter, the AO finalized the assessment and passed the assessment order under Section 143(3) of the Act on 30.11.2009 accepting return of income of the petitioner. 2.1. That thereafter, respondent no.2 has issued impugned notice under Section 148 of the Act dated 31.3.2014 reopening the assessment for AY 2007-08. On the request made by the assessee, the AO has served the reasons recorded for reopening of the assessment vide letter dated 16.4.2014. That on receipt of the reasons recorded, the petitioner raised various objections against the reopening of the assessment for AY 2007-08 vide letter dated 19.08.2014 and requested to drop the reassessment proceedings. 2.2. That vide letter dated 24.2.2015, the AO has disposed of the said objections and has not accepted the request made by the assessee to drop the reassessment proceedings. Hence, petitioner has preferred present Special Civil Application for the aforesaid reliefs. 3.0. Shri B.S. Soparkar, learned advocate for the petitioner has vehemently submitted that in the present case reassessment proceedings have been initiated beyond the period of four years from the relevant assessment year and even on t....

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....eceived by him to the tune of Rs. 4,85,93,639/for taxation. It is submitted that provisions of Section 2(22)(e) of the Act are applicable and free reserves of Rs. 4,86 crores is to be brought to taxation under the provisions of Section 2(22) (e) of the Act in the hands of the assessee, It is submitted that therefore, the impugned reassessment proceedings are absolutely just and proper and in consonance with the provision of Section 147 of the Act and notice issued for reopening dated 31.3.2014 is valid and legal. 5.0. Heard the learned advocates for the respective parties at length. 5.1. At the outset, it is required to be noted that what is challenged in the present Special Civil Application by the petitioner assessee is the reopening of the assessment for the A.Y. 2007-2008 and initiation of the reassessment proceedings for the A.Y. 20072008, in exercise of the powers under section 147 read with section 148 of the Income Tax Act. It is required to be noted that in the present case initiation of reassessment proceedings is beyond 4 years from the assessment year. Therefore, unless and until it is observed and found that the income has escaped assessment due to the failure on....

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....that the addition on account of deemed dividend shall be subject to the extent and availability of profits with the lending company. In other words, such addition shall be restricted to the extent of accumulated profit possessed by the company. As per the information available with the undersigned, the assessee is a shareholder is M/s. Jivraj Tea Limited as well as in Vesta Exim Pvt Ltd and both the companies are not being companies in which the public are substantially interested. The assessee, Shri Viren Shah is holding more than 10% shareholding (voting power) in M/s. Jivraj Tea Limited and also having more than 20% shareholding (voting power) in M/s. Vesta Exim Pvt Ltd. Thus the first and basic prerequisite is satisfied. The supporting documents in this regard are enclosed as Annexures 1 and 2. Further, examination of the Audit Report of M/s. Jivraj Tea Limited for the period relevant to Asst. Year 200708 shows that M/s. Jivraj Tea Limited has given a loan of Rs. 7,14,99,000/to M/s. Vesta Exim Pvt Ltd. Further to corroborate this fact, M/s. Jivraj Tea Limited has also earned an interest of Rs. 26,79,767/from M/s. Vesta Exim Pvt Ltd. Thus, the second c....

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....mmunication dated 8/7/2014 is nothing but a change of opinion of the A.O. and that too, without any new material, which is not permissible. 5.6. Identical question came to be considered by the Division Bench of this Court in the case of Niko Resources Ltd. (supra) and while considering the scope and ambit of powers to be exercised under section 147 of the Income Tax Act by the Assessing Officer, while reopening the assessment beyond the period of 4 years, the Division Bench of this Court while considering its decisions in the case of Gujarat Lease Financing Limited (supra), has observed and held in paragraph Nos.16, 17 and 27 as under : "16. The Assessing Officer is authorized to make reassessment in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the 1st proviso to section 147 of the Act, assessment can be reopened under section I47 of the Act after expiry of 4 years only if (1) the assessee failed to make a return under section I39 of the Act or in response to notice issued under section 142(1) or under section 148 of the Act, he failed to disclose truly and fully all material facts necessary....