TaxTMI 
TaxTMI 
2022 (4) TMI 346
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....ce on behalf of the Respondents. 4. The Petition challenges the notice dated 25.03.2014 issued under Section 148 of the Income Tax Act seeking to reopen the assessment for Assessment Year 2010-11. The reasons in support of the impugned notice do not indicate any directions from CIT (Appeals) to issue the re-opening notice. However, the Order dated 23.07.2014 disposing of the objections relies upon the directions of the CIT (Appeals) to make Section 150 of the Income Tax Act applicable to reject the objections. Thus, prima facie, the reasons in support not referring to the directions of the CIT (Appeals), cannot support the impugned notice. Therefore, interim relief in terms of prayer (d)." 3. Though Ms. Linhares, the learned Counsel for the respondents, tried to urge that the issues involved in both these petitions may not be the same, after extensively hearing the learned Counsel for the parties, we are satisfied that there is no substantial difference between the two matters. Therefore, we propose to dispose of both these petitions by this common judgment and order, no doubt, bearing in mind the points of distinction urged by Ms. Linhares. Writ Petition No.500/2014 wi....
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....rder dated 26.12.2011 concerning the petitioner's assessment for the assessment year 2010-2011. By order dated 10.03.2014, however, the Deputy Commissioner of Income Tax refused to exercise revisional jurisdiction by pointing out that the AO had a remedy under Section 148 read with Section 150 of the IT Act to reassess the petitioners. 9. Based on the order of the Deputy Commissioner of Income Tax, the AO issued the impugned notices to the petitioners seeking to reopen the assessment for the assessment year 2010- 2011. 10. The petitioners, upon service of the impugned notice, requested the AO for furnish of reasons on 24.04.2014. Such reasons were furnished to the petitioner. The petitioner filed objections which were rejected by the AO on 10.06.2014. This petition was instituted on 06.08.2014 and ad-interim relief was granted on 29.01.2015. This ad-interim relief was confirmed on 23.04.2015. 11. Mr. Pangam, the learned Counsel for the petitioners, submits that the impugned notice stands vitiated because the same was issued at the dictates of the Deputy Commissioner of Income Tax and there was no independent application of mind by the AO. He submits that, in any case, ....
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....f Section 150 of the IT Act will not apply in Writ Petition No.72/2015. 15. Ms. Linhares, without prejudice to the aforesaid, submitted that both the petitioners were admittedly the only shareholders and Directors of the companies DTRPL and MMPL. She submitted that being such, neither could claim ignorance about the proceedings before CIT (Appeals) that culminated with the order dated 16.01.2013. She submitted that DTRPL was granted a full opportunity of hearing before CIT (Appeals) and the petitioners who are the only Directors and shareholders of this company should also be deemed to have been granted such opportunity by CIT (Appeals). She submits that the directions and findings recorded by CIT (Appeals), in its order dated 16.01.2013, therefore bind the petitioners, and based thereon the AO was fully competent to issue the impugned notices seeking to reassess the petitioners' returns for the assessment year 2010- 2011. She relies on Hungerford Investment Trust Ltd. V/s. Income Tax Officers & Ors. (1998) 3 SCC 168 in support of her contentions. She also pointed out that the decision in Murlidhar Bhagwan Das (supra), relied upon by Mr. Pangam, was considered, explained, an....
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....10-2011, are based on the order dated 16.01.2013 made by CIT (Appeals). 21. Section 150 of the IT Act is concerned with provision for cases where assessment is in pursuance of an order on appeal, etc. Section 150 of the IT Act as it was then obtained, reads as follows:- "150. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision [or by a Court in any proceeding under any other law]. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for ass....
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....ered as dividend as introduced by the Finance Act, 1987 with effect from 1.4.1988 viz., payment by a company 'to any concern in which such shareholder is a member or a partner and in which he has a substantial interest' do not say as to in whose hands the dividend has to be brought to tax, whether in the hands of the 'concern' or the 'shareholder'. However, this confusion has been clarified by the Board in the CBDT circular no.495 dated 22nd September 1987. That is the year when the new limb of section 2(22)(e) was introduced. The circular states that the 'further, deemed dividend would be taxed in the hands of the concern receiving where all the following conditions are satisfied...." The Assessing Officer has discussed in detail in assessment order that in the present case of the appellant, the conditions mentioned in section 2(22) (e) of the Act are fulfilled to hold that the advances received by the assessment company constitutes to be deemed dividend to the extent of Rs.17,09,30,012/-. Therefore, hold that the entire advance made by M/s Minescape Minerals Pvt. Ltd. to the extent of its accumulated profit fits into the definition of advance which qualifies to ....
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.... High Court in the case of CIT vs Universal Medicare (P) Ltd (2010) 190 Taxman 144 (Bom) (supra). 24. In the result, the appeal is treated as allowed. Sd/- (Preeti Garg) Commissioner of Income Tax (Appeals)-VI, Bangalore." 26. The ambit and scope of the expression finding or direction have been discussed and explained by the Hon'ble Supreme Court in Murlidhar Bhagwan Das (Supra) and Rajinder Nath (Supra). 27. In Murlidhar Bhagwan Das (supra), the Constitution Bench of the Hon'ble Supreme Court has interpreted the expression finding or direction in Section 34(1) of the Income Tax Act, 1908. This provision was more or less similar to the provision now contained in Section 150 of the IT Act. The Court approved the decision of the Division Bench of the Allahabad High Court in Pt. Hazari Lal V/s. Income Tax Officer, Kanpur (1960) 39 ITR 265 in which it was held that the word finding will only cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the final decision in the appeal, has been the subject of controversy between the intere....
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....sment year. To be a necessary finding it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in respect of B may be called for, which is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. 32. In the context of the expression direction, the Court held that a direction in Section 153(3)(ii) must be an express direction necessary for the disposal of the case before the authority or court, and must be one which the authority or court is empowered to give while deciding the case before it. A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the ITO whether or not to take action, it cannot be descri....
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....ends in the hands of DTRPL, only made the following observations: - "This decision leaves it open for the Assessing Officer to make an assessment of such deemed dividend in the hands of the shareholders as held by Hon'ble Bombay High Court in the case of CIT vs Universal Medicare (P) Ltd (2010) 190 Taxman 144 (Bom) (supra)." 36. Following the law laid down in Murlidhar Bhagwan Das (supra) and Rajinder Nath (supra), the aforesaid observations cannot be called a direction based upon which the impugned notices can be sustained. 37. Now, the next question is whether there is any finding in the order dated 16.01.2013 made by CIT (Appeals) based upon which issuance of the impugned notices could be sustained. 38. Even if we proceed based on the premise that there are findings in the said order to the effect that the deemed dividends that arose could be taxed in the hands of the petitioners, who were the shareholders and directors of DTRPL, the real question is whether such findings were recorded by CIT (Appeals) after the petitioners were given an opportunity of being heard before the CIT (Appeals) made its order dated 16.01.2013 in terms of Explanation 3 to Secti....