TaxTMI 
TaxTMI 
1981 (6) TMI 18
X X X X Extracts X X X X
X X X X Extracts X X X X
....tances of the case and on a correct interpretation of section 297(2)(b) and section 297(2)(d)(ii), the Appellate Tribunal was justified in holding that the sum of Rs. 12,26,206 could not be assessed as the income of the assessee for the year under consideration ? " The assessee is a registered firm and the reference relates to the assessment year 1955-56. There was a private limited company under the name and style of M/s. Hall & Anderson Ltd., whose entire shares were purchased in the name of the assessee-firm, M/s. Madanlal Sohanlal, some time in September, 1946, for Rs. 80,00,000. Later on, a public limited company under the same name of M/s. Hall & Anderson Ltd. was floated which purchased the entire assets and liabilities of the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... " The assessee-firm held the entire shares of M/s. Hall & Anderson Pvt. Ltd. It received Rs. 80,00,000 on behalf of the Private Ltd. Co. when the assets of this company were sold to M/s. Hall & Anderson (Public) Ltd. This amount has been shown in the assets side of the Pvt. Ltd. Company's balance-sheet as an advance recoverable in cash from director. This advance included accumulated profits of Rs. 12,26,206 relating to the private limited company. Since the assessee-firm being the only shareholder of the company, should be regarded as the director in receipt of the said advance which has not yet been paid to the company so far. I have reasons to believe that deemed dividend of Rs. 12,26,206 by virtue of section 12(1B) read with section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome-tax Appellate Tribunal. The Tribunal was of the view that all the particulars were disclosed by the assessee to the revenue authorities and, therefore, if the ITO did not take proper action at the time of the original assessment and was not informed of what legal inferences should have been drawn from the facts disclosed and how the law should be applied to the facts of the case, s. 147(a) of the I.T. Act, 1961, was not attracted. The Tribunal further held that if an assessment was reopened in view of s. 297(2)(b) read with s. 297(2)(d)(ii) of the I.T. Act, 1961, the assessment should be made in accordance with the provisions of the new Act, and since under the 1961 Act there was no provision similar to s. 12(1B) of the Indian I.T. Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rverse in law, the view taken by the Tribunal that s. 147(a) was not attracted, could not be assailed in a reference. The Tribunal was justified in the view it took. We, therefore, answer the first question in the affirmative and in favour of the assessee. So far as the second question is concerned though it does not survive in the view we have taken, as it would be of an academic nature, it appears to us that the Tribunal was in error in the view it took on this aspect of the matter. In this connection reference may be made to the observations of the Supreme Court in the case of Govinddas v. ITO [1976]. 103 ITR 123, where the Supreme Court observed that the words "all the provisions of the new Act shall apply accordingly " in cl. (ii) o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income. They do not import any substantive provisions of the new Act which create rights or liabilities. The word 'accordingly', in the context, means nothing more than 'for the purpose of assessment' and it clearly suggests that the provisions of the new Act which are made applicable are those relating to the machinery of assessment. The substantive law to be applied for determining the liability to tax must necessarily be the law under the old Act, for, that is the law which applied during the relevant assessment years and it is that law which must govern the liability of the parties. Though subsections (1) to (5) of section 171 merely lay down the machinery for assessment of a Hindu undivided family after partition, sub-section (6) of s....