TaxTMI 
TaxTMI 
2022 (12) TMI 301
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....zance the Order of the Hon'ble Supreme Court the "Suo Moto WP 03/2020 dated 20.03.2020 while considering the condonation of delay. It is a fact that 'Covid-19' pandemic was prevalent during the period and in term of the directions issued by the Hon'ble Supreme Court in Miscellaneous Application No.21/2022 in Suo Motu Writ Petition No.3 of 2020, we condone the delay of 96 days and admit the appeal for adjudication on merits. 3. The Assessee has raised two issues, i.e. (i) challenging the reopening of the assessment u/s.147 r.w.s.148 of the Act vide Ground Nos.2 to 6, as under: "2) He erred in re-opening the assessment of the Appellant u/s.147 of the Act, beyond a period of four years as the Appellant had truly and fully disclosed all material facts necessary for completion of the original assessment (completed u/s.143(3) of the Act) and, hence the first proviso to Sub-Section (1) to Section 147 of the Act would apply. 3) The CIT(A) erred in law in re-opening the assessment as the reasons recorded for reassessment does not state that there is a failure on the part of the Appellant to disclose fully and truly all primary material or relevant facts which were neces....
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....t be annulled and the addition made u/s.2(22)(e) of the Act amounting to Rs.1,40,67,365/- be deleted." 5. The brief facts of the case are that the Assessee is a Private Limited company namely, Pallava Resorts Private Limited and it has filed its return of income on 01.10.2012. The original assessment was completed u/s.143(3) of the Act and subsequently the assessment was reopened u/s.147 of the Act dated 30.12.2018. The Assessing Officer during the course of reassessment proceedings noted on perusal of the financials that the Assessee company has received a loan to the tune of Rs.1,40,67,365/- from Questnet Enterprises Private Limited [QNEI] during the Financial Year 2010 - 2011 relevant to the Assessment Year 2011 - 2012. It was observed from the financials of QNEI that it has accumulated profit as on 31.03.2011 at Rs. 12,21,49,133/-. The Assessing Officer has brought out the shareholder pattern of both the companies, as under: Sl. No. Name of the Shareholder Percentage of share in Pallava Resorts Pvt. Ltd. Questnet Enterprises Pvt. Ltd. 1 Ms. Pushpam Appalanaidu 24.94% 75% 2 Mr. Joseph Augustine 2.77% 25% 3 Questnet Enterprises Indi....
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....ovided to a concern in which there are common shareholders holding substantial interest, the provisions of Section 2(22)(e) of the Act will trigger. 5.3.6 In the case of the Appellant, a shareholder Ms. Pushpam Appalanaidu holds 24.99% shares of the Appellant and 75% shares of QNEI. Hence, it satisfies the condition of holding substantial interest. 5.3.7 The Appellant has further highlighted various case laws which state that the provisions of Section 2(22)(e) of the Act trigger only if it is received by a shareholder. The list of such case laws is provide below for ease of reference. * Commissioner of Income Tax Vs. Jignesh P Shah [ITA No.197/2013] (Mumbai HC) * Commissioner of Income Tax Vs. Ankitech Private Limited [2011-ITRV-HC-Del-109](Delhi HC) * Principal Commissioner of Income Tax Vs. Ennore Cargo Terminal Private Limited [406 ITR 477] (Madras HC) 5.3.8 It is pertinent to note that a similar finding in favour of the Appellant was also upheld by the Hon'ble Karnataka High Court in the case of Commissioner of Income Tax Vs. Namdhari Seeds [2017] 246 Taxmann 0061. The Income Tax Department had filed an SLP against the ....
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....on by the learned Counsel for the Assessee in support of his contentions. (a) The decision of the Hon'ble Delhi High Court in the case of the Commissioner of Income Tax Vs. Ankitech Private Limited reported in [2012] 340 ITR 14 (Del.) wherein the Hon'ble Delhi High Court has held that the provisions of Section 2(22)(e) of the Act is not attracted if the recipient is not a shareholder. (b) The decision of the Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Checkpoint Apparel Labelling Solutions India Limited reported in [2021] 276 Taxmann 312 (Mad.) wherein it has held that since the recipient of the loan was not a shareholder in a company from which loan was received, hence loan cannot be assessed as deemed dividend. (c) The decision of the Mumbai High Court in the case of Commissioner of Income Tax Vs. Jignesh P. Shah [2015] 372 ITR 392 (Bom.) wherein it has held that the provision of Section 2(22)(e) of the Act cannot be invoked unless the Assessee itself is a shareholder of the company who was lending money to him. (d) The decision of the Co-ordinate Bench of this Tribunal, Mumbai Benches in the case of The Bombay Oil Industries Limited Vs. Deputy Commiss....