1979 (2) TMI 24

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....rivate limited company and the assessment year involved in this reference is 1961-62. The short point involved is about the application of s. 23A(1) of the Indian I.T. Act, 1922. The accounting year followed by the assessee-company was the calendar year. Though the assessee was liable to distribute a dividend to the extent of 65% of its total income, it did not declare anything during the relevant assessment year. However, it had declared more than 65% of its total income less taxes as dividend on 26th February, 1962, which is beyond the accounting year of the company. Accordingly, the ITO issued a show-cause notice to the assessee as to why an order under s. 23A(1) should not be passed for the assessment year in question. In reply, the ass....

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....ation of the rival contentions, the Tribunal took the view that s. 23A was a penal provision and if the assessee had not been able to call the annual general meeting for a good reason, then there was no warrant for holding that s. 23A had been violated. In the view of the Tribunal, only a company which had held its annual general meeting within this period and at that meeting declared no dividend or a dividend less than the statutory percentage, could be regarded as having violated s. 23A. The Tribunal applied its mind to the reasons offered by the assessee for the delay in holding the annual general meeting and concluded that the assessee could not be said to have not held the meeting with a motive to avoid distribution of dividend. Accord....