2024 (10) TMI 471

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....ible by law, the re-opening be held to be invalid and bad-in-law. 2. The Hon. CIT(A) erred in upholding the re-opening of assessment u/s 147 of the I. Tax Act 1961, by issue of the notice u/s 148 dt. 31.03.2016, not appreciating that the original assessment was completed u/s 143(3) and four years had elapsed from the end of the assessment year and therefore, as per first proviso to section 147, without there being any omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, the reopening of assessment u/s 147 was invalid and bad-in-law. 3. The Hon. CIT(A) erred in upholding the addition of Rs. 29,76,508/- made by the ld. AO ws 56(2)(i) of the I.T. Act 1961, in respect of advance received by the appellant from M/s. Zojwalla Housing and Properties Private Limited, not appreciating that such advance was on account of a business transaction and therefore outside the ambit of the provisions of deemed dividend as contained in section 2(22)(e) of the I.T. Act 1961 and therefore addition u/s 56(2)(i) was not merited." 3. As the assessment in the present case was reopened by the Assessing Officer ("AO"), th....

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.... submitted that the amount was received as a part consideration towards the sale of the said commercial premises. The assessee submitted that since the proprietary concern could not construct the premises due to the non-availability of construction premises, the entire amount was repaid to M/s Zojwalla Housing and Properties Private Ltd. The AO vide order dated 26/12/2016 passed under section 143(3) read with section 147 of the Act disagreed with the submissions of the assessee and treated the amount of Rs. 29,76,508 as deemed dividend under section 2(22)(e) and added the same to the total income of the assessee under section 56(2)(i) of the Act. 5. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on the challenge against the invocation of proceedings under section 147 of the Act and also on addition made by the AO on merits. Being aggrieved, the assessee is in appeal before us. 6. During the hearing, the learned Authorised Representative ("learned AR") submitted that in the present case notice under section 148 of the Act was issued on 31/03/2016, i.e., after the expiry of 4 years from the end of the relevant assessment year, merely on the ....

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.... the AO initiated reassessment proceedings under section 147 and issued notice under section 148 of the Act on 31/03/2016 to the assessee. The reasons recorded by the AO, while reopening the assessment, are reproduced as follows: - "In this case, the assessee is a proprietor of M/s. Sab reality. The assessee is also a director in Co. M/s. Zojwala Housing & Properties Pvt. Ltd. having more than 10% voting shares. On perusal of records, it is found that during A.Y. 2009-10, the assessee has received the unsecured loans from M/s Zojwalla Housing & Properties Pvt Ltd to the tune of Rs. 29,80,340/ The accumulated profit of M/s Zojwalla Housing & Properties Pvt Ltd as on 31.03.2009 is Rs. 85,47,660/, which is more than the loan taken by the assessee. The assessee, being substantial shareholders in the company and the company being a Pvt Ltd Company in which Public interest are not substantial. Hence, the payment as received by the assessee as unsecured loan comes under the ambit of deemed dividend u/s 2(22)(e). In this case, the Scrutiny Assessment U/s 143(3) for A.Y.2009-10 was completed on 29.12.2011. On perusal of assessment records, it is found that the issue of dee....

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....d accepted the claim of the assessee. Therefore, we find no merits in the allegation of the Revenue, as stated in the aforenoted reasons recorded while reopening the assessment, that the issue of deemed dividend was not considered/discussed during the scrutiny assessment proceedings under section 143(3) of the Act. Further, we are of the considered view that the impugned reassessment proceeding is nothing but a change of opinion by the AO on the issue which was considered at the time of the scrutiny assessment. 11. Further, from the perusal of the aforenoted reasons recorded by the AO while reopening the assessment, it is pertinent to note that reopening is based only on perusal of the record and there is no reference to any new or tangible material which came to the knowledge of the AO for initiating the reassessment proceedings. The aforesaid conclusion is duly supported by the disclosure in the financial statement of the assessee, page 44 of the paper book, wherein the receipt of Rs. 29,80,339.94 from M/s Zojwalla Housing and Properties Private Ltd.has duly been disclosed by the assessee. 12. At this stage, it is also pertinent to note that the impugned reassessment procee....