×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
31-10-2019, Ravi Sharma, Section 147, 148, 2(22(e), Tribunal Delhi
This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [Appeals] - 17, New Delhi dated 06.07.2016 pertaining to assessment year 2007-08.
2. The solitary grievance of the revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 1,80,42,924/- on account of deemed dividend u/s 2(22)(e) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short].
3. At the very outset, the ld. counsel for the assessee drew our attention to the application dated 16.09.2019 invoking Rule 27 of ITAT Rules to support the order of the ld. CIT(A) on lega ground. It is the say of the ld. counsel for the assessee that the assessee has challenged the reopening of assessment before the ld. CIT(A) and the ld. CIT(A) did not adjudicate upon the grievance on the ground that he has deleted the additions on merits of the case.
4. The ld. counsel for the assessee drew our attention to the reasons for reopening assessment which are placed at page 18 of the paper book, which read as under:
“Accordingly, I am satisfied that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the said assessment year and income of Rs. 1,80,42,924/- chargeable to tax has escaped assessment for the assessment year 2007-08 by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for 2007-08. 1 have, therefore, reason to' believe that the sum of Rs._ 1,80,42,924/- chargeable to tax has escaped assessment for the 2007-98. Thus, the same is to be brought to tax under section 147/148 of the 1.7. Act. 1961.”
5. The ld. counsel for the assessee vehemently submitted that the Assessing Officer has borrowed satisfaction from the Assessing Officer of M/s J.C. Infotech Technologies Ltd. Without examining the reserves and surplus of that company, the Assessing Officer formed a belief that the income escaped assessment without applying his mind. The ld. counsel for the assessee relied upon various judicial decisions to support his contentions
6. Per contra, the ld. DR, in support of the reopening of the assessment, stated that at the stage of reopening the assessment, the Assessing Officer should have prima facie belief and only after reopening assessment, he will go into facts. Therefore, there is no illegality in reopening of the assessment.
7. We have given thoughtful consideration to the rival submissions and have carefully perused the reasons for initiating the proceedings u/s 147 of the Act. The said notice is exhibited elsewhere. A perusal of the same shows that the Assessing Officer of M/s J.C. Infotech Technologies Ltd found that the company has given loans and advances to one of its Directors, who is a major share holder holding 49,400 shares out of total number of shares of 50,000. This information was passed on to the officer of the appellant. On the basis of this information, the Assessing Officer was satisf ed that there is a failure on the part of the assessee to disclose fully and truly all material facts and, accordingly, proceeded to reopen the assessment.
8. In our considered opinion, there is no illegality in the formation of belief by the Assessing Officer, in as much as, at the stage of issuing the notice u/s 148 of the Act, all that is required is that the Assessing Officer should have some tangible material evidence to reopen the assessment. The information based on which the notice u/s 148 of the Act was issued is an information received from another Income tax officer and the same cannot be faulted with.