Case Law Details
Jayesh T Kotak Vs DCIT (Gujarat High Court)
Conclusion: In the absence of failure on the part of assesse to disclose fully and truly all material facts necessary for his assessment, the reopening of assessment beyond a period of four years from the end of relevant assessment year was without authority of law.
Held: AO reopened assessment by issuing notice under section 148 after a gap of more than four years. Assessee contended that he had filed all primary documents which were statutorily required to be filed along with the return of income and had also filed all documents that were called for during the course of scrutiny assessment. Assessee pointed out that AO, while carrying out scrutiny assessment, had examined the issue of deemed dividend under section 2(22)(e). Adverting to the reasons recorded, it was submitted that the reasons did not state that any loan or advance had been received by assesse or any benefit had been received; there was no allegation that income of dividend had been earned by assesse; and hence, in the absence of those overriding considerations, the notice under section 148 must fail. It was held that it was not the case of AO that assessee had received any loan from the loan giver company or that the loans advanced by the loan giver company in which assesse had shareholding of not less than 10% of the voting power to the two concerns in which assesse had substantial interest was for the benefit of assesse. Assessee had also disclosed the extent of his shareholding in the loan giver as well as loan receiver companies. The reopening of assessment was founded on the premise that assesse did not disclose the transactions between the loan giver company in which he had shareholding not less than 10 per cent of the voting power and the loan receiver concerns in which he had substantial interest. However, when the amount received by the two concerns from the loan giver company was neither received by assesse nor was it for the benefit of the assesse, such amount could not be considered as deemed dividend in the hands of assessee, and consequently no income accrued to assessee from such transactions. In the absence of any finding having been recorded by AO that any income had accrued in favour of assessee, it was not possible to say that there was any obligation cast upon him to disclose such transactions. In the absence of any failure on the part of assesse to disclose fully and truly all material
facts necessary for his assessment, the reopening of assessment beyond a period of four years from the relevant assessment was without authority of law.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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