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| The Tax Publishers2019 TaxPub(DT) 0967 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 263
Since actual liability of company was transferred to assessee which increased his liability and there was no revenue loss to the department, though AO did not examine this issue, therefore, assessment could not be held to be prejudicial to the interest of the revenue.
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Revision under section 263 - Validity - Deemed dividend under section 2(22)(e) -
DCIT had taken up the case of assessee for revision and observed that assessee had taken unsecured loans from various companies. CIT further observed from the share application account copy from the books of assessee and found that amounts have been transferred from creditors of company to M/s. N towards share application money. PCIT viewed that such loans constitute the deemed dividend under section 2(22)(e) and AO failed to make enquiries and to tax the same as deemed dividend. Thus, he was under the opinion that the assessment order passed by the AO under section 143(3) was erroneous and prejudicial to the interest of revenue. Held: No asset was distributed to assessee relating to company and accumulated profits were not distributed in the form of loans or advances to assessee. Actual liability of company was transferred to assessee which increased his liability and there was no revenue loss to department. Though AO did not examine this issue, assessment could not be held to be prejudicial to the interest of the revenue. Accordingly, order of DCIT passed under section 263 was not sustained and order of AO was restored.
Relied:CIT v. Parle Plastics Ltd. (2011) 332 ITR 0063 (Bom) : 2011 TaxPub(DT) 0481 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, VISAKHAPATNAM BENCH
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