Atma Ram Properties (P) Limited. v. Dy. CIT

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The Tax Publishers2012 TaxPub(DT) 0760 (Del-HC) : (2012) 343 ITR 0141 : (2012) 254 CTR 0597 : (2011) 203 TAXMAN 0408 : (2012) 072 DTR 0177 INCOME TAX ACT, 1961 --Reassessment--Full and true disclosureAO failed to apply legal provisions--These two appeals under section 260A have been filed by AR Properties Private Limited, the appellant and relate to assessment years 1999-00 and 2000-01. For the said years, the appellant had filed returns of income on 10-12-1999 and 30-11-2000 declaring income of Rs. 49,85,970 and Rs. 39,87,710, respectively. Return for the assessment year 1999-2000 was taken up for scrutiny and the total income was assessed at Rs. 1,11,76,124. Return for the assessment year 2000-2001 was not taken up for scrutiny and was processed and the returned income as declared was not enhanced/modified. For the assessment year 2001-02, the AO made an addition of Rs. 1,56,51,570 as deemed dividend under section 2(22)(e). This amount reflected the advance given by a group company, i.e., A R Builders (P) Ltd., to the appellant-assessee. On appeal, the Commissioner (Appeals), rejected the argument of the appellant that the aforesaid amount of Rs.1,56,51,530 reflected only a current account entry and no loan or advance was taken. However, he restricted the addition to Rs. 19,51,725 as the said amount was advanced to the appellant during the assessment year 2001-02. He deleted the balance addition of Rs. 1,36,99,845.14 as the said amount was the opening balance and had not been advanced or given as a loan/advance during the assessment year in question, i.e., assessment year 2001-02. The CIT (A) further observed that the AO was free to take remedial action as per law. The AO thereupon initiated reassessment proceedings recording identical reasons for the two assessment years in question. Reassessment orders were thereafter passed making addition, under section 2(22)(e) of Rs. 79,23,834 and Rs. 60,00,000 for the assessment years 1999-2000 and 2000-01 respectively. The said additions were sustained by the Commissioner (Appeals) and the Tribunal. Held: If the AO had failed to apply legal provisions/section of the Act, the fault cannot be attributed to the assessee. The requirement is that the assessee should have failed or omitted to make full and true disclosure of material facts. The assessee is not required to disclose, state or explain the law. It cannot be said that the appellant-assessee had failed to make full and true disclosure of material facts. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0760 (Del-HC) : (2012) 343 ITR 0141 : (2012) 254 CTR 0597 : (2011) 203 TAXMAN 0408 : (2012) 072 DTR 0177

INCOME TAX ACT, 1961

--Reassessment--Full and true disclosureAO failed to apply legal provisions--These two appeals under section 260A have been filed by AR Properties Private Limited, the appellant and relate to assessment years 1999-00 and 2000-01. For the said years, the appellant had filed returns of income on 10-12-1999 and 30-11-2000 declaring income of Rs. 49,85,970 and Rs. 39,87,710, respectively. Return for the assessment year 1999-2000 was taken up for scrutiny and the total income was assessed at Rs. 1,11,76,124. Return for the assessment year 2000-2001 was not taken up for scrutiny and was processed and the returned income as declared was not enhanced/modified. For the assessment year 2001-02, the AO made an addition of Rs. 1,56,51,570 as deemed dividend under section 2(22)(e). This amount reflected the advance given by a group company, i.e., A R Builders (P) Ltd., to the appellant-assessee. On appeal, the Commissioner (Appeals), rejected the argument of the appellant that the aforesaid amount of Rs.1,56,51,530 reflected only a current account entry and no loan or advance was taken. However, he restricted the addition to Rs. 19,51,725 as the said amount was advanced to the appellant during the assessment year 2001-02. He deleted the balance addition of Rs. 1,36,99,845.14 as the said amount was the opening balance and had not been advanced or given as a loan/advance during the assessment year in question, i.e., assessment year 2001-02. The CIT (A) further observed that the AO was free to take remedial action as per law. The AO thereupon initiated reassessment proceedings recording identical reasons for the two assessment years in question. Reassessment orders were thereafter passed making addition, under section 2(22)(e) of Rs. 79,23,834 and Rs. 60,00,000 for the assessment years 1999-2000 and 2000-01 respectively. The said additions were sustained by the Commissioner (Appeals) and the Tribunal. Held: If the AO had failed to apply legal provisions/section of the Act, the fault cannot be attributed to the assessee. The requirement is that the assessee should have failed or omitted to make full and true disclosure of material facts. The assessee is not required to disclose, state or explain the law. It cannot be said that the appellant-assessee had failed to make full and true disclosure of material facts.