INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Assessee did not disclose deemed dividend as its income -

AO reopened the concluded assessment of assessee on the ground that assessee held 41.78% shareholding of its subsidiary company. The aforesaid subsidiary company had accumulated profits to the tune of Rs. 6,69,15,506 and assessee company had taken a loan of Rs. 5,45,76,988 from its aforesaid subsidiary company which in the opinion of AO had infringed provisions of section 2(22)(e). Assessee contended that these were commercial transactions between assessee and its subsidiary company for the purposes of business and to promote mutual business interest and hence deeming fiction of provisions of section 2(22)(e) were not attracted. Held: Assessee on its part had not included in its return of income, the aforesaid amount as deemed dividend as its income chargeable to tax being hit by provision of section 2(22)(e). AO might have received aforesaid tangible information as to escapement of income chargeable to tax from records itself before it but the same was valid for invocation of provisions of section 147 as there was no estoppel against law, more-so provisions of section 147 were invoked within four years from the end of assessment year and proviso to section 147 was not applicable. Thus, AO had rightly invoked provisions of section 147 in reopening the concluded assessment and reopening of the concluded assessment by AO on legal ground was upheld.

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