INCOME TAX ACT, 1961

Section 147

Reassessment - Escapement of income under section 2(22)(e) - Source of information -

Assessee was one of the directors in a company 'S'. He was having more than 10% share holding of the said company. During assessment year 2008-09, the said company gave advance to the assessee as 'advance to suppliers' and the balance was still continuing till assessment year 2013-14. As the advance given remained unchanged till assessment year 2013-14, thus, AO alleged that the said advance was in the nature of deemed dividend under section 2(22)(e). Accordingly, the AO reopened assessee's case on the ground that the income chargeable to tax escaped assessment for the assessment year 2008-09. Held: AO reopened assessee's assessment on account of escapement of income under section 2(22)(e). Further, AO's assertion that the assessee was holding in excess of 10% of the value of shareholding was nowhere denied by the assessee. However, in the objections raised, the assessee merely called upon the AO to reveal the source from which he gathered such information. If the case of the assessee was that he in fact, did not hold more than 10% of shares of the company, it was easy for him to assess and demonstrate the same. Therefore, the matter was remanded.

REFERRED : Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC): 2007 TaxPub(DT) 1257 (SC), Raymond Woollen Mills Ltd. v. ITO & Ors. (1999) 236 ITR 34 (SC): 1999 TaxPub(DT) 0348 (SC), Inductotherm (India) (P) Ltd. v. M. Gopalan, Dy. CIT (2013) 356 ITR 481 (Guj.): 2012 TaxPub(DT) 3254 (Guj-HC)

FAVOUR : Matter remanded.

A.Y. :

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