INCOME TAX ACT, 1961

Section 148

Reassessment - Notice beyond four years - No income accrued to assessee from impugned transaction and thus no failure to disclose fully and truly all material facts -

AO issued notice under section 148 after expiry of four years from the end of relevant assessment year on the reasoning that assessee's loan as extended by M/s. JP Iscon Limited to its sister concern amounting to Rs. 12 crores was to be treated as deemed dividend under section 2(22)(e) in assessee's hands as assessee was holding 27% of shares in M/s. M/s. J.P. Iscon Ltd., however, assessee did not disclose the transactions between loan giver company in which he had shareholding not less than 10 per cent of voting power and loan receiver concerns in which he had substantial interest challenged the notice by way of writ petition. Held: It was not the case of AO that assessee received loan for benefit of assessee when amount received by the two concerns from loan giver company was neither received by assessee, nor was it for the benefit of assessee, 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. Under such circumstances, in the absence of any failure on part of assessee to disclose fully and truly all material facts necessary for his assessment, reopening of assessment beyond four years was invalid.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

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