Law:

Section:

Section 147(a) of the Income-tax Act, 1961-Reassessment-Non-disclosure of primary facts-Assessee, holding entire shares of a private limited company, received certain amount on its behalf on sale of its assets to a public limited company-Amount shown on asset side of balance sheet as advance recoverable from director-Advance included accumulated profits relating to private limited company-ITO treated assessee (being sole shareholder) as its director and included under section 147(a) said accumulated profits as "deemed dividends" within the meaning of section 12(1B), read with section 2(6A)(a ), of the 1922 Act-Whether assessment could be reopened under section 147(a)-Held, on facts, no Facts The assessee-firm MS purchased in September 1946 the entire shares of a private limited company HA for Rs. 80 lakhs. A public limited company, floated in December 1946 with the same name, purchased for Rs. 80 lakhs the entire assets and liabilities of HA. Under the instructions of HA's directors, it made over the said sale proceeds of Rs. 80 lakhs to MS which issued receipt in full discharge and settlement of the amount thus due to HA. The amount of Rs. 80 lakhs had been shown on the asset side of HA's balance sheet as an advance recoverable in cash from a director. This advance included accumulated profits of Rs. 12,26,206 relating to HA. Since MS was its only shareholder, the ITO felt (i) that it should be regarded as the director in receipt of the said outstanding advance ; (ii) that the said accumulated profits of Rs. 12,26,206 were "deemed dividends" within the meaning of section 12(1B) read with section 2(6A)( e) of the 1922 Act; and (iii) that the assessee did not disclose truly and fully those basic material facts as a result of which this taxable income had escaped assessment for the assessment year 1965-66. The ITO accordingly reopened the assessment under section 147(a) of the 1961 Act and made suitable additions as dividends in the consequential reassessment. The AAC sustained the addition. The Tribunal, however, deleted the same, observing (i) that all the particulars had been disclosed by the assessee, and if the ITO did not take proper action at the time of…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492