Per Shamim Yahya, Accountant Member: These appeals by assessee emanate out of common order of Commissioner of Income-tax (Appeals)-XII, Chennai dated 5-10-2006 and pertain to assessment years 1998-99 and 1999-2000. 2. first common issue raised is that Commissioner of Income-tax (Appeals) erred in confirming reopening of assessment. plea of assessee is that there is no concealment on part of assessee, hence reopening beyond period of four years after end of assessment year is without jurisdiction and is bad in law. It is further contended that reopening was mainly on basis of change of opinion. 2.1 We have heard both counsels and perused relevant records. We find that for assessment year 1999-2000, original assessment was processing under section 143(1). Hon'ble Apex Court in case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 has held that intimation under section 143(1)(a) cannot be treated as assessment order and, hence, reopening matter cannot be agitated on that account. Hence, assessee's plea regarding reopening of assessment for assessment year 1999-2000 is liable to be dismissed and same is dismissed as such. 3. Before adjudicating upon reopening issue for assessment year 1998- 99, it will be appropriate to deal with facts leading to reopening and addition in this case. After processing of return under section 143(1) for assessment year 1999-2000 and assessment under section 143(3) for assessment year 1998-99, Assessing Officer found that assessee-firm had received huge amounts as advances from company, Pallava Granite Industries (India) (P.) Ltd. (PHIIPL) during accounting periods ended 31-3-1998 and 31-3-1999 in which two partners of assessee-firm are shareholders and are having substantial interest. He also found that company possessed accumulated profits for both accounting periods 1997-98 and 1998-99. Since amount of advances received by firm from company to extent of accumulated profits were subjectible to tax as deemed dividend within meaning of section 2(22)(e) of Income-tax Act and further since firm had not admitted as income any amount towards deemed dividend in returns of income filed, Assessing Officer was of view that income chargeable to tax had escaped assessment and he initiated assessment/reassessment proceedings under section 147 of Act, by issue of notices under section 148 on 29-3-2005 for both assessment years. Assessing Officer concluded assessment/reassessment proceedings by passing orders under section 143(3), read with section 147, of Income-tax Act dated 31-3-2006 in which he had subjected to tax sums of Rs. 2,22,34,064 and Rs. 1,33,13,307 as deemed dividend respectively for assessment years 1998-99 and 1999-2000. 3.1 In this context assessee pleaded before learned Commissioner of Income-tax (Appeals) that all relevant materials were before Assessing Officer in original assessment under section 143(3). learned Commissioner of Income-tax (Appeals) elaborately considered issue. She came to conclusion that beyond showing unsecured loans in Balance Sheet from company, assessee-firm had furnished no other details. She observed that neither assessee-firm nor its representative had furnished any details regarding shareholders of company nor details of accumulated profits of company for different accounting periods were filed at time of original assessment. Further, she observed that Assessing Officer came into possession of relevant information only on 23-2-2005 after completion of original assessment on 19-3-2001. Hence, reopening of assessment does not amount to change of opinion. She concluded that in absence of such vital information as filed by assessee-firm, Assessing Officer cannot be said to have been in position to arrive at any conclusion that advances received by firm from company must be examined from angle of taxability of sum as deemed dividend under section 2(22)(e). 3.2 Against this order assessee has appealed before us. We have heard both counsels and perused relevant records on this issue. We find that learned Commissioner of Income-tax (Appeals) has taken correct view of matter and same does not need any interference on our part. When there was no information before Assessing Officer regarding shareholding pattern of company or its accumulated profits, it cannot be said that assessee has disclosed all necessary materials for assessment in this regard. Hence, Assessing Officer has no occasion to examine advances received from company from angle of taxability of sum under section 2(22)(e). There can also not be said to have been any change of opinion. Hence, we affirm order of learned Commissioner of Income-tax (Appeals) on this issue. Hence, first issue raised regarding reopening of assessment is dismissed for both appeals. 4. On merits, issue raised is that Commissioner of Income-tax (Appeals) erred in confirming and enhancing assessment with regard to advances received by firm/assessee from company to extent of accumulated profits in terms of section 2(22)(e) of Income-tax Act. 4.1 Before adjudicating this issue at threshold it will be necessary to refer to provisions of section 2(22)(e) of Income-tax Act. same reads as under:- ' Any payment by company, not being company in which public are substantially interested, of any sum (whether as representing part of assets of company or otherwise) [made after 31st day of May, 1987, by way of advance or loan to shareholder, being person who is beneficial owner of shares (not being shares entitled to fixed rate of dividend whether with or without right to participate in profits) holding not less than ten per cent of voting power, or to any concern in which such shareholder is member or partner and in which he has substantial interest (hereafter in this clause referred to as said concern)] or any payment by any such company on behalf, or for individual benefit, of any such shareholder, to extent to which company in either case possesses accumulated profits; but 'dividend' does not include- (i) distribution made in accordance with sub-clause (c) or sub-clause (d) in respect of any share issued for full cash consideration, where holder of share is not entitled in event of liquidation to participate in surplus assets; (ia) distribution made in accordance with sub-clause (c) or sub-clause (d) insofar as such distribution is attributable to capitalised profits of company representing bonus shares allotted to its equity shareholders after 31st day of March, 1964, (and before 1st day of April, 1965); (ii) any advance or loan made to shareholder (or said concern) by company in ordinary course of its business, where lending of money is substantial part of business of company; (iii) any dividend paid by company which is set off by company against whole or any part of any sum previously paid by it and treated as dividend within meaning of sub-clause (e), to extent to which it is so set off; (iv) any payment made by company on purchase of its own shares from shareholder in accordance with provisions of section 77A of Companies Act, 1956 (1 of 1956); (v) any distribution of shares pursuant to demerger by resulting company to shareholder of demerged company (whether or not there is reduction of capital in demerged company).' 4.2 As regards assessee's plea that this was normal business transaction so as to escape from provisions of rule 2(22)(e), learned Commissioner of Income-tax (Appeals) observed that,- ' On going through purchase agreement between firm and company, it is seen that however sale was to take place only after lease period was over. There is also condition imposed in this agreement that vendor, i.e., assessee-firm will not take steps to view its quarry lease with Government authorities, but this agreement had not been implemented and sale had not been effected till date. Further it is seen that there are no witnesses' signatures in this agreement. So, it is clear that seemingly there is agreement entered into between company and firm as early as in 1-4-1996 but firm had never taken steps to carry this agreement to its logical end and executed same. So, there seems to be business deal on paper between these two concerns, for which advances are purported to have been received by firm, but in actuality, there is no such deal. Nothing had taken place. copy of agreement as filed by assessee's representative has no validity or it cannot be taken as proof for business exigency that is supposed have prevailed between these two concerns. copy of ledger account of company as per books of assessee-firm shows that firm is maintaining nothing but running account with company and there is nothing to indicate in these account statements that amounts advanced by PGIIPL to assessee-firm were during course of its business.' 4.3 Having heard both counsels on this issue, we note that on this issue learned Commissioner of Income-tax (Appeals) has given finding that these have been mere statements and no documentary evidence was produced to oxygenate claim that assessee-firm was utilizing money for procurement of mine or mining equipments, etc. fact remained that advances received by firm from company were utilized by firm in its own business. Hence, this cannot be said to be normal business transaction. Hence, learned Commissioner of Income-tax (Appeals)'s finding in this regard is confirmed. 4.4 Further, learned Commissioner of Income-tax (Appeals) had elaborately considered case. She dealt with following case laws of Hon'ble Apex Court - CIT v. G. Narasimhan [1999] 236 ITR 327; Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345; Navnit Lal C. Javeri v. K.K. Sen, Asstt. CIT [1965] 56 ITR 198 and concluded as under:- ' 1. Assessing Officer's action of subjecting to tax advances received by assessee-firm from company PGIIPL are to be treated as deemed dividend within meaning of section 2(22)(e) for both assessment years since company was possessing accumulated profits for accounting periods relevant to both these assessment years. Therefore, Assessing Officer's action is upheld in principle. 2. But, however, as regards amounts of deemed dividend to be considered for accounting period, position is as under:- (i) In view of fact that no part of advances received by firm was subjected to tax as deemed dividend for any of earlier assessment years, amounts of advances received during these two years relevant to assessment years are to be subjected to tax as deemed dividend and Supreme Court's decision in case of G. Narasimhan v. CIT 236 ITR 327 cannot be applied. (ii) Actual amounts of advances received by firm from PGIIPL during t h e two accounting periods are to be considered and not balances outstanding as at end of accounting periods and also accumulated profits as at beginning of accounting periods are to be taken into account according to Supreme Court's decision in case of Tarulata Shyam v. CIT [1977] 108 ITR 345. Thus, amount to be taxed as deemed dividend for assessment year 1998-99 should be Rs. 2,28,92,408 and amount to be considered for assessment year 1999-2000 should be Rs. 1,75,05,871.' Against this order of Commissioner of Income-tax (Appeals) assessee is in appeal before us. 4.5 Before us learned counsel of assessee submitted that, inasmuch as company PGIIPL had been granting advances to assessee- firm during earlier accounting periods also, amounts so advanced should also be taken into consideration and accumulated profits must be reduced by such advances since they were to be treated as deemed dividend for those years. learned counsel of assessee further argued that if this exercise was carried out, then there were no sufficient accumulated profits for impugned accounting periods in view of fact that profits or reserves and surpluses of company were getting reduced year after year. Hence, it was pleaded that there was no accumulated profits available for relevant accounting period in hands of company, so that amount received as advance by assessee-firm from company could be brought under purview of section 2(22)(e). 4.6 learned counsel of assessee had relied upon decision of Hon'ble Apex Court in case of G. Narasimhan (supra). In this case, it was held as under:- ' Any legal fiction will have to be carried to its logical conclusion. If payment under section 2(22)(e) of Income-tax Act, 1961, is treated as deemed dividend and is required to be so treated to extent that company possesses accumulated profits, logical conclusion is that this payment must be considered as adjusted against company's accumulated profits to extent that it is treated as deemed dividend while calculating accumulated profits of company. Whenever accumulated profits of company are required to be determined, such adjustment will have to be made.' From above it clearly follows that only if payment is treated as deemed dividend, then payment must be considered adjusted against company's accumulated profits. Admittedly, in this case, no part of advance received by assessee firm before assessment year 1998-99 under consideration was considered as deemed dividend. 4.7 We further find that Hon'ble Apex Court in case of Smt. Tarulata Shyam (supra) has held that,- ' statutory fiction created by section 2(6A)(e) of Indian Income-tax Act, 1922, would come into operation at time of payment of advance or loan to shareholder by company in which public are not substantially interested and tax is attracted to loan or advance to extent to which company possesses accumulated profits moment loan or advance is received. Even if loan or advance ceases to be outstanding at end of previous year in which loan or advance was taken, it can still be deemed to be 'dividend' if conditions of section 2(6A)(e) are satisfied. Except for specific provision in section 12(1B) for assessment year 1955-56, Legislature has deliberately not made subsistence of loan or advance, or its remaining outstanding, on last date of previous year relevant to assessment year prerequisite for raising statutory fiction.' 4.8 From above, it is clear that it is amount that is advanced during year that is to be considered as deemed dividend and not balance outstanding at end of accounting period. Hence, in background of aforesaid discussion and precedents, we do not find any infirmity in order of learned Commissioner of Income-tax (Appeals) for assessment year 1998-99 as no part of advance given has been treated as deemed dividend before this assessment year. Hence, we affirm learned Commissioner of Income-tax (Appeals)'s order for assessment year 1998-99. As regards assessment year 1999-2000, we are not in agreement with learned Commissioner of Income-tax (Appeals) that deemed dividend for assessment year 1998-99 should not be adjusted from balance of accumulated profits as on close of assessment year 1998-99. Hon'ble Apex Court's order in G. Narasimhan's case (supra) above is very clear on this point and we do not see any ambiguity in this regard. Hence, for assessment year 1999-2000, Assessing Officer is directed to compute deemed dividend equal to amount advanced during that year to extent company had accumulated profits after adjustment of deemed dividend for assessment year 1998-99. 5. In result, assessee's appeal in ITA No. 488/Mds./07 for assessment year 1998-99 is dismissed and assessee's appeal in ITA No. 489/Mds./07 for assessment year 1999-2000 is partly allowed. *** ASWANI ENTERPRISES v. ASSISTANT COMMISSIONER OF INCOME TAX