JUDGMENT :

K.R. SHRIRAM, J.

1. Since identical issues are involved in both petitions, facts from Writ Petition No.602 of 2014 in the case of Mr. Pavan Murarka (petitioner) are referred to hereunder :

Petitioner held 50% of the equity share capital of Shivum Holdings Pvt. Ltd. (Shivum) and 25% of the equity share capital of P & A Estate Pvt. Ltd. (P&A). Petitioner’s wife, Rachana Murarka (RM), petitioner in Writ Petition No.2145 of 2014, held 50% of the equity share capital of Shivum and 25% of the equity share capital of P&A. Balance 50% of the equity share capital of P&A was held by Mr. Akshat Prasad. Shivum held 85% interest in a partnership firm named Laxmi Trading Company (LTC) and petitioner held the balance 15% interest in LTC. During the previous year relevant to the assessment year 2006-2007, LTC gave an advance of Rs.1,25,00,000/- to P&A on behalf of Shivum. The accumulated profits of Shivum as on 31st March 2006 were Rs.3,38,53,410/-.

2. On 29th July 2006 petitioner filed return of income for Assessment Year 2006-2007. An assessment order dated 25th November 2008 came to be passed under Section 143(3) of the Income Tax Act, 1961 (the said Act). In the meanwhile, an assessment order dated 20th June 2008 under Section 143(3) of the said Act came to be passed in the case of P&A holding that the amount advanced by LTC on behalf of Shivum to P&A constituted dividend in the hands of P&A under Section 2(22)(e) of the said Act.

3. On 17th February 2009 Commissioner of Income Tax (Appeals) [CIT(A)] decided P&A’s appeal against the Revenue holding that addition under Section 2(22)(e) cannot be made in the hands of P&A since P&A was not a shareholder of Shivum. The other contentions of P&A challenging the correctness of the treatment of the amounts advanced as dividend were not adjudicated. The view of CIT(A) was not accepted by the Department and an appeal was filed by them before the Income Tax Appellate Tribunal (ITAT) contending that an addition under Section 2(22)(e) was required to be made in the hands of P&A. The ITAT dismissed Revenue’s appeal and held that the addition under Section 2(22)(e) can only be made in the hands of the shareholder and since P&A was not the shareholder, addition in its hands could not be sustained, thus deciding the issue against Revenue.

4. Unhappy with the view of the ITAT, an appeal was filed by Revenue before the Hon’ble High Court at Delhi maintaining their contention that the addition was required to be made in the hands of P&A. The High Court was pleased to dismiss Revenue’s appeal by an order and judgment pronounced on 11th May 2011 holding that the loan or advance cannot be treated as deemed dividend in the hands of the concern which is not a shareholder. Thereafter, in paragraph 30 of the judgment, the High Court observed as under :

“Before we part with, some comments are to be necessarily made by us. As pointed out above, it is not in dispute that the conditions stipulated in section 2(22)(e) of the Act treating the loan and advance as deemed dividend are established in these cases. Therefore, it would always be open to the Revenue to take corrective measure by treating this dividend income at the hands of the shareholders and tax them accordingly. As otherwise, it would amount to escapement of income at the hands of those shareholders.”

5. Displeased with the decision of the High Court at Delhi, Revenue preferred an SLP before the Hon’ble Supreme Court contending that the dividend was taxable in the hands of P&A. That appeal is still pending.

6. Relying on the observations of the Delhi High Court, the Assessing Officer at New Delhi issued a notice dated 22nd March 2013 under Section 148 of the said Act to petitioner despite agitating correctness of the conclusion of the Delhi High Court before the Apex Court. By a letter dated 28th March 2013, petitioner objected to the reassessment proceedings on the ground that the Assessing Officer at New Delhi did not have jurisdiction over petitioner as