“Section 177(2)”

Trade advances arising from genuine commercial transactions are not considered deemed dividends under Section 2(22)(e) of the Income-tax Act. The provision applies only to payments in the nature of dividend, not bona fide business transactions.

If an assessee does not claim any exempt income during an assessment year, no disallowance under Section 14A of the Income-tax Act for expenditure incurred in relation to such income can be made.

The case establishes that an assessment order under Section 143(3) read with Section 144 of the Income Tax Act, 1961, cannot be challenged on the grounds of an invalid notice under Section 142(1) when the assessee has not raised such a contention before the assessing officer.

Payments from a closely held company to a concern in which a shareholder has substantial interest may be treated as deemed dividend under section 2(22)(e) of the Income Tax Act, 1961, if the conditions are met. However, if such amounts are repaid and the subsidiary's ledger account becomes a debit balance reflecting as sundry debtors, it supports the assessee's case.

An assessment made by the Assessing Officer is invalid if no notice under Section 143(2) has been served upon the assessee within the prescribed period.