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2019 (8) TMI 987 - ITAT JAIPURReopening of assessment u/s 147 - as alleged notice u/s 148 was issued without proper sanction - Borrowed satisfaction - deemed dividend addition u/s 2(22)(e) - HELD THAT:- AO has not applied his mind independently while forming the belief that income has escaped assessment but the reopening is based on the information received from the AO wherein a definite opinion or expression by the AO of M/s. Saj Properties Pvt. Ltd. is given then the case falls in the category of borrowed satisfaction as the reasons failed to demonstrate the link between the material and formation of reason to belief that income has escaped assessment. Accordingly, we hold that the initiation of proceedings u/s 148 is not sustainable in law and the same is quashed. Addition of deemed dividend u/s 2(22)(e) - as per assessee advances by the company was for purchase of land - contended that there was no accumulated profits at the time of alleged transaction - HELD THAT:- The assessee explained the facts regarding the loan given by the assessee to the company and which was also received during the year under consideration along with the interest, the details of which has been reproduced by the AO at pages 8 & 9 of the impugned order. Second transaction of payment of ₹ 11.70 crores was shown separately being advance given for purchase of land. Therefore, these are two separate transactions, first one is the loan earlier given by the assessee to the company was repaid during the year under consideration along with the interest and second transaction was the advance given for purchase of land as per the agreement dated 28th October, 2009. Thus when the transaction does not fall in the category of loan or advance in terms of section 2(22)(e) but the same is a business transaction, then the addition made by the AO is not sustainable. Availability of accumulated profits with the company as on the date of alleged transaction and, therefore, in any case the addition made by the AO of the full amount is not sustainable when the AO has not computed the accumulated profits as on date of transaction and then reducing the brought forward losses to the tune of ₹ 2,55,34,499/-. After considering all these relevant aspects if something is still found to be accumulated profits as on the date of transaction, the addition can be made only to the extent of such amount. AO has not conducted any such exercise and thus the assessment was framed in a mechanical manner without even considering the relevant provisions of the Act as well as the binding precedents. Accordingly, in view of the above discussion, the addition made by the AO is not sustainable and liable to be deleted. - Decided in favour of assessee.
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