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2020 (3) TMI 678 - ITAT MUMBAIReopening of assessment u/s 147 - deemed dividend addition u/s 2(22)(e) - HELD THAT:- By mere application of section 2(22)(e) of the Act may not be sufficient, but AO has to investigate and substantiate that the advances received by the beneficiary are in the nature of business advance or other advance and whether the chargeability of the provisions in the hands of the beneficiary or in the hands of the shareholders. We notice that AO has not applied his mind whether the chargeability of deemed dividend are attracted in the hands of the assessee or not, were not properly investigated and proceeded with the information received from JCIT(OSD) office. It is a duty of the AO to apply his mind and record satisfaction of escapement of income. Without clear satisfaction, AO cannot initiate re-assessment proceeding. Further, assessee has raised the objections before the AO, as soon as it received reasons for reopening of the assessment and the same has to be disposed of by the AO before completing the re-assessment order u/s 147 of the Act. In this case, AO has miserably failed to dispose off the objections raised by the assessee. It is clearly against the decision in the case of GKN Driveshafts (India) Ltd vrs. ITO [2002 (11) TMI 7 - SUPREME COURT] Respectfully following the above decision, we are inclined to accept the submission of Ld. AR and we hold that AO has not disposed off the objections prior to completion of the assessment. Hence, assessment order passed by the AO is not proper, accordingly quashed. Decided in favour of assessee
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