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2022 (4) TMI 346 - HC - Income TaxReopening of assessment u/s 147 - Order disposing of the objections relies upon the directions of the CIT (Appeals) to make Section 150 of the Income Tax Act applicable to reject the objections - deemed dividend addition u/s 2(22)(e) - whether AO has incorrectly invoked the provisions of Section 150 of the IT Act because in this case there was neither any direction nor any finding to reassess the returns filed by the petitioners? - HELD THAT:- It is quite clear that CIT (Appeals) in his order cannot be said to have issued any direction as contemplated by Section 150 read with Explanation 3 of Section 153 of the IT Act. This is because the CIT (Appeals) after deleting the addition of deemed dividends in the hands of DTRPL, only made the following observations that decision leaves it open for the Assessing Officer to make an assessment of such deemed dividend in the hands of the shareholders as held by Hon’ble Bombay High Court in the case of CIT vs Universal Medicare (P) Ltd [2010 (3) TMI 323 - BOMBAY HIGH COURT] Following the law laid down in Murlidhar Bhagwan Das [1964 (1) TMI 5 - SUPREME COURT] and Rajinder Nath [1979 (8) TMI 3 - SUPREME COURT] the aforesaid observations cannot be called a direction based upon which the impugned notices can be sustained. Whether there is any finding in the order dated 16.01.2013 made by CIT (Appeals) based upon which issuance of the impugned notices could be sustained? - It is apparent that the respondent has invoked the provisions of Section 150 of the IT Act for issuing the impugned notices. This invocation was in turn based on an order dated 16.01.2013 made by CIT (Appeals). This order dated 16.01.2013 contains no direction as contemplated by Section 150 of the IT Act. Even assuming that this order dated 16.01.2013 contains a finding affecting the petitioners, it is apparent that such a finding came to be recorded without granting the petitioners any opportunity of being heard. Such finding, therefore, was not only in breach of principles of natural justice and fair play, but also contrary to Explanation 3 to Section 153 of the IT Act and could not have formed the basis for invoking the provisions of Section 150 of the IT Act. The impugned notices are liable to be set aside and are hereby set aside.
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