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Issues Involved: Appeal against deletion of penalty u/s.271(1)(c) for deemed dividend u/s.2(22)(e) of the IT Act, 1961.
Summary: The Appellate Tribunal ITAT Mumbai heard the appeal filed by the revenue challenging the deletion of penalty u/s.271(1)(c) for the assessment year 2004-05. The assessee, engaged in the business of Exporter, Manufacturer & trader of readymade garments, had filed a return declaring total income. The AO made an addition u/s.56 r.w.s.2(22)(e) treating advances received as deemed dividend. The CIT (A) confirmed the addition, leading to the penalty imposition by the AO. The CIT (A) later deleted the penalty, citing the conditions for penalty u/s.271(1)(c) as interpreted by the Apex Court in previous cases. The revenue appealed the decision. The Tribunal considered the arguments of both parties. The revenue contended that the assessee filed inaccurate particulars of income knowingly, while the assessee argued that all details were provided, and a difference in interpretation should not lead to penalties. The assessee also referenced a previous case where a similar penalty was deleted. The assessee explained that the advances were part of business transactions and not undisclosed income. The Tribunal agreed with the assessee, stating that the deemed dividend concept u/s.2(22)(e) did not warrant penalty imposition as the assessee did not conceal income or provide false particulars. The Tribunal upheld the CIT (A)'s decision, dismissing the revenue's appeal. In conclusion, the revenue's appeal against the deletion of the penalty u/s.271(1)(c) for deemed dividend u/s.2(22)(e) was dismissed by the Tribunal on 31st January 2012.
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