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TMI Blog2016 (4) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue debatable. The case relied on by the AO i.e. Mak Data P. Ltd. is not applicable as assessee at every stage had filed the explanation before the AO as well as CIT (A) i.e. these transactions were made for the purpose of business and commercial expediency, is bonafide. Penalty imposed by the AO and confirmed by ld. CIT (A) are not justified. Accordingly we delete the penalty in all the cases. - Decided in favour of assessee - ITA No. 661 to 665 & 468/JP/2011, ITA No. 667/JP/2011, ITA No. 668/JP/2011, ITA No. 666/JP/2011 - - - Dated:- 12-2-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Assessee : Shri Rajeev Sogani (C.A) and Shri Rohan Sogani (C.A.) For The Revenue : Shri O.P. Bateja (Addl. CIT) ORDER PER BENCH : All the assessees are in appeal against the order of ld. CIT (A), Central, Jaipur dated 09.05.2011, 06.05.2011, 17.03.2011 for the A.Y. 2002-03, 03-04, 04-05, 05-06, 06-07, 07-08 08-09. The sole ground in all the appeals is against confirming the penalty under section 271(1)(c) of the I. T. Act. 2. The A.O. in all the penalty orders has observed that M/s. Trimurty Buildcon Pvt. Ltd., Geeta Mishra (B), Abhishek Estate Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of business and are not per se within this section. The assessee even had surrendered income to buy peace and avoid prolonged litigation. Surrender of income and non-filing of appeal do not mean concealment of income. Mens rea is an active element in the imposition of penalty and that is lacking in this case. The ld. AO held that even advances made during the course of business do not absolve from the application of section 2(22)(e) of the IT Act. The section does not distinguish an advance into a business advance or any other kind. In taxation law, the meaning understood in the plain reading has to be accepted. One cannot import words to suit one s convenience into a legal provision when it is absent. This is the supreme principle of cassus omissus, which has been reiterated in various judgments and thus firmly established in the legal lexicons. The AO further relied on the case of Padma Sundra Rao vs. State of Tamil Nadu, 255 ITR 147 (SC), Brittania Industries vs. CIT, 278 ITR 546 (SC). The AO further observed that there were intra group money transfers on a large scale. In most companies, the board of directors comprised members of the family in one way or the other. This led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or seven years from A.Y. 2002-03 to 08-09. These facts were confronted with the appellant. Thereafter he surrendered the income which was not disclosed by it in the return filed under section 139 or 153A. He further considered various decisions quoted by the ld. A/R of the assessee in the cases of Dharmendra Textiles Processors Others (supra), Dilip N. Shroff vs. JCIT, 291 ITR 519 (SC), Atul Mohan Bindal (supra) which are not squarely applicable in the case of assessee. He further considered the Hon ble Supreme Court decision in the case of CIT vs. Reliance Petroproductrs P. Ltd., 322 ISTR 158 9SC) which was also held not applicable in the case of the assessee. He further distinguished case laws cited by the ld. A/R in the matter of CIT vs. Rajiv Garg, 313 ITR 256 (P H), CIT vs. Haryana Warehousing Corporation, 314 ITR 215 (P H), CIT vs. VIP Industries Ltd., 21 DTR 153 (ITAT Mumbai). He further held that Hon ble Mumbai High Court on the issue of penalty under section 271(1)(c) on addition of income under section 2(22)(e) in case of CIT vs. Alkesh K. Patel, 325 ITR 118, has not found favour with the ITAT decision of confirming the order of ld. CIT (A) deleting the penalty. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business purposes by facts, figures and details, but all details were submitted before the AO during the course of assessment proceedings which is evident from the assessment order that AO asked to supply the information from the assessee. The ld. A/R further relied on the Hon ble Delhi High Court decision in case of Creative Dyeing Printing (P) Ltd. (2009) 318 ITR 0476 (Del.) wherein it has been held that section 2(22)(e) can be applied to loans or advances simplicitor and not to those transactions carried out in course of business as such as these advances were given in mutual interest. There is no legal bar in having such transaction. The purpose of the advances is to be ascertained. He further relied on the case of CIT vs. Ambassador Travels Pvt. Ltd., 318 ITR 0376 (Delhi) and CIT vs. Raj Kumar, 318 ITR 461 (Delhi). The issue of business advances is not liable to be deemed dividend even if not accepted in quantum proceedings, is undisputedly a debatable one as various courts have decided this issue in favour of the assessee. The assessee was having bonafide belief that these business advances are not under the purview of section 2(22)(e) of the Act. He further relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. Lapse on deeming fiction cannot lead to penalty. 3. The offering for tax is voluntary and therefore penalty my not be imposed. 4. All the facts were on record and there was no guilty mind and therefore penalty cannot be imposed. 5. No penalty can be imposed where addition is based on deeming provision. 6. Complex tax laws related to deeming fiction can get skipped by assessee. In view of the above, penalty confirmed by the ld. CIT (A) deserves to be reversed. 4.2. At the outset, the ld. D/R vehemently supported the order of ld. CIT (A) and argued that assessee has not disclosed deeming dividend income in the computation of income in the return filed under section 139, even in return filed under sec. 153A of the IT Act. The AO made investigation on this point and had come to the conclusion that assessee has violated section 2(22)(e) of the Act. The disclosure was not voluntary. He further relied on the case of Mak Data Pvt. Ltd. vs. CIT, (2013) 38 Taxmann.com 448 (SC) wherein it has been held that voluntary disclosure does not release assessee from mischief of penal proceedings under section 271(1)(c). He further relied on the case of CIT vs. Alkesh K. Patel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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