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TMI Blog2019 (5) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... g particulars of income or had concealed any income. The penalty has been imposed only on account of difference of opinion between the Assessing Officer and the assessee. The assessee held it to be a loan taken from a sister concern whereas the Assessing Officer treated it as deemed dividend. In a debatable issue and in a case like this where the assessee had furnished complete details of the transaction, the penalty cannot be imposed as has been held by various decisions. - Decided in favour of assessee. - ITA No.404/Lkw/2018 - - - Dated:- 17-5-2019 - Shri A. D. Jain, Vice President And Shri T. S. Kapoor, Accountant Member For the Appellant : Shri Rakesh Garg, Advocate For the Respondent : Smt. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come or furnishing of inaccurate particulars of income, there being no satisfaction by the Assessing Officer, the CIT(A) has erred on facts and in law in upholding the penalty imposed which is bad in law and be deleted. 2. Ground No. 5 is a legal ground, which was not argued during the course of hearing therefore, the same is dismissed as not pressed. The other grounds relate to one issue of imposition of penalty u/s 271(1)(c) of the Act. 3. The brief facts of the case are that the assessment of the assessee was completed u/s 143(3) of the Act and addition of ₹ 3,00,000/- was made as deemed dividend. In view of the above, the penalty was imposed u/s 271(1)(c) of the Act. The matter was carried to learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts Limited has also clarified that penalty u/s 271(1)(c) cannot be imposed for a wrong claim. It was argued by Learned A. R. that even if the claim of the assessee was held to be wrong, penalty was not imposable. 4. Learned D. R., on the other hand, relied on the orders of the authorities below. 5. We have heard the rival parties and have gone through the material placed on record. We find that it is an undisputed fact that the penalty on the assessee was imposed on account of addition of ₹ 3,00,000/-, which the Assessing Officer had made on deemed dividend u/s 2(22)(e) of the Act. The assessee had claimed this amount as loan from a sister concern, which the Assessing Officer has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. It is the contention of the assessee that penalty cannot be levied u/s 271(1)(c) towards addition made by invoking deeming provisions provided under the Act. The assessee further contended that the AO has made addition u/s 2(22)(e) for the first time in the impugned assessment year and such addition was made on the basis of information gathered during the course of assessment proceedings of AY 2008-09 from the financial statement filed by the assessee. The assessee has disclosed loan borrowed from the company, in his balance-sheet. The assessee further contended that deeming fiction provided under the provisions of section 2(22)(e) cannot be extended to the provisions of section 271(1)(c) to hold that the assessee has furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s disclosed borrowings from the company in its balance-sheet. We further observe that the AO has made addition for the first time in the financial year under consideration. Therefore, we are of the considered view that the explanation offered by the assessee that no penalty can be levied towards addition made by invoking deeming provisions for levying penalty appears to be bonafide. We further observe that whether the provisions of section 2(22)(e) is applicable or not to a particular loan and advance from a company in the hands of the director is a debatable issue and there is a possibility of two views. The AO has taken a view to bring it to tax loans and advances under the provisions of section 2(22)(e) of the Income-tax 10 ITA No.982 /M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive for determining the imposition of penalty. Thus, while imposing penalty, the entirety of circumstances must reasonably point to the conclusion that there is a concealment or furnishing of inaccurate particulars. It was apparent from the record that the assesseecompany was neither holding any shares nor it was a registered share holder of 'R' Ltd. who had given loan to the assessee-company. Assessing Officer had levied penalty with reference to the addition made on account of loans/advances received by the assessee company from 'R' Ltd., by bringing such loans and advances under the purview of section 2(22)(e). While levying the penalty, the deeming provisions can he applied to a limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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