9911796707
TMI Blog2018 (6) TMI 1647X X X X Extracts X X X X X X X X Extracts X X X X ..... of treating the returnable loans/advances as taxable income in the hands of borrower in departure with the operation of the normal provisions. Admittedly, the relevant facts concerning the issue were available to the AO. Thus, there is no concealment of any particulars of any fact per se. Assessee has simultaneously claimed that the aforesaid advances have been received the course of ordinary business and owing to ongoing business transactions and thus not susceptible to provisions of section 2(22)(e) - while the provisions of s.2(22)(e) have been applied, the issue is not entirely free of any debate. As noted, section 2(22)(e) of the Act is only deeming provision of law and is not a substantive provision. Thus, in the absence of any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice issued which was vague, unclear and capable of two views as to whether Penalty proceedings were initiated and Penalty levied were For concealing Income or For furnishing inaccurate particulars of such Income in view of binding judgment of Hon. Gujarat High Court in the case of New Sarathiya Engg. Company vs CIT 282 ITR page 642 Penalty is void abinitio 2. Apart from the above said ground, appellant also filed following additional grounds of appeal: 2. (a) Your Appellant submits that in view of recent Circular of Central Board of Direct Taxes bearing F.No.279/Misc./140/2015/ITJ and Circular No.19/2017) dated 12th June, 2017 the amount added as Dividend of ₹ 47,50,727/- as a result of is Peck Credit of debits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 determining total income at ₹ 42,59,058/-. Subsequently, order u/s. 263 of the Income-tax Act 1961 C.I.T-I, Baroda which is reproduced as under: The record of the assessment proceedings in the case of the assessee for the A.Y.2004-05 leading to passing order u/s. 143(3) on 29.12.2011 was called for an examined. It was found that the order passed by the Assessing Officer was erroneous in so far as it was prejudicial to the interest of the revenue. A notice of hearing under section 263(1) was accordingly issued on 24.02.2012. The assessee filed his -written submission on 13.02.2013. The point raised in the notice was regarding non-addition of income towards deemed dividend from MJs Checkmate Detective Agency of& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in response to notice u/s. 148 of the Act, though he had already paid tax thereon. The submission of the assessee has been examined. It is_ undisputed that deemed dividend of ₹ 42,14,149/- was not declared in the return filed in response to notice u/s. 147. The assessee contention that this was an inadvertent mistake because tax on this was paid was not found to be correct. This can be ascertained from the following: - The original return was filed showing an income of ₹ 23,76,210/- and claiming refund of ₹ 19,38,418/- on account of IDS of ₹ 26,93,967/-. The return of income was processed u/s. 143(1) on 31.03.2005 and refund of ₹ 18,15,470/- (including interest u/s.244A of ₹ 1,02,762 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue which tantamount to acceptance of the default and made him liable to penalty u/s.271(l)(c) of the IT. Act, 1961. 5. Under the above circumstances, it is reasonably concluded that the assessee could not substantiate his case or furnish any satisfactory explanation. The assessee failed to bring any appreciable material on record to rebut the charge of concealment of his income. In this case, deemed dividend of ₹ 5,35,568 ₹ 42,14,149/- was detected by the Department during the course of survey and the assessee himself admitted the said amount. However, this amount was not shown in the original return filed by the assessee on 01.11.2004. Thus there was a concealment of income totaling to ₹ 47,49,717/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etected by the Department during the course of survey and the same was admitted by the appellant. 9. However in challenge to penalty proceedings made u/s. 271(1)(c) in IT(SS)A No. 17/Ahd/2014 ITA No.45/Ahd/2014 order dated 05.04.2017 in similar situation, the issue of imposition of penalty was held to favour of Assessee. 3. The simple question that arises for consideration is whether penalty can be imposed by invoking section 271(1)(c) of the Act on loans and advances as taken by the assessee and regarded as deemed income by virtue of s.2(22)(e) of the Act. 4. Section 2(22)(e) of the Act creates legal fiction whereby loans/advances received by an assessee are deemed as taxable income in the hands of the recip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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