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TMI Blog2023 (10) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars have been concealed. Explanation 1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income. Also observed that by way of deeming provision the Assessing Officer made addition of Rs. 18,42,000/- being the loan taken by the assessee from the company in which he was a substantial shareholder which addition was ultimately reduced to the accumulated profits of the lender company at Rs. 4,73,526/- by the Tribunal vide order in MANOJ MITTAL [ 2020 (4) TMI 841 - ITAT DELHI] There is no concealment of particulars of income by the assessee so as to attract penalty u/s 271(1)(c) - AO is directed to delete the penalty levied u/s 271(1)(c) - Appeal of assessee allowed. - Shri Challa Nagendra Prasad, Judicial Member For the Assessee : S/Shri Rajat Jain, CA, Akshat Jain, CA For the Revenue : Shri Om Prakash, Sr. DR ORDER This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-24, New Delhi dated 08.08.2023 for the AY 2010-11 in sustaining the penalty levied u/s 271(1)(c) of the I.T. Act, 1961. 2. Brief facts are that the assessee is an individual filed his return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the appellant is beneficial shareholder in M/s Mittal Construction Real Estate Company Private Limited and has taken loans and advances of Rs. 18,42,000/- during the financial year under consideration and neither concealed nor furnished any wrong or inaccurate particulars. Further, M/s Mittal Construction Real Estate Company Private Limited has accumulated profit as on as on 31.03.2009 and 31.03.2010 of Rs. Nil and Rs. 5,46,787/- respectively is also a matter of record. Therefore, it cannot be said that the appellant has furnished inaccurate particulars of his income, more specifically when the addition of Rs. 4,73,526/- was made on the basis of deeming provisions of Section 2(22)(e) of the Act by estimating income and not because of furnishing of any inaccurate particulars of income by the appellant. 4. The Ld. Counsel further submits that it is pertinent to note that the Ld. AO to justify his action of imposing penalty of Rs. 1,46,319/- u/s 271(1)(c) of the Act on account of furnishing inaccurate particulars of income has arbitrarily invoked provisions of Explanation - 1 to Section 271(1)(c) of the Act and alleged that the explanation offered by the appellant is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ech Pvt. Ltd. Vs. ACIT (supra) the Tribunal while dealing with Explanation 1 of Section 271(1)(c) of the Act held as under: 15. Furthermore, the AO in the assessment order passed u/s.143(3), had initiated penalty for concealing the particulars of income, however, at the time of passing penalty order the AO levied the penalty for filing of inaccurate particulars of income under the virtue of Explanation 1 to Section 271(1)(c) of the Act. 16. For dealing with the above observation let us analyze the relevant provision u/s 271(1)(c) Explanation 1, which is reproduced herein below: Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or Explanation 1. Where in respect of any facts material to the computation of the total income of any person under this Act, (A) such person fails to offer an explanation or offers an explanation which is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of any further appeal, has attained finality. It is noted that under identical set of facts, the Coordinate Bench in ITA No. 661/JP/2011 and others dated 12.02.2016 in assessee's group cases has deleted the penalty levied on deemed dividend and the relevant findings are as under: 43. We have heard rival contentions and perused the material on record. The assessee filed the return under section 139 for all the years and disclosed the particulars of shareholding pattern, advances taken and given by the assessee company/individual in return itself. The accumulated profit also has been disclosed. Thereafter assessee filed return u/s 153A of the IT Act wherein also all the detailed facts and figures were disclosed in the return. The assessee's case is auditable. The assessee at the time of quantum addition as well as at the time of penalty proceedings has reiterated that these advances are in the course of regular business. It is a running account, said advances later on repaid. This issue is debatable arid various courts particularly in the case of Creative Dyeing Printing (P) Ltd. (supra) wherein it has been held that business transaction is not covered under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. 10. It is also observed that by way of deeming provision the Assessing Officer made addition of Rs. 18,42,000/- being the loan taken by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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