2016 (2) TMI 1245 - AT - Income Tax

Tribunal dismisses revenue's appeal on penalty for deemed dividend, emphasizing details and interpretation.

ACIT Circle-4 (1), Visakhapatnam Versus Sri Ganta Srinivasa Rao And Sri P. Raja Rao

ACIT Circle-4 (1), Visakhapatnam Versus Sri Ganta Srinivasa Rao And Sri P. Raja Rao - TMI Issues:Assessment of deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961, Penalty u/s 271(1)(c) for concealing income or furnishing inaccurate particulars.Analysis:1. The appeals were filed by the revenue against the CIT(A) order for the assessment year 2001-02, concerning the assessment of deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961. The A.O. noted the assessee's interest in M/s. Pratyusha Associates and M/s. Pratyusha Shipping Pvt. Ltd., assessing a loan amount as deemed dividend. The CIT(A) and ITAT confirmed this assessment.2. Penalty proceedings u/s 271(1)(c) were initiated by the A.O. for alleged concealment of income. The assessee argued that no concealment occurred as the information was disclosed. However, the A.O. imposed the penalty, which was later deleted by the CIT(A) on the basis that the issue of advance vs. deemed dividend was interpretative, thus no penalty could be levied.3. The Tribunal considered the arguments from both sides. The A.O. treated the amount received as deemed dividend, while the assessee claimed it was an advance. The Tribunal agreed with the assessee that no concealment or inaccurate particulars were involved, citing the Hon'ble Supreme Court's observation that a mere unsustainable claim does not constitute inaccurate particulars.4. The Tribunal found that the assessee had provided all details and made a claim that the amount was an advance, not deemed dividend. Since there was no concealment or furnishing of inaccurate particulars, the penalty was unjustified. The Tribunal upheld the CIT(A)'s decision to delete the penalty, dismissing the revenue's appeal.5. Another appeal with similar facts and issues was also dismissed following the same reasoning. The Tribunal concluded that the assessee did not conceal income or furnish inaccurate particulars, aligning with the Supreme Court's stance on penalty imposition. Both appeals filed by the revenue were ultimately dismissed.In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the penalty imposed under section 271(1)(c) as the assessee had not concealed income or furnished inaccurate particulars, emphasizing the importance of providing all details and the interpretative nature of the issue at hand.