TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 406
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....tices u/s 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO found that the assessee was holding substantial interest in M/s ZAN Engg (India) Pvt Ltd. and also raised unsecured loan from the said company which were outstanding as on 31.3.2006 to the tune of Rs. 21,57,903/- out of which a sum of Rs. 8,50,000/- was received by the assessee during the year Rs. 2,50,000/- on 14.12.2005 and Rs. 6,00,000 on 2.3.2006. The AO after issuing show cause notice to the assessee and after considering the reply of the assessee came to the conclusion that Rs. 8,50,000/- was deemed dividend u/s 2(22)(e) of the Act and finally framed the assessment u/s 143(3) r.w.s.147 of the Act vide order dated 30.10.2009 making the addition on account of deemed dividend u/s 2(22)(e) of the Act of Rs. 8,50,000/-. 4. The ld.CIT(A) also confirmed the addition made by the AO vide order No.CIT(A)-34/IT 195/2009-10 dated 9.11.2010 and by dismissing the appeal of the assessee and thereafter no appeal was preferred against the order of ld. CIT(A) by the assessee meaning thereby that the assessee accepted the addition made by the AO. Upon dismissal of the appea....
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....s not extend to subjective areas such as taxability of income, admissibility of a deduction and interpretation of Law. The making of an incorrect claim does not amount to furnishing inaccurate particulars. 10) The mensrea still applies to imposition of penalty. There was no mensrea on the part of assessee which is prerequisite for imposing penalty. 11) Explanation to Section 271(119 applies to assessee which is as under: Where in respect of any facts material to the computation of total income of the assessee. a. Fails to offer an explanation or offers an explanation which found to be false or b. Offers an explanation which is to prove that such explanation is bona fide and facts to prove that all the material facts have been disclosed. He should be deemed to have concealed the particulars of income which is added or disallowed in the assessment. 12) The facts in our case are that the assessee has disclosed the facts. 13) The assessee relies on the following judgments in support of his explanation. a) CIT v Dholie Tea Co. Ltd. 231 ITR 65 (Cal) it was held that the revenue has to prove that the assessee had knowingly concealed his income. b) CIT v Rahuljee and Co. 25....
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.... the penalty imposed by the AO u/s 271(1)(c) and confirmed by the ld.CIT(A) without properly appreciating the facts of the assessee and in a mechanical manner and in the light of fact of the case to be deleted. Per contra, the ld. DR supported the orders of authorities below. 7. We have considered the rival contentions and perused the material placed before us including the case laws relied upon by the assessee. During the course of hearing it was brought to our notice by the ld.counsel that during the year the assessee raised a total sum of Rs. 8,50,000/- from of M/s ZAN Engg (India) Pvt Ltd. out of which Rs. 8,15,000/- was repaid during the year. We further find that the assessee has fully disclosed full facts qua raising money and repayment thereof in the return of income filed with the department. We find that the impugned penalty was imposed by the AO for furnishing inaccurate particulars of income and also for concealing the particulars of income which was confirmed by the ld. CIT(A) without passing any speaking order and just confirmed the penalty mentioning that the predecessor CIT(A) vide order in appeal order No.CIT(A)-34/IT 195/2009-10 dated 9.11.2010 for the assessment....
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....may add at this stage that some of the observations of the Tribunal in the impugned order relating to interpretation of the clauses of the MOU may not be correct. This is more so when this Court also, while dismissing the quantum appeal of the assessee, interpreted these very clauses. Therefore, we may not entirely agree with the observations of the ITAT occurring in paras 19 to 22. However, still in view of the position explained by us in the foregoing paras, we are inclined to accept the conclusion of the Tribunal that the claim of the assessee about the amount in question being security deposit was bona fide as it was based on the possible interpretation of relevant clauses of the MOU. This is more so when the amount of Rs. 3 crores in question paid to the assessee was not treated as income even by M/s. DMIL and this position was found to be correct by the Assessing Officer on inquiry made on M/s. DMIL. It may be that the claim of the assessee was not found to be acceptable in quantum proceedings on merits. However, as it was not a case of concealment, the provisions of Section 271(1)(c) attracting levy of penalty would not be applicable more so when all material facts relevant ....