2017 (4) TMI 872

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....016 and penalty order passed under section 271(1)(c) of the Act pertaining to appeal in ITA No.3409/Mds./16 for assessment year 2010-11. 2. The main contention of the assessee in ITA No.3408/Mds./2016 is with regard to confirming the addition of Rs. 52,64,846/- as deemed dividend under section 2(22)(e) of the Act. 2.1 The other appeal in ITA No.3409/Mds./2016 is with regard to confirming the levy of penalty on account of disallowance of deemed dividend under section 2(22)(e) of the Act. First we take up ITA No.3408/Mds./16 3. The facts of the issue are that during the assessment year under consideration, the assessee, the Managing Director of the company, M/s.Chroma Print India Pvt Ltd., has received an amount of Rs. 76,47,999/-....

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....company, has mortgaged all his properties for obtaining loan by the company. Being so, the provisions of the section 2(22)(e) of the Act cannot be applied. For this purpose, he relied on the various judgements. He also submitted that M/s.Mind Ware Pvt Ltd., which was merged with M/s.Chroma Print India Pvt Ltd., wherein the "Appointed date" was 01.04.2009. He submitted that the balance on the said date in the assessee's account in the books of the amalgamating company (Mindware) as on 01.04.2009 should be considered as balance in the books of account of the amalgamated company. For this purpose, he relied on the judgment of Supreme Court in the case of Marshall Sons reported in 223 ITR 809(SC). He also submitted that for the purpose of quant....

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....ee is that the assessee received money on account of commercial expediency for mortgaging the assessee's property to bank for enabling the company, M/s.Chroma Print India Pvt Ltd., to avail loan from State Bank of India(SBI). However, the lower authorities clearly brought on record that there was no authority by way of Board Resolution from M/s.Chroma Print India Pvt Ltd. to give the said amount of Rs. 52,64,846/- . When there is no resolution or authority from the Board of Directors of the said company, to give the said amount to the assessee, it cannot be said that there exist in commercial expedience to grant such a huge amount to the assessee. In such circumstances, in our opinion, the provisions section 2(22)(e) of the Act is applicabl....

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....t balance in the books of account of the company, M/s.Chroma Print India Pvt Ltd. in the name of assessee and he has already excluded the other amount payable to the assessee. Being so, we do not find any merit in this argument. Hence, this ground raised by the assessee stands dismissed. 9. Coming to the penalty levied for addition sustained on account of deemed dividend, in our opinion the addition on account of deemed provisions cannot be construed as furnishing inaccurate particulars of income or concealment of income. Accordingly by placing reliance on the judgment of Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. in [2010] 322 ITR 158 (SC) wherein held that: "12. We do not agree, as the assessee had f....