TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 1820
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.... in the Company as mentioned by CIT ( A ) 23 Mumbai as one of the reasons for justifying the penalty levied as in para 2.9 on page 6 of CIT ( A ) 23 Mumbai. Share holding pattern of Company was disclosed during the assessment proceedings before AU ACIT 12 ( 1 ) as reiterated in para 2.2 on page 62 of CIT ( A ) 23 Mumbai which has been reproduced ad verbatim from penalty order of ACIT 12 ( 1 ) Mumbai. e. Addition on a/c of deemed dividend was accepted to buy peace with the department and avoid litigation as reiterated in assessment order for A.Y.2009-10 para 6.2 on page 3 of which is reproduced ad verbatim Vide Order sheet noting dated 10.10.2011 the assesse has agreed to pay taxes on the above two additions. f. Based on findings of A.Y.2009-10 wherein deemed dividend was taxed for the first time asssessment was reopened U/S 148 for A.Y.2008-09 and A.Y.2010-11. g. Our belief that tax was not payable u/s 2 ( 22 ) ( e ) was accepted by the AO ACIT 12(1) Mumbai in A.Y.2008-09 and A.Y.2009-10 and penalty proposed to be levied U/S 271(1)(c) was not levied. h. On similar facts / findings penalty is levied once again. i. 1. The Income department was itself aware and knowi....
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....ts levy of penalty u/s 271(1)(c) of the Act The AO, after considering the submissions of the assessee and also relying upon the decision of Hon'ble Rajasthan High Court in the case of CIT vs Hotel Hill Top (2009) 313 ITR 116 (Raj) observed that the assessee has failed to offer an explanation with regard to the non disclosure of deemed dividend towards loans borrowed from a company, in which he was a beneficial shareholder, in the return of income for the relevant assessment year. The assessee also failed to prove the explanation offered by him is bona fide. Therefore, he opined that the assessee has furnished inaccurate particulars of income in respect of deemed dividend assessable u/s 2(22)(e) which warrants levy of penalty u/s 271(1)(c) and accordingly levied penalty of Rs. 24,12,806. 3. Aggrieved, the assessee preferred appeal before CITA) and reiterated his submissions made before the AO. The assessee further submitted that fact of taking loan from the company was disclosed in the balance-sheet and the addition towards deemed dividend u/s 2(22)(e) was made for the first time. Therefore, penalty cannot be levied for furnishing inaccurate particulars of income in respect of an ....
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....ble. 2.10 From the above facts, it is clear that although the amount of deemed dividend of Rs. 78,08,433/- was required to be declared by the assessee as its income, it did not disclose the same in the return of income filed by her. This fact was discovered only by the Assessing Officer who initiated the proceedings u/s 147 of the I.T. Act, 1961 and brought the same to tax. Otherwise, this income would have escaped taxation. Hence, in view of the decision in Reliance Petroproduct P.Ltd it is without doubt clear that the details supplied in the return were not accurate nor exactly correct, not according to the truth. In the of Zoom Communication Ltd. 327 ITR 510, the Hon'ble Delhi High Court has, after considering the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd., held as follows:- "The Court cannot overlook the fact that only a small percentage of the IT returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bonafide, it would be difficult to say that he would still not be....
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....The assessee has disclosed loan borrowed from the company, in his balance-sheet. The assessee further contended that deeming fiction provided under the provisions of section 2(22)(e) cannot be extended to the provisions of section 271(1)(c) to hold that the assessee has furnished inaccurate particulars of income, despite details of loan has been disclosed in the balance-sheet filed for the relevant assessment year. 5. The AO has levied penalty on the basis of information gathered during the course of assessment proceedings for the AY 2008-09 which revealed that the assessee has borrowed loan from a company for Rs. 78,08,433 in which he was a beneficial shareholder. The said information has been gathered from the financial statement of the assessee. The assessee has disclosed loan borrowed from the company in his balance-sheet. We further notice that the AO has made addition u/s 2(22)(e) for the assessment year 2009-10 for the first time. No such addition has been made in the preceding financial years. The assessee claims that he was under a bonafide belief that deeming fiction provided u/s 2(22)(e) for the purpose of making addition towards loans and advances borrowed from a comp....