2016 (2) TMI 1245

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....for the sake of convenience. ITA No.243/Vizag/2013: 2. The facts are in brief that the assessee had filed a return of income by declaring total income of Rs. 1,12,008/-. The case of the assessee was reopened and assessment was completed by invoking deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961 (hereinafter called as 'the Act') and addition of Rs. 46,16,144/- was made. In the assessment order, the A.O. has noted that the assessee is a partner with 45% interest in the form M/s. Pratyusha Associates and also Director in M/s. Pratyusha Shipping Pvt. Ltd. having a substantial interest. The A.O. has noted further that the company had shown accumulated reserves and surplus of Rs. 145.53 lakhs as on 31.3.2001 and has also adv....

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....tute deemed dividend is an interpretative one. With the above observation, the penalty imposed by the A.O. was deleted. The revenue carried matter in appeal before the Tribunal. The Ld. Counsel for the assessee has submitted that based on the annual report and other particulars submitted by the assessee, A.O. came to a conclusion that the amount received by the assessee is not an advance and it is a deemed dividend by following the deemed fiction, as per the section 2(22)(e) of the Act. In fact the assessee neither concealed the income nor filed inaccurate particulars. Therefore, section 271(1)(c) of the Act is no application in this case and supported the order passed by the Commissioner. 5. On the other hand, the Ld. D.R. has supported ....

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....ratyusha Associates is only an advance not deemed dividend. He also submitted that annual report and other details were furnished before the A.O. Therefore, assessee neither concealed the income nor filed inaccurate particulars. By virtue of deeming fiction, no penalty can be levied. We find that there is a merit in the argument of the Ld. Counsel and we are of the opinion that when the assessee makes a claim by submitting all the details if the A.O. has not accepted the claim of the assessee and made an addition by invoking deemed provisions u/s 2(22)(e) of the Act, it cannot be said that the assessee has neither concealed the income nor filed inaccurate particulars. 7. The Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Prod....