TMI Blog2019 (8) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... f the deemed income, the assessee had intentionally not returned it to tax. The bonafides of the assessee therefore cannot be doubted. The fact that the ITAT held the explanation of the transaction being commercial in nature for purchase of property, as an after thought and sham, makes no difference, since the ITAT also held that the explanation in any case was of no help to the assessee and did not save it from the rigors of section 2(22)(e). The ITAT held that merely because an advance is received in a commercial transaction does not suffice to exempt it from being treated as deemed dividend, unless and until the advance is received in the course of money lending business of the company giving the advance. Therefore the explanation did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) has erred in confirming the levy of penalty u/s 271(1)(c) amounting to ₹ 5,83,282/-. 2. That the Worthy CIT(A) had failed to appreciate the fact that the complete particulars of income had been furnished and neither there has been concealment of income nor furnishing of inaccurate particulars of income. 3. That the Worthy CIT (A) had ignored the judgment of Reliance Petroproducts (P) Ltd. and further, the levy of penalty is not justified since the addition u/s 2(22)(e) is only on account of deeming provisions and, as such, it is not a case of levy of penalty u/s 271(1)(c). 4. That even otherwise, no proper satisfaction has been recorded by the Assessing Officer for conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order in the present case, passed u/s 143(3) of the Act, wherein the impugned addition was made, it was pointed out therefrom that the A.O. had noted that the assessee had a debit balance of ₹ 18,22,923/- in the books of M/s Chhabra Wines Ltd., a company in which the assessee was a Director holding 51.98% of shares. The A.O., therefore, found that the assessee fulfilled all the conditions for treating the impugned amount as deemed dividend u/s 2(22)(e) of the Act and accordingly, made the addition in the hands of the assessee. It was thereafter pointed out that the said addition was confirmed in appeal both by the Ld.CIT(A) and the I.T.A.T. also. Thereafter the Ld. counsel for assessee contended that no penalty was leviable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RIB 7. Shankar Lai Khandelwal Vs. Deputy Commissioner of Income Tax, ITA No.878/JP/2013 JAIPUR-TRIB 8. Vikram P. Mahurkar V/s Assistant Commissioner of Income Tax, ITA No.3195/ADH/2014 AHD-TRIB 7. The Ld. DR, on the other hand, vehemently supported the order of the Ld.CIT(A). The Ld. DR pointed out that during assessment proceedings and even in appellate proceedings the assessee had given an explanation of the impugned transaction to escape from the rigours of the deeming provisions of section 2(22)(e) of the Act by stating that the loans/advances had been received on account of sale of property by the assessee to the company. The Ld. DR pointed out that this explanation of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the company. 9. The ld. CIT(Appeals), on going through the Agreement to Sell in question specifically found that part of the amount is stated as advance and that assessee is 1/3rd owner of the property in question. However, in the Agreement to Sell, assessee claimed to be owner of the property in question. In the Agreement to Sell, it is stated that assessee shall receive the balance amount at the time of execution and registration of the Sale Deed. However, till date, no Sale Deed is executed by assessee in favour of the assessee. Therefore, there is no question of making further payment to the assessee as advanced against the property in question. The other co-owner have never entered into any Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g inaccurate particulars of income, has to be adjudicated by us. There is no dispute about the fact that the assessee had correctly disclosed all particulars relating to the deemed income. The assessee had shown the loan/advance as received from the company and the revenue had, accepting this fact and taking into consideration other factors, treated the same as deemed income of the assessee. So far as the bonafides of the assesses claim for not treating it as income for the purposes of taxation, we see no reason to doubt it. The true nature of the amount was not income, but loan/advance. It was only deemed to be in the nature of dividend on account of fulfillment of conditions specified u/s 2(22)(e) of the Act. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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