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2018 (6) TMI 1647 - AT - Income TaxPenalty u/s. 271(1)(c) - deemed dividend addition u/s 2(22)(e) - HELD THAT:- As decided in SHRI DIPESH L. SHAH [2017 (4) TMI 1458 - ITAT AHMEDABAD] Section 2(22)(e) of the Act creates legal fiction whereby loans/advances received by an assessee are deemed as taxable income in the hands of the recipient assessee in certain circumstances as specified therein. In view of section 2(22)(e) of the Act, loans/advances amount under consideration artificially partake the character of dividend and brought to tax as deemed dividend. The aforesaid provision of section 2(22)(e) has brought a deeming and unnatural concept of treating the returnable loans/advances as taxable income in the hands of borrower in departure with the operation of the normal provisions. Admittedly, the relevant facts concerning the issue were available to the AO. Thus, there is no concealment of any ‘particulars’ of any fact per se. Assessee has simultaneously claimed that the aforesaid advances have been received the course of ordinary business and owing to ongoing business transactions and thus not susceptible to provisions of section 2(22)(e) - while the provisions of s.2(22)(e) have been applied, the issue is not entirely free of any debate. As noted, section 2(22)(e) of the Act is only deeming provision of law and is not a substantive provision. Thus, in the absence of any perceptible mala fides, we find no infirmity in the order of the CIT(A) deleting the penalty imposed by the AO. Thus, we do not see any merits in the appeals of the Revenue.
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