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2019 (8) TMI 286 - AT - Income TaxLevy of penalty u/s 271(1)(c) - addition of deemed dividend u/s 2(22)(e) - HELD THAT:- 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). The assessee is an individual who, unlike corporate, is generally not guided and assisted by professionals in tax matters, which, as is evident from the issue before us, are highly complex taxing even receipts which are not in the nature of income. In such circumstances, it cannot be said that having disclosed all particulars of 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 not save it from the rigors of 2(22)(e), and therefore if the same was found false, it could not be said that the assessee had malafidely not returned the deemed income to tax. We set aside the order of the Ld.CIT(A) and hold that no penalty is exigible in the present case. The penalty so levied is directed to be deleted - Decided in favour of assessee.
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