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2023 (7) TMI 686 - ITAT VISAKHAPATNAMPenalty levied u/s 271(1)(c) - addition u/s 2(22)(e) - Deemed dividend - assessee contended that deeming fiction provided u/s 2(22)(e) for the purpose of making addition towards loans and advances borrowed from a company in the hands of the director cannot be extended to penalty provisions provided u/s 271(1)(c) to hold that non disclosure of deeming dividends in the return of income would amount to furnishing of inaccurate particulars of income - HELD THAT:- While levying the penalty, the deeming provisions can be applied to a limited extent and instant case was concerned with the imposition of penalty under section 271(1)(c), which was not sustainable in so far as the assessee-company was not a registered shareholder of loan advancing company who had vien loan / advance to the assessee-company. As decided in the case of Shri P.James [2017 (11) TMI 1820 - ITAT MUMBAI] penalty cannot be levied u/s 271(1)(c) towards addition made for loans and advances by invoking deeming provisions of section 2(22)(e) of the Act. Therefore, we direct the AO to delete penalty levied u/s 271(1)(c) - Appeal filed by the assessee is allowed.
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