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2015 (6) TMI 52 - ITAT MUMBAI

2015 (6) TMI 52 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) - deemed dividend u/s 2(22)(e) - CIT(A) deleted penalty levy - Held that:- The assessee’s explanation that the money received from these companies were in the nature of refundable security deposits received by the assessee in lieu of letting of the properties owned by her has not been found to be false and in fact has been substantiated by the evidence in the form of internal bank vouchers and the entries in the books of account of the .....

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purpose is in the nature of loan. It is a trite law that the deeming fiction has to be strictly construed and such legal fiction cannot be extended for any kind of payment by a company to its shareholder. Thus, on the facts and circumstances of the case, we find that the reasons recorded by the Ld. CIT(A) for deleting the penalty is legally and factually correct and accordingly the same is affirmed. - Decided in favour of assesse. - ITA No. 3767/Mum/2012 - Dated:- 25-3-2015 - Shri B. R. Baskaran .....

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case are that, assessee is an individual who had received money from 3 companies, wherein she was major shareholder. The details of amount received and pattern of her shareholding were as under:- Sr. No. Name of the Company Amount Received % of Shares 1 M/s. Exim Multi Media P. Ltd. Rs.68,00,000 50 2 M/s. Edge Fine Print P. Ltd. Rs,9,00,000 13.33 3 M/s. Shipping Times (I) P. Ltd. Rs.24,00,000 50 Total Rs.1,01,00,000 In response to the show cause notice by the AO, as to why this amount should no .....

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first appeal, the Ld. CIT(A) confirmed the said action of the AO on the ground that all the conditions mentioned u/s 2(22)(e) are fulfilled and therefore, the provisions of deemed dividend are squarely applicable. In the second appeal also, the Tribunal has confirmed the said addition on the ground that the assessee s argument that she has received deposits in lieu of the premises given to these companies for their official purpose could not be substantiated. Therefore, order of the Ld. CIT(A) w .....

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be treated as loan or advance within the ambit of section 2(22)(e). However, the assessing officer reiterated the same finding as was given in the quantum proceedings and held that since this issue has been confirmed by the Tribunal therefore, penalty is leviable. He also held that the assessee had not furnished proper particulars of income and assessee s claim have been held to be incorrect. After referring to catena of case laws he levied the penalty of ₹ 33,99,660/-. 5. Before the Ld. C .....

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and therefore, wrong finding of fact has been arrived. However, the Tribunal has dismissed the assessee s application on the ground that it is beyond the scope of section 254(2). It was further submitted that, not every amount received by the shareholder on account of the business dealing can be treated as loan or advance within the purview of section 2(22)(e). The security deposits received by these companies was for the use of the premises belonging to the assesseee and such a security deposi .....

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rial placed on record and the explanation filed by the assessee. He noted that the assessee has given complete details of refundable deposits for the use of the property given on rent and assessee also has furnished internal bank vouchers made by these concerns which clearly stated that the payment was towards deposits and not any advance or loan. This fact has not been taken into cognizance either by the CIT(A) or by the Tribunal even though they were placed before them. He also took note of th .....

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t for the letting of the properties. After referring to the decision of Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products P. Ltd. reported in (2010) 322 TTR 158, he deleted the penalty. 7. Before us, the Ld. DR strongly relied upon the order of the AO and the finding given in the quantum proceedings and submitted that it could not be established by the assessee during the course of the quantum proceedings that the amount received by the assessee from the three companies was no .....

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deposits from these companies. This is evident from the internal bank payment vouchers of these companies that they were in the nature of deposits. This evidence itself goes to show that assessee had not received any loan or advance as stipulated u/s 2(22)(e). This vital evidence which was filed before AO as well as before the appellate authorities has not been considered at all. The assessee s explanation in this regard has not been rebutted by the department in the penalty proceedings. Thus, .....

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sums aggregating ₹ 1,01,00,000/- which has been contended to be in the form of refundable security deposits for letting the properties owned by the assessee to these companies for their business purpose. List of properties owned by the assessee and given for use to these company were filed before the authorities during the quantum proceedings. Along with these details, the assessee had also filed internal bank payment voucher by these companies which show that amount has been given as depo .....

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acts, it cannot be conclusively held that the amounts given by these companies are in the form of loan or advance. This fact is further corroborated by the fact that, neither there is any entry of loan in the books of the assessee nor in the books of these companies. How such an amount received by the assessee is considered in the nature of loan is not borne out from the records. Be it that as may be, it is well settled proposition of law that the finding given in the quantum proceedings are qui .....

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guilty of concealment of income or furnishing of inaccurate particulars of income. The assessee may adduce fresh evidence in the penalty proceedings to establish that the material and relevant facts goes to prove the bona fide of the claim or take a different plea upon the same existing material that there is no concealment of income or furnishing of inaccurate particulars. The degree of proof necessary under the Explanation-1 to section 271(1)(c) can be discharged by the assessee by pointing o .....

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