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Mohit Diamonds Pvt. Ltd. Versus Deputy Commissioner of Income Tax

2015 (12) TMI 1023 - ITAT MUMBAI

Penalty imposed under section 271(1)(c) - addition of deemed dividend under section 2(22)(e) - Held that:- There is a credit balance in respect of M/s. Emmar Diamonds Ltd., appearing in the books of the assessee during the relevant financial year. It is also a fact that the assessee is a shareholder in M/s. Emaar Diamonds Ltd. It is also a fact on record that the credit balance appearing in the name of M/s. Emaar Diamonds Ltd. has been treated as a deemed dividend under section 2(22)(e) of the A .....

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In the facts of the present case, on a reference to the statement of account of loan transaction with M/s. Emaar Diamonds Ltd., a copy of which has been submitted at Page-8 of the paper book, it is very much clear that the assessee had an opening balance of loan to M/s. Emaar Diamonds Ltd. amounting to ₹ 2,32,26,000. During the year, the assessee has also received payment against the aforesaid loan to M/s. Emaar Diamonds Ltd., on different dates starting from 2nd August 2004. As it app .....

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lanation of the assessee appears to be correct. It is seen from the statement of account that the assessee is regularly advancing loan to M/s. Emaar Diamonds Ltd., therefore, the claim of the assessee that on 23rd September 2004, M/s. Emaar Diamonds Ltd., while making repayment has paid back excess amount per mistake is quite plausible. Considering the aforesaid facts, we are of the view that the assessee cannot be accrued of furnishing inaccurate particulars of income or concealing particulars .....

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eals)-9, Mumbai, sustaining the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2005-06. 2. Briefly the facts are the assessee is a company engaged in the business of import and export of diamond and studded jewellery. For the assessment year under consideration, the assessee filed its return of income on 30th October 2005, declaring total income of ₹ 9,71,76,944. During the assessment proceeding, the Assessing Off .....

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d not be treated as deemed dividend under section 2(22)(e) of the Act as the said company is a shareholder, the assessee in letter dated 26th December 2008, replied that the advances given by the assessee to the sister concern cannot be considered as deemed dividend under section 2(22)(e). The Assessing Officer, however, did not find merit in the submissions of the assessee. The Assessing Officer observed, though the provisions of deemed dividend is not applicable in case of loan advanced by the .....

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2,74,000. The Assessing Officer observed that as the assessee is having more than 10% share in M/s. Emaar Diamonds Ltd., provisions of section 2(22)(e) is attracted. He, therefore, treating the amount of ₹ 42,74,000, as deemed dividend added back to the return of income. The addition made under section 2(22)(e) was also confirmed by the Commissioner (Appeals). Though, the assessee challenged the addition made under section 2(22)(e) of the Act before the Tribunal, but, as it appears from th .....

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ction 271(1)(c) of the Act, but the Assessing Officer, however, was of the view that as additions made under section 2(22)(e) was accepted by the assessee before the Tribunal it is proved that the assessee by not offering the deemed dividend of ₹ 42,47,000 as income has furnished inaccurate particulars of income. Accordingly, he proceeded to impose penalty of ₹ 15,54,083, being 100% of the tax sought to be evaded. Challenging the imposition of penalty, the assessee preferred appeal b .....

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loan was brought forward and shown as opening balance on 1st April 2004. During the current previous year, M/s. Emaar Diamonds Ltd., started repaying the loan on different dates and on 23rd September 2004, M/s. Emaar Diamonds Ltd., by mistake paid an amount of ₹ 1.50 crores as a result of which there was a credit balance of ₹ 42,74,000 against M/s. Emaar Diamonds Ltd. However, since M/s. Emaar Diamonds Ltd., is based in Surat, immediately after the mistake was noticed, the assessee o .....

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he assessee to furnish inaccurate particulars of income or concealment of particulars of income imposition of penalty under section 271(1)(c) is not justified. In support of his contention, the learned Counsel for the assessee relied upon the following decision. i) Sunilchandra Vohra v/s Asstt. Commissioner of Income Tax, [2009] 32 SOT 365 (Mum.) ii) Gitanjali Ghate v/s Dy. Commissioner of Income Tax, ITA no.6560/Mum./2010, order dated 23rd May 2012; iii) ACIT v/s M/s. Patel Holdings Ltd. ITA no .....

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ct of M/s. Emmar Diamonds Ltd., appearing in the books of the assessee during the relevant financial year. It is also a fact that the assessee is a shareholder in M/s. Emaar Diamonds Ltd. It is also a fact on record that the credit balance appearing in the name of M/s. Emaar Diamonds Ltd. has been treated as a deemed dividend under section 2(22)(e) of the Act and in the quantum of appeal before the Tribunal, the assessee has accepted the addition by not pressing the ground raised. However, these .....

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