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TMI Blog2019 (5) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 271(1)(c) of the IT. Act, 1961, which penalty is bad in law and be deleted. 2. Because there being neither any concealment of particulars of income nor furnishing inaccurate particulars of income, the provisions of section 271(1)(c) of the Act are not applicable, the penalty imposed of Rs. 92,700/- is bad in law and be deleted. 3. Because the CIT(A) has failed to appreciate that the issue for which the assessee has been held liable for penalty being highly debatable (case of deemed dividend) there was no justification for levy of penalty under section 271(1)(c) of the IT. Act, 1961, the penalty imposed be deleted. 4. Because the CIT(A) has failed to appreciate that the amount on which the penalty has been imposed is at be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Office. During the assessment proceedings and from the records of the assessee itself, the Assessing Officer came to the conclusion that the transaction of loan taken by the assessee was deemed dividend. Therefore, it was prayed that the penalty cannot be imposed as there was no concealment of income or no wrong particulars of income were filed and it was only because of the opinion of the Assessing Officer that the addition was made. It was argued that the assessment of deemed dividend is highly debatable and on a debatable issue, the penalty u/s 271(1)(c) cannot be imposed. Reliance in this respect was placed on the decision of Mumbai Bench of the Tribunal in the case of P. James vs. ACIT in I.T.A. No.982/Mum/2015, order dated 22/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer treated it as deemed dividend. In a debatable issue and in a case like this where the assessee had furnished complete details of the transaction, the penalty cannot be imposed as has been held by various decisions. The reliance placed by the assessee in the case of P. James (supra) supports the case of the assessee where Hon'ble Tribunal, while deleting the penalty, has held as under: "4. None appeared for the assessee. We have heard the Ld.DR, perused the material available on record and gone through the orders of authorities below. The AO levied penalty u/s 271(1)(c) towards addition made on account of deemed dividend u/s 2(22)(e) of the Act. According to the AO, the assessee has failed to offer any explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 2(22)(e) for the assessment year 2009-10 for the first time. 9 ITA No.982 /Mum/2015 No such addition has been made in the preceding financial years. The assessee claims that he was under a bonafide belief 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. We find force in the arguments of the assessee for the reason that deeming fiction provided u/s 2(22)(e) for making addition towards loans and advances from a closely held company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concealment of income or furnishing of inaccurate particulars of income. In the instant appeal, the assessee company had neither concealed its income nor furnished the inaccurate particulars of income. Insofar as the assessee had disclosed all the particulars 0/transactions with the sister concern in the audited accounts as well as in the return of income, therefore it was not a good case for imposing penalty under section 271(1)(c). In the instant case, complete details were disclosed in the balance sheet and in the schedule annexed to tax audit report, meaning thereby that all material facts were disclosed to the department by the assessee and the additions had been made on legal interpretation of law. There is no dispute to the wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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