TMI Blog2015 (8) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholder of the company. Moreover the AO has not stated as to why the ratio promulgated in the case referred to by the assessee would not apply to the him. We are therefore satisfied that the assesses explanation in regard to taxability of this amount in its hands is probable and true. Explanation of the assessee that he had no intention to either conceal or furnish inaccurate particulars of income is quite probable and true in the state of law set out. The assessee has ,therefore, discharged his onus of proof under Explanation 1 to section 271(1)(c) of the Act and shown that there was no willful or gross neglect on his part in returning the correct income. We are also satisfied that the assessee had disclosed all relevant particulars relating to his income and there was neither any concealment of income nor furnishing of inaccurate particulars of income. Addition made applying deeming provisions would not disclose it to be a case of filing inaccurate particulars of income. In any case ,without prejudice to what has been stated above, the displacement of presumption raised against the assessee by the Expl. 1 to section 271(1)(c) amounts to concealing particulars of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u. 3. The only effective ground of appeal in this case is against the deletion of penalty of ₹ 4,61,465/- levied under section 271(1)(c) of the Income Tax Act, 1961. 4. Brief facts of the case are that ,the assesse is a partnership concern of four partners ,Sanjeev Singal, Harpreet Singh, Himjyoti Dhir and Satish Kumar .These four persons are also shareholders of 85.79% shares in M/s Preet Remedies (P) Ltd..For the year under reference it was noticed that M/s Preet Remedies (P) Ltd. had advanced a loan amounting to ₹ 13 Lacs to the assessee i.e.; M/s Quixotic Healthcare. The AO treating the same as deemed dividend under section 2(22)(e) of the Income Tax Act, 1961, made an addition of ₹ 13 Lacs in the hands of the assesse. Aggrieved with the order of the AO the assessee preferred an appeal before the Ld. CIT(A) who vide his order dt. 01/09/2011 in the Appeal No. 482/2009-10, confirmed the addition of ₹ 13 Lacs made by the AO against which the assessee did not prefer any further appeal before the ITAT. 5. Penalty proceedings were initiated under section 271(1)(c) of the Act on this addition. In the penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 (Mum)(SB) in this regard.The AR further argued that since the addition made was solely on account of difference of view taken on the same set of facts,it had nothing to do with the concealment of income or furnishing of inaccurate particulars of income.The AR argued that the addition to income was made under the deeming provisions of the Act and as such penalty was not leviable as held by the ITAT Mumbai G Bench in the case of Rajesh L Durgani vs ACIT Circle 18(3) Mumbai .Relying upon the decision of the Apex court in Reliance Petro products the AR argued that penalty could not be levied for a mere disallowance of a claim in the assessment proceedings .The Revenue on the other hand placed reliance on the order of the AO. 9. We have heard the rival submissions and perused the documents placed before us as well as the orders of the lower authorities. 10. The only issue before us is whether not treating the advance received by the assesse of ₹ 13 lacs from M/s Preet Remedies Pvt. Ltd. as income in the nature of deemed dividend, would attract penalty under section 271(1) and also whether the CIT(A) has rightly cancelled the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of CIT Vs. Hotel Hilltop, 313 ITR 116 which held that to bring to tax any amount as deemed dividend as per the provisions of section 2(22)(e) ,it is essential that the recipient of the amount must be a shareholder of the company. Moreover the AO has not stated as to why the ratio promulgated in the case referred to by the assesse would not apply to the him. We are therefore satisfied that the assesses explanation in regard to taxability of this amount in its hands is probable and true. It is the argument of the Revenue that the assesse should have disclosed this amount in his return of income.This argument is untenable in view of the legal position prevailing at that time as laid down by the Delhi High Court and the Rajasthan High court referred to above.We therefore hold that the explanation of the assesse that he had no intention to either conceal or furnish inaccurate particulars of income is quite probable and true in the state of law set out above. The assesse has ,therefore, discharged his onus of proof under Explanation 1 to section 271(1) of the Act and shown that there was no willful or gross neglect on his part in returning the correct inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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