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TMI Blog2023 (10) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... . as on the date of transfer of loan as the assessee was having more than 10% of the shareholding of that company. Pursuant to the order of the Tribunal an assessment u/s 143(3) read with section 254 of the Act was passed by the Assessing Officer making an addition of Rs. 4,73,526/- u/s 2(22)(e) of the Act. Subsequently the Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act and levied penalty of Rs. 1,46,319/- by order dated 29.06.2022 pursuant to the addition of Rs. 4,73,526/- made u/s 2(22)(e) of the Act while completing the consequential assessment. Assessee preferred an appeal before the Ld.CIT(A) and the Ld.CIT(A) by order dated 08.08.2023 sustained the penalty. 3. The Ld. Counsel for the assessee submits that on perusal of the impugned penalty order, it is quite evident that the Ld. AO has imposed penalty of Rs. 1,46,319/- under section 271(1)(c) of the Income tax Act, 1961 on addition of Rs. 4,73,526/- made on account of deemed dividend under section 2(22)(e) of the Act by alleging that appellant has furnished inaccurate particulars of income. It is pertinent to note that the appellant is holding 25% share capital of M/s Mittal Construction & Real Esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1 to Section 271(1)(c) of the Act deeming fiction can only be invoked when an amount is added or disallowed in computation of total income which is deemed to represent the income in respect of which particulars have been concealed. While, in the instant case, the Ld. AO initiated and imposed penalty for furnishing of inaccurate particulars of his income, thus invoking of Explanation 1 to section 271(1)(c) in the case of appellant for imposing penalty is bad in law. Reliance was placed on the decision of the ITAT, Delhi Bench in the case of Tristar Intech (P.) Ltd. v. Assistant Commissioner of Income Tax, Circle 16(1), New Delhi [2017] 88 taxmann.com 392. The Ld. Counsel for the assessee further placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd. [322 ITR 158] submits that mere making of a claim which is not sustainable in law cannot lead to levy of penalty u/s 271(1)(c) of the Act. 5. The Ld. Counsel for the assessee further submits that the Assessing Officer initiated penalty proceedings for furnishing of inaccurate particulars in the assessment order and while levying the penalty u/s 271(1)(c) of the Act in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of which particulars have been concealed." 17. From the said provision, it is apparent that, if the ld.AO in the course of assessment proceedings is satisfied that, any person has concealed the particulars of income or furnished inaccurate particulars of such income, then he may levy penalty on the assessee. Thus, there are two different charges i.e. concealment of particulars of income or furnishing of inaccurate particulars of income. The penalty can be imposed only for a specific charge. Furnishing inaccurate particulars of income means, when the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas, concealment of particulars of income means, when the assessee has concealed the income and has not shown the income in its return or in its books of accounts. Explanation 1 is a deeming provision and is applicable when an amount is added or disallowed in computation of total income which is deemed to represent the income in respect of which particulars have been concealed. Explanation 1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income." 8. We further observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 476 &. 477/JP/14 vide its order dated 29.06.2016, the Coordinate Bench under identical set of facts has followed the above decision and has deleted the penalty on addition on account of deemed dividend and the relevant findings are as under: "23 We have heard the rival contentions and perused the material available on record. Undisputedly the facts pattern in the impugned matters are similar to the facts before Coordinate Bench in respect of assessee's group companies wherein the penalty on addition on account of deemed dividend u/s 2(22)(e) was deleted. Hence respectfully following decision of the Coordinate Bench referred (supra), we hereby delete the penalty in the hands of the assessee for both the years under consideration. " 8. Following the consistent position taken by the Coordinate Benches in assessee's group cases where the penalty levied under section 271(1)(c) has been deleted, the penalty levied." 9. It is further observed that the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd. (supra) held as under: "10. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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