M/S. TRIMURTY BUILCON PVT. LTD., Jaipur V. DCIT, Jaipur

ITA 661/JPR/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5483 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 07-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATEJA CIT DHK
• Keywords: Opportunity of being heard; Bonafide belief; Deemed to accrue or arise in india; Deemed dividend; Commercial expediency; Revised return
• Section: 143(3); 153A; 27; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 661 TO 665 & 468/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03, 03-04,04-05, 06-07, 07-08 & 08-09 . M/S. TRIMURTY BUILDCON PVT. LTD., 601, GEETA ENCLAVE, VINOBA MARG C-SCHEME, JAIPUR. CUKE VS. THE DCIT, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCT 7285 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 667/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 . SMT. GEETA MISHRA, JAIPUR. CUKE VS. THE DCIT, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ACSPM 8468 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 668/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 . M/S. ABHISHEK ESTATE PVT. LTD., JAIPUR. CUKE VS. THE DCIT, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABCA 5594 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 666/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 . M/S. TRIMURTY FARMS & RETREATS, JAIPUR. CUKE VS. THE DCIT, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACFT 7626 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT 2 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (C.A) & SHRI ROHAN SOGANI (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.01.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/02/2016. VKNS'K@ ORDER PER BENCH : ALL THE ASSESSEES ARE IN APPEAL AGAINST THE ORDER OF LD. CIT (A), CENTRAL, JAIPUR DATED 09.05.2011, 06.05.2011, 17.03.2011 FOR THE A.Y. 2002-03, 03-04, 04-05, 05-06, 06-07, 07-08 & 08-09. THE SOLE GROUND IN AL L THE APPEALS IS AGAINST CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE I. T. AC T. 2. THE A.O. IN ALL THE PENALTY ORDERS HAS OBSERVED THAT M/S. TRIMURTY BUILDCON PVT. LTD., GEETA MISHRA (B), ABHISHEK ESTATE PVT. LTD. (C ) AND TRIMURTY FARMS & RETREATS (D) WHICH ARE PART OF UDAIKANT MISHRA GROUP WERE SEARCH ED ON 03.05.2007. IN THIS CASE ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE I.T . ACT. THE AO MADE ADDITION ON ACCOUNT OF DEEMED DIVIDEND / PENALTY U/S 271(1)(C) AS UNDER :- A.Y. APPEAL NO. ASSESSEE DEEMED DIVIDEND AMOUNT PENALTY U/S 271(1)(C) 2002 - 03 661/JP/2011 TRIMURTY BUILDCON PVT. LTD 75,825 27,069 2003 - 04 662/JP/2011 TRIMURTY BUILDCON PVT. LTD 38,442 14,127 2004 - 05 663/JP/2011 TRIMURTY BUILDCON PVT. LTD 105,000 37,668 2006 - 07 664/JP/2011 TRIMURTY BUILDCON PVT. LTD 79,510 26,783 2007 - 08 665/JP/2011 TRIMURTY BUILDCON PVT. LTD 180,000 60,558 2008 - 09 468/JP/2011 TRIMURTY BUILDCON PVT. LTD 3,929,017 1,214,066 3 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. 2007 - 08 667/JP/2011 GEETA MISHRA (B) 527,768 202,537 2005 - 06 668/JP/2011 ABHISHEK ESTATE PVT. LTD.(C) 80,000 29,274 2005 - 06 666/JP/2011 TRIMURTY FARMS & RETREATS (D) 11,005 4,027 TOTAL (A+B+C+D) : 5,026,567 1,616,109 BEFORE IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT, THE AO GAVE REASONABLE OPPORTUNITY OF BEING HEARD TO ALL THE ASSESSEES. T HE DIRECTOR OF THE COMPANY SHRI ABHISHEK MISHRA VIDE WRITTEN SUBMISSION DATED 08.05 .2009 HAD ADMITTED THAT THE INTRA GROUP FUND TRANSFERS WERE FALLING WITHIN THE AMBIT OF SECTION 2(22)(E) OF THE IT ACT. THUS ADDITIONS IN ALL THE CASES WERE MADE ON ACCOUN T OF DEEMED DIVIDEND. THE ASSESSEE HAD NOT PREFERRED APPEAL BEFORE APPELLATE AUTHORITY THAT THE AMOUNT HAD BEEN ADVANCED IN THE NORMAL COURSE OF BUSINESS AND ARE N OT PER SE WITHIN THIS SECTION. THE ASSESSEE EVEN HAD SURRENDERED INCOME TO BUY PEACE A ND AVOID PROLONGED LITIGATION. SURRENDER OF INCOME AND NON-FILING OF APPEAL DO NOT MEAN CONCEALMENT OF INCOME. MENS REA IS AN ACTIVE ELEMENT IN THE IMPOSITION OF PENALTY AND THAT IS LACKING IN THIS CASE. THE LD. AO HELD THAT EVEN ADVANCES MADE DURIN G THE COURSE OF BUSINESS DO NOT ABSOLVE FROM THE APPLICATION OF SECTION 2(22)(E) OF THE IT ACT. THE SECTION DOES NOT DISTINGUISH AN ADVANCE INTO A BUSINESS ADVANCE OR A NY OTHER KIND. IN TAXATION LAW, THE MEANING UNDERSTOOD IN THE PLAIN READING HAS TO BE A CCEPTED. ONE CANNOT IMPORT WORDS TO SUIT ONES CONVENIENCE INTO A LEGAL PROVISION WH EN IT IS ABSENT. THIS IS THE SUPREME PRINCIPLE OF CASSUS OMISSUS, WHICH HAS BEEN REITERA TED IN VARIOUS JUDGMENTS AND THUS FIRMLY ESTABLISHED IN THE LEGAL LEXICONS. THE AO FU RTHER RELIED ON THE CASE OF PADMA SUNDRA RAO VS. STATE OF TAMIL NADU, 255 ITR 147 (SC ), BRITTANIA INDUSTRIES VS. CIT, 278 ITR 546 (SC). THE AO FURTHER OBSERVED THAT THERE WE RE INTRA GROUP MONEY TRANSFERS ON 4 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. A LARGE SCALE. IN MOST COMPANIES, THE BOARD OF DIRE CTORS COMPRISED MEMBERS OF THE FAMILY IN ONE WAY OR THE OTHER. THIS LED TO THE SUS PICION THAT THEY WERE ALSO SUBSTANTIAL SHAREHOLDERS IN THE COMPANY. TAKING THAT QUEUE, TH E WEBSITE OF THE REGISTRAR OF COMPANIES WAS ACCESSED AND THE SHARE HOLDING PATTER N WAS SEEN. THE SUSPICION PROVED RIGHT AND THE SHAREHOLDING PATTERN WAS TAKEN DOWN FROM THE WEBSITE. THE AO HAS FOUND OUT THE DETAILS OF ADVANCES/LOANS, ACCUMU LATED PROFITS. ACCORDINGLY THIS GROUP HAS OFFERED RS. 39.29 LACS UNDER SECTION 2(22)(E) O F THE ACT. THERE WAS NO VOLUNTARY SURRENDER OF THE ASSESSEE BUT THIS WAS DUE TO INVES TIGATION MADE BY THE AO. THE ASSESSEE FILED FIRST RETURN UNDER SECTION 139 AND T HEREAFTER SECOND RETURN FILED UNDER SECTION 153A. BUT IN BOTH THE RETURNS, THE ASSESSEE HAD NOT DISCLOSED DEEMED INCOME IN THE COMPUTATION OF INCOME. HE FURTHER RELIED ON THE CASE OF CIT VS. DR. R.C. GUPTA & CO., 122 ITR 567 (RAJ.) WHEREIN IT HAS BEEN HELD TH AT WHERE THE ASSESSEE HIMSELF HAD ADMITTED THAT THE AMOUNT IN QUESTION REPRESENTED HI S INCOME, NO FURTHER EVIDENCE WOULD BE NECESSARY TO SHOW THAT IT WAS THE AMOUNT W HICH REPRESENTED HIS INCOME AND/THAT IT REPRESENTED HIS CONCEALED INCOME. HE F URTHER RELIED ON THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS & OTHERS, 306 ITR 277 (SC) FOR MENS REA, UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVING MIL LS (2009) 180 TAXMAN 609 (SC) FOR PENALTY IS COMPENSATORY IN NATURE. THEREAFTER, HE RELIED ON THE CASE OF ATUL BINDAL,317 ITR 1 (SC) WHEREIN THE APEX COURT HAS EQUATED CIVIL LIABILITY WITH A STRICT LIABILITY. AFTER CONSIDERING THE EXPLANATION-1 TO SECTION 271(1)(C), THE AO IMPOSED PENALTY IN A.Y. 2008-09 AT RS. 12,14,066/- WHICH IS 100% OF TAX SOU GHT TO BE EVADED. SIMILAR PENALTY WAS ALSO IMPOSED BY THE AO FROM A.Y. 2002-03 TO 04- 05 AND A.Y. 2006-07 TO 07-08, BUT AMOUNT PENALTY VARY TO YEAR TO YEAR, THE FINDIN GS OF THE AO ARE THE SAME. 5 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. 3. BEING AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD. CIT (A) WHO HAD CONFIRMED THE ADDITION AFTER CONSIDERIN G THE ASSESSEES REPLY AND HELD THAT ASSESSEES CLAIM THAT THESE WERE THE BUSINESS TRANS ACTIONS BETWEEN THE GROUP COMPANIES WERE NOT SUPPORTED BY FACTS, FIGURES AND DETAILS. HE FURTHER HELD THAT EVEN THESE ADVANCES WERE FOR BUSINESS PURPOSES, WHICH AR E NOT DIFFERENTIATED UNDER SECTION 2(22)(E) OF THE ACT. THE ASSESSEES ACTION WAS ALS O NOT VOLUNTARY AS THE AO HAD GATHERED THESE EVIDENCES FROM ROC AND QUANTUM OF AD VANCES/LOANS WERE WORKED OUT FOR SEVEN YEARS FROM A.Y. 2002-03 TO 08-09. THESE F ACTS WERE CONFRONTED WITH THE APPELLANT. THEREAFTER HE SURRENDERED THE INCOME WHI CH WAS NOT DISCLOSED BY IT IN THE RETURN FILED UNDER SECTION 139 OR 153A. HE FURTHER CONSIDERED VARIOUS DECISIONS QUOTED BY THE LD. A/R OF THE ASSESSEE IN THE CASES OF DHAR MENDRA TEXTILES PROCESSORS & OTHERS (SUPRA), DILIP N. SHROFF VS. JCIT, 291 ITR 519 (SC) , ATUL MOHAN BINDAL (SUPRA) WHICH ARE NOT SQUARELY APPLICABLE IN THE CASE OF ASSESSEE. H E FURTHER CONSIDERED THE HONBLE SUPREME COURT DECISION IN THE CASE OF CIT VS. RELIA NCE PETROPRODUCTRS P. LTD., 322 ISTR 158 9SC) WHICH WAS ALSO HELD NOT APPLICABLE IN THE CASE OF THE ASSESSEE. HE FURTHER DISTINGUISHED CASE LAWS CITED BY THE LD. A/R IN THE MATTER OF CIT VS. RAJIV GARG, 313 ITR 256 (P&H), CIT VS. HARYANA WAREHOUSING CORPORATION, 314 ITR 215 (P&H), CIT VS. VIP INDUSTRIES LTD., 21 DTR 153 (ITAT MUMBAI). HE FURT HER HELD THAT HONBLE MUMBAI HIGH COURT ON THE ISSUE OF PENALTY UNDER SECTION 271(1)( C) ON ADDITION OF INCOME UNDER SECTION 2(22)(E) IN CASE OF CIT VS. ALKESH K. PATEL , 325 ITR 118, HAS NOT FOUND FAVOUR WITH THE ITAT DECISION OF CONFIRMING THE ORDER OF L D. CIT (A) DELETING THE PENALTY. IN VIEW OF THE ABOVE DECISION OF HONBLE HIGH COURT IN THE CASE OF ALKESH K. PATEL (SUPRA), THE DECISION OF ITAT CITED BY THE LD. A/R OF THE AP PELLANT, NAMELY SHRI ULHAS SABANE VS. 6 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. ITO, VIDE ITA NO. 190/PN/2006 AND A.P. MADHAVAN VS. ITO, 008-TTJ-0343 TMAD OF NO HELP TO THE APPELLANT. ACCORDINGLY, HE CONFIRME D THE PENALTY IN ALL THE YEARS BY FOLLOWING THE DECISION GIVEN IN PENALTY APPEAL FOR A.Y. 2008-09. 4. NOW THE ASSESSEE IS BEFORE US. 4.1. IT IS SUBMITTED THAT ASSESSEE IS ENGAGED IN TH E BUSINESS OF REAL ESTATE DEVELOPMENT AND PART OF UDAIKANT MISHRA GROUP WHOM WERE SEARCHED ON 03.05.2007. THEREAFTER ASSESSMENT WAS COMPLETED UNDER SECTION 1 53A OF THE IT ACT. DURING THESE YEARS ASSESSEE COMPANY RAISED LOANS FROM ITS SISTER CONCERNS TRIMURTY LANDCON (INDIA) PVT. LTD., ABHISHEK FINLEASE PVT. LTD., ABHISHEK EST ATE PVT. LTD. AND TRIMURTY COLONISERS & BUILDERS PVT. LTD. THESE LOANS RECEIVED WERE OF FERED FOR TAX AS DEEMED DIVIDEND DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WER E ACCORDINGLY TAXED. THE ASSESSEE HAD NOT FILED ANY APPEAL. DURING THE COUR SE OF PENALTY PROCEEDINGS, ASSESSEE SUBMITTED THAT AMOUNTS WERE OFFERED FOR TAX VOLUNTA RILY. THESE LOANS RECEIVED FOR BUSINESS PURPOSES, ALL GROUP COMPANIES ARE ENGAGED IN SIMILAR LINE OF REAL ESTATE BUSINESS AND THAT DEEMED DIVIDEND LAW IS NOT APPLIC ABLE ON BUSINESS ADVANCES. THE LOANS WERE RE-PAID BACK. ON BUSINESS ADVANCES MADE BY THE COMPANY TO ITS SHAREHOLDERS FOR BUSINESS PURPOSES ARE HELD BY VARI OUS COURTS THAT SUCH ADVANCES ARE NOT COVERED UNDER SECTION 2(22)(E) OF THE ACT AS DE EMED DIVIDEND. THIS ISSUE IS DEBATABLE, THE ASSESSEE AT THE TIME OF ASSESSMENT P ROCEEDINGS AS WELL AS PENALTY PROCEEDINGS HAD RAISED THIS ISSUE BEFORE THE AO WHI CH WAS NOT CONSIDERED BY BOTH THE AO. EVEN AT THE TIME OF IMPOSING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, BOTH THE AUTHORITIES I.E. AO AS WELL AS LD. CIT (A) HAS HELD THAT SECTION 2(22)(E) DOES NOT 7 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. DIFFERENTIATE BETWEEN ADVANCES CLAIMED TO BE BUSINE SS ADVANCE OR ANY OTHER TYPE OF ADVANCE. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE FUNDS RECEIVED BY THE ASSESSEE COMPANY WERE USED FOR ACQUIRING DEVELOPMEN T RIGHTS IN LAND AT TEHSIL PHAGI, JAIPUR FOR THEIR REAL ESTATE TOWNSHIP PROJECT AND T HAT SUCH FUND WAS ON SEVERAL OCCASIONS GIVEN BACK TO THE OTHER GROUP COMPANIES. THE LD. CIT (A) WAS ALSO NOT JUSTIFIED BY HOLDING THAT ASSESSEE HAD NOT SUPPORTE D THESE ADVANCES FOR BUSINESS PURPOSES BY FACTS, FIGURES AND DETAILS, BUT ALL DET AILS WERE SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH I S EVIDENT FROM THE ASSESSMENT ORDER THAT AO ASKED TO SUPPLY THE INFORMATION FROM THE ASSESSEE. THE LD. A/R FURTHER RELIED ON THE HONBLE DELHI HIGH COURT DECISION IN CASE OF CREATIVE DYEING & PRINTING (P) LTD. (2009) 318 ITR 0476 (DEL.) WHEREIN IT HAS BEEN HELD THAT SECTION 2(22)(E) CAN BE APPLIED TO LOANS OR ADVANCES SIMPLICITOR AND NO T TO THOSE TRANSACTIONS CARRIED OUT IN COURSE OF BUSINESS AS SUCH AS THESE ADVANCES WERE G IVEN IN MUTUAL INTEREST. THERE IS NO LEGAL BAR IN HAVING SUCH TRANSACTION. THE PURPO SE OF THE ADVANCES IS TO BE ASCERTAINED. HE FURTHER RELIED ON THE CASE OF CIT VS. AMBASSADOR TRAVELS PVT. LTD., 318 ITR 0376 (DELHI) AND CIT VS. RAJ KUMAR, 318 ITR 461 (DELHI). THE ISSUE OF BUSINESS ADVANCES IS NOT LIABLE TO BE DEEMED DIVIDEND EVEN I F NOT ACCEPTED IN QUANTUM PROCEEDINGS, IS UNDISPUTEDLY A DEBATABLE ONE AS VAR IOUS COURTS HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. THE ASSESSEE WAS HAVING BONAFIDE BELIEF THAT THESE BUSINESS ADVANCES ARE NOT UNDER THE PURVIEW OF SECTION 2(22) (E) OF THE ACT. HE FURTHER RELIED ON THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) AND C IT VS. RAJ OVERSEAS, 336 ITR 261 (P&H) AND ARGUED THAT ASSESSEE HAS DISCLOSED FULL P ARTICULARS OF INCOME IN THE RETURN ABOUT SHAREHOLDING PATTERN, LOANS AND ADVANCES & AC CUMULATED PROFIT. THEREFORE, THERE 8 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. IS NO CONCEALMENT OF ANY PARTICULARS OF INCOME. HE FURTHER ARGUED THAT THESE ADVANCES WERE REPAID BY THE ASSESSEE COMPANY IN SUBSEQUENT Y EAR. FOR VOLUNTARY DISCLOSURE, HE PLACED RELIANCE ON THE CASE OF CIT VS. D&H SECHERON ELECTRODES LTD., 296 ITR 193 (MP). FURTHER, HE ARGUED THAT THERE WAS NO MALAFIDE INTEN TION OF THE ASSESSEE TO EVADE TAX. HE FURTHER ARGUED THAT EVEN HONBLE SUPREME COURT H AS HELD THAT THIS IS A CIVIL LIABILITY BUT IT HAS CHARACTER OF PENAL. THE ONUS IS ON THE REVENUE TO PROVE THAT ASSESSEE HAD INTENTIONALLY EVADED THE TAX. HE FURTHER ARGUED TH AT NO PENALTY CAN BE IMPOSED WHERE ADDITION IS BASED ON DEEMING PROVISION, FOR WHICH H E RELIED ON THE FOLLOWING DECISIONS :- S.V. KALYANAM V. ITO (2010) 327 ITR 477 (MAD.) RENU HINGORANI VS. ACIT, (ITA NO. 2210/MUM/2010) SHRI CHIMANLAL MANILAL PATEL VS. ACIT, CIRCLE-6, (ITA NO. 508/AHD/2010) ACIT VS. MRS. N. MEENAKSHI (2009) 319 ITR (AT) 26 2 (CHENNAI) HE ARGUED THAT DEEMING PROVISIONS ARE TECHNICAL IN NATURE AND WHICH SHOULD BE APPLIED ONLY FOR SOME DEFINITE PURPOSES FOR WHICH FICTION W AS CREATED AND NOT TO BE EXTENDED BEYOND THAT LEGITIMATE. HE FURTHER ARGUED THAT HON BLE MUMBAI HIGH COURT DECISION IN THE CASE OF ALKESH K. PATEL (SUPRA) IS NOT APPLICAB LE IN THE CASE OF THE ASSESSEE AS HONBLE HIGH COURT HAS NOT EXPRESSED ANY VIEW IN TH IS JUDGMENT AS MATTER WAS RESTORED BACK TO THE ITAT. THE DEEMING LAW IS A COMPLEX LAW EVEN SPECIALIST CANNOT CALCULATE INCOME CORRECTLY. FINALLY, HE SUMMARIZED HIS ARGUME NT AS UNDER :- 9 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. IN VIEW OF THE ABOVE, TO SUMMARIZE, PENALTY CONFI RMED BY THE LD. CIT (A) DESERVES TO BE REVERSED FOR THE FOLLOWING REASONS 1. THE ADVANCES HAVE NOT BEEN DISPUTED TO BE BUSINESS ADVANCES. BUSINESS ADVANCES DO NOT ATTRACT PROVISION OF SECTI ON 2(22)(E) IS SUPPORTED BY THE JUDICIAL PRONOUNCEMENTS. THUS IT I S A POSSIBLE VIEW AND A DEBATABLE ONE. WHERE TWO VIEWS ARE POSSIBLE N O PENALTY CAN BE IMPOSED. 2. THE TRANSACTION IN REALITY WAS A LOAN REPAYABLE CON TRACTUALLY AND THE LENDER BY FORCE OF LAW COULD RECOVER IT BACK AND TH E SAME HAVE BEEN REPAID BACK. IT IS ONLY A DEEMING FICTION WHICH HAS MADE A LOAN TO BE AN INCOME. LAPSE ON DEEMING FICTION CANNOT LEAD TO PENALTY. 3. THE OFFERING FOR TAX IS VOLUNTARY AND THEREFORE PEN ALTY MY NOT BE IMPOSED. 4. ALL THE FACTS WERE ON RECORD AND THERE WAS NO GUILT Y MIND AND THEREFORE PENALTY CANNOT BE IMPOSED. 5. NO PENALTY CAN BE IMPOSED WHERE ADDITION IS BASED O N DEEMING PROVISION. 6. COMPLEX TAX LAWS RELATED TO DEEMING FICTION CAN G ET SKIPPED BY ASSESSEE. IN VIEW OF THE ABOVE, PENALTY CONFIRMED BY THE LD. CIT (A) DESERVES TO BE REVERSED. 4.2. AT THE OUTSET, THE LD. D/R VEHEMENTLY SUPPORTE D THE ORDER OF LD. CIT (A) AND ARGUED THAT ASSESSEE HAS NOT DISCLOSED DEEMING DIVI DEND INCOME IN THE COMPUTATION OF INCOME IN THE RETURN FILED UNDER SECTION 139, EVEN IN RETURN FILED UNDER SEC. 153A OF THE IT ACT. THE AO MADE INVESTIGATION ON THIS POINT AN D HAD COME TO THE CONCLUSION THAT ASSESSEE HAS VIOLATED SECTION 2(22)(E) OF THE ACT. THE DISCLOSURE WAS NOT VOLUNTARY. HE FURTHER RELIED ON THE CASE OF MAK DATA PVT. LTD. VS. CIT, (2013) 38 TAXMANN.COM 448 (SC) WHEREIN IT HAS BEEN HELD THAT VOLUNTARY DI SCLOSURE DOES NOT RELEASE ASSESSEE 10 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. FROM MISCHIEF OF PENAL PROCEEDINGS UNDER SECTION 27 1(1)(C). HE FURTHER RELIED ON THE CASE OF CIT VS. ALKESH K. PATEL (2010) 195 TAXMAN 3 38 (BOMBAY) WHEREIN THIS ISSUE HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT. HE FURTHER RELIED ON THE CASE OF SMT. SHANTIDEVI MAHAVIR PRASAD GUPTA VS. ITO, (2014) 43 TAXMANN.COM 325 (MUMBAI TRIB.) WHEREIN ASSESSEE CLAIMED THESE ADVANCES FOR THE PURPOSE OF BUSINESS. HOWEVER, ITAT HELD THESE ADVANCES AS DEEMED DIVIDEND UNDER S ECTION 2(22)(E) OF THE ACT. IN CASE OF DCIT VS. SUSHMA DEVI AGARWAL, (2011) 16 TAX MANN.COM 68 (KOL.)(TM) WHEREIN ASSESSEE DISCLOSED INCOME IN THE REVISED RETURN AND HELD PENALTY U/S 271(1)(C) IS LEVIABLE BY THE ITAT. THEREFORE, HE REQUESTED TO C ONFIRM THE ORDER OF LD. CIT (A). 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. THE ASSESSEE FILED THE RETURN UNDER SECTION 139 FOR ALL THE YEARS AND DISCLOSED THE PARTICULARS OF SHAREHOLDING PATTERN, ADVANCES TAKEN AND GIVEN BY THE ASSESSEE COMPANY/INDIVIDUAL IN RETURN ITSELF. THE ACCUMULAT ED PROFIT ALSO HAS BEEN DISCLOSED. THEREAFTER ASSESSEE FILED RETURN UNDER SECTION 153A OF THE IT ACT WHEREIN ALSO ALL THE DETAILED FACTS AND FIGURES WERE DISCLOSED IN THE RE TURN. THE ASSESSEES CASE IS AUDITABLE. THE ASSESSEE AT THE TIME OF QUANTUM ADDI TION AS WELL AS AT THE TIME OF PENALTY PROCEEDINGS HAS REITERATED THAT THESE ADVAN CES ARE IN THE COURSE OF REGULAR BUSINESS. IT IS A RUNNING ACCOUNT, SAID ADVANCES LA TER ON REPAID. THIS ISSUE IS DEBATABLE AND VARIOUS COURTS PARTICULARLY IN THE CASE OF CREA TIVE DYEING & PRINTING (P) LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT BUSINESS TRANSACTION IS NOT COVERED UNDER SECTION 2(22)(E) OF THE ACT. VARIOUS OTHER CASE LAWS CITED BY THE A SSESSEE HAS ALSO MADE THIS ISSUE DEBATABLE. THE CASE RELIED ON BY THE AO I.E. MAK DA TA P. LTD. IS NOT APPLICABLE AS ASSESSEE AT EVERY STAGE HAD FILED THE EXPLANATION B EFORE THE AO AS WELL AS CIT (A) I.E. 11 ITA NO.661-668 & 468/JP/2011. TRIMURTY BUILDCON PVT. LTD & OTHERS. THESE TRANSACTIONS WERE MADE FOR THE PURPOSE OF BUS INESS AND COMMERCIAL EXPEDIENCY, IS BONAFIDE. PENALTY IMPOSED BY THE AO AND CONFIRM ED BY LD. CIT (A) ARE NOT JUSTIFIED. ACCORDINGLY WE DELETE THE PENALTY IN ALL THE CASES. 5. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/02/2016. SD/- SD/- ( YFYR DQEKJ ) VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12/02/ 2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1 . VIHYKFKHZ @ THE APPELLANT- M/S. TRIMURTY BUILDCON PVT. LTD., JAIP UR. M/S. GEETA MISHRA, M/S. ABHISHEK ESTATE PVT. LTD. & M/S. TRIMURTY FARMS & RETREATS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 661(9)/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR