TAHER AFSAR ALI, MUMBAI V. ITO 24(1)(2), MUMBAI

ITA 7577/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2876 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Deemed dividend
• Section: 143(3); 142(1); 147; 68; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 75 77 /MUM/ 201 3 ( / ASSESSMENT YEAR : 20 0 6 - 07 ) TAHER AFSAR ALI , 5 NAND KISHORE INDL ESTATE, OFF MAHAKALI CAVES, RDM ANDHERI(E), MUMBAI . / VS. INCOME TAX OFFICER 24(1(2), PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. ./ PAN : AABPA0014H / ASSESSEE BY SHRI HARESH P SHAH / REVENUE BY SHRI VINOD KUMAR / DATE OF HEARING : 16 .6. 2016 / DATE OF PRONOUNCEMENT :22 . 6. 2016 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13.11.2013 PASSED B Y COMMISSIONER OF INCOME TAX (A) - 34 , MUMBAI , FOR ASSESSMENT YEAR 20 09 - 10 CONFIRMING THE PENALTY LEVIED BY AO U/S 271(1)(C) OF THE ACT. 2. TH E ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF PENALTY OF RS.2,09,100/ - BY THE LD.CIT(A) AS IMPOSED BY THE AO U/S 271(1)(C ) OF THE ACT ON THE DEEMED INCOME. 2 75 77 /MUM/ 201 3 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED RETURN OF INCOME ON 29.3.2007 DECLARING A TOTAL INCOME AT NIL. THE RETURNED WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ACCEPTING THE RETURNED INCOME. THEREAFTER THE CASE WAS RE - OPENED U/S 147 READ WITH SECTION 148 OF THE ACT AND ACCORDINGLY A NOTI CE U/S 148 DATED 9.2.2009 WAS ISSUED TO THE ASSESSEE AND SERVED UPON HIM. THEREAFTER, A STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE WAS HO LDING SUBSTANTIAL INTEREST IN M/S ZAN ENGG (INDIA) PVT LTD . AND ALSO RAISED UNSECURED LOAN FROM THE SAID COMPANY WHICH WERE OUTSTANDING AS ON 31.3.2006 TO THE TUNE OF RS.21,57,903/ - OUT OF WHICH A SUM OF RS.8,50,000/ - WAS RECEIVED BY THE ASSESSEE DUR ING T HE YEAR RS.2 , 50 , 000 / - ON 14.12.2005 AND RS.6 , 00 , 000 ON 2.3.2006 . THE AO AFTER ISSUING SHOW CAUSE NOTICE TO T HE ASSESSEE AND AFTER CONSIDERING T HE REPLY OF THE ASSESSEE CAME TO THE CONCLUSION THAT RS.8,50,000/ - WAS DEEMED DIVIDEND U/S 2(22)(E) OF T HE ACT AND FINALLY FRAMED TH E ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 30.10.2009 MAKING THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT OF RS.8,50,000/ - . 4 . THE LD.CIT(A) ALSO CONFIRMED THE ADDITION MADE BY THE AO VIDE ORDER NO.CIT(A) - 34/IT 195/2009 - 10 DATED 9.11.2010 AND BY DISMISSING THE APPEAL 3 75 77 /MUM/ 201 3 OF THE ASSESSEE AND THEREAFTER NO APPEAL WAS PREFERRED AGAINST THE ORDER OF LD. CIT(A) BY THE ASSESSEE MEANING THEREBY THAT THE ASSESSEE ACCEPTED THE ADDITION MADE BY THE AO. UPON DISMISSAL OF THE APPEAL BY THE LD.CIT(A), THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE DATED 30.10.2009 AS TO WHY THE PENALTY U/S 271(1) (C ) R.W.S.274 OF THE ACT SHOULD NOT BE IMPOSED FOR FILING INACCURATE PARTICULAR OF INCOME AN D CONCEALMENT OF THE INCOME IN RESPECT OF DEEMED DIVIDEND. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE FILED A LETTER DATED 31.12.2010 OPPOSING THE LEVY OF PENALTY ON VARIOUS GROUNDS SUCH AS THAT OUT OF RS.8,50,000/ - RAISED AS UNSECURED LOANS FROM M/S ZAN ENGG (INDIA) PVT LTD RS.8, 15 ,000/ - WAS REPAID DURING THE YEAR AND THE ASSESSEE HAS DISCLOSED FULL FACTS WHICH HAS BEEN INC ORPORATED AT PAGE 1 OF THE PENALTY ORDER PASSED BY THE AO IS REPRODUCED BELOW : 'WITH REFERENCE TO ABOVE AND UNDER THE INS TRUCTION FROM OUR CLIENT; WE STATE THAT OUR CLIENT RECE IVED NOTICE U /S 271(1)(C) OF THE IT ACT, 1961. IN RESPECT OF PENALTY WE ARE SUBMITTING AS UNDER: 1) THE ADDITION OF RS.850000 / - HAS BEEN MADE IN THE ASSESSMENT ORDER AS DEEMED DIVIDEND ON ACCOUNT OF LOAN TAKEN FROM ZAN ENGINEERING (I) PVT. LTD. OUT OF WHICH RS.815000 / - WAS REPAID DURING THE YEAR. 2) THE ASSESSEE HAD FULLY DISCLOSED THE FACTS AND DID NOT CONCEAL LOAN RECEIVED FROM THESE TWO COMPANIES. THE LOAN HAS BEEN PROPERLY DISCLOSED IN THE BALAN CE SHEET. 3) THE LOAN IS ALLOWED TO DIRECTORS HAVING SHAREHOLDING AS PER PROVISIONS OF COMPANIES ACT, 1956. THE PROVISIONS OF INCOME TAX ACT IS CONTRARY TO THE PROVISIONS OF THE COMPANIES ACT. 4 ) THE ASSESSEE HAS PAID TAXES DUE ON ASSESSED INCOME. 4 75 77 /MUM/ 201 3 5) THE LOAN TAKEN FROM COMPANY BY SHAREHOLDER IN ACTUALITY IN IS NOT AN INCOME BUT DEEMED INCOME AS PER INCOME TAX ACT, 1961. 6) ASSESSMENT & PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS. 7) THE DECISION IN DHARMENDRA TEXTILES IS NOT AN AUTHORITY IS A N AUTOMATIC CONSEQUENCE OF AN ADDITION BEING MADE TO INCOME OF TAXPAYER FOR THE REASON THAT WHETHER IT IS A CIVIL LIABILITY OR A CRIMINAL LIABILITY PENALTY CAN ONLY COME INTO PLAY WHEN THE CONDITIONS ARE SATISFIED. EVEN EXPLANATION 1 TO SECTION 271(1)(C) R AISES REBUTTABLE PRESUMPTION & SHIFTS THE ONUS ON THE ASSESSEE TO ESTABLISH BONAFIDE OF THE CLAIM. 8) THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OR FACTS RELATING TO LOAN RECEIVED FROM THE COMPANY DURING THE YEAR. 9) THE EXPRESSION FURNISHING OF AN ACCURATE PARTICULAR OF INCOME IMPLIES FURNISHING DETAILS OR INFORMATION ABOUT INCOME WHICH ARE NOT IN CONFORMITY WITH THE FACT OR TRUTH. IT DOES NOT EXTEND TO SUBJECTIVE AREAS SUCH AS TAXABILITY OF INCOME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW. THE MAKING OF AN INCORRECT CLAIM DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 10 ) THE MENSREA STILL APPLIES TO IMPOSITION OF PENALTY. THERE WAS NO MENSREA ON THE PART OF ASSESSEE WHICH IS PREREQUISITE FOR IMPOSING PENALTY. 11) EXPLAN ATION TO SECTION 271(119 APPLIES TO ASSESSEE WHICH IS AS UNDER: WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE. A. FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH FOUND TO BE FALSE OR B. OFFERS AN EXPLANATION WHICH IS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND FACTS TO PROVE THAT ALL THE MATERIAL FACTS HAVE BEEN DISCLOSED. HE SHOULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME WHICH IS ADDED OR DISALLOWED IN THE ASSESSMENT. 5 75 77 /MUM/ 201 3 12) TH E FACTS IN OUR CASE ARE THAT THE ASSESSEE HAS DISCLOSED THE FACTS. 13) THE ASSESSEE RELIES ON THE FOLLOWING JUDGMENTS IN SUPPORT OF HIS EXPLANATION. A) CIT V DHOLIE TEA CO. LTD. 231 I TR 65 (CAL) IT WAS HELD THAT THE REVENUE HAS TO PROVE THAT THE ASSESS EE HAD KNOWINGLY CONCEALED HIS INCOME. B) CIT V RAHULJEE AND CO. 250 ITR 225 (DEL) IT WAS HELD THAT IF THE EXPLANATION GIVEN BY THE ASSESSEE WAS BONAFIDE, PENALTY U/S. 271(1)(2) WILL NOT BE ATTRACTED. 14) FURTHER THE ASSESSEE DID NOT WILLINGLY SHOWN DEE MED DIVIDEND IN RETURN OF INCOME B UT IT WAS INADVERTENT. THERE WAS NO MENSREA ON THE PART OF THE ASSESSEE WHICH IS PREREQUISITE FOR IMPOSING PENALTY . IN VIEW OF THE ABOVE YOU ARE REQUESTED TO D ROP THE PENALTY PROCEEDINGS U/S 271(1)( C ) OF THE IT ACT, 19 61 AS PENALTY WILL BE AN ADDITIONAL BURDEN OVER AND ABOVE TAXES PAID ON DEEMED INCOME. DEEMED DIVIDEND IS DEEMING FICTION AND NOT REAL INCOME 5. THE AO FINALLY AFTER CONSIDERING THE SUBMISSIONS, REJECTED THE CONTENTIONS OF THE ASSESSEE AND CAME TO THE CO NCLUSION THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE BURDEN OF PROVING THE CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF EXPLANATION (1) TO SECTION 271(1)( C ) OF THE ACT AND FINALLY LEVIED THE MINIMUM PE NALTY AT THE RATE OF 100 % OF THE TAX SOUGHT TO BE EVADED BY IMPOSING A PENALTY OF RS.2,09,100/ - U/S 271(1)( C) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) WHO ALSO CONFIRMED THE ACTION OF THE AO BY OBSERVING AND HOLDING AS UNDER : 6 75 77 /MUM/ 201 3 4. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THE IMPUGNED PENALTY ORDER ON THIS ISSUE. THE ASSESSING OFFICER HAD ADDED INCOME OF RS.8,50,OOO/ - ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)( E) IN THE ORDER PASSED U/S.143(3) R.W.W 147 OF THE ACT. SINCE MY PREDECESSOR VIDE ORDER IN APPEAL NO.CIT(A) - 34/1T195/2009 - 10 DATED 09.11.2010 FOR A.Y.2006 - 07 HAD REJECTED THE CLAIM OF THE APPELLANT AND DISMISSED THE QUANTUM APPEAL, THE PENALTY LEVIED U/S.2 71 (1)( C ) IS ALSO CONFIRMED 6 . THE LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US THAT THE BURDEN CAST UPON THE ASSESSEE BY EXPLANATION (1) TO SECTION 271(1)(C) HAS BEEN FULLY DISCHARGED BY THE ASSESSEE BY SUBMITTING THAT THE ASSESSEE HAS NOT CONCE ALED ANY PARTICULARS OF INCOME IN RESPECT OF RS.8,50,000/ - OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS FULLY DISCLOSED THE FACT OF HAVING BORROWED THE MONEY FROM THE SAID CONCERN IN THE BALANCE SHEET AND THUS , THERE WAS N O QUESTION OF FI LING EITHER INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. IN VIEW OF THIS FACTS , THE LD. COUNSEL PRAYED THAT THE PENALTY IMPOSED BY THE AO U/S 2 71(1)(C) AND CONFIRMED BY T HE LD.CIT(A) WITHO UT PROPERLY APPRECIATING T HE FACTS OF THE ASSESSEE AND IN A MECHANICAL MANNER AND IN THE LIGHT OF FACT OF TH E CA S E TO BE D E LETED. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL PLACED BEFORE US INCLUDING THE CASE LAW S RELIED UPON BY THE ASSESSEE. DURING THE COURSE OF HEARING IT WAS BROUGHT TO OUR NOTICE BY THE LD.COUNSEL THAT 7 75 77 /MUM/ 201 3 DURING THE YEAR THE ASSESSEE RAISED A TOTAL SUM OF RS.8,50 ,000 / - FROM OF M/S ZAN ENGG (IND IA) PVT LTD. OUT OF WHICH RS.8,15,000/ - WAS REPAID DURING THE YEAR. WE FURTHER FIND THAT THE ASSESSEE HAS FULLY DISCLOSED FULL FACTS QUA RAISING MONEY AND REPAYMENT THEREOF IN THE RETURN OF INCOME FILED WITH THE DEPARTMENT. WE FIND THAT THE IMPUGNED PEN ALTY WAS IMPOSED BY THE AO FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND ALSO FOR CONCEALING THE PARTICULARS OF INCOME WHICH WAS CONFIRMED BY THE LD. CIT(A) WITHOUT PASSING ANY SPEAKING ORDER AND JUST CONFIRMED THE PENALTY MENTIONING THAT THE P REDECESSOR CIT(A) VI D E ORDER IN APPEAL ORDER NO.CIT(A) - 34/IT 195/2009 - 10 DATED 9.11.2010 FOR THE ASSESSMENT YEAR 2006 - 07 DISMISSED THE QUANTUM APPEAL OF THE ASSESSEE AND HENCE PENALTY LEVIED BY THE AO CONFIRMED BY THE LD.CIT(A). IN OUR VIEW, THE PENALT Y IS NOT AN AUTOMATIC CONSEQUENCE OF CONFIRMATION OF ADDITION . IN THE CASE OF MAHAVIR IRRIGATION PVT LTD VS CIT (2009) 314 ITR (AT) 150 (DEL) IT HAS BEEN HELD 16. IN THE FIRST INSTANCE, WE FIND THAT THE TRIBUNAL HAS RIGHTLY HELD IN THE IMPUGNED ORDER TH AT THE ASSESSEE HAD NOT CONCEALED THE PARTICULARS OF INCOME. IN THIS RESPECT, IT WOULD BE INTERESTING TO POINT OUT THAT NOT ONLY THE ASSESSEE HAD DISCLOSED THE RECEIPT OF AFORESAID AMOUNT OF RS.3 CRORES FROM M/S. DMIL, ALBEIT, SHOWING IT AS A LIABILITY AT THAT TIME (AS ACCORDING TO THE ASSESSEE THE SAME HAD NOT BEEN CONVERTED INTO INCOME) THE ASSESSING OFFICER, IN FACT, WENT INTO THIS ASPECT SPECIFICALLY AND ACCEPTING THE STAND TAKEN BY THE ASSESSEE, DID NOT TREAT THE SAID RECEIPT AS INCOME. THE ISSUE WAS D EALT WITH BY THE AO IN THE QUANTUM PROCEEDINGS. THE ASSESSMENT ORDER MAKES AN EXPLICIT REFERENCE TO THE RECEIPT OF RS. 3 CRORES IN THE FOLLOWING WORDS: - 8 75 77 /MUM/ 201 3 'DURING THE YEAR UNDER CONSIDERATION, THERE IS AN INCREASE OF RS.3 AS SECURITY DEPOSIT. THE ASSESSEE WA S ASKED TO EXPLAIN THE SAME. AS REGARD THE DEPOSIT OF RS. 3 CRORES IS REFLECTED IN THE BANK ACCOUNT AS PER PHOTOCOPY SUBMITTED BY THE ASSESSEE, IT HAS BEEN EXPLAINED BY THE ASSESSEE VIDE ITS LETTER DATED 05.03.2001 AS UNDER: - THE RECEIPT OF RS. 3 CRORES AS SECURITY DEPOSIT BY THE ASSESSEE COMPANY FROM M/S DAEWOO MOTORS (I) LTD FLOWS FROM THE MOU ENTERED INTO BETWEEN THEM. THE RELEVANT CLASUE 8, 9, 10 AND 11 OF THE MOU HAVE BEEN REPRODUCED IN OUR LETTER DATED 06.02.2001. WE REFER TO THEM AGAIN. IN TERMS OF CLAUSE 9 OF THE MOU, THE FEE PAYABLE BY DMIL TO MIL WILL ACCRUE ON THE DATE ON WHICH THE CONTRACT BETWEEN THE DTC AND DMIL IS SIGNED OR ON WHICH THE DTC PLACES AN ORDER ON DMIL FOR THE SUPPLY OF BUSES. THE ORDER OR THE CONTRACT HAS YET NOT BEEN AWARDED BY DTC AND HENCE THE SECURITY DEPOSIT OF RS.3 CORES HAS NOT YET CHANGED ITS CHARACTER AND REMAINS AS A SECURITY DEPOSIT WITH THE ASSESSEE COMPANY.' 17. THIS WOULD AMPLY DEMONSTRATE THAT THE ASSESSEE HAD NOT CONCEALED THE PARTICULARS OF HIS INCOME NOR IT IS A CASE WHERE THE ASSESSEE DELIBERATELY FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THIS WOULD ALSO DEMONSTRATE THAT TWO VIEWS WERE POSSIBLE AND THE CLAIM OF THE ASSESSEE WAS BONA FIDE. 18. WE MAY ADD AT THIS STAGE THAT SOME OF THE OBSERVATIONS OF THE T RIBUNAL IN THE IMPUGNED ORDER RELATING TO INTERPRETATION OF THE CLAUSES OF THE MOU MAY NOT BE CORRECT. THIS IS MORE SO WHEN THIS COURT ALSO, WHILE DISMISSING THE QUANTUM APPEAL OF THE ASSESSEE, INTERPRETED THESE VERY CLAUSES. THEREFORE, WE MAY NOT ENTIRELY AGREE WITH THE OBSERVATIONS OF THE ITAT OCCURRING IN PARAS 19 TO 22. HOWEVER, STILL IN VIEW OF THE POSITION EXPLAINED BY US IN THE FOREGOING PARAS, WE ARE INCLINED TO ACCEPT THE CONCLUSION OF THE TRIBUNAL THAT THE CLAIM OF THE ASSESSEE ABOUT THE AMOUNT IN QUESTION BEING SECURITY DEPOSIT WAS BONA FIDE AS IT WAS BASED ON THE POSSIBLE INTERPRETATION OF RELEVANT CLAUSES OF THE MOU. THIS IS MORE SO WHEN THE AMOUNT OF RS.3 CRORES IN QUESTION PAID TO THE ASSESSEE WAS NOT TREATED AS INCOME EVEN BY M/S. DMIL AND TH IS POSITION WAS FOUND TO BE CORRECT BY THE ASSESSING OFFICER ON INQUIRY MADE ON M/S. DMIL. IT MAY BE THAT THE CLAIM OF THE ASSESSEE WAS NOT FOUND TO BE ACCEPTABLE IN QUANTUM PROCEEDINGS ON MERITS. HOWEVER, AS IT WAS NOT A CASE OF CONCEALMENT, THE PROVISION S OF SECTION 9 75 77 /MUM/ 201 3 271(1)(C) ATTRACTING LEVY OF PENALTY WOULD NOT BE APPLICABLE MORE SO WHEN ALL MATERIAL FACTS RELEVANT TO THE SAID CLAIM WERE DULY FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 19. WE MAY USEFULLY REFER TO THE JUDGMENT OF THE APEX COURT IN COMMISSIONER OF INCOME TAX V. RELIANCE PETROPRODUCTS PVT. LTD ., [2010] 322 ITR 158 (SC). AFTER TAKING NOTE OF VARIOUS EARLIER PRONOUNCEMENTS ON T HE SUBJECT AND REITERATING THAT FOR IMPOSITION OF PENALTY CONDITIONS STATED IN SECTION 271(1)(C) MUST EXIST. THE COURT EXPLAINED THE TERMS 'CONCEALMENT OF INCOME' AND 'FURNISHING INACCURATE PARTICULARS' IN THE FOLLOWING MANNER: - ..... WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONARY, THE WORD 'INACCUR ATE' HAS BEEN DEFINED AS: 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS.' 20. AS A RESULT, THE QUESTION IS ANSW ERED IN THE NEGATIVE, THAT IS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND THIS APPEAL IS DISMISSED. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF LD CIT(A) IS WRONG TO THAT EXTENT. IN THIS CA S E, THE INCOME HAS BEEN ASSESSED U NDER THE 10 75 77 /MUM/ 201 3 DEEMING PROVISIONS OF SECTION 2(22)(E) WHICH WAS CONFIRMED BY THE LD. CIT(A) VIDE ABOVE REFERRED ORDER IN THE CA S E OF S V KALYANAM V/S ITO (2010) 327 ITR 477 (MAD) WHEREIN IT HAS BEEN HELD : THAT ADDITION MADE UNDER A DEEMING PROVISION LIKE SECTI ON 69, COULD NOT BE EXTENDED TO PENALTY PROVISION. IN THE INSTANT CASE, ADDITION WAS MADE U/S 68 WHICH IS A DEEMING PROVISION. THUS, DEEMING PROVISION CANNOT BE EXTENDED FOR LEVY OF PENALTY. 8. IN THE CASE BEFORE US, THE ASSESSEE HAS DECLARED FULL FAC T S QUA THE LOAN RAISED FROM A COMPANY IN WHICH HE HAS SUBSTANTIAL SHARE HOLDING AND THE EXPLANATION OFFERED BY T HE ASSESSEE WAS BONAFIDE AND NOT FALSE AND THEREFORE THE PENALTY CANNOT BE LEVIED IN SUCH A CASE. THE FAA HAS CONFIRMED THE ACTION OF AO JUST ON T HE BASIS THAT QUANTUM WAS CONFIRMED BY PREDECESSOR CIT(A), WHICH IS NOT CORRECT AND PROPER . IN OUR VIEW THE ADDITION MADE U/S 2(22)(E) UNDER THE DEEMING PROVISIONS O F ACT IS MADE AND CONFIRMED BY T HE LD. CIT(A), IN THAT CASE THE PENALTY IS NOT ATTRACTED SPECIALLY WHEN THE A S SES S EE HAS OFFER ED AN EXPLANATION WHICH IS BONAFIDE AND HAS DISCLOSED FULL FACTS IN THE RETURN OF INCOME QUA THE SAID UNSECURED LOANS RAISED FROM THE SISTER CONCERN IN WHICH THE ASSESSEE HAS SUBSTANTIAL INTEREST . IN VIEW OF THE ABOVE FACTS, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 11 75 77 /MUM/ 201 3 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22. 6. 2016. S D SD ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 22 .6.2016 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / T HE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE C OPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI