Penalty u/s. 271(1)(c)

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CA Namrata Shetty (Querist)
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13 January 2009 At the time of scrutiny of a private company it was seen that a shareholder holding more than 90% holding had taken loan from the company. That loan amount was held to be deemed dividend u/s. 2(22) (e).Thereafter a notice u/s. 148 was issued to the shareholder, who in response to same filed a revised return, agreed to the addition and paid tax in relation to the amount held as deemed dividend. Against that revised return notice u/s.143 (2) was issued. Assessment was completed accepting the total income as per revised return. But now A.O. has levied penalty for concealment u/s. 271(1) (c). Is A.O.'s contention right? How can the assessee cancel the penalty levied?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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13 January 2009 To impose penalty u/s 271(1)(C) no mens rea is required vide the full bench decision in the case of UOI Vs.Dharmendra Textile Processors (2008) 306 ITR 277(SC).
However file an appeal before the CIT (Appeals) and keep the case alive.

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CA Namrata Shetty

CA Namrata Shetty (Querist)
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14 January 2009 No but,why file an appeal sir? cant we just submitt a letter stating that assessee has agreed to the fact and also paid tax in relation to same,so it does not amount to concealment on the part of the assessee.As penalty is not still levied, its the show cause notice that we have recd along with the assessment order.Can we state the following caselaw:-
Akshay Bhandar v CIT (1997) 90 Taxman 289 (Gau) wherein it is stated that “Where the assessee agrees to certain additions either with a view to buy peace or avoid harassment or litigation on agreement by the ITO, penalty cannot be levied.” ?

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