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2019 (9) TMI 868 - AT - Income TaxPenalty levied u/s. 271(1)(c) - additions towards partners remuneration, interest income and capital gain on redemption of mutual fund - HELD THAT:- Disallowance of partners remuneration was made only for the reason that interest income was considered as ‘income from other sources’ which in the opinion of AO did not qualify for book profit so as to compute partner’s remuneration under s. 40(b). We notice that co-ordinate bench of Tribunal in some cases, namely, Akshar Associates [2015 (12) TMI 123 - ITAT AHMEDABAD] and Horizan Motors [2015 (11) TMI 1789 - ITAT AHMEDABAD] have taken a view that income under all the heads of income are eligible for computing partners remuneration. Without going to the correctness of the eligibility of remuneration from income generated under the head ‘income from other sources’, we firmly think that the action of the assessee cannot be discarded summarily on the face of divergent views prevailing on the subject. Thus, as claimed, the issue thus not free of debate at the time of filing of return by the assessee. The action of the assessee thus falls within the bracket of bonafide belief. In such circumstances, furnishing inaccurate particulars of income by the assessee cannot be alleged as contemplated under s. 271(1)(c) of the Act. In so far as inclusion of capital gains of maturity of mutual funds is concerned, it is noticed that the assessee has explained the sources of such investment but the effect of redemption was left out to be given in the books of accounts. The assessee has pleaded oversight and mistake. It was pointed out that mistake was committed as it was assumed that long term capital gains from units of mutual funds is exempt from taxation. The other additions towards interest income was on account of mistake in showing correct income due to non-availability of interest income arising from IDBI Ltd. The action of the assessee was however in conformity with the TDS certificate. The assessee has thus discharged the burden of explaining the circumstances of omission or mistakes. Assessee has acted bonafide and there appears to be no falsity in the explanation offered by the assessee. Imposition of penalty on fastening of tax liability is not automatic. The fulfillment of conditions stipulated in Section 271(1)(c) of the Act is a sin qua non for imposition of penalty u/s 271(1)(c) of the Act. The existence of conditions is not discernable from the case records - Decided in favour of assessee.
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