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M/s. Shreeji Enterprises Versus ACIT (OSD) , Circle-10, Ahmedabad

2016 (9) TMI 1065 - ITAT AHMEDABAD

Penalty under section 271(A)(c) - additions made on account of shortage of stock treated as unaccounted sales and disallowance of remuneration to partner paid to the private limited company - Held that:- So far the penalty levied on account of shortage of stock, it was incumbent upon the assessee to give true and fair picture of the stock. Since the assessee failed to do so, in our considered view, the penalty levied on this amount cannot be deleted. However, in respect of claim of remuneration .....

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paid to the working partner. Thus, this ground of the assessee’s appeal is partly allowed. - ITA No. 292/Ahd/2012 - Dated:- 29-6-2016 - Shri Anil Chaturvedi, Accountant Member And Shri Kul Bharat, Judicial Member Assessee by : Shri Pritesh Shah, AR Revenue : Shri Rajdeep Singh, Sr DR ORDER Per Shri Kul Bharat, Judicial Member This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-XVI, Ahmedabad, dated 24.11.2011 pertaining to Assessment Year 2007-08 .....

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ficer made addition on account of shortage in stock, disallowance of remuneration paid to working partner and disallowance of gift expenditure and also initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. Subsequently, the Assessing Officer levied penalty of ₹ 3,00,000/- on addition of ₹ 8,89,592/- vide order dated 28.01.2011. Against this penalty order, the assessee filed an appeal before the ld. CIT(A) who, after considering the su .....

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(Karnataka) in support of his contention that the assessee has neither concealed the particulars of his income nor furnished any inaccurate particulars of income. He submitted that in case of shortage of stock, the Assessing Officer has treated the same as unaccounted sales without having any evidence on record and in the case of remuneration to partner, there was a double taxation since the assessee firm as well as partner, both comes under the highest slab of income tax rates; thus, in case of .....

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ner paid to the private limited company. We find that ld. CIT(A) has decided this issue by observing as under:- 2.3 I have carefully considered the submissions of the Ld. Counsel and the facts of the case. The penalty u/s 271(1)(c) of the Act has been levied for furnishing of inaccurate particulars of income with reference to remuneration paid to the company M/s. Dhiraj Diamond Tools Pvt Ltd as working partner and for the shortage of stock treated as unaccounted sales. It is the settled position .....

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e allowable as deduction in case of the firm. 2.4 Thus, it is clear that the remuneration can be paid to a working partner who is an individual because only the individual can render services as a working partner for the firm. As per the facts of the case, the remunerations of ₹ 5,16,537/- and ₹ 4,16,606/- were actually paid to Shri Rajhesh Agarwal as a working partner respectively for himself and as a representative director of the company. Thus, in fact remuneration of ₹ 9,33 .....

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this remuneration as other income in its return of income and claimed certain deductions and net income was shown for ₹ 2,17,371/- only. This is a fact that no expenses were incurred to earn the remuneration by the company but the company had claimed the deduction by showing the remuneration as other income. Thus, the basic purpose of giving remuneration to the company was to oblige the company to claim certain expenses against this income. The Assessing Officer had thus rightly come to a .....

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