New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (9) TMI 1216 - ITAT DELHI

2016 (9) TMI 1216 - ITAT DELHI - TM - Penalty u/s 271(1)(c) - assessee claimed remuneration to partners - assessee has contended that the case of the assessee was audited under section 44AB of the Act, however, the learned Auditor did not disallow the excess claim of the remuneration - Held that:- We find that the assessee has offered explanation in respect of the facts material to the computation of income and which has not been found to be false by the Assessing Officer. The assessee has subst .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e in assessment proceedings and in the penalty proceedings the assessee explained his bonafide in claiming the remuneration. Before us also, learned Authorised Representative of the assessee has explained that the learned Auditor did not point out in audit reports under section 44AB of the Act allowability of the remuneration to partners to the extent of ₹ 50,000/- only and, because of which, the assessee has paid tax on the remuneration paid to the partners and the disallowance has also b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ture, which has not been accepted by the Revenue, cannot lead to the levy penalty under section 271(1)(c) of the Act.See Reliance Petroproducts Private Limited [2010 (3) TMI 80 - SUPREME COURT ] - Decided in favour of assessee. - ITA No. 3422/Del/2013 - Dated:- 19-8-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. Kunal Bhatia, Adv. For The Respondent : Smt. Anima Barnwal, Sr.DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

XXII, New Delhi has erred both in law and on facts in upholding the penalty proceedings initiated u/s 271(l)(c) without appreciating that the remuneration paid to partners of ₹ 2,40,000/- is as per the Partnership Deed and since in this year there was loss from business the remuneration to partners was allowable at ₹ 50,000/- therefore, balance 1,90,000/- was disallowed which is a matter of difference of opinion and there is no concealment of income. Therefore, the penalty imposed u/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fference of opinion and hence there is no concealment of income. Therefore, the penalty imposed is altogether invalid, illegal, unsustainable and unsustainable and unjustified. 3. That the penalty proceeding u/s 271(1)(c) can be initiated only in case of concealment of income or inaccurate particulars furnished for income whereas in this case there is no concealment of income and disallowances made cannot be taken as concealment of income. Therefore, the contention of Learned Assistant Commissio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct on part of the assessee and the assessee has furnished true and accurate particulars of income. Hence there is no concealment of income end therefore the penalty imposed is wholly untenable and unsustainable. 6. That the quantum of penalty imposed at the rate, if 150% of the tax sought to be evaded is highly excessive, harsh and arbitrary. PRAYER:- The assessee most respectfully prays your honour on the aforesaid grounds which are described in brief among other detailed grounds which the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs at ₹ 2,40,000/-, whereas looking to the loss from the business activity, the assessee was allowable remuneration to partners to the extent of ₹ 50,000 only. Therefore, he disallowed the balance amount of ₹ 1,90,000/- and initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 (for short the Act ). The said disallowance was confirmed by the learned Commissioner of Income-tax (Appeals). The Assessing Officer levied penalty under section 271(1)(c) of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the part of the assessee and the assessee has furnished true and accurate particulars of income and the remuneration debited to profit and loss account was as per the clauses of the partnership deed and the assessee firm was regularly claiming the remuneration to partners in profit and loss account from last many years . The assessee also relied on the judgment of the Hon ble Delhi High Court in the case of Commissioner of Income Tax Vs. Regency Express Builders (P) Ltd, (2008) 166 taxmann 269, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the penalty levied by the Assessing Officer with following observations: 8.2 The Assessee has claimed that the Hon ble Apex Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. (2010) 189 Taxman 322 (SC) held that Whether merely because Assessee had claimed expenditure, which claim was not accepted or was not acceptable to Revenue, that by itself would not attract penalty under section 271(l)(c) . It is seen that the Income Tax Act vide section 40(b)(v)(a), very clearly provided for the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

llant has also relied upon the case of Commissioner of Income Tax vs. Regency Express Builders P. Ltd. (2008) 166 Taxman 269, where it was held by Hon ble Delhi High Court that the Commissioner (Appeals) held that two views were possible. However, in the case under consideration there was no way in which any other view was possible and thus the facts of the case are entirely different and thus the finding of the Hon ble Delhi High Court again cannot give any relief to the Appellant. 3. Aggrieved .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

heir respective income tax returns and paid tax @ of 30%, therefore, intention to evade tax was absent and there had been double taxation of the said remuneration in the hands of the assessee as well as in the hands of partners, hence, levying a penalty was not justified. (ii) As per the remuneration clause of the partnership deed, assessee was regularly claiming the remuneration to partners of ₹ 2,40,000/- for last many years and has been assessed and allowed and same has been claimed in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an incorrect claim in law tantamounts to furnishing of inaccurate particulars. Merely, because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that, by itself, would not attract the penalty under section 271(1)(c) of the Act as held by the Hon ble Apex Court in the case of CIT Vs. Reliance Petroproducts, (2010) 189 taxmann 322 (SC) 4.2 On the other hand, the learned Senior Departmental Representative relied on the orders of the lower .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r under consideration. In the return of income filed, the assessee reduced the rental income of ₹ 26,16,000/- out of the net profit and offered the same under the head income from house property , which resulted into a loss of ₹ 10,20,466/- under the head profit and gains of business and profession. In view of loss under the head profit and gains of business/profession , the remuneration to partner was allowable only to the extent of ₹ 50,000/- in terms of Section 40(b)(v) of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has not been disputed by the learned Senior Departmental Representative. We find that the assessee has offered explanation in respect of the facts material to the computation of income and which has not been found to be false by the Assessing Officer. The assessee has substantiated the explanation and proved that the explanation filed is bonafide and all the facts and material related to computation of total income has been disclosed by the assessee. In view of above, in our considered opinion, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

itor did not point out in audit reports under section 44AB of the Act allowability of the remuneration to partners to the extent of ₹ 50,000/- only and, because of which, the assessee has paid tax on the remuneration paid to the partners and the disallowance has also been sustained resulting into double taxation on the remuneration paid to the partners. This explains the bonafide of the assessee in claiming the remuneration to the partners, which is found to be excess by the Assessing Offi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version