2004 (5) TMI 239 - AT - Income Tax

Summary

Issues:
1. Challenge to notice under section 148 of the IT Act, 1961.
2. Sustenance of addition of remuneration paid to a partner.
3. Charging of interest under sections 234B and 234C.

Issue 1:
The appeal challenged the issuance of a notice under section 148 of the IT Act, 1961, which was not pressed by the assessee before the ITAT, leading to its rejection as not pressed. The learned CIT(A) did not adjudicate on this issue.

Issue 2:
The second ground of the appeal contested the addition of Rs. 39,100 as remuneration paid to a partner of the assessee-firm. The AO made the addition based on the confirmation of disallowance by the CIT(A) for a previous assessment year. The assessee argued that the partner was actively engaged in the firm's business, supported by evidence such as telephone bills, letters, and affidavits. The ITAT found that the partner's involvement justified the remuneration, disagreeing with the CIT(A)'s decision, and deleted the addition.

Issue 3:
Ground No. 3 of the appeal was against the charging of interest under sections 234B and 234C. The CIT(A) upheld the AO's decision, stating that charging interest was mandatory and consequential. The ITAT rejected the assessee's argument that the AO's direction for charging interest was not sufficient, affirming the CIT(A)'s order. Consequently, this ground of the appeal failed.

In conclusion, the ITAT partially allowed the appeal by rejecting the challenge to the notice under section 148, deleting the addition of remuneration paid to the partner, and upholding the charging of interest under sections 234B and 234C.