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TMI Blog1975 (12) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... howed in its return an income of Rs. 79,927 and the income finally determined after the order of Tribunal stands at Rs. 1,10,470. The IAC levied the penalty on two counts, under-valuation of closing stock to the extent of Rs. 1,214 and disallowance out of salaries claimed amounting to Rs. 20,400. The IAC held the assessee to be liable to penalty both under the main provisions of s. 271(1)(c) and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income shown in the computation sheet are Rs. 88,855 was higher than that and hence the Explanation could not apply. 3. We find force in the submission of Shri Puranik. The assessee had disclosed an income of Rs. 88,855 an had be mistake shown the net income after deducting firm s tax. Considering the figure of income as per the computation sheet accompanying the return, explanation in s. 27(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o treat this amount to be concealed income for levying penalty. 5. The IAC has levied the penalty by considering the under-valuation of the closing stock of Rs. 1,214. It was pointed out on behalf of the assessee that as is clear from the computation sheet the assessee had revalued the closing stock for the purposes of taxation on market value basis at the rate of Rs. 400 per Kg. and it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Shri Shivnarayan and Shri Nandlal. So far as the first item of Rs. 14,400 is concerned, right upon the Tribunal stage in quantum assessment, the assessee was making this claim on the ground that the partners were partners in the firm on behalf of their HUFs while the salaries had been paid to them for services rendered in individual capacity. The Tribunal rejected this contention by interpretin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. In view of their close relationship with the partners even if they were rendering some services by sitting on the shop and doing some work, it could not be held that they were employees. This is also ultimately a case of disallowance of expenditure claimed which was not proved to the satisfaction of the authorities to have been incurred for business reasons. The penalty, in our opinion, will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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