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TMI Blog2016 (9) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 Officer. Where the assessee has furnished all the details of its expenditure as well as income, in its return, which themselves were not found to be inaccurate nor could be viewed as concealment of income on its part and merely because the assessee had claimed the expenditure, 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, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appreciate that there is no mensrea or conscious concealment on part of the assessee firm in claiming the excess remuneration paid to partners of ₹ 1,90,000/-. Hence, the penalty imposed is not valid in the eyes of law, arbitrary, wrong and illegal. 5. That neither there is any fraudulent intention nor any willful act 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 assessee may take up during the course of the hearing to kindly delete the additions made along with interest and also allow the appropriate relief on the basis of aforesaid grounds. 2. The facts in brief of the case are that the assessee filed return of income declaring total income of ₹ 8,07,546/- on 18/10/2005. In the scrutiny assessment compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause 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 year under consideration that only an amount of ₹ 50,000/- can be allowed on payment of remuneration in case of a loss. However, despite the unambiguous provisions of the statute, the Appellant sought to evade the taxes by claiming excess remuneration. It was not a case where the claim was not accepted or not acceptable to Revenue, but rather it was a case for which it could not have even been thought that a claim in excess of ₹ 50,000/- in case of loss could be allowed. 8.3 The Appellant 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 H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners of ₹ 2,40,000/-. This information was available on record before the Assessing Officer. According to profit and loss account, there was a net profit of ₹ 11,91,033/- during the year 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 the Act during the assessment year under consideration. Before us, the learned Authorised Representative of the 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. Due to the reason, the assessee claimed the remuneration as per the amount debited in the profit and loss account and also paid taxes in the hands of the partner on the remuneration received by them. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the 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 Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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