TaxTMI 
TaxTMI 
2016 (4) TMI 116
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.... iii. In levying the penalty without identifying the offence for which the penalty u/s u/s 271(1)(c) was levied. iv. In levying the penalty ignoring the fact that the material particulars were accurately disclosed before the CIT(A). v. In ignoring the fact that the claim of the firm for allowance of the said claim was made under the bonafide belief that it was allowable and that the additions for the claim was partly deleted by the Hon. ITAT vide its order dt.28.03.2009. vi. In levying penalty under an order dt.29/03/2010 that was barred by time u/s 275 of the Act. vii. In ignoring the fact that the remuneration disallowed in the hands of the appellant firm was offered for taxation in the hands of partner while filing the return of income of respective partners. viii. In ignoring the fact that the payment of remuneration for the full year was authorized by the deed of the partnership. ix. In levying the penalty without appreciating the fact that the claim of the appellant for foreign tour expenses and membership and subscription expenses were genuine business expenditures. b) Your appellant prays that penalty l....
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.... to explanation 271 was clearly applicable to the assessee's case and consequently liable for penalty of Rs. 6,92,330/- being 100% tax sought to be evaded vide order dated 29.03.2010. The ld. CIT(A) dismissed the appeal of the assessee by confirming the penalty of Rs. 6,92,330/- by holding as under:- "1.6 I have carefully considered the submissions of the appellant. The contention that appellant firm had fully and truly disclosed all the facts relating to payment of remuneration of Rs. 1.35 crores cannot be accepted in view of the clear finding given by the Hon'ble ITA T. For the sake of convenience, the relevant portion of the finding is reproduced hereunder: "We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact that the assessee was not claiming the remuneration to partners in the earlier partnership deed executed prior to the instant deed dated 20.6.2004. Section 40(b)(v) provides that any payment of remuneration to any working partner, which is authorized by, and is in accordance with the terms of the partnership deed and relates to any period falling after the date of such partnership deed shall ....
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....in the partnership deed and there was no scope left to the partners to determine the payment of remuneration for the entire year. Hence, the claim of payment u/s 40(b)(v) is not admissible to the extent of Rs. 16,00,000/- since the partnership deed neither specified the amount of remuneration payable to each working partner nor lays down the manner of quantifying such remuneration. After thorough analysis of sec.40(b )(v) and the Circular NO.739 dated 25/03/1996, the Hon'ble ITAT had sustained the disallowance to the extent of Rs. 16,00,000/-. Knowing fully well that the partnership deed has no provision for claim of remuneration for the period 1/04/2004 to 19/06/2004, but still consciously the claim of remuneration payment was made by the appellant in the Return of Income. Hence, this is a clear case of not only concealment of income but also furnishing of inaccurate particulars of income. Hence, the Assessing Officer had rightly levied the penalty in respect of remuneration paid and the action of the Assessing Officer is upheld. 1.8 As far as the claim of foreign travel expenses are concerned, the addition of the Assessing Officer was confirmed by the CIT(A) but subs....
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....tries Ltd. In respect of membership subscription, the ld. AR submitted that amount claimed was Rs. 51,635/- and out of which Rs. 19,175/- was allowed resulting into disallowance to the tune of Rs. 32,460/- consisting of personal expenses of partners of Rs. 23,385/- and prepaid expenses of Rs. 975/-. The ld. CIT(A) confirmed the penalty on this amount for the reason that no appeal was filed on merit however the same were genuine business expenses incurred in connection with meeting suppliers, foreign guests and were incurred by way of annual membership and other expenses. The turnover of the assessee was Rs. 20 crores and in view the turnover of Rs. 23,385/- were very meagre amount. Moreover the assessee was under bonafide belief that these were genuine business expenses and therefore on this account also penalty was not leviable. The appeal was not filed raising this ground in view of the petty amount involved. Regarding foreign tour expenses, the ld. AR submitted that the amount claimed was Rs. 4,24,000/- whereas the claim allowed was Rs. 1,64,451/- resulting into disallowance to the tune of Rs. 2,59,550/- which included the expenses on the credit card, food, local conveyance and ....
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.... the AO which substantially allowed in the quantum appeal by the Tribunal. We are of the view that these were bonafide claim of the assessee and were incurred or provided by considering the same to be admissible under the law. The salary of the partners was provided under the expert views however wrongly calculated whereas the amount incurred in respect of foreign tour expenses and subscription and membership were fully and exclusively incurred for the business and is supported by bills and vouchers. This can at the most be regarded a case of difference of opinions where out of huge disallowance a small fraction had survived till the final disposal of the quantum appeal. The case of the assesee find strong support from the decision of the Apex Court in the case of (i) Reliance Petroproducts (P.) Ltd. 322 ITR 158 (SC) the Hon'ble Supreme Court has held, where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding th....