TaxTMI 
TaxTMI 
2016 (9) TMI 1216
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....ership Deed and since in this year there was loss from business the remuneration to partners was allowable at Rs. 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/s 271(l)(c) is wrong, arbitrary mid against the natural justice. 2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that as per the remuneration clause of the partnership deed assessee firm was regularly claiming the remuneration to partners of Rs. 2,40,000/- from last many years and in routine the same has been claimed this year also out of which the Ld. Assistant Commissioner has disallowed the excess remuneration of Rs. 1,90,000/- which is a matter of difference 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 canno....
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....d thereby concealed the income. Aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals) and submitted that there was not any fraudulent intention, nor any willful Act on 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, where it is held that 'on question whether rental income received by the assessee was to be assessed under head "income from house property" or under "business income", the Commissioner of Income Tax(Appeals) held that two views were possible and since there was no clear and definite inference could be drawn, one way or another, the assessee could not be said to have concealed its income or furnished inaccurate particulars of income. However, the learned Commissioner of Income-tax (Appeal....
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....arly claiming the remuneration to partners of Rs. 2,40,000/- for last many years and has been assessed and allowed and same has been claimed in the year under consideration also. (iii) The accounts of the assessee were audited under section 44AB of the Income-tax Act, 1961 and the Auditor did not disallow the remuneration in his tax audit report and so the assessee failed to add back the excess claim of the remuneration. (iv) No penalty can be levied in case of the bonafide mistake as held by the Hon'ble Supreme Court in the case of PWC (Private) Limited Vs. CIT Kolkata, (2012) 25 taxmann 400. (v) By no stretch of imagination, making of 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 authorities. 4.3 We hav....
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....esentative 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 Rs. 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. We find that in the case of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts (P) Ltd (supra), the Hon'ble Apex Court has held that when the details supplied by the assessee are not found to be incorrect or erroneous or false, there was no question of inviting penalty under section 271(1)(c) of the Act. The relevant findings of the Hon'ble Supreme Court are reproduced as under: "9. We are not concerned in the present case with the mensrea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccu....