BHIMA GOLD AND DIAMONDS,ADOOR vs. ASSISTANT COMMISSIONER OF INCOME TAX, KOLLAM

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ITA 570/COCH/2023Status: DisposedITAT Cochin23 October 2024AY 2016-17Bench: Shri Satbeer Singh Godara (Judicial Member), Shri Amarjit Singh (Accountant Member)2 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a disallowance in assessment proceedings does not automatically attract a penalty under Section 271(1)(c). It relied on the principle that quantum and penalty are separate proceedings.

What were the facts?

The assessee's appeal concerns a penalty levied under Section 271(1)(c) of the Income Tax Act. This penalty was related to a disallowance of partner's remuneration claimed in excess of the partnership deed's provisions.

What were the issues?

Whether a penalty under Section 271(1)(c) is automatically leviable for a disallowance made under Section 40(b) regarding partner's remuneration.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 40(b)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Appellant: Shri R. Krisahnan, CA
For Respondent: Smt. V. Swarnalatha, Sr. D.R
Hearing: 22.08.2024Pronounced: 23.10.2024

O R D E R Per Bench This assessee’s appeal for A.Y. 2016-17 arises against the National Faceless Appeal Centre, Delhi [CIT(A)]’s DIN & Order No. ITBA/NFAC/S/250/2023- 24/1053337184(1) dated 31.05.2023 in proceedings u/s. 250 of the Income Tax Act, 1961 (the Act).

Heard both parties at length. Case file perused.

2.

Coming to the sole substantive ground that both the lower authorities have erred in law and on facts in levying the impugned section 271(1)(c) penalty of Rs.3,83,160/- , it emerges during the course of hearing that the same pertains to section 40(b) partners remuneration disallowance which was allegedly claimed over and above the sum(s) specified in the corresponding partnership deed. The Revenue

3.

We have given our thoughtful consideration to the vehement stand of the Revenue and find no merit in its arguments in light of CIT vs. M/s. Reliance Petro Products [2010] 322 ITR 158 (SC) that quantum and penalty are separate proceedings and each and every disallowance/addition in former does not ipso facto attract the latter penal provision. We delete the impugned penalty going by the very analogy. Ordered accordingly.

4.

This assessee’s appeal is allowed in above terms.

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