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Facts
The assessee made outward remittances for importing machinery from foreign countries. The Assessing Officer (AO) observed that Form 15CA was not furnished for remittances made after 01.06.2015. The penalty was levied under Section 271-I of the Income Tax Act, 1961.
Held
The Tribunal held that Section 195(6) of the Income Tax Act was amended effective from 01.06.2015, but the rules prescribing the form and manner of furnishing information (Rule 37BB) were notified only from 01.04.2016. Before this amendment, Form 15CA was only required for remittances where the income of the payee was chargeable to tax.
Key Issues
Whether the penalty under Section 271-I is justified when the relevant rules for furnishing information were not notified at the time of remittance, leading to a bonafide belief of non-compliance.
Sections Cited
271-I, 195(6), 37BB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SURAT BENCH”, SURAT
Before: Shri Sanjay Garg & Shri Bijayananda Pruseth.
O R D E R
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the Assessee against the order passed by the Learned Commissioner of Income Tax (Appeal), Ahmedabad/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “Ld.CIT(A)”] passed u/s.250 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2016-17.
The Assessee has taken the following grounds of appeal:- Gopal Chandak vs. ACIT Asst.Year –2016-17 - 2– "1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in levying penalty of Rs. 43,00,000/-u/s.271-1 of the 1.T. Act, 1961.
2. It is therefore prayed that the above penalty levied by the assessing officer and confirmed by the learned CIT(A) may please be deleted.
3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal."
3. In this appeal, the assessee has assailed the order of the “Ld.CIT(A)” confirming the action of the Assessing Officer (in short “the AO”) in levying the penalty of Rs.43,00,000/- u/s 271-I of the Income Tax Act, 1961.
The brief facts of the case are that during the year under consideration, the assessee had made outward remittance for importing machineries from various foreign countries. On verification of the outward remittances made to various companies at China, “AO” observed that assessee has not furnished the necessary certificate i.e. Form No. 15CA in respect of all remittances made after the date 01.06.2015. 5. It is to be noted that the provisions of section 195(6) of the income Tax Act got amended by the Finance Act 2015 w.e.f. it 01.06.2015. Before this amendment, the assessee was not required to file Form 15CA in cases, where income of payee is not chargeable to tax. The sub section 6 of the Gopal Chandak vs. ACIT Asst.Year –2016-17 - 3– section 195 of the Act has been amended w.e.f 01.06.2015. The said amended section 195(6) of the Act states as under:
…195(6) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall furnish the information relating to payment of such sum, in such form and manner, as may be prescribed…
Now the plea of the assessee is that the corresponding Rules prescribing the form & manner for furnishing of such information were not notified at the relevant time. The relevant Rule 37BB of the Act was amended w.e.f 01.04.2016. Prior to 01.04.2016 as per the Rule 37BB of the Act (unamended), the information relating to foreign remittance was to be provided in Form 15CA/15CB. As per the said unamended Rule, the remitter was required to report foreign remittances in Form No.15CA only in respect of payment chargeable to tax. Admittedly, the foreign remittances made by the assessee were not chargeable to tax at the hands of payee. The assessee was thus under bonafide belief that he was not supposed to furnish Form 15CA in regard of foreign remittances made by the assessee. Even the bank authorities also did not demand the Form 15CA in respect of foreign remittances as there was no such requirement as per the then prevalent Rule 37BB. Gopal Chandak vs. ACIT Asst.Year –2016-17 - 4– 7. We have heard the rival contention and gone through the record. As per the amended section 195(6) of the Income Tax Act amended w.e.f 01.06.2015 the remitter is required to furnish information relating to payment in such form and manner as may be prescribed. However, the form and the manner in which information was to be furnished has been notified w.e.f 01.04.2016. The Assessee thus was under bonafide belief that the furnishing of information in Form 15CA by him was not required as the relevant Rule 37BB as existing during the relevant period, did not prescribe for furnishing of Form 15CA in respect of remittances not chargeable to tax. Under the circumstances, the action of the lower authorities in imposing the impugned penalty, when the corresponding Rules/Form/manner of furnishing of information was notified, is not justified. Accordingly the impugned penalty is ordered to be deleted. The appeal of the assessee is hereby allowed.
In the result, the appeal of the assessee is allowed.