ELUMALAISELVAM,CHENNAI vs. ITO, CHENNAI

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ITA 1410/CHNY/2017Status: DisposedITAT Chennai10 July 2017AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the documents submitted by the assessee were not examined by the AO. Therefore, the Tribunal remitted the quantum appeal and penalty proceedings back to the AO for fresh examination and a speaking order.

What were the facts?

The assessee, a sailor, claimed his salary income as exempt based on his non-resident status. However, he failed to provide sufficient documentation to the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) to substantiate his claim. The AO taxed the salary and initiated penalty proceedings.

What were the issues?

Whether the salary earned by a non-resident seafarer for services rendered outside India on a foreign ship is taxable in India, and whether penalty is leviable for concealment of income when supporting documents were not produced before the lower authorities.

Which sections of the Income-tax Act were involved?

Section 5(2),Section 90,Section 91,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

Hearing: 04.07.2017Pronounced: 10.07.2017

आदेश /O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

1.

The assessee filed these appeals against the orders of the Commissioner of Income Tax (Appeals)-16, Chennai in & 55/CIT(A)-16/AY 2012-13 dated 31.03.2017.

:-2-: I.T.A. N0s. 1409 & 1410/Mds/2017

2.

Shri ElumalaiSelvam, the assessee, filed his return for assessment year 2012-13 declaring a total income at Rs. 23,77,559/- from salary and sought relief u/ss. 90 and 91 for Rs. 23,77,559/-. Before the AO, he contended that his residential statues was non-resident. He was away from India for more than 180 days during the relevant period. He was employed with BARNAD Shulte India as second engineer, the relief u/s. 90 was wrongly claimed instead of claiming the exempt income. The AO asked him to substantiate his claim. The assessee could not produce before the AO the employer certificate or copy of Form 16, by which, the source of salary and that he was in international waters etc., could be established. Therefore, the AO held that the salary is liable to tax in India u/s. 5(2) of the Act and accordingly finalised the assessment determining the income at Rs. 23,77,559/- and initiated penalty proceedings u/s. 271(1)(c). Aggrieved by this order, the assessee filed an appeal before the CIT(A). The CIT(A) held that even during the appeal proceedings the assessee could not prove that he earned income from salary and that he was in international waters etc., and hence dismissed the appeal.

3.

In pursuance of the penalty notice, the AO after giving due opportunity to the assessee and after considering his reply, levied a penalty of Rs. 5,82,226/- u/s. 271(1)(c) towards the inaccurate claim which resulted in concealment of income.

:-3-: I.T.A. N0s. 1409 & 1410/Mds/2017

4.

Since, both the appeals are inter-connected and for the same assessment year, they are heard together and disposed off by a consolidated order for the sake of convenience.

4.1 The AR submitted that the assessee is a NRI, sailor, marine engineer and was employed with OMCI Ship Management Pvt. Ltd. (OMCI). Seeking our attention to Page No. 1 of the paper book, wherein, a copy of the certificate issued by the OMCI dated 26.06.2016 signed by Shri Suhas Pande, Technical Manager, pointed out that the assessee served on different dates, say, from 11th August, 2010 to 30th March, 2012 in various vessels giving Rank, Trade, Wages per month in USD etc. He took our attention to the copy of the discharge certificate in Page 2, wherein the name of the ship and official No. Of the Tunnage, date and place of engagement and discharge, rating, description of voyage, signature of Master, Bar Counsellor, Officer etc is mentioned. Thereafter, he sought out attention to the copies of statement of account with HSBC for the period 31.05.2011 to 27.03.2012 in Account No. 041-261629-006, Product Type - Saving Account-NRE and Axis Bank for the period from 01.01.2012 to 30.03.2012, Account No. 911010009538757, Customer No. 837945638, Scheme, SB-NRE Normal and a copy of Seaman’s Employment Contract from Bernhard Schulte Ship management and sought our attention to date of commencement of contract 09.08.2012 and the :-4-: I.T.A. N0s. 1409 & 1410/Mds/2017 copies of certificates Testimonial for Sea Service-Engineers issued by Bernard Schulte Ship Management for various period etc and pleaded that the assessee was a NRI, employed with OMCI, earned salary in NRI account and as per Board Circular No. 13/2017 dated 11.04.2007 read with circular No. 17/2017 dated 26.04.2017 which clarified that salary accrued to a non- resident seafarer for services rendered outside India on a foreign ship shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian bank by the seafarer etc pleaded that the addition made and the penalty levied may be deleted.

Per contra, the DR relied on the orders of the CIT(A).

5.

We have heard the rival contentions and gone through the orders of the AO, the CIT(A) and the copies of the documents placed in the paper book.

Since, these documents were not produced before the Assessing Officer and the associated facts and circumstances were not examined duly by the AO, we remit these issues to the Assessing Officer for due examination/verification and for passing a speaking order, after affording reasonable opportunity to the assessee. Since, the quantum appeal is remitted back to the AO, we deem it fit to remit the penalty proceedings also for a fresh consideration.

6.

In the result, the assessee’s appeals are treated as allowed for statistical purpose.

:-5-: I.T.A. N0s. 1409 & 1410/Mds/2017

Order pronounced on Monday, the 10th day of July, 2017 at Chennai.

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