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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: SRI RAJPAL YADAV, VICE- & SRI SANJAY AWASTHI
order
: May 6th, 2024 ORDER
Per Sanjay Awasthi, Accountant Member:
This appeal filed by the assessee pertains to the Assessment Year (in short ‘AY’) 2014-15, is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by ld. Commissioner of Income-tax (Appeals)-NFAC, Delhi, [in short ld. ‘CIT(A)’] dated 11.01.2024 arising out of the Assessment Order framed u/s 143(3) of the Act dated 30.06.2017.
In this case, the assessee has canvassed his grievance through four grounds of appeal
, in which the fourth ground is of general nature and does I.T.A. No.: 202/KOL/2024 Assessment Year: 2014
15. Sri Sanat Kumar Das. not require any specific adjudication. For the sake of reference, the grounds are extracted as under:
“1. That on the facts and on the circumstances of the case, Ld. CIT(A) had grossly erred in not understanding/appreciating the fact that notice dt. 14.12.2016 issued by the AO u/s 274 read with sec. 271(1)(c) of the Income- tax Act, 1961 is bad in law, illegal and void ab initio as the AO had not formed any opinion as to whether the penalty proceedings were initiated on the alleged ground of concealment of income or furnishing of inaccurate particulars of income and accordingly the entire penalty proceedings is liable to be quashed / cancelled / set aside.
2. That on the facts and on the circumstances of the case, the AO as well as the Ld. CIT(A) have failed to understand to appreciate the fact that there has not been any concealment of income or furnishing of inaccurate particulars of income so as to suffer the rigors of penalty u/s 27(1)(c).
3. Without prejudice to Grounds No. 1 & 2 above, the Ld. CIT(A) had grossly erred and had wrongly held that his predecessor while passing the appellate order dt. 25.7.2017 against the order u/s 143(3)/ 144 had only given relief to the extent of Rs. 8,22,519/-. The Ld. CIT(A) had failed to understand that the erstwhile Ld. CIT(A) in the said order dt. 25.7.2017 had not only disallowed the deduction in respect of Rs.1,56,793/- from computing the income under salaries but on the other hand had allowed the said amount of Rs. 1,56,793/- as a deduction from tax payable u/s 90(2) of the Act. Accordingly, it is submitted before the Ld. Bench that there had neither been any concealment of income nor furnishing of any inaccurate particulars of income and accordingly penalty u/s 271 (1)(c) could not be imposed on the appellant.
For that your petitioner craves the right to put additional grounds and/or to alter/ amend/ modify the present grounds at the time of hearing.”
Before adjudicating the grounds of appeal, the facts in brief of this case may be enumerated. The assessee derived income from salary by virtue of being an employee of M/s. Bechtel India Pvt. Ltd. and M/s. Bechtel Ltd., UK. He was admittedly a “Resident in India” for the purposes of tax, having stayed in India for 309 days. During the course of assessment proceedings, it was seen that the assessee had earned Rs. 16,08,681/- from M/s. Bechtel Ltd., UK and this amount was apparently not disclosed as taxable in the revised return of income file by him. To bring things in perspective, it is seen that the assessee filed return of income for AY 2014-15 on 28.07.2014 declaring his I.T.A. No.: 202/KOL/2024 Assessment Year: 2014-15 Sri Sanat Kumar Das. total income at Rs. 39,22,270/-. Thereafter, the assessee filed a revised return of income on 10.11.2014 declaring total taxable income at Rs. 23,13,590/-. The Assessing Officer (in short ld. 'AO') in order u/s 143(3) of the Act dated 14.12.2016 assessed the total income at Rs. 39,22,270/-, effectively assessing the income as per the original return filed on 28.07.2014. Ld. AO brought to tax the amounts received from M/s. Bechtel Ltd., UK which were not disclosed as taxable in the revised return of income. Furthermore, relief claimed u/s 90 of the Act was also not allowed on the ground that the same was not claimed in the return of income. Thereafter, the assessee filed an application for rectification u/s 154 of the Act claiming that certain reimbursable items were included in the total income, along with an amount of Rs. 1,56,793/- representing tax deducted at source in the UK, for which the assessee had pleaded that either a deduction of like amount may be allowed or the credit of such taxes paid in the UK may be considered. 3.1. The rectification application was rejected by ld. AO vide his order dated 23.06.2017. Being aggrieved, the Appellant approached the First Appellate Authority. Before ld. first appellate authority the assessee succeeded through the following findings: “15. Following the aforesaid decisions (supra) I am of the view that since the amount of Rs. Rs. 8,22,519.37/- received by the appellant towards reimbursement of living expenses, the details of which were also filed with the AO during the course of the assessment proceedings could not be taxed under "Salary" and accordingly, the appellant gets a relief of Rs. 8,22,519.37/- 16. Now coming to the 2nd issue in respect of Rs. 1,56,793/- which represents the tax deducted at source in the UK by the UK Company, the appellant pleads that either the said sum may kindly be deducted from the taxable Salary or the credit of such taxes paid in the UK may kindly be allowed. I do not agree with the submission of the appellant and direct the Ld. AO to deduct the said sum of Rs. 1,56,793/-, from the Income under the head Salary as the "Income" received by the appellant in the UK is to be taxed on actuals. However the appellant will be entitled to credit of the said sum of Rs. 1,56,793/- u/s 90(2) while computing the tax liability of the Appellant. Accordingly, the Ld. AO is directed to Compute the UK Salary Income of the Appellant at accordingly and also allow credit for taxes as held as above.”
I.T.A. No.: 202/KOL/2024 Assessment Year: 2014-15 Sri Sanat Kumar Das.
4. Admittedly, the impugned order of penalty was passed on 30.06.2017 levying the penalty on the entire amount of Rs. 16,08,681/-, being the amount shown as not taxable as per the revised return. It is pertinent to note that the impugned order has been passed much before the decision rendered by the ld. first appellate authority in the matter concerning the rejection of rectification application. Before us, ld. Counsel for the assessee initially stressed on the point that no penalty was leviable as there was no concealment of income as was made out by the ld. AO. He also took us through the peculiar facts of this case and pointed out that the ld. first appellate authority, vide order dated 11.01.2024, duly noted the ld. CIT(A)’s order dated 31.05.2019 (u/s 154 of the Act) and held that the assessee was eligible for relief of Rs. 8,22,529/- from the impugned amount of Rs. 16,08,861/-. Ld. Counsel for the assessee reiterated the fact that there was no mala fide intention in presenting the facts before the assessing authorities and the revised return (supra) was on the basis of a bona fide belief that the amounts received from the parent company in UK were not taxable in India, considering that it had already suffered taxation in the UK. 4.1. Ld. A/R also argued that the notice issued by the AO u/s 274 read with Section 271(1)(c) of the Act was not maintainable because ld. AO had not specified whether he intended to levy penalty for concealment of income or for furnishing inaccurate particulars of income.
Ld. D/R was content to support the order of the authorities below and also took pains to point out that the assessee would get partial relief once the effect has been given to the ld. first appellate authority’s order passed directing for necessary rectification to be carried out by the ld. AO in the impugned penalty proceedings.
The rival contentions have been carefully considered and since the facts in the case as far as the merit of the matter is concerned are fairly clear, there is no hesitation in holding that the assessee does not deserve to suffer penalty proceedings u/s 271(1)(c) of the Act for the reason that the amounts treated as taxable ultimately by ld. first appellate authority were arrived at after a I.T.A. No.: 202/KOL/2024 Assessment Year: 2014-15 Sri Sanat Kumar Das. great deal of deliberation. The conduct of the assessee is nowhere mala fide or leads to any inference that there was anything but a genuine belief regarding the correctness of his claim through the revised return. In any case the issue of taxability of its receipts from the UK were open to debate and discussion, which can only go to prove that the assessee was relying on the advice of tax consultants in an attempt to file a correct computation of income. In light of this, the penalty levied by the AO is hereby deleted. 6.1. In arriving at this conclusion, strength is derived from the findings in the case of CIT vs. Pilani Investment & Industries Corporation Ltd. reported in [2016] 383 ITR 635 (Calcutta) wherein in para 13 of this order it is held “As held in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) merely making a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. The conditions precedent under clause (c) of section 271(1) is that the assessee should have concealed the particulars of his income or furnished inaccurate particulars.” The instant case meets the criteria for granting relief as per the Pilani Investment & Industries Corporation Ltd. (supra) case which has itself relied on the case of Reliance Petroproducts (P.) Ltd. (supra).
Since we have adjudicated on the merit, in favour of the assessee, there appears to be no need to express any opinion regarding the maintainability of notice u/s 274 read with Section 271(1)(c) of the Act, which led to the levy of penalty in the impugned order.