LR2 MANAGEMENT K/S [AS FOREIGN COMMR. MANAGER/AGENT OF PRINCIPAL FREIGHT BENEFICIARY, TORM A/S],JAMNAGAR vs. THE DEPUTY COMISSIONER OF INCOME TAX, INTER. TAXA.,, RAJKOT-GUJARAT

Thereafter, he stated that even otherwise, on merit, the penalty levied needed tobe deleted since even on merits the addition made in the case of the assessee had been deleted bythe ITAT in entirety vide its order dated 30.10.2015 in ITA No.757/RJT/2014. The ld.DR fairly admitted to this fact.

We have heard both the parties. We find that the dismissal by the ld.CIT(A) of the assessee’s appeal filed before it manually was highly unjustifiable and wasnot evenin accordance with the notification issued by the CBDT No.S.O.637(E) dated 1.3.2016 as referred to by the ld.CIT(A) himself. As per the said notification, as noted in para 1.2 of the CIT(A)’s order,all assesses whose returns were required to be filed electronically, had to file their appeals to the Ld.CIT(A) also electronically. The assessee had demonstrated that being an agent of freight beneficiary, voyage return which were required to be filed by the assessee in the return form VVR was required to be filed manually. The ld.CIT(A) has not controverted this contentions of the ld.counsel for the assessee. On the contrary, the ld.CIT(A) has countered by stating that the assessee being a corporate entity, it was required to file return electronically. The moot fact for determining the return form for filing return of income wasbeing a voyage return filed by the agent on behalf of the freight beneficiary, as per the provisions of section 172(3) of the Act, the filing of the return was to be in form VVR i.e. voyage return, as canvassed by the Ld.Counsel for the assessee both to the Ld.CIT(A) and even before us. Without controverting this fact and finding it to be incorrect the Ld.CIT(A) clearly was in error in stating that being a corporate assessee the return should have been filed electronically. Therefore, dismissal by the ld.CIT(A) of the assessee’s appeal, we find was based on incorrect appreciation of the facts. Even otherwise, mere mode of filing appeal - electronically or in physical mode ,alone should not take away the assessee’s right to appeal, being just a technical/ procedural aspect that too not mandated by statute but by CBDT notification which has no persuasive value and is binding only on its Revenue Officers.. Therefore also the order of the ld.CIT(A) dismissing the assessee’s appeal as not admitted is set aside.

On merits of the case, it is an admitted fact that the addition on which penalty was levied under section 271(1)(c) of the Act was deleted by the ITAT. We have noted from the assessmentorder, and copy of the penalty order before us that the assessee, being an agent of freight beneficiary M/s LR2 Management K/s -Denmark, had filed various voyage final returns under section172(3) of the Act without paying freight taxes. The assessee had claimed DTAA benefit vis a vis Denmark for the said purpose, but the AO held that the assessee had wrongly claimed DTAA benefit and accordingly withdrew the same. Thus, 7.5% of the total freight earned in India by the assessee was treated as its taxable income amounting to Rs.1,76,71,602/- and penalty levied on the same for having concealed/furnishing inaccurate particulars of income. The ITAT passed order in dated 30.10.2015 holding that profits embedded in the freight receipts were not taxable in India and deleted the demand raised on the assessee.

Since the quantum addition stands deleted by the ITAT in the above order, there remains no basis for levy of penalty under section 271(1)(c) and therefore the same is directed to be cancelled. The grounds of appeal of the assessee are allowed.

In the result, appeal of the assessee is allowed.