TMI Blog2010 (6) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... the ultimate consignee in India. Likewise in respect of contracts entered into between AFL and Indian consignors for delivery of parcels outside India, the appellant was to pick up the parcels from the international gateways and deliver the parcels to the ultimate consignees outside India through its network. For carrying out their respective obligations of delivery, appellant and AFL were to charge each other at a rate which was fixed in terms of the agreement dated May 19, 1989 and revised from time to time. 2.1 The appellant had filed its return of income in India declaring Nil income for assessment year 1989-90 contending that no income accrued or arose to it in India or is deemed to accrue or arise to it in India and hence, it was not chargeable to tax in India. For the assessment 1990-91, it was further contended that it did not have a Permanent Establishment (PE) in India and hence, even under Double Taxation Avoidance Agreement entered into between the Government of India and the Netherlands (DTAA), the income would not be taxable in India in view of Article 7 of DTAA. 2.2 The appellant had made complete disclosure in the notes to the return of income. In the notes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit on inbound revenue. 2.4 The CIT(Appeals) held that the provisions of section 9(1)(i) of the Act are not applicable and accordingly, there is no business connection in India under the Act. For the assessment year 1990-91, the CIT(Appeals) further held that there was no PE under Article 5(1) Article 5(5)(5)/5(6) of DTAA. Accordingly, the CIT(Appeals) held that the appellant is not liable to tax in India and he did not adjudicate the issue as to whether the quantum of income estimated was justified. 2.5 The Tribunal in ITA Nos. 7897 and 7988/Bom/92 in the appeals filed by the Revenue for assessment years 1989-90 and 1990-91 held that the appellant has a business connection in India in the form of a principal agent relationship between the appellant and AFL. The Tribunal, with respect to inbound transactions, held that it was the obligation of the appellant to deliver the consignments to consignees in India. Accordingly, it held that the activity of such delivery through AFL amounted to operations carried out by the appellant in India and a reasonable estimate of income attributable to such operations would be taxable in India. However, in respect of outbound consignme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the income was assessable under the DTAA as well and hence the penalty is leviable. The CIT(Appeals) confirmed the order of the AO primarily relying on the decision of the Tribunal on the merits and holding that there is no question of calling the factual position as merely difference of opinion when it is based on the appreciation and analysis of the facts by the highest fact finding authority. 3. The assessee preferred appeals on the following grounds: On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the penalties levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 for assessment years 1989-99 and 1990-91 merely relying on the order of the Income Tax Appellate Tribunal which confirmed part of the additions to the total income. 4. The learned counsel for the assessee, Mr. P.J. Pardiwala, submitted that the penalty cannot be levied when there is no concealment of income or furnishing of inaccurate particulars. His case is that the assessee has disclosed all particulars and neither the AO nor the CIT(Appeals) has pointed out any material particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it is a debatable legal issue. The claim of the assessee, in our humble opinion, is a bonafide claim. The Hon ble Bombay High Court has also admitted the appeal of the assessee on the ground that a substantial question of law arises. On this factual matrix, we are of the considered opinion that no penalty can be levied on the facts and circumstances of the case. The facts have already been brought out on page 1 to 6 of this order. 8. The Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts Ltd. held as follows : A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. As per Law Lexion, the meaning of the word particular is a details (in plural sense); the details of the claim, or the separate items of an account. Therefore, the word particulars used in the s. 271(1)(c) would embrace the meaning of the details of the claim made. It is an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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