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2015 (10) TMI 1081 - ITAT MUMBAI

2015 (10) TMI 1081 - ITAT MUMBAI - [2016] 45 ITR (Trib) 358 - Penalty u/s.271(1)(c) - non receipt of export proceeds (i.e., in convertible foreign exchange) within six months from the end of the relevant previous year. No instruction from Reserve Bank of India (RBI) had in fact been applied for - Held that:- No ‘post facto approval’ had been allowed to the assessee, which gets established as fact by the tribunal, the final fact finding authority, we are unable to see as to how any such contentio .....

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tled for approval. The assessee, by making a claim of having been allowed extended time, or an approval up to the time the export proceeds have been received, from the competent authority, thus, makes a false claim, i.e., misleads. The assessee’s argument, consequently, fails.

As nobody can be presumed to be bestowed with prescience so as to know in advance if the payment, not received by the date of filing the return of income, shall be received in future – and when, or not, the law .....

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val – a condition precedent, much less having received it by the date of filing the return, whereby the assessee lodges the claim for deduction. It is the return as furnished, and the facts, as well as law, as obtaining at the relevant time, that is relevant for the purpose of imposition of penalty (See: CIT v. Onkar Saran & Sons [1992 (3) TMI 1 - SUPREME Court ]).

We, in view of the foregoing, are in full agreement with the findings of the authorities below that the assessee’s explan .....

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Kumar ORDER Per Sanjay Arora, A. M.: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-8, Mumbai ( CIT(A) for short) dated 20.02.2012, confirming the levy of penalty u/s.271(1)(c) of the Income Tax Act, 1961 ( the Act hereinafter) for the assessment year (A.Y.) 2003-04 vide order dated 28.03.2011. 2. The facts of the case in brief are that the assessee filed its return of income for the year on 01.12.2013 at nil income, claiming deduction u .....

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nted export of another firm, M/s. First Trading House, Chennai/Mumbai?, which received the export proceeds as well. The assessee had only acted as an in between or intermediary for the purpose of availing export benefits from the Government of India; and b) non receipt of export proceeds (i.e., in convertible foreign exchange) within six months from the end of the relevant previous year. No instruction from Reserve Bank of India (RBI) had in fact been applied for. The assessee having found favou .....

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l disposing the assessee s appeal on quantum (in ITA No. 2428/Mum/2010 dated 12.08.2011/PB pgs. 7-13) is the subject matter of appeal before the hon'ble jurisdictional high court, having been since admitted by it. Accordingly, following the decision in the case of CIT vs. Nayan Builders & Developers (in ITA No. 415 of 2012 dated 08.07.2014/PB pgs. 3 & 4), no penalty u/s. 271(1)(c) could be levied. 4. We have heard the parties, and perused the material on record. 4.1 We shall address .....

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e prescribed in its respect, the matter should be viewed liberally in-asmuch as that it needs to be borne in mind that these are penalty proceedings, so that a bona fide conduct coupled with a proper disclosure of all material facts, i.e., relevant to its claim, would save penalty. What would in fact be more relevant in these proceedings, as distinct from the quantum proceedings, which clearly subject the deduction to grant of the requisite approval, is the basis for making the claim, so that a .....

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her within time or even belatedly? What the assessee describes as a post facto approval is in fact and, in effect, a communication from the RBI that the fact of receipt of export proceeds of five shipping bills, as intimated by the assessee thereto vide its letter dated 18.06.2008, has been noted in its records, i.e., it had noted this fact. Nothing more, and, nothing less. This fact stands noted by the tribunal, reproducing the contents of the RBI s letter to the assessee as well as to another .....

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post facto approval , which the other letter, cited as an example, clearly grants. The reference to the words post facto approval in its letter, i.e., while stating its subject, is, again, firstly of no consequence in-as-much as the letter has to be read with reference to its contents and, two, is only as the assessee s letter, which stands responded to, as apparent, mentions the same as the captioned subject. The same, in any case, is of little moment as no extension has been sought, so that th .....

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he penalty proceedings, without brining any further material or fact/s or circumstances on record would therefore be to no effect or purpose. Why, no approval, as afore-noted, stands sought, so that there is no basis or scope for the assessee to even consider itself as being entitled for approval. The assessee, by making a claim of having been allowed extended time, or an approval up to the time the export proceeds have been received, from the competent authority, thus, makes a false claim, i.e. .....

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ed by law. As afore-stated, the assessee did not apply for any extension of time. The payment in each case stands received much after the lapse of the six month period (30.09.2003), i.e., from as low as two years from the date of raising the bills, to a maximum of six years, the latest being received only on 13.06.2008 in respect of one of the bills (dated 21.06.2002). No explanation for the inordinate delay has been furnished by the assessee. Further, the payments have not been received by the .....

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assessee s claim for deduction u/s.80HHC on that part of its exports? We observe no explanation by the assessee at any stage. None could in fact it be, given the clear provision of law (Section 80HHC(2)(a)), which clearly speaks of only that part of the export turnover as being eligible for being considered as so, i.e., for the purpose of this provision, which stands received within six months of the expiry of the relevant year or within the extended time as allowed by the competent authority. .....

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ix month period, but surely unless the same has been obtained, there is no basis to make a claim for deduction. In the instant case, the approval having not been sought, there is no basis to even expect an approval - a condition precedent, much less having received it by the date of filing the return, whereby the assessee lodges the claim for deduction. It is the return as furnished, and the facts, as well as law, as obtaining at the relevant time, that is relevant for the purpose of imposition .....

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ssessment on 14/2/2006. As explained by the apex court time and again, it all depends on the return of income (refer: Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277 (SC)). The assessee s case is full of specious and unsubstantiated pleas, de hors the facts of the case and the clear law in the matter. No wonder no argument qua the merits of the disallowance effected by the A.O. as well as the assessee s explanation qua the same, was raised during hearing in the first instance. .....

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ars of income in terms of Explanation 1 to section 271(1)(c). This decides the assessee s Gd. 1, against it, while the sole other Gd. 2 per Form 36 was not pressed during hearing. 4.3 We next consider the second issue raised by the assessee listed at para 3(b) (supra), presumably qua its Ground No. 1, generally worded, assailing the impugned order on the ground that the ld. CIT(A) had erred in law and on facts in confirming the penalty of levy u/s.271(1)(c) of the Act at ₹ 2.50 lacs. Towar .....

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a substantial question of law, saves penalty in-as-much as the matter becomes per se debatable. Reliance is also placed on the decision by the Tribunal in the case of Advaita Estate Development Ltd. vs. ITO [2013] 27 ITR (Trib) 112 (Mum) to buttress the claim of such an understanding of the said decision by the Hon'ble jurisdictional High Court. In this regard, to begin with, the argument cannot be adopted in pursuance to the Ground No.1 in-as-much as the order by the Hon ble High Court in .....

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e an oral ground before us, which can be admitted and adjudicated upon, after allowing an opportunity to the other side, both qua admission and for responding. The same was given and, in fact, very fairly, not even objected to by the Revenue. We, accordingly, consider the plea on merits. The decision by the Hon'ble jurisdictional High Court is, without doubt, binding on us, so that if it indeed states or lays down such a proposition, i.e., as stated, the same would require being followed by .....

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Respondent. CORAM : S.C. DHARMADHIKARI AND B.P. COLABAWALLA JJ. DATE : 8TH JULY 2014. P.C.:- Having heard Mr Ahuja, learned counsel appearing on behalf of the Appellant, we find that this Appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the Appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on Assessee s Appeal in Quantum proceedings and .....

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ion and, consequentially, to answer it. The laying down of any proposition of law, in-as-much as it is only the pronouncement of law or the ratio of the decision that is binding, could only follow and be subsequent to it admitting a substantial question of law as arising from the impugned order, where-upon only the Hon ble Court would exercise jurisdiction and, being called upon to, adjudicate or answer the question of law as admitted or as suitably modified by it in view of the exact or the pre .....

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ther, even if so, it would imply just that - that the issue in assessment appeal was found by it as debatable indeed; it referring to the Order by the Tribunal in the quantum proceedings as well as to the substantial questions of law arising there-from, since admitted. Further on, the Hon ble High Court has not expressed any view with regard to the issue as delineated, i.e., of admission of appeal in assessment as per se making the issue debatable, precluding penalty. Rather, a finding as to a d .....

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done, or not done, by the Revenue authorities in the penalty proceedings. When the Hon ble Court says that no case for the imposition of the penalty is made out, it means only that, i.e., there is no case for the levy of penalty u/s.271(1)(c) of the Act in the facts and circumstances of the case, given the law in the matter. No other inference could, in our humble view, be drawn from the said statement. A decision, it is trite law, is an authority for what it actually decides, and not what may r .....

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posted with this view by the Bench on a reading of the decision in the case of Nayan Builders and Developers (supra), would then take us to the order by the tribunal in Advaita Estate Development Ltd. (supra), claiming that the cited decision had been found by the tribunal therein to raise the said proposition. We have carefully perused the said order to find it as not correct. The decision by the Hon'ble jurisdictional High Court in Nayan Builders and Developers (supra) is conspicuous by i .....

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ase of CIT vs. Dharmshi B. Shah [2014] 366 ITR 140 (Guj) and CIT vs. Splender Construction [2013] 352 ITR 588 (Del), i.e., decisions by the higher courts taking a different view, and which would supersede that by the tribunal. The Hon ble Court in Dharmshi B. Shah (supra), faced with a question as to whether admission of a tax appeal by the Hon ble High Court would itself be a sufficient ground for coming to the conclusion that the matter is debatable (refer Question of law (ii) raised before it .....

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s made out, and the question/s are required to be decided after admission. Unless, therefore, some other intention clearly emerges from the order itself, mere admission of an appeal by the Hon ble High Court cannot, without anything further, be an indication of the issue being debatable so as to delete penalty u/s.271(1)(c) of the Act. Of-course, it hastens to add, as well as to put the record straight, that it does not, when it says so, suggests that no intention, i.e., as to the matter arising .....

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as nonmaintainable merely on the basis of a presumption as to a debate on the basis of admission of the appeal in the quantum proceedings, i.e., without being accompanied by the reasons for the same - even if prima facie, or even if there were independent grounds and reasons to believe that the assessee s case would fall under mischief envisaged in clause (c) of sub section (1) of section 271 of the Act. Reference toward this is made to paras 11 and 12 in Prakash S. Vyas (supra), which were als .....

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ly upon its admission, would raise a debatable issue, or would exclude penalty. We observe a parity of facts with the instant case. Further, the said decision also is a pointer to that even one fact may be crucial, for the purpose of deciding as to the issue being debatable. We say so as a question of law has to be decided in a given set of facts. The question formulated for adjudication by the Hon ble High Court predicates on a given set of facts, which may have a direct bearing on the issue it .....

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mputation of income for the relevant year, on the assessee, failing which he is deemed to have concealed the particulars of income. In other words, the applicability of the provision hinges critically on the satisfaction of the ingredients of the charging provision, which are well settled. Coming to the issue of the matter being debatable, the same itself implies that the matter admits of two or more views. If that be so, the same itself constitutes a reasonable explanation, eschewing the levy o .....

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e same could always be drawn upon in the penalty proceedings. Why, then, an inference be required to be drawn from the mere fact of the collateral proceedings being in further appeal? This is more so as the assessee is in the penalty proceedings also at liberty to furnish explanation/s or adduce material, i.e., which have not been relied upon in the quantum proceedings. Reference in this context be made to the decision in P. Jayappan v. ITO [1984] 149 ITR 696 (SC). In the facts of that case, pro .....

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o such scope, given the clear provision of section 271(1)(c). Coming to the facts of the case, we have already found as a matter of fact that the assessee had, much less received a post facto approval, not even applied for extension of time, so that there was no question of it having been allowed the same, and that a claim in its respect is, therefore, false. An allowance of extension of time would clearly specify the time period allowed, besides referring to the Application, while the reference .....

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