TMI Blog2001 (3) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ly declaring salaries/ perks paid to their expatriate employees posted in India and in particular portion of the salaries paid to them outside India. Under the Income-tax Act, 1961 (in short "the Act"), the entire salaries received by such expatriate employees posted in India are liable to be declared irrespective of the fact whether it was paid in India or abroad and has to be taxed in India. The only condition requisite for such declaration was that stay of such employee in India for the relevant financial year exceeds 183 days in aggregate. The income-tax authorities issued notices to some foreign companies seeking information regarding salaries of expatriate employees which were paid to them outside India. On getting such notice, some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey was conducted on the premises of various companies in 1998-99. It is alleged that despite all these actions by giving premium to defaulters, penalties which were leviable have not been levied; on the other hand, by resorting to section 273B of the Act orders have been passed not to levy penalties. A list of 95 cases has been annexed to show that in these cases requisite action has not been taken. It has also been stated that action against individual employees has not been taken though available to be taken. It has been urged that such action on the part of the income-tax authorities has resulted in huge loss to the public exchequer and has been done under pressure from the Japanese Chamber of Commerce and Industry (in short "the Chambe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to warrant non-levy of penalty. Learned counsel for the Revenue, on the other hand, submitted that each case has been examined on its merits and after recording satisfaction that reasonable cause existed penalty has not been levied. From the materials on record we find that that the petition relates to 93 cases and not 95 cases as stated. Two names have been duplicated. It is further seen that in 46 cases penalty has been levied. In 41 cases either penalty has not been levied, or proceedings have been dropped. In 5 cases the matter is still pending consideration. So far as the cases were penalty has been levied, the petitioner cannot have any grievance. So far as the non-levy is concerned, we have perused the reasons indicated by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, application of the ingredients/criteria applicable to section 273A to a case governed by section 273B cannot be held without logic or justification. The matter may be looked at from another angle. In a hypothetical case, penalty under section 271C is levied, and the matter is carried to the Tribunal in appeal. The Tribunal applies the parameters applicable to section 273A and cancels the penalty levied holding that reasonable cause existed. In that event a case for reference under section 256(1) or (2) of the Act would not arise. What would constitute reasonable cause cannot be laid down with precision. It would depend upon the factual background and the scope for interference in a reference application or much less in a writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. So far as non-action against individual employees is concerned, certain practical difficulties have been highlighted by the authorities. It is stated that tax and interest required to be paid by grossing up relevant amount has been calculated, and collection has been made. Except a negligible number, others have left the country on completion of projects, and it would be practically impossible to lay hands on those employees for further action relating to penalty, etc. While this practical aspect cannot be lost sight of, none the less it would be desirable and appropriate for the income-tax authorities to take action against those who are still available in India in accordance with law. What particular action would be appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X
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