TMI Blog2019 (8) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal filed u/s 260A, wherein the taxpayer is allowed to enter the doors of the Hon ble High Court, , the tribunal shall refrain from deciding the issue even in penalty proceedings u/s 271(1)(c) keeping in view judicial propriety and discipline, the tribunal being lower in hierarchy than Hon ble High Court. Once the High Court is seized of the issues which are admitted by Hon ble jurisdictional High Court against quantum additions, the tribunal shall refrain from deciding even penalty levied u/s 271(1)(c) on merits. Section 275(1A) comes to the rescue of Revenue as in the instant case before us and the most appropriate course of action in such situations for tribunal shall be restore the matter back to the file of the AO to adjudicate afresh levy of penalty u/s 271(1)(c) against assessee read with Section 274 275(1A), wherein the AO be directed to pass penalty order u/s 271(1)(c) r.w.s 274 275(1A). Thus, we are restoring issues in this appeal to the file of the AO for fresh adjudication keeping ,inter-alia, provisions of Section 275(1A). - I.T.A. No.6579/Mum/2017 - - - Dated:- 23-8-2019 - Shri Sandeep Gosain, Judicial Member And Shri Ramit Kochar, Accountant Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings following information have been submitted by you regarding the details of your employment in India and abroad. S.No. Period No. of days Employed with Salary( Rs.) 1 01.04.2008 to 21.07.2008 112 M/s Precision Drilling Services at Abudhabi 16,70t371/- 2 24.07.2008 to 30.09.2008 69 Triton Holdings Ltd INDIA 5,94,468/- 3 01.1 0.2008 to 18.12.2008 79 Transocean Offshore International Ventures Ltd. INDIA 9,75,656/- 4 28. 01. 2009 to 31.03.2009 63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing issues arises in the case of the assessee: 1. Whether assessee is resident in India. 2. Whether the assessee went to Abu Dhabi for the purpose of employment from 14.09.2008 to 13.10.2008 (30 days). 5. Status of the assessee For the purpose of this Act - (1) An individual is said to be resident in India in any previous year, if he- a. is in India in that year for a period or periods amounting in all to one hundred and eighty two days or more; or b. Omitted c. having within four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. [Explanation - In the case of an individual],- a. Being a citizen of India, who leaves India in any previous year for the purpose of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words sixty days , occurring therein, the words one hundred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Vijay Mallya held that: While deciding the residential status of an assessee, the Assessing Officer should consider the provisions of both section 6(1)(a) and 6(1)(c) and this is a mandatory requirement of law. An assessee may not be a resident‟ of India under section 6(1)(a) but may be a resident of India under section 6(1)(c). The authorities functioning under the Act who have been empowered to see that proper revenues are collected can suo motu call for the records to see whether question of residential status has been properly determined by the Assessing Officer or not. Under the circumstances, even when the Assessing Officer accepts the claim of an assessee and decides that the assessee is a non resident‟ under section 2(30) , then also he is duty-bound to record the reasons as to why he is not holding the assessee as a resident‟ in India either under the provisions of section 6(1)(a) or under section 6(1)(c)-Vijay Mallya V. Asst. CIT (2003) 131 Taxman 477( Cal.) 6. In view of the submission above, the assessee‟s residential status during the year under consideration is RESIDENT‟ and his glob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee in quantum and on further appeal by the assessee, the tribunal was also pleased to dismiss the appeal of the assessee in quantum in ITA no. 7537/Mum/2012 for ay: 2009-10 , vide appellate orders dated 16.09.2015 passed by tribunal , by holding as under:- 7. We have considered the rival submissions as well as the relevant material on record. As far as the factual matrix of the case regarding stay of the assessee in India and outside India, the same is not disputed by the parties as reproduced in the foregoing paragraph. There is no dispute that the assessee stayed in India for a period of 847 days in the 4 years preceding the year under consideration. As per provisions of sec.6(1), an individual is said to be resident in India in any previous year if he has satisfied the conditions as provided in clause (a) or (c) of sub-section (1) of sec.6. For ready reference, we quote sec.6(1) as under: 6. For the purposes of this Act,- (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod, assessee, though was physically in Abudhabi, however the AO was of the view that the stay in Abudhabi for this 30 days is not for purpose of employment outside India. It is pertinent to note that in the case of an individual, other than in employment, the requirement of clause (c) of sub-sec. (1) of section 6 is only 60 days or more in India during the relevant year whereas in the case of an individual who is in employment outside India, the condition of stay in India is for a period of 182 days by virtue of Explanation to sub-sec.(1). 8. The learned AR of the assessee of the assessee argued that the previous year under consideration is not the first year leaving India because the assessee has been outside India for last so many years, Therefore, clause (b) of the Explanation has to be considered for application in the case of the assessee. According to him, as per clause (b) of Explanation to sec. 6(1) only stay in India has to be counted and not the stay and purpose of stay outside India. 9. The plain reading of the provisions of sec.6(1) as well as Explanation manifest that if an individual who is a citizen of India or a person of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not levying penalty u/s 271(1)(c) of the I.T. Act 1961. Assessee's request for keep the penalty proceedings in abeyance is not accepted as already the Hon'ble CIT(A) has confirmed the addition made by the AO. On perusal of the facts in the assessment order and the materials on record, the following points were emerged. The assessee's explanation is not satisfactory and not showing any reasonable cause, clarifying why this concealment is not attracting penalty proceedings u/s 271(1)(c). It is a clear case of concealment by deliberately concealing her income. Therefore, the assessee's submission is not acceptable and thus rejected. 9. If the case would not have been picked up for scrutiny, the income of ₹ 27,20,633/- could have escaped from the assessment. Thus, the assessee is liable to be penalised for her deliberate concealment. Therefore, in view of the above discussion, I am satisfied that the additions on account of concealed income of ₹ 27,20,633/- clearly attracts the penalty provisions of section 271(1)(c) and accordingly, I levy the penalty of ₹ 9,24,740/- u/s 271(1)(c) of the IT Act, which is minimum and 100% of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h requirement under the provisions of section 6(1)(a) of the income tax act, 1961 that the person should be out of the country for the purpose of employment or otherwise. Secondly the Ld. A.O. held that the assesse had been in India for more than 365 days in the preceding 4 years and had been in India for more than 60 days in the previous year and hence becomes 'Resident' within the meanings of section 6(1)(c) of the act. Whereas the fact remains is that for Indian Citizens the condition of 60 days is replaced by 182 days by Explanation (b) to section 6 (1) of the act vi. As such there is no finding by the department to suggest that the appellant was out of India during those impugned 30 days not for the purpose of employment. It is a sheer imagination of the Ld. A.O. and that too based on a highly non-prudent thinking. The purpose of employment, as has been held in number of cases by various judiciaries, has vast spectrum which covers almost all purposes except leisure medical purpose. Submission on the ground of appeal: The only ground m this appeal is about levy of penalty of ₹ 9,24,740/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted those impugned 30 days (from the period 14.09.2008 to 13.10.2008) of his stay in Abu Dhabi as his stay abroad and therefore brought his income earned abroad to Indian taxation. Whereas the fact remains is that the appellant was indeed abroad during those impugned 30 days also. b. The same position was held by the Hon'ble Delhi High Court in CIT Vs. Dharampal Premchand Ltd. (2010)329 ITR 572 (Del). C. In the case of CIT Vs. Sandur Manganese Iron Ores Ltd. (2014) 362 ITR 160 (Kar.) the Hon'ble Karnataka High court held that imposition of penalty is not automatic. It is only when there is attempt to evade tax by offering explanation which is found to be false or not bonafide, that penalty can be imposed. In the present case, the appellant under bonafide belief has claimed his residential status as non-resident, which has technically not been accepted by the Ld. A.O. and hence imposition of penalty is not justifiable. d. The same position has again recently been held by the Hon'ble High Court of Allahabad in CIT Another Vs. Euro Footwear Ltd. Another (2015) 94 CCH 128 (All. HC). Prayer: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late authority as well as by the ITAT Mumbai bench. In the light of the facts of the case as well as detailed decisions cited as referred supra, I hold that the appellant is liable for concealing the particulars of his income to the extent of ₹ 27,20,633/- and therefore penalty levied by the Assessing Officer u/s 271(1)(c) amounting to ₹ 9,24,740/- is absolutely in order and therefore upheld. 9. Now the matter is before tribunal at the behest of the assessee who is aggrieved by levying of the penalty by the AO u/s 271(1)(c) of the 1961 Act which was later confirmed by Ld. CIT(A). The Ld. Counsel at the outset submitted that quantum appeal has been decided by tribunal against the assessee and our attention was drawn to appellate order in ITA no. 7537/Mum/2012 dated 16.09.2015 passed by tribunal in quantum, wherein tribunal dismissed the appeal of the assessee by holding that the assessee is resident in India in the year under consideration based on facts and circumstances of the case. It is submitted by Ld. Counsel for the assessee that the assessee has challenged the decision of tribunal before the Hon ble Bombay High Court who is pleased to admit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tourism, medical treatment, studies or the like. Secondly the Ld. A.O. held that the assesse had been in India for more than 365 days in the preceding 4 years and had been in India for more than 60 days in the previous year and hence becomes 'Resident' within the meanings of section 6(1)(c) of the act. Whereas the fact remains is that for Indian Citizens the condition of 60 days is replaced by 182 days by Explanation (b) to section 6 (1) of the act. vi. As such there is no finding by the department to suggest that the appellant was out of India during those impugned 30 days not for the purpose of employment. It is a sheer imagination of the Ld. A.O. and that too based on a highly non-prudent thinking. The purpose of employment, as has been held in number of cases by various judiciaries, has vast spectrum which covers almost all purposes except leisure medical purpose. B. Submission on the ground of appeal: I.T.A. No.6579/Mum/2017 14 | P a g e The only ground in this appeal is about levy of penalty of ₹ 9,24,740/- u/s 271(1)(c) of the act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. The Hon'ble Supreme Court of India has clearly held in CIT Vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) that mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars nor it will amount to concealment of particulars. The present case of the appellant is identical in nature to the above referred case, where he has claimed its residential status as non-resident in the return for A.Y. 2009-10 based on the bona fide belief and facts that he was not in India for 182 days or more in the previous year. However, the Ld. A.O. technically has not counted those impugned 30 days (from the period 14.09.2008 to 13.10.2008) of his stay in Abu Dhabi as his stay abroad and therefore brought his income earned abroad to Indian taxation. Whereas the fact remains is that the appellant was indeed abroad during those impugned 30 days also. c. The same position was held by the Hon'ble Delhi High Court in CIT Vs. Dharampal Premchand Ltd. (2010)329 ITR 572 (Del). d. In the case of CIT Vs. Sandur Manganese Iron Ores Ltd. (2014) 362 ITR 160 (Karn.) the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidential status of the assessee. It was submitted that assessee was under a bonafide belief that assessee is a non-resident within meaning of Section 6 of the 1961 Act, r.w.s. 2(30) of the 1961 Act . It was submitted that if a claim is made by assessee under a bonafide belief which is not accepted by Revenue that will not automatically lead to levy of penalty u/s. 271(1)(c) of the 1961 Act. 9.3. The Ld. DR on the other hand placed strong reliance on the appellate order passed by Ld. CIT(A) and our attention was specifically drawn to para 6 of Ld. CIT(A) appellate order dated 31.08.2017. 10. We have considered rival contentions and perused the material on record. We have observed that the assessee is an individual. The assessee has claimed that he is non-resident during the previous year relevant to impugned assessment year under consideration, keeping in view provisions of Section 6 read with Section 2(30) of the 1961 Act. The assessee has claimed that he was out of India for a period of 205 days during the previous year under consideration , while the AO was of the view that the assessee was out of India for 175 days for computing his residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no dispute that the assessee stayed in India for a period of 847 days in the 4 years preceding the year under consideration. As per provisions of sec.6(1), an individual is said to be resident in India in any previous year if he has satisfied the conditions as provided in clause (a) or (c) of sub-section (1) of sec.6. For ready reference, we quote sec.6(1) as under: 6. For the purposes of this Act,- (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or (b) [* * *] (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. [Explanation 1],-In the case of an individual,- (a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The learned AR of the assessee of the assessee argued that the previous year under consideration is not the first year leaving India because the assessee has been outside India for last so many years, Therefore, clause (b) of the Explanation has to be considered for application in the case of the assessee. According to him, as per clause (b) of Explanation to sec. 6(1) only stay in India has to be counted and not the stay and purpose of stay outside India. 9. The plain reading of the provisions of sec.6(1) as well as Explanation manifest that if an individual who is a citizen of India or a person of Indian origin as per sec.115C of the Act and comes on a visit to India then the second condition of clause (c) of sub-section (1) would be the stay of 182 days instead of 60 days. In the case in hand, assessee has come to India being employed by the Indian company and therefore there is no question of enlarging the period of stay as per provisions of clause (b) of Explanation. Therefore, the assessee will not get the benefit as per the Explanation to sec. 6(1) of the Act simply because neither the assessee has left India during the year for the purpose of empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 1961 Act comes to the rescue of Revenue as in the instant case before us and the most appropriate course of action in such situations for tribunal shall be restore the matter back to the file of the AO to adjudicate afresh levy of penalty u/s 271(1)(c) of the 1961 Act against assessee read with Section 274 275(1A) of the 1961 Act, wherein the AO be directed to pass penalty order u/s 271(1)(c) of the 1961 Act read with Section 274 275(1A) of the 1961 Act. Thus, we are restoring issues in this appeal to the file of the AO for fresh adjudication keeping ,inter-alia, provisions of Section 275(1A) of the 1961 Act. The decision of Hon ble Gujarat High Court in the case of PCIT v. Geetaben Chandulal Prajapati reported in (2018) 96 taxmann.com 100(Guj.) is relevant. Needless to say that proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law. The evidences/ explanations submitted by the assessee in its defence in denovo proceedings before the AO shall be admitted by the AO and shall be dealt with on merits in accordance with law. We order accordingly. 11. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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