TaxTMI 
TaxTMI 
2019 (8) TMI 1263
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....der:- "1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in confirming levy of penalty u/s. 271(1)(c) of Rs. 9,24,740/-. 2. The appellant craves leave to amend, alter, delete or add any of the above grounds of appeal." 3. This is an appeal arising from penalty levied by AO u/s. 271(1)(c) of the 1961 Act vide penalty orders dated 27.03.2014 , which was later confirmed by Ld. CIT(A) vide appellate orders dated 31.08.2017. The whole controversy revolves around whether assessee is resident in India or non-resident and consequentially it will decide chargeability of income of Rs. 27,20,633/- earned as salary by assessee outside India , to tax in India. The AO was of the view that assessee is resident in India and accordingly global income of the assessee is chargeable to income-tax in India. The said view of the AO in quantum assessment was later upheld by learned CIT(A) and thereafter also by the tribunal while passing appellate order in quantum in ITA No. 7537/Mum/2012 for ay: 2009-10 vide appellate orders dated 16.09.2015. The assessment was framed by the AO vide assessment order dated 26.12.2011 passed u/s 143(3) in quantum....
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....2008 by Triton Holding Ltd. On perusal of the information submitted by the assessee it is seen that he was with Triton ltd. till 13.09.2008 and from 01.10.2008, he had shifted his job to Transocean offshore Ltd. If the statement of the assessee is believed to be true then how could he shift the job during the period he was abroad and why Triton paid for the assessee when he had shifted to another company. He further stated that during his stay at Abu Dhabi the expenses were drawn by Triton so he did not have any details in respect of these expenses. In view of the discussions above following 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 ....
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....essing 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 global income i.e. earned inside and abroad is taxable in India. Accordingly, the Salary earned outside India as per Bank ....
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....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 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-f....
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....irement 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 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....
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.... 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 Rs. 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 Rs. 27,20,633/- clearly attracts the penalty provisions of section 271(1)(c) and accordingly, I levy the penalty of Rs. 9,24,740/- u/s 271(1)(c) of the IT Act, which is minimum and 100% of the tax sought to be evaded on account of concealed income which is not shown in the return. 10. This order is passed with the prior approval of the Addl. Commissioner of Income Tax, Range-3, Thane vide letter no. THN/CIT(OSD)/Penalty/2013-14/1304 dated. 27.03.2014." 7. The assessee challenged penalty of Rs. 9,24,740/- u/s 271(1)(c) of the 1961 Act levied by AO before the Ld. C....
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....ian 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 Rs. 9,24,740/- u/s 271(1)(c) of the act alleging deliberate concealment of facts on its residential status. a. There is no dispute on the fact that the appellant was indeed out of India for 205 days during the previous year and therefore was not in India for 182 days or more during the previous year. In such circumstances there is nothing wrong on part of the appellant to declare its status as non-resident and not to offer its income earned abroad to Indian income tax. b. Mere interpretation on part of the Ld. A.O. on....
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....tic. 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: In view of the above submissions it is prayed that penalty of Rs. 9,24,740/- imposed by the Ld. A.O. u/s 271(1)(c) of the income tax act, being unwarranted, may kindly be directed to be done away with." 8. The Ld. CIT(A) dismissed the appeal of the assessee vide appellate order dated 31.08.2017, by holding as under:- "5.1 I have perused the facts of the case as mentioned in the Assessing Officer's order as well as arguments taken on behalf of the appellant. I have also gone through the relevant citations on the issue. On a perusal of the facts, it can be clearly seen that the status of the appellant durin....
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....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 the substantial question of law in ITA no. 657 of 2016 vide order dated 27.11.2018 and thus, it was submitted that the issue in quantum is now before Hon'ble Bombay High Court who is seized of the aforesaid issue. The Ld. Counsel for the assessee produced before us written submission as are detailed hereunder:- "A. Brief Facts of the case : i. The appellant is a NRI and he has been enjoying this status in earlier years also and now also he continues to have NRI status. During the assessment year under this appeal also he remains NRI. ii. The fact remains is that during the captioned assessment year the appellant was out of India for 205 days. This is an admitted fact which is contained in para (v) of page 4 of the penalty order also. However....
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....hich 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 Rs. 9,24,740/- u/s 271(1)(c) of the act. a. There is no dispute on the fact that the appellant was indeed out of India for 205 days during the previous year and therefore was not in India for 182 days or more during the previous year. In such circumstances there is nothing wrong on part of the appellant to declare its status as non-resident and not to offer its income earned abroad to Indian income tax. b. Mere interpretation on part of the Ld. A.O. on the number of days not eligible to be counted as stay abroad for the purpose of employment and thereby bringing the income earned abroad by the appellant to income tax in India will not amount to concealment of the particulars nor it will amount to furnishing of inaccurate particulars of his income. c. To mandatory requirement for applying penalty u/s 271(1)(c) of the income tax act is that there should be either a case of concealment of the particulars of income or furnishi....
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....ourt 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'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. e. 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 : In view of the above submissions it is prayed that penalty of Rs. 9,24,740/- imposed by the Ld. A.O. u/s 271(1)(c) and confirmed by the Hon'ble CIT(A) may kindly be directed to be done away with." 9.2 Prayers are made by learned counsel for the assessee to delete penalty levied by the AO u/s 271(1)(c) which was later confirmed by Ld. CIT(A). It was submitted that assessee w....
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.... was of the view that the assessee was out of India for 175 days for computing his residential status as per provisions of the 1961 Act. The differential period of 30 days when assessee stayed out of India in Abu Dhabi from 14.09.2008 to 13.10.2008 was not considered by the AO for determining his residential status as the assessee visited Abu Dhabi during the said period on behalf of the Triton Holding Ltd., India, wherein assessee's salary as well reimbursement of expenses were borne by said Indian Company namely Triton Holding Limited, India and consequently said period of 30 days was not considered by AO to be a period of stay outside India for employment abroad and hence even salary of Rs. 27,20,633/- earned by assessee abroad from Precision Drilling Services from 01.04.2008 to 21.07.2008 and from 28.01.2009 to 31.03.2009 was also brought to tax by the AO in India by holding that the assessee is resident in India. The assessee undisputedly was in India for a period of 847 days during four preceding previous years namely , financial year: 2004-05 to 2007-08. The assessee on the strength of being outside India for a period of 205 days including said period of 30 days of sta....
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....Act, 1958 (44 of 1958), or for the purposes 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 and eighty-two days" had been substituted ; (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, 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 and eighty-two days" had been substituted, [Explanation 2,-For the purposes of this clause, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed.] For an individual to be a resident in India, either he is in India during the year, for a total period of 182 days or more or he has been in India during 4 years preceding the year under consideration....
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.... year. The assessee though claimed to have left India for the purpose of employment but the employment of the assessee remains with Indian company and the assessee received salary in India even during the said period of 30 days from 14/9/2008 to 13/10/2008. Therefore, the said period of stay outside India cannot be regarded as for the purpose of employment outside India. Accordingly, we do not find any merit in the appeal of the assessee. The impugned order of the CIT(A) is upheld. 10. In the result, the appeal of the assessee is dismissed." 10.2 The assessee being aggrieved by the aforesaid decision of the tribunal dated 16.09.2015 has filed an appeal with Hon'ble Bombay High Court u/s 260A of the 1961 Act , wherein Hon'ble Bombay High Court was pleased to admit substantial question of law in ITA no. 657 of 2016 in Sanjiv K. Ashtamkar v. The Tax Recovery Officer, vide orders dated 27.11.2018 as under:- " 1. The Appeal is admitted for consideration on following substantial question of law : (i)Whether in the facts and in the circumstances of the case and in law, could the appellant be treated as "resident in India" within the meaning of Section 6(1) of....