M.G.Vasan, CHENNAI V. ACIT, CHENNAI

ITA 1029/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9759 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2014
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Residential status
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1029/MDS/2014 / ASSESSMENT YEAR : 2005-06 SHRI M.G.VASAN LUZ CHURCH ROAD MYLAPORE, CHENNAI 600 004 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE II CHENNAI [PAN ADOPG 4031 G ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI SASIKUMAR, JCIT / DATE OF HEARING : 24 - 02 - 2016 ! / DATE OF PRONOUNCEMENT : 01 - 04 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CENTRAL-I , CHENNAI, DATED 27.2.2014 AND PERTAINS TO ASSESSMENT YEAR 2005-06 . 2. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT IN THIS CASE, THE ASSESSMENT U/S 143(3) OF THE ACT WA S COMPLETED ON 27.12.2007. ACCORDING TO THE LD. COUNSEL, THE AS SESSEE IS A NON- RESIDENT AND MADE SEVERAL DEPOSITS IN THE SCHEDULED BANK. THE LD. ITA NO.1029/14 :- 2 -: COUNSEL FURTHER SUBMITTED THAT THE INTEREST EARNED BY THE ASSESSEE ON THE DEPOSITS MADE NON-RESIDENT EXTERNAL ACCOUNT IS EXEMPT U/S 10(4)(I) OF THE ACT. THE ASSESSEE HAS SUBSEQUENTL Y CONVERTED THE DEPOSITS INTO NON-RESIDENT NON-REPATRIABLE ACCOUNT IN 2001. THE INTEREST WAS STILL EXEMPT FROM TAXATION U/S 10(15) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER S CONTENTION THAT THE ENTIRE INTEREST RECEIPT OF ` 4,69,43,615/- WAS TAXABLE FOR THE ASSESSMENT YEAR 2005-06 HAS NOT BEEN APPROVED BY TH E CIT(A) AND THE AMOUNT TAXABLE DURING THE ASSESSMENT YEAR 2006- 07 HAS BEEN DETERMINED AT ` 33,69,100/-. THE ASSESSING OFFICER FURTHER FOUND THAT THE RESIDENTIAL STATUS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RESIDENT, THEREFORE, THE INTERE ST IS NOT EXEMPT U/S 10(4)(I) OF THE ACT. THE CLAIM OF THE ASSESSEE T HAT THE INTEREST ON THE DEPOSITS MADE WAS EXEMPT U/S 10(4) OF THE ACT HAS BEEN ELABORATELY CONSIDERED BY THE ASSESSING OFFICER AND THE CIT(A) IN THE ASSESSMENT/APPELLATE PROCEEDINGS AND IT WAS REJECTE D. SINCE THE ASSESSEE HAS NOT RETURNED THE INTEREST INCOME IN TH E RETURN FILED, PENALTY PROCEEDING WAS INITIATED U/S 271(1)(C) OF THE ACT. SINCE THE ASSESSEE PERSISTENTLY CLAIMED THAT THE INTEREST INC OME WAS EXEMPT U/S 10(4) OF THE ACT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN THE RETURN OF I NCOME. THEREFORE, HE LEVIED THE PENALTY OF ` 11,34,085/- U/S 271(1)(C) OF THE ACT. THE ITA NO.1029/14 :- 3 -: CIT(A) HAS ALSO CONFIRMED THE PENALTY IMPOSED BY TH E ASSESSING OFFICER. ACCORDING TO THE LD. COUNSEL, WHEN THE A SSESSEE DECLARED ALL THE DEPOSITS AND CLAIMS THAT THE INTEREST INCOME ON THE NON-RESIDENT DEPOSIT WAS EXEMPT FROM TAXATION, SUCH A CLAIM CANN OT BE SAID TO BE FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E LD. COUNSEL FURTHER SUBMITTED THAT THE ENTIRE DEPOSIT IN NON-RESIDENT A CCOUNT WAS MADE DURING THE ASSESSMENT YEARS 2004-05 AND 2005-06. A FTER DISCLOSING ALL THE DEPOSITS, ACCORDING TO THE LD. COUNSEL, A MERE CLAIM THAT IT WAS EXEMPTED U/S 10(4) CANNOT BE CONSTRUED AT ANY STRE TCH OF IMAGINATION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICU LARS OF INCOME. THE LD. COUNSEL FURTHER SUBMITTED THAT EVEN IF THE CLAI M MADE BY THE ASSESSEE THAT THE INTEREST INCOME WAS EXEMPTED FROM TAXATION IS NOT CORRECT, STILL THAT CANNOT BE A REASON TO LEVY PENA LTY IN VIEW OF THE JUDGMENT OF THE APEX COURT IN CIT VS RELIANCE PETRO PRODUCTS PVT. LTD, 322 ITR 158. 2. ON THE CONTRARY, SHRI SASIKUMAR, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WAS FOLL OWING CASH SYSTEM OF ACCOUNTING, THEREFORE, THE INTEREST INCOME OF ` 4,69,43,615/- IS TAXABLE DURING THE ASSESSMENT YEAR 2005-06. THE A SSESSEE CLAIMED BEFORE THE CIT(A) THAT HE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE, THE INTEREST INCOME HAS TO B E TAXED ON ACCRUAL ITA NO.1029/14 :- 4 -: BASIS. THE CIT(A) FOUND THAT THE STATUS OF THE AS SESSEE IS ONLY RESIDENT AND NOT ORDINARILY RESIDENT. THE CIT( A) FURTHER FOUND THAT THE INTEREST ACCRUED IN THE NON-RESIDENT NON-REPATR IABLE ACCOUNT DEPOSITS OF THE ASSESSEE WAS EXEMPT FROM TAX U/S 10(15)(IV)(FA) OF THE ACT FOR THE FINANCIAL YEARS 2001-02 AND 2002-03 WHEN THE ASSESSEES STATUS WAS RESIDENT. THE LD. DR FURTH ER SUBMITTED THAT FOR THE YEAR UNDER CONSIDERATION, THE INTEREST INCOME E ARNED BY THE ASSESSEE IS NOT EXEMPT U/S 10(15) OF THE ACT, THER EFORE, THE CLAIM MADE BY THE ASSESSEE THAT THE INTEREST INCOME IS E XEMPT WOULD AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME. ACCORDING TO THE LD. DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE PE NALTY LEVIED BY THE ASSESSING OFFICER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE RETURN OF IN COME IN THE STATUS OF RESIDENT. IN THE NOTE FILED ALONGWITH THE RETURN OF INCOME, THE ASSESSEE CLAIMS THAT HE WAS A NON-RESIDENT UPTO A SSESSMENT YEAR 2001-02. THE ASSESSEE HAS ALSO INDICATED IN THE N OTE FILED ALONGWITH THE RETURN OF INCOME THAT THE INVESTMENT MADE IN TH E SECURITIES AND BANK DEPOSITS ARE OUT OF THE REMITTANCE MADE FROM A BROAD. THE ASSESSING OFFICER, AFTER EXAMINING THE CLAIM OF THE ASSESSEE, FOUND THAT THE INTEREST FROM THE MATURITY OF NON-RESIDENT NON-REPATRIABLE ITA NO.1029/14 :- 5 -: ACCOUNT DEPOSITS IS NOT ENTITLED FOR EXEMPTION U/S 10(4) OF THE ACT. ACCORDINGLY, THE INTEREST ON THE NON-RESIDENT NON-R EPATRIABLE ACCOUNT DEPOSITS WAS ADDED TO THE TOTAL INCOME. THE ASSESS ING OFFICER HAS ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON TH E GROUND THAT THE CLAIM MADE BY THE ASSESSEE THAT THE INTEREST ON T HE NON-RESIDENT NON-REPATRIABLE ACCOUNT DEPOSITS IS EXEMPTED FROM T AXATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT AFTER FU RNISHING ALL THE DETAILS FOR MAKING A CLAIM BEFORE THE ASSESSING OFFICER UND ER THE INCOME-TAX ACT, 1961, CANNOT BE CONSTRUED AS FURNISHING INACCU RATE PARTICULARS OF INCOME. THE DETAILS OF DEPOSITS MADE BY THE ASSES SEE AND THE INTEREST ACCRUED ON SUCH DEPOSITS ARE VERY MUCH AVA ILABLE BEFORE THE ASSESSING OFFICER. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSEE CLAIMED THAT INTEREST ON SUCH DEPOSIT IS E XEMPT FROM TAXATION. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THIS CLAIM CANNOT BE CONSTRUED AS FURNISHING OF INACCURATE PAR TICULARS OF INCOME IN VIEW OF THE JUDGMENT OF THE APEX COURT IN RELIAN CE PETROPRODUCTS PVT. LTD. (SUPRA). IN VIEW OF THE ABOVE, WE ARE UN ABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE PENALTY LEVIED B Y THE ASSESSING OFFICER IS DELETED. ITA NO.1029/14 :- 6 -: 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 1 ST APRIL, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF