Sri Monish Nesaraj, Kolkata V. A.C.I.T.(IT)-1(2), Kolkata

ITA 2357/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5176 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 25-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTA KHANRA
• Assessee Lawyers: DEBRAJ SHAH
• Keywords: Residential status; Earning of tax free income; Reasonable cause; Bonafide mistake

Judgement Text

1 ITA NO. 2357/KOL/2019 MONISH NESARAJ, AY- 2016-17 , A(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL A(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] ITA NO.2357/KOL/2019 ASSESSMENT YEAR: 2016-17 SHRI MONISH NESARAJ (PAN: AAEPN3337P) VS. ASSISTANT COMMISSIONER OF INCOME-TAX, (IT)-1(2) , KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 22.01.2020 DATE OF PRONOUNCEMENT 19. 02.2020 FOR THE APPELLANT SHRI DEBRAJ SHAH, ADVOCATE FOR THE RESPONDENT SHRI JAYANTA KHANRA, JCIT, SR. D R ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-22, KOLKATA DATED 19-07-2019 FOR THE ASSESSMENT YEAR 2016-17. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.26,04,360/- MADE BY T HE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED IN THE ASSESSMENT ORDER THAT ASSESSEE HAD DECLARED NIL TOTAL INCOME. LATER, THE CASE WAS S ELECTED FOR SCRUTINY. THE AO NOTED THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE W AS OUTSIDE INDIA FOR 231 DAYS AND AS SUCH HIS RESIDENTIAL STATUS WAS THAT OF A NON-RESIDENT. THE AO NOTED THAT THE ASSESSEE WAS EMPLOYED WITH M/S. WALLEM SHIPMANAGEMENT LIMITED, H ONG KONG AS CAPTAIN. THE AO NOTED THAT THE REMUNERATION EARNED BY HIM AS CAPTAI N OF THE SHIP HAS BEEN CREDITED IN THE ASSESSEES BANK ACCOUNT IN HDFC, BAGUIATI BRANCH, K OLKATA AND THE ASSESSEE HAD CLAIMED EXEMPT INCOME OF RS.78,80,800/- AS PER SCHEDULE EI OF HIS RETURN OF INCOME. HOWEVER, THE AO NOTED FROM THE RECORDS AVAILABLE THAT THE ASSESS EE HAD ONLY PRODUCED A SALARY STATEMENT OF RS.45,76,441/- (US $ 70,406.79 X RS.65/-). IN TH E LIGHT OF THE SAME, THE ASSESSEE WAS ASKED TO CLARIFY THE DISCREPANCY OF SHOWING INCOME OF RS.78,80,800/-. HOWEVER, ACCORDING TO THE AO, THE ASSESSEE DID NOT CLARIFY, THEREFORE, HE HAD NO OTHER OPTION BUT TO ADD THE 2 ITA NO. 2357/KOL/2019 MONISH NESARAJ, AY- 2016-17 DIFFERENCE OF RS.26,04,359/- (RS.71,80,800/- - RS .45,76,441/-). AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS P LEASED TO CONFIRM THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE THIS TRIBUNAL. 4. I HAVE HEARD BOTH THE SIDES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR DREW MY ATTENTION TO PAGE 2 OF THE PAPER BOO K WHICH IS THE ORIGINAL COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME FROM W HICH MY ATTENTION WAS DRAWN TO THE FACT THAT THE ASSESSEE HAS SHOWN US $ 70,407 AS HIS SALA RY. HOWEVER, HE HAS ERRONEOUSLY CONVERTED THE SAME INTO INDIAN CURRENCY AT RS.71,80 ,800/- (I.E. @ RS.102/- PER US $ APPROX.) WHEN THE PREVAILING CONVERSION RATE OF IND IAN CURRENCY WAS AT THE RATE OF US $ 65/- (RS.45,76,441/-). HOWEVER, WHEN THE DISCREPANCY W AS DETECTED BY THE AO, THE ASSESSEE COULD NOT REPLY/EXPLAIN SINCE HE WAS IN HIGH SEAS A ND DID NOT RECEIVE THE SHOW CAUSE NOTICE (SCN) ISSUED BY THE AO. BUT, DURING THE FIRST APPEL LATE PROCEEDING THE ASSESSEE FILED AND BROUGHT IT TO THE NOTICE OF THE LD. CIT(A) THAT WHE N US $ 70,406.79 WAS CONVERTED INTO RUPEES @ RS.65/- PER US $ IT COMES TO RS.45,76,441/ - AND IT WAS A BONAFIDE MISTAKE WHILE FILING THE COMPUTATION ALONG WITH ROI. HOWEVER, THE LD. CIT(A) CONFIRMED THE ACTION OF AO. IT IS NOTED THAT THOUGH THE AO HAD NOTED THAT THE CONVERSION RATE WAS RS.65/- PER US $ HE MADE THE ADDITION BECAUSE THE ASSESSEE DID NOT C LARIFY THE DISCREPANCY OF ASSESSEE SHOWING INCOME OF RS.71,80,800/- @ RS.102/- PER US $. I NOTE THAT THE REASON FOR THE ASSESSEE NOT CLARIFYING THE DISCREPANCY WAS BECAUS E THE ASSESSEE WAS IN THE HIGH SEAS, THEREFORE, THERE WAS A REASONABLE CAUSE FOR HIM NOT TO CLARIFY THAT AT THAT POINT OF TIME TO AO THE ERROR OF CONVERSION OF US $ TO INDIAN RUPEE. HO WEVER, DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAS ALREADY BROUGHT TO THE NOTICE OF T HE LD. CIT(A) THAT THE DISCREPANCY WAS ONLY BECAUSE OF THE CONVERSION RATE AND THE ASSESSE E HAD NOT MADE ANY MISTAKE IN RESPECT OF THE REMUNERATION RECEIVED I.E. US $ 70,406.79. IN SUCH A SCENARIO, I AM OF THE OPINION THAT SINCE THERE IS NO DIFFERENCE IN RESPECT OF REMUNERA TION OF ASSESSEE TO THE TUNE OF US $ 70,407, THE ADDITION WAS NOT WARRANTED MERELY ON AC COUNT OF RATE OF CONVERSION. IT HAS TO BE KEPT IN MIND THAT THE TAX HAS TO BE LEVIED ON RIGHT PERSON, FOR THE RIGHT YEAR AND THE RIGHT INCOME. THIS IS A CASE OF MISTAKE OF FACT AND MIST AKE OF FACT CAN BE EXCUSED SINCE IN THIS CASE ASSESSEE HAS NOT MISREPRESENTED BEFORE AO/LD. CIT(A) IN RESPECT OF HIS REMUNERATION 3 ITA NO. 2357/KOL/2019 MONISH NESARAJ, AY- 2016-17 IN US FIGURES AND CONVERSION RATE HE APPLIED WAS WR ONG AND SINCE THE AO HIMSELF HAS TAKEN THE VALUE AT RS.65/- THEN NO ADDITION IS WARRANTED, THEREFORE, APPEAL OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 19TH FEBR UARY, 2020. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED :19TH FEBRUARY, 2020 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI MONISH NESARAJ, C/O D. SAHA, AD VOCATE, 1 ST FLOOR, 22A, RAJANI SEN ROAD, ANUPAMA BUILDING, KOLKATA-700 02 6. 2 RESPONDENT ACIT (IT), WARD-1(2), KOLKATA. 3. 4. 5. CIT(A)-22, KOLKATA (SENT THROUGH E-MAIL) CIT- , KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) BY ORDER, / TRUE COPY, ASSISTANT REGISTRAR