M/s Rameshvar Impex, Surat V. ACIT, Circle-3(3), Surat

ITA 433/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5484 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 15-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 195; 250

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.433/SRT/2024 AY: (2016-17) (Physical court hearing) M/s Rameshvar Impex 12 12 Krishna Diamond, 2 nd Floor, Nr. Jalaram Furniture Showroom, Kapodara, Varachha, Surat-395006 Vs. Assistant Commissioner of Income-tax, Circle-3(3), Surat, Room No.414, 4 th Floor, Aaykar Bhawan, Majura Gate, Surat- 395001 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AANFR 81 54 R (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Assessee by Shri Sapnesh R Sheth, CA राजˢ की ओर से /Revenue by Shri Vinod Kumar, Sr-DR अपील पंजीकरण/Appeals instituted on 16.04.2024 सुनवाई की तारीख/Date of Hearing 10.07.2024 उद्घोषणा की तारीख/Date of Pronouncement 30.07.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, “the Act”) dated 22.03.2024 for assessment year 2016-17 by the National Faceless Appeal Centre, Delhi / Learned Commissioner of Income Tax [in short, “CIT(A)”], which in turn arises from the order of penalty levied u/s 271-I of the Act by Asstt.Commissioner of Income-tax, Circle-3(3), Surat (in short, “AO”) on 27.06.2019. The grounds of appeal raised by the assessee are as under:- “1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals), NFAC has erred in confirming the action of Assessing Office in imposing penalty u/s 271-I of the I.T. Act, 1961 by sustaining penalty amounting to Rs.42,00,000/-. 2 ITA No.433/SRT/2024 /AY 16-17 M/s Rameshvar Impex 2. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals), NFAC has erred in not considering Form 15CA/CB, which is available on the income tax portal of the assessee. 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Facts in brief are that the assessee-firm filed its return of income of Rs.22,70,490/- on 15.09.2016 for AY 2016-17. During the year under consideration, assessee-firm was engaged in the business of manufacturing and sale of diamonds. The case was selected for scrutiny under CASS and assessment was completed u/s 143(3) of the Act on 13.12.2018 by accepting returned income. Since the assessee failed to submit the Form-15CA certificates, AO initiated penalty proceedings u/s 271-I of the Act. 3. During the penalty proceedings u/s 271-I of the Act, the AO verified the outward remittances made by the assessee and found that the assessee could not submit necessary certificates in Form-15CA in respect of all remittances made outside India. As per Section 195(6) of the Act, any person responsible for paying any sum to a non-resident or a foreign company, whether it is chargeable or not chargeable to tax, is required to furnish the information related to such transactions in Form-15CA before the Income-tax Department. The AO found that assessee failed to do so in 42 instances and therefore, it was liable for penalty u/s 271-I of the Act for each default @ Rs.1,00,000/- per default. The AO issued a notice to the assessee requesting him to furnish its reply. The AO was not satisfied with the explanation of the assessee and held that it has committed default by not furnishing any requisites details before 3 ITA No.433/SRT/2024 /AY 16-17 M/s Rameshvar Impex the AO in respect of 42 foreign remittances. Accordingly, he levied penalty of Rs.42,00,000/- u/s 271-I of the Act. Aggrieved by the order of AO assessee filed appeal before CIT(A). 4. Before Ld.CIT(A) assessee filed written submissions. The Ld.CIT(A) found that assessee-firm made foreign remittance in 42 instances during the year under consideration with a non-residence company but assessee failed to submit necessary certificate / information in Form No.15CA, which was required as per provisions of Section 195(6) of the Act during assessment proceedings. He observed that the AO after considering the reply of assessee and the amended section 195(6) of the Act levied penalty u/s 271-I of the Act. He held that the assessee committed mistake by not filing the requisites certificates in Form-15CA and the AO rightly imposed penalty u/s 271-I of the Act in respect of 42 instances. Accordingly, the appeal was dismissed. Aggrieved by the order of Ld.CIT(A) assessee has filed present appeal before the Tribunal. 5. Before us, Ld.AR for the assessee submitted paper book containing pages 1 to 35. He submitted that the CIT(A) has passed a very short order which is not as per mandate of Section 250(6) of the Act. He has failed to consider the submission of the assessee that Form-15CA was filed and uploaded by the assessee in the ITBA portal, which was enclosed as Annexure- 1 of the written submission to CIT(A). Copy of the written submission and Annexure-1 has been given in pages 1 to 5 of the paper book. The Ld.AR filed 4 ITA No.433/SRT/2024 /AY 16-17 M/s Rameshvar Impex copies of Form-15CA filed on-line which had been submitted to the CIT(A). However, the CIT(A) did not consider the submission and evidence and simply passed a perfunctory order without discussing the merit of the case. The AR of the assessee further referred to amended provisions of section 195(6) with effect from 01.06.2015. Rule-37BB of the Income-tax Rules, 1962 was also amended w.e.f. 16.12.2015. The Ld.AR of the assessee relied on the decision in case of ACIT vs. M/s Vinay Diamonds in ITA No.103/SRT/2020 dated 26.06.2023 wherein under similar facts and circumstances, the co-ordinate Bench of this Tribunal has upheld the order of CIT(A) who had deleted the penalty imposed u/s 271-I of the Act. 6. On the other hand, Ld.Sr-DR for the Revenue relied on the order of lower authorities. He stated that neither AO nor CIT(A) has verified the details submitted by the assessee. He has, however, no objection if the issue is remitted back to the AO for due verification and consequential relief as per law. 7. We have heard rival submissions and perused the materials on record. We have also gone through the decision relied upon by the Ld.AR of the assessee. We find that the issue under consideration is similar to the issue decided by the co-ordinate Bench of this Tribunal in case of M/s Vinay Diamonds (supra). The assessment year in the said case was AY 2016-17 and the AO had levied penalty of Rs.70,00,000/- u/s 271-I of the Act for not furnishing requisite Form-15CA/certificate before him in respect of 70 foreign 5 ITA No.433/SRT/2024 /AY 16-17 M/s Rameshvar Impex remittances. After considering the facts of the case and submission of both parties, the co-ordinate Bench of this Tribunal has dismissed appeal of Revenue, which is at para Nos.7 to 11 of the order (supra). The relevant portion is reproduced for ready reference: “7. We have considered the rival submissions and perused the relevant finding given in the impugned order ld CIT(A). We note that assessee is in the business of trading, import and manufacturing of diamonds. The rough diamonds are imported and payments are made through foreign outward remittance in foreign currency. The assessing officer held that the provision of section 195(6) was amended by Finance Act, 2015 which came w.e.f. 01.06.2015 and as per the amended provision the assessee had to provide the Form 15CA to the assessing officer for each transaction. The assessee had made 80 transactions of foreign remittance out of which 10 transactions, were made between the period 01-04-2015 to 31-05-2015, where provisions of section 195(6) were not in force. During the appellate proceedings, the assessee submitted that all the details were filed online before the assessing officer but he has not considered the submissions made on 23.05.2019. The remittance made by the assessee was against the import of goods and does not attract the provision of withholding tax and therefore the requirement to furnish the details u/s 195(6) r.w.Rule 37BB is not mandatory. The Form 15CA/15CB are required to be submitted only for those payments which are chargeable to tax in India and therefore later on the Government amended the provision of section 195(6) by issuing notification no.G.S.R. 978(E) dated 16tth December, 2015. It was further submitted that Section 195 of the Income Tax Act, empowers the CBDT to capture information in respect of payment made to non-residents, whether chargeable to tax or not. On another side, Rule 37BB of the Income-tax Rules has been amended vide Notification No.G.S.R.978(E) dated 16 th December, 2015, to strike a balance between reducing the burden of compliance and collection of information under section 195 of the Act. The significant changes under the amended Rules are as follows:  No Form 15CA and 15CB will be required to be furnished by an individual for remittance which do not require RBI approval under its Liberalized Remittance Scheme (LRS)  Further the list of payments of specified nature mentioned in Rule 37BB which do not require submission of Forms 15CA and 15CB has been expanded from 28 to 33 including payments for imports. Following are the five new example payment types: 1. “Advance payment against imports 2. Payment towards imports-settlement of invoice 3. Imports diplomatic missions 4. Intermediary trade 5. Imports below Rs.5,00,000/- (For use by ECD officers)” 8. Therefore, assessee submitted before ld CIT(A) that there was conflict between section 195 and rule 37BB regarding the compliance of Form 15CA, which was later on amended by the government by Notification 6 ITA No.433/SRT/2024 /AY 16-17 M/s Rameshvar Impex No.G.S.R.978(E) dated 16 th December, 2015. So, there is lack of clarification of words expressively in the provisions only during this assessment year and no express specification have been made for penalty for each default. So, penalty under section 271-I should not be levied for non-furnishing of Form 15CA. 9. The ld CIT(A), after considering the submission of the assessee, observed that the remittance made by the assessee was against the import of goods and does not attract the provision of withholding tax and therefore the requirement to furnish the details u/s 195(6) r.Rule 37BB is not mandatory. The form 15CA/15CB are required to be submitted only for those payments which are chargeable to tax in India and therefore later on the government amended the provision of section195(6) by issuing notification no. G.S.R. 978(E) dated 16 th December, 2015. The remittances which were made were against the import of goods and do not attract the provision of withholding tax and the requirement to furnish the details u/s 195(6) r.w Rule 37BB is not mandatory. The Form 15CA/15CB are required to be submitted only for those payments which are chargeable to tax in India and do not require RBI approval under its Liberalized Remittance Scheme (LRS). 10. The ld CIT(A) also noted that the list of payments of specified nature mentioned in Rule 37BB, which do not require submission of Forms 15CA and 15CB, has been expanded from 28 to 33, including ‘payments for imports’. Hence, apparently there was conflict between section 195 and rule 37BB regarding the compliance of Form 15CA, which was later on amended by the government by Notification No. G.S.R. 978(E) dated 16 th December, 2015. Since, the remittances which were made, were against the import of goods and does not attract the provision of withholding tax and the requirement to furnish the details u/s 195(6) r.w. Rule 37BB is not mandatory. Therefore, ld CIT(A) held that there is lack of clarification of words expressively in the provisions, and only during this assessment year and no express specification have been made for penalty for each default. The Income Tax Rules were amended w.e.f. from 16/12/215, in which the list of payments of specified nature mentioned in Rule 37BB, which do not require submission of Forms 15CA and 15CB, has been expanded from 28 to 33. The amendment though came into effect from 16 th December 2015, but it is a settled law that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended. Therefore, ld CIT(A) held that the penalty provisions u/s 271-I of the Act will not be applicable in the case and therefore ld CIT(A) deleted the same. We have gone through the above findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.” 7.1 Since the facts are similar, following the decision of this Tribunal cited supra, we set aside the order of CIT(A) and remit the matter back to the file of 7 ITA No.433/SRT/2024 /AY 16-17 M/s Rameshvar Impex AO for necessary verification and consequential relief as per decision discussed above. The ground is of assessee is allowed for statistical purposes. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 30/07/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 30/07/2024 Dkp Outsourcing Sr.PS Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat