Tilke GmbH & Co. KG, Noida V. DDIT (International Taxation), Noida

ITA 6055/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4027 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief
• Section: 145; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-6055/DEL/2015 ( ASSESSMENT YEAR: 2010-11) TILKE GMBH & CO. KG CA, SAURABH ANAND, UGF-6, OCEAN COMPLEX, P-6, SECTOR-18, NOIDA. AADCT5633N VS DDIT (INTERNATIONAL TAXATION) NOIDA. ASSESSEE BY SH. ANIL KUMAR GUPTA, CA REVENUE BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE CHALLENGING THE O RDER DATED 23.07.2014 IN APPEAL NO. 204/2013-14/NOIDA PASSED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS), NOIDA (HEREIN AFTER FOR SHORT CALLED AS THE LD. CIT (A)) ON THE FOLLOWING GROUN DS: THE LD. DEPUTY DIRECTOR OF INCOME TAX, INTERNATION AL TAX, NOIDA, U.P. (HEREINAFTER REFERRED TO AS LD. DDIT) HAS ERRED IN LAW VIS--VIS THE FACTS & FEATURES OF THE SUBJECT MATTERS OF THE CASE OF THE ASSESSEE COMPANY/APPELLANT IN THE IMPUGNED ORDER U/S 271(1)( C) DATED 26.09.2013 WHILE LEVYING PENALTY OF RS. 11,43,348/- THEREIN PE R SE ADDITION OF RS. 1,14,33,486/- (IN TOTAL INCOME ASSESSED IN ORDER U/ S 143(3)/144C DATED DATE OF HEARING 19.09.2017 DATE OF PRONOUNCEMENT 09.10.2017 2 ITA NO. 6055/DEL/2015 28.05.2013), WHICH HAS BEEN UPHELD BY THE LD. CIT ( APPEALS) (NOIDA) ALLEGING CONCEALMENT OF INCOME AND FILING OF INACCU RATE PARTICULARS OF INCOME IN ITR FILED: 1. BY UNDERMINING & DISREGARDING THE FACT THAT INCO ME OF RS. 1,14,33,486/- WHICH WAS ALREADY DULY DECLARED IN TH E ITR FILED FOR AY 2011-12 (THOUGH WAS AGREED BY ASSESSEE COMPANY/A PPELLANT AS ADDITION IN AY 2010-11 FOR AVOIDING LITIGATION A ND BUYING PEACE OF MIND), THUS, NO INCOME AND/OR INCOME TAX THEREON HAS BEEN CONCEALED BY THE APPELLANT IN THE YEAR UNDER APPEAL , SINCE SUCH INCOME (IN FACT ALL INCOMES RECEIVED) HAD SUFFERED TDS U/S 195 R/W SEC. 90 R/W DTAA, WHICH WERE BEING DECLARED IN THE ITR (S) OF RESPECTIVE ASSESSMENT YEARS, I.E. AY 2010-11 & 2011 -12; 2. BY ALLEGING IN UNFOUNDED MANNER REGARDING THE A MOUNT OF TAX SOUGHT TO BE EVADED, CONCEALMENT OF PARTICULARS O F INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME MERELY ON THE BASIS OF ALLEGATION MADE IN THE IMPUGNED ORDERS U/S 143(3)/1 44C AS WELL AS 271(1)(C) THAT SINCE THE ASSESSEE HAS REGULARLY ADOPTED THE MERCA NTILE METHOD OF ACCOUNTING, INCOME OFFERED IN THE RETURN ON ACTUAL BASIS WILL BE IN CONTRAVENTION OF SECTION 145 OF TH E I.T. ACT, 1961. HENCE, THE EXCESS INCOME OF RS. 1,14,33,486/ - ON ACCRUAL BASIS IS PROPOSED TO BE ADDED TO THE GROSS RECEIPTS OF THE ASSESSEE. 3. BY ACTING CONTRARY TO THE PRINCIPLES & UNDERLYIN G RULINGS IN VERDICTS MADE BY THE APEX COURT, THE HIGH COURTS AND THE TRI BUNALS AS NECESSARY INGREDIENTS FOR LEVYING PENALTY PER SE TH E FACTS AND FEATURES OF THE SUBJECT MATTERS OF THE CASE OF THE APPELLANT/ASSESSEE COMPANY. THE APPELLAND/ASSESSEE COMPANY PRAYS FOR GRANT OF P ERMISSION TO ADD/MODIFY/RECTIFY/INSERT/WITHDRAW ANY PART OF THE ABOVE SUBMITTED GROUNDS OF APPEAL AT ANY TIME ON OR BEFORE OR DURIN G THE COURSE OF HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE WAS O RIGINALLY INCORPORATED IN GERMANY IS ENGAGED IN THE BUSINESS OF DRAWING AN D DESIGNING OF RACING & TEST TRACK. THEY HAVE ENTERED INTO AN AGREEMENT WITH M/S JPSK SPORTS PVT. LIMITED, SECTOR-128, NOIDA, AND UTTAR PRADESH ON 31.10.2009 IN RELATION TO DESIGN AND SUPERVISION WORKS FOR A FOR MULA 1 RACE TRACK WITH 3 ITA NO. 6055/DEL/2015 ALL NECESSARY FACILITIES AT DISTRICT GAUTAM BUDH NA GAR, GREATER NOIDA AND IN THAT CONNECTION THEY HAVE ALSO ENTERED INTO A CO NTRACT WITH M/S TILKE ENGINEERS & ARCHITECTS INDIA PVT. LIMITED FOR SUPER VISION WORKS AND SERVICES OF THE ABOVE RACE TRACK AND ITS NECESSARY BUILDINGS/FACILITIES. FOR THE AY 2010-11 THE ASSESSMENT WAS COMPLETED U/S 143 (3) READ WITH 143C(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT CALL ED AS THE ACT) BY MAKING AN ADDITION OF RS. 1,14,33,486/- ON ACCOUNT OF DIFFERENCE BETWEEN THE DECLARED GROSS RECEIPTS AND THE DETAILS OF AMOU NT PAID OR CREDITED AS PER THE CERTIFICATE OF DEDUCTION AT SOURCE AND INVO ICES. SIMULTANEOUSLY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INIT IATED AND THE AO BY WAY OF ORDER DATED 26.09.2013 CONCLUDED THE SAME WITH T HE LEVY OF PENALTY OF RS. 11,43,348/- U/S 271(1)(C) OF THE ACT. APPEAL P REFERRED BY THE ASSESSEE WAS DISMISSED BY THE LD. CIT (A) BY WAY OF IMPUGNED ORDER. HENCE, THIS APPEAL BY THE ASSESSEE. 3. THIS APPEAL IS FILED WITH A DELAY OF 384 DAYS AN D THE EXPLANATION OFFERED BY THE ASSESSEE IS THAT IN SPITE OF THEIR I NSTRUCTIONS THEIR ARS DID NOT REFER THE SECOND APPEAL WITHIN TIME, AS SUCH, T HEY HAD TO CHANGE THEIR COUNCIL TO TAKE THE CONSCIOUS DECISION TO FILE THIS APPEAL RESULTING IN THE DELAY. UNLESS THE RIGHTS OF THE PARTIES ARE CRYSTA LLIZED BY AFFLUX OF TIME, WE ARE OF THE CONSIDERED OPINION THAT THE TECHNICAL CO NSIDERATION SHALL NOT 4 ITA NO. 6055/DEL/2015 RESULT IN DENYING THE POSSIBILITY OF DELIVERY OF SU BSTANTIAL JUSTICE. WITH THIS VIEW OF THE MATTER, WE CONDONE THE DELAY AND PROCEE D TO HEAR THE MATTER ON MERITS. 4. IT IS THE ARGUMENT OF THE LD. AR THAT THE ASSESS EE OFFERED THE INCOME FOR TAX ON RECEIPT BASIS WHEREAS THE TDS CER TIFICATE INCOME WAS SHOWN ON ACCRUAL BASIS, THEREFORE, THE DIFFERENCE O F RS. 1,14,33,486/- AROSE BUT IN SPITE OF THE FACT THAT THE ASSESSEE HA D FURNISHED FULL OF TRUE PARTICULARS OF THE INCOME AND OFFERED THE AMOUNT ON RECEIPT BASIS TO TAX THE AO PROCEEDED TO LEVY THE PENALTY. IT IS THE SU BMISSION OF THE LD. AR THAT THERE IS NO WANT OF BONA FIDES ON THE PART OF THE ASSESSEE IN AS MUCH AS THE ASSESSEE HAD SHOWN THIS AMOUNT OF RS. 1,14,3 3,486/- IN THE COMPUTATION OF INCOME RELATING TO THE AY 2011-12 WH ICH THE ASSESSEE HAD TO GET DELETED IN RESPECT OF SUCH YEAR. PER CONTRA , IT IS THE ARGUMENT OF THE LD. DR THAT WITH THE INTRODUCTION OF THE EXPLANATIO N TO SECTION 271(1)(C) OF THE ACT W.E.F. 01.04.1964 THE ONUS FOR PROVING THAT THE STATEMENT OF INCOME WAS NOT ON ACCOUNT OF ANY WILLFUL NEGLECT IS ON THE PART OF THE ASSESSEE AND MERE OFFERING OF AN EXPLANATION IS NOT SUFFICIENT BUT SUCH AN EXPLANATION HAS TO BE SUBSTANTIATED WITH REFERENCE TO COGENT AND RELIABLE EVIDENCE. ON THIS PREMISE, LD. DR SUBMITTED THAT T HE ORDERS OF THE 5 ITA NO. 6055/DEL/2015 AUTHORITIES BELOW DO NOT WARRANT ANY INTERFERENCE A ND THE APPEAL IS LIABLE TO BE DISMISSED. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD. IN T HIS MATTER THE EXPLANATION OF THE ASSESSEE FOR THE DIFFERENCE OF R S. 1,14,33,486/- IS THAT THOUGH THE INCOME AS PER TDS CERTIFICATES WAS SHOWN ON ACCRUAL BASIS, THE ASSESSEE OFFERED THE INCOME FOR TAX ON RECEIPT BASIS THEREBY GIVING RISE TO THE DIFFERENCE WHICH WAS OFFERED FOR TAX ON RECEIPT BASIS FOR THE AY 2011-12. RECORD SPEAKS VIDE PAGE NO. 78 & 80 READ WITH THE ORDER DATED 15.06.2016 OF THE LD. CIT (A) IN THE APPEAL RELATIN G TO THE AY 2011-12 VIDE PARAGRAPH NO. 5.10, THAT THE RETURN OF INCOME FOR THE AY 2011-12 WAS FILED BY THE ASSESSEE ON 29.11.2011, WHEREAS TH E ASSESSMENT ORDER FOR THE YEAR 2010-11 WAS PASSED ON 28.05.2013. THI S MEANS LONG PRIOR TO THE ASSESSMENT ORDER FOR THE YEAR 2010-11 CAME TO B E PASSED IN THE YEAR 2011 ITSELF THE ASSESSEE OFFERED THE SUM OF RS. 1,1 4,33,486/- TO TAX. THIS UNMISTAKABLY ESTABLISHES BONA FIDES ON THE PART OF THE ASSESSEE AS TO THE SYSTEM OF ACCOUNTANCY FOLLOWED. AFTER THE AMOUNT O F 1,14,33,486/- WAS BROUGHT TO TAX FOR THE AY 2010-11, BY WAY OF ORDER DATED 15.06.2016 FOR THE AY 2011-12 THE ASSESSEE GOT THIS PARTICULAR AMO UNT DELETED AND THE ORDER VIDE PARAGRAPH NOS. 5.17 TO 5.21 ESTABLISHES THE SAME. WE ARE, THEREFORE, SATISFIED THAT ABSOLUTELY THERE IS NO WI LLFUL NEGLIGENCE NOR ANY 6 ITA NO. 6055/DEL/2015 MALA FIDES ON THE PART OF THE ASSESSEE IN SUPPRESSI NG ANY INCOME NOR IS THERE ANY CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS. WE, THEREFORE, DIRECT THE AO TO DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2017 SD/- SD/- (G.D. AGRAWAL) (K.N. CHARY) PRESIDENT JUDICIAL MEMBER DATED: 09.10.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 6055/DEL/2015