Smt. Neela Madhaukar Dhavale legal heir of late Shri Madhukar V Dhavale, Pune V. ITO, Ward (Int. Taxation)-I, Pune

ITA 970/PUN/2013

• Counselvise Citation: 97024514 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Residential status; Salary income; Principle of natural justice; Wrong claim
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.970/PN/2013 (A.Y: 2006-07) MRS. NEELA MADHUKAR DHAVALE LEGAL HEIR OF LATE SHRI MADHUKAR V DHAVALE FLAT NO.6, PLOT NO.16, BHOSALE ENCLAVE, BHOSALE NAGAR, PUNE 411007 PAN: AFJPD0514N APPELLANT VS. ITO, WARD (INT.TAXATION)-I, PUNE RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI B.C. MALAKAR DATE OF HEARING: 15.07.2014 DATE OF ORDER : 18.07.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY MRS. NEELA MADHUKAR DHAVALE AS LEGAL HEIR OF LATE SHRI MADHUKAR V DHAVALE AGAIN ST THE ORDER OF CIT(A)-IT/TP, PUNE ON LEVY OF PENALTY OF 5,13,620/- LEVIED BY THE ASSESSING OFFICER. 2. LATE SHRI MADHUKAR DHAVALE WORKED AS A MASTER OF THE SHIP WITH THE GREAT EASTERN SHIPPING COMPANY LIMITED, MU MBAI (GREAT EASTERN). DURING THE RELEVANT ASSESSMENT YE AR, HE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF 92,962/- ON THE STATUS OF NON-RESIDENT INDIVIDUAL. SHRI DHAVAL E CLAIMED AN EXEMPTION OF SALARY PAID BY GREAT EASTERN OF 15,33,810/- IN HIS RETURN ON THE GROUND THAT HE WAS NON-RESIDENT DURIN G THE YEAR AND SALARY RECEIVED IN INDIA DID NOT ACCRUE TO HIM BECAUSE HE 2 ITA NO.970 OF 13 MRS. NEELA DHAVALE L/H OF SHRI MADHUKAR V DHAVALE HAD RENDERED SERVICES ABROAD ON A SHIP IN FOREIGN W ATERS. THE ASSESSING OFFICER REJECTED THE CLAIM BY HOLDING THA T THE SHRI DHAVALE'S CLAIM WAS AB-INITIO WRONG. HE STATED THAT THE EMPLOYER COMPANY IS AN INDIAN COMPANY AND SALARY EA RNED AND RECEIVED IN INDIA IS TAXABLE U/S.5(2) OF THE I T AC T. 3. IN QUANTUM APPEAL, THE CIT(A) OBSERVED THAT SHRI DHAVALE HAD CLAIMED NON-RESIDENT STATUS ON THE GROUND THAT HE WAS OUTSIDE INDIA FOR 201 DAYS. HOWEVER, HIS EMPLOYER- GREAT EASTERN DID NOT CONFIRM THE SAME. THE GREAT EASTERN IN RES PONSE TO THE LETTER WRITTEN BY THE ASSESSING OFFICER U/S. 133(6), STATED THAT DURING THE YEAR, SHRI DHAVALE WAS ON BOARD OF SHIPS FOR 158 DAYS. ON THE BASIS OF THIS LETTER, THE CIT(A) HELD THAT SHRI DHAVALE COULD NOT CLAIM THE STATUS OF NON-RESIDENT. SECONDLY, HE HELD THAT SHRI DHAVALE WAS UNDER THE CONTRACT OF EM PLOYMENT WITH THE INDIAN COMPANY AND THIS CONTRACT WAS ENFOR CEABLE IN INDIA. WITH THE RESULT, SALARY INCOME RECEIVED IN INDIA WAS TO BE TAXABLE IN INDIA. ACCORDINGLY, THE CIT(A) CONFIRME D DENIAL OF EXEMPTION TO SALARY INCOME VIDE APPELLATE ORDER DAT ED 08.09.2009. SUBSEQUENTLY, THE ASSESSING OFFICER VI DE ORDER DATED 25.03.2011 LEVIED THE PENALTY OF 5,13,620/- U/S.271(1)(C) OF THE ACT. THE ASSESSING OFFICER HELD THAT THE CI T(A) HAS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. SHRI D HAVALE DID NOT BRING OUT ANY VALID REASON FOR NOT OFFERING SALARY INCOME TO TAX. HE HELD THAT SHRI DHAVALE MADE A WRONG CLAIM IN RES PECT OF SALARY BY INCORRECTLY CLAIMING RESIDENTIAL STATUS A S NON-RESIDENT. WITH THE RESULT, HE LEVIED PENALTY U/S.271(1)(C) OF THE ACT, WHICH WAS CONFIRMED BY THE CIT(A). NONE APPEARED ON BEHA LF OF THE ASSESSEE. HOWEVER, THE LEARNED DEPARTMENTAL REPRES ENTATIVE HAS SUPPORTED THE ORDER OF CIT(A) THE ORDER OF AUTHORIT IES BELOW. SO, THE MATTER IS BEING DECIDED EX-PARTE ON THE BASIS O F MATERIAL ON RECORD AND ARGUMENT OF LEARNED DEPARTMENTAL REPRESE NTATIVE. 3 ITA NO.970 OF 13 MRS. NEELA DHAVALE L/H OF SHRI MADHUKAR V DHAVALE 4. IT IS SETTLED LEGAL POSITION THAT THE PENALTY PR OCEEDINGS ARE INDEPENDENT OF QUANTUM PROCEEDINGS. THE MAIN CONTR OVERSY IS WITH REGARD TO STATUS OF THE ASSESSEE AT THE RELEVA NT POINT OF TIME AS NON-RESIDENT OR OTHERWISE. THE ASSESSEE HAS CLA IMED THAT HE WAS OUTSIDE INDIA FOR 201 DAYS, WHEREAS AS PER HIS EMPLOYER, HE WAS OUTSIDE FOR 158 DAYS ON THEIR SHIP. THE EMPLOY ER HAS STATED THAT LATE SHRI DHAVALE WAS ON BOARD FOR 158 DAYS, I T MEANS THAT HE WAS ON SHIP FOR THIS MUCH OF TIME. ACCORDING TO THE EMPLOYER, THERE IS NOTHING ON RECORD TO SUGGEST THAT WHETHER THIS PERIOD INCLUDES THE STAY OF ASSESSEE OVERSEAS WHILE THE SH IP WAS STAYED ON OVERSEAS PORT FOR LOADING AND UNLOADING. IN VIE W OF ABOVE, THE COMPUTATION OF STAY OUTSIDE INDIA COULD NOT PROPERL Y BE COMPUTED. BOTH IN QUANTUM AND PENALTY PROCEEDINGS, THE STATEMENT OF EMPLOYER OF ASSESSEE GREAT EASTERN WEN T AGAINST THE ASSESSEE WHICH WAS TAKEN UNDER THE PROVISIONS OF SE CTION 133(6) OF THE ACT. THERE IS NOTHING ON RECORD BEFORE US T O SUGGEST THAT THE ABOVE STATEMENT OF ASSESSEES EMPLOYER WAS CONF RONTED TO LATE SHRI DHAVALE AT ANY POINT OF TIME. AN OPPORTU NITY OF BEING HEARD IS ESSENCE OF PRINCIPLES OF NATURAL JUSTICE W HICH SHOULD NOT BE SACRIFICED BY THE JUDICIAL AUTHORITIES. IN THIS CASE, WE FIND THAT IT IS APPARENTLY MISSING BY VIRTUE OF THE FACT THAT THE STATEMENT OF EMPLOYER RECORDED U/S.133(6) HAS BEEN TAKEN AS SACR OSCENT BY THE LOWER AUTHORITIES WHILE REACHING TO ANY CONCLUS ION, IT SHOULD HAVE BEEN CONFRONTED TO THE ASSESSEE AT THE RELEVAN T POINT OF TIME. UNFORTUNATELY, THE ASSESSEE IS NO MORE AS ST ATED ABOVE. THE MATTER IS CARRIED THROUGH LEGAL HEIR, SO AN OPP ORTUNITY OF BEING HEARD CANNOT BE AVAILED ANY MORE BUT THE FACT REMAINS THAT THE ASSESSEE WAS NOT PROVIDED DUE OPPORTUNITY OF BE ING HEARD AT THE RELEVANT POINT OF TIME WHICH IS NOT JUSTIFIED. IN THE INTEREST OF JUSTICE AND WITHOUT PREJUDICE TO MERIT OF QUANTUM P ROCEEDINGS, WE SET ASIDE THE ORDER OF CIT(A) WHO CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER OF 5,13,620/- UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. SINCE WE SET ASIDE T HE ORDER OF CIT(A) 4 ITA NO.970 OF 13 MRS. NEELA DHAVALE L/H OF SHRI MADHUKAR V DHAVALE ON PRELIMINARY ISSUE, WE ARE REFRAINING FROM COMMEN TING ON THE MERIT OF THE ISSUE AT HAND. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 18 TH OF JULY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 18 TH JULY, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-IT/TP, PUNE 4) THE CIT-IT/TP, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE