2023 (8) TMI 39 - AT - Income Tax

Penalty u/s 271-I - Assessee has not furnished / provided information fully related to section 195 before the AO - assessee could not submit the necessary certificate i.e. Form No.15CA in respect of the all remittance made before the AO during the scrutiny proceedings - HELD THAT - We note that the assessees issue is squarely covered by the judgment of this Tribunal in the case of ACIT vs. Vinay Diamonds 2023 (7) TMI 1262 - ITAT SURAT 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. 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 16th 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 - there is no infirmity in the conclusion reached by ld CIT(A). Thus we delete the penalty imposed by the Assessing Officer - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the issue of penalty imposed under section 271-I of the Income Tax Act, 1961 for non-furnishing of necessary certificate Form No.15CA before the Assessing Officer in relation to foreign remittances made by the assessee to a non-resident company in Turkey during the Assessment Year 2016-17.

Summary of Judgment:

Issue 1 - Penalty Imposed under Section 271-I of the Income Tax Act:
The appellant, engaged in the trading of yarn, filed a return of income for AY 2016-17 but failed to provide complete information related to section 195 of the Act before the Assessing Officer. The penalty proceedings were initiated under section 271-I of the Act due to non-furnishing of Form No.15CA for outward remittances made to a foreign company. The Assessing Officer imposed a penalty of Rs. 4,00,000/- for four instances of non-compliance. The CIT(A) upheld the penalty, leading to the appeal before the ITAT.

Issue 2 - Legal Interpretation and Precedent:
The appellant argued that the conflict between section 195 and Rule 37BB regarding the compliance of Form 15CA was resolved by an amendment issued on 16th December 2015. The amendment clarified that remittances made against the import of goods do not attract withholding tax and do not require submission of Form 15CA for non-taxable payments. Citing a precedent involving Vinay Diamonds, the ITAT concluded that the penalty under section 271-I should not be levied in this case.

Conclusion:
Relying on the precedent and the clarification provided by the amendment to Rule 37BB, the ITAT allowed the appeal and deleted the penalty of Rs. 4,00,000/- imposed by the Assessing Officer. The judgment highlighted the importance of understanding the legal provisions and amendments to avoid unnecessary penalties for non-compliance with tax regulations.

This summary provides a detailed overview of the issues involved in the judgment, the facts of the case, the legal interpretation, and the final decision rendered by the ITAT Surat.