2019 (8) TMI 1263 - AT - Income Tax

Penalty u/s. 271(1)(c) - income accrued in India - income outside India from salaries - non-resident OR resident - period of stay outside India - HELD THAT - The assessee on the strength of being outside India for a period of 205 days including said period of 30 days of stay outside India from 14.09.2008 to 13.10.2008 had claimed that his income outside India from salaries to the tune of 27, 20, 633/- is not chargeable to tax in India but the AO was of the view that the said salary income is chargeable to tax in India as assessee stayed outside India in Abu Dhabi for the period from 14th September to 13th October 2008 not for the purposes of employment outside India as he was in employment with Triton Holding Limited India and his salary as well reimbursement of expenses were paid by said company Triton Holding Limited India . This involved interpretation of provisions of Section 6(1)(a) and (c) read with Explanation 1(a) and 2(30) of the 1961 Act. Once substantial question of law against quantum additions are admitted by Hon ble High Court in appeal filed u/s 260A wherein the taxpayer is allowed to enter the doors of the Hon ble High Court the tribunal shall refrain from deciding the issue even in penalty proceedings u/s 271(1)(c) keeping in view judicial propriety and discipline the tribunal being lower in hierarchy than Hon ble High Court. Once the High Court is seized of the issues which are admitted by Hon ble jurisdictional High Court against quantum additions the tribunal shall refrain from deciding even penalty levied u/s 271(1)(c) on merits. Section 275(1A) comes to the rescue of Revenue as in the instant case before us and the most appropriate course of action in such situations for tribunal shall be restore the matter back to the file of the AO to adjudicate afresh levy of penalty u/s 271(1)(c) against assessee read with Section 274 275(1A) wherein the AO be directed to pass penalty order u/s 271(1)(c) r.w.s 274 275(1A). Thus we are restoring issues in this appeal to the file of the AO for fresh adjudication keeping inter-alia provisions of Section 275(1A).

Issues Involved:
1. Whether the assessee is a resident in India.
2. Whether the assessee's 30-day stay in Abu Dhabi was for the purpose of employment.
3. Whether the penalty under Section 271(1)(c) of the Income-tax Act, 1961, for concealment of income, is justified.

Issue-Wise Detailed Analysis:

1. Whether the assessee is a resident in India:

The main controversy revolves around the assessee's residential status, which determines the taxability of his global income. The Assessing Officer (AO) contended that the assessee is a resident in India, thereby making his global income taxable in India. The AO's assessment was based on the fact that the assessee was in India for 160 days during the relevant financial year and 847 days in the preceding four years, thus fulfilling the conditions under Section 6(1)(c) of the Income-tax Act, 1961. The AO rejected the assessee's claim of being a non-resident on the grounds that the 30-day stay in Abu Dhabi was not for the purpose of employment.

2. Whether the assessee's 30-day stay in Abu Dhabi was for the purpose of employment:

The assessee argued that his 30-day stay in Abu Dhabi was for training related to employment, which should be considered as a period of stay outside India for employment purposes. However, the AO found inconsistencies in the assessee's claims, noting that the salary and expenses for this period were paid by Triton Holding Ltd., an Indian company. The AO concluded that this period could not be considered as stay for employment abroad, thus reducing the assessee's stay outside India to 175 days, which is less than the required 182 days for non-resident status.

3. Whether the penalty under Section 271(1)(c) of the Income-tax Act, 1961, for concealment of income, is justified:

The AO imposed a penalty under Section 271(1)(c) for concealing income, arguing that if the case had not been scrutinized, the income of ?27,20,633/- would have escaped assessment. The assessee contended that his claim of non-resident status was based on a bona fide belief and that mere rejection of this claim does not amount to concealment or furnishing inaccurate particulars of income. The assessee cited various judicial precedents, including the Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd., to support his argument that a bona fide claim, even if not accepted, does not warrant a penalty.

Tribunal's Decision:

The Tribunal noted that the quantum appeal had been decided against the assessee, and the matter was pending before the Hon'ble Bombay High Court, which had admitted a substantial question of law regarding the assessee's residential status. The Tribunal emphasized judicial propriety and discipline, suggesting that once a substantial question of law is admitted by a higher court, the Tribunal should refrain from deciding the issue in penalty proceedings.

The Tribunal restored the matter to the AO for fresh adjudication of the penalty under Section 271(1)(c), considering the provisions of Section 275(1A) of the Income-tax Act, 1961. The AO was directed to provide an adequate opportunity for the assessee to present his case and to consider all evidence and explanations submitted by the assessee during the de novo proceedings.

Conclusion:

The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the penalty issue in light of the pending substantial question of law before the Hon'ble Bombay High Court. The Tribunal's decision underscores the importance of judicial hierarchy and the need to await the higher court's ruling on the substantive issue before finalizing penalty proceedings.

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