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TMI Blog2015 (10) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... ime the export proceeds have been received, from the competent authority, thus, makes a false claim, i.e., misleads. The assessee’s argument, consequently, fails. As nobody can be presumed to be bestowed with prescience so as to know in advance if the payment, not received by the date of filing the return of income, shall be received in future – and when, or not, the law prescribes a procedure for claiming deduction in its respect in cases of delay in payment. That is, the claim for deduction is made conditional to the allowance of the extended time for receipt. It may be that the assessee delays seeking the extension of time, i.e., by the expiry of the six month period, but surely unless the same has been obtained, there is no basis to make a claim for deduction. In the instant case, the approval having not been sought, there is no basis to even expect an approval – a condition precedent, much less having received it by the date of filing the return, whereby the assessee lodges the claim for deduction. It is the return as furnished, and the facts, as well as law, as obtaining at the relevant time, that is relevant for the purpose of imposition of penalty (See: CIT v. Onkar Sara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qua the disallowance on the second issue. 3. Before us, the assessee s case was two-fold: a) that, on facts, post facto approval had, in fact, been obtained from RBI vide its letter dated 20.06.2008, so that it could not be said that no approval, albeit subsequent, had been obtained; and b) that the order by the tribunal disposing the assessee s appeal on quantum (in ITA No. 2428/Mum/2010 dated 12.08.2011/PB pgs. 7-13) is the subject matter of appeal before the hon'ble jurisdictional high court, having been since admitted by it. Accordingly, following the decision in the case of CIT vs. Nayan Builders Developers (in ITA No. 415 of 2012 dated 08.07.2014/PB pgs. 3 4), no penalty u/s. 271(1)(c) could be levied. 4. We have heard the parties, and perused the material on record. 4.1 We shall address the two issues in seriatim. As regards the first issue, clearly, if approval has been sought and obtained, even if subsequently, it may not be a case of levy of penalty in-as-much as receipt of export proceeds, which is to be from a party located outside India, is not always within the assessee s control. As such, where approval stands sought, all that the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with reference to its contents and, two, is only as the assessee s letter, which stands responded to, as apparent, mentions the same as the captioned subject. The same, in any case, is of little moment as no extension has been sought, so that there is no question of it being granted . In fact, the tribunal having found thus, i.e., that no post facto approval had been allowed to the assessee, which gets established as fact by the tribunal, the final fact finding authority, we are unable to see as to how any such contention could at all be raised in penalty proceedings . This is as the said finding, which is one of fact, and even otherwise not challenged before the hon ble high court, has attained finality . Repeating the same argument in the penalty proceedings, without brining any further material or fact/s or circumstances on record would therefore be to no effect or purpose. Why, no approval, as afore-noted, stands sought, so that there is no basis or scope for the assessee to even consider itself as being entitled for approval. The assessee, by making a claim of having been allowed extended time, or an approval up to the time the export proceeds have been received, fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deduction is made conditional to the allowance of the extended time for receipt. It may be that the assessee delays seeking the extension of time, i.e., by the expiry of the six month period, but surely unless the same has been obtained, there is no basis to make a claim for deduction. In the instant case, the approval having not been sought, there is no basis to even expect an approval a condition precedent, much less having received it by the date of filing the return, whereby the assessee lodges the claim for deduction. It is the return as furnished, and the facts, as well as law, as obtaining at the relevant time, that is relevant for the purpose of imposition of penalty (refer: CIT v. Onkar Saran Sons [1992] 195 ITR 1 (SC)). As such, as would be apparent, even the question of law as raised by the assessee before the hon ble high court, may not capture the controversy arising in the instant case, i.e., the absence of any factual basis for the assessee to have made the claim . In fact, even as observed during hearing, the letter from RBI dated 20.06.2008, described as post facto approval , is itself only received much after the completion of the assessment on 14/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument cannot be adopted in pursuance to the Ground No.1 in-as-much as the order by the Hon ble High Court in the assessee s own case is dated 8-8-2014, while the orders levying and confirming the penalty in the present case are dated 28-3-2011 and 20-2-2012 respectively. In fact, the decision in the case of Nayan Builders and Developers (supra) by the Hon ble High Court stands also rendered subsequently on 8-7-2014. How could the ld. CIT(A), or for that matter, the AO, be faulted or said to have erred ? The impugned order cannot, therefore, be assailed on that score. So, however, the appellant can assume an oral ground before us, which can be admitted and adjudicated upon, after allowing an opportunity to the other side, both qua admission and for responding. The same was given and, in fact, very fairly, not even objected to by the Revenue. We, accordingly, consider the plea on merits. The decision by the Hon'ble jurisdictional High Court is, without doubt, binding on us, so that if it indeed states or lays down such a proposition, i.e., as stated, the same would require being followed by us, being a declaration of the law in the matter in-so-far as the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum proceedings. Could it be said that that is what it, nevertheless, meant. We are afraid not. Rather, even if so, it would imply just that that the issue in assessment appeal was found by it as debatable indeed; it referring to the Order by the Tribunal in the quantum proceedings as well as to the substantial questions of law arising there-from, since admitted. Further on, the Hon ble High Court has not expressed any view with regard to the issue as delineated, i.e., of admission of appeal in assessment as per se making the issue debatable, precluding penalty. Rather, a finding as to a debatable issue may also not assist the assessee s case unless the same is found to lead to a substantial question of law. No doubt, the hon ble court has expressed a view when it states that no case for the imposition of the penalty has been made out. Even as the Hon ble Court does not state any reason for the same, perhaps considering it redundant to do so in the factual matrix of the case, the same is only with regard to the levy of penalty, and which could only be on the basis of what stands done, or not done, by the Revenue authorities in the penalty proceedings. When the Hon ble Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Question of law (ii) raised before it at pg. 142 of the reports), so that the penalty could not survive, rejected the said proposition, answering the question in the negative. It, referring to its earlier decision in CIT vs. Prakash S. Vyas (in Tax Appeal No. 606 of 2010 dated 15.11.2015/copy on record), also relied upon by the Revenue before us, held that admission of a tax appeal by a high court is only indicative of the courts opinion that the issue raised before it requires further consideration by it. That a prima facie case is made out, and the question/s are required to be decided after admission. Unless, therefore, some other intention clearly emerges from the order itself, mere admission of an appeal by the Hon ble High Court cannot, without anything further, be an indication of the issue being debatable so as to delete penalty u/s.271(1)(c) of the Act. Of-course, it hastens to add, as well as to put the record straight, that it does not, when it says so, suggests that no intention, i.e., as to the matter arising being debatable, could at all be gathered from the order of the court, i.e., in explicit or implicit terms. But only that, without such intention, no presump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the assessee, failing which he is deemed to have concealed the particulars of income. In other words, the applicability of the provision hinges critically on the satisfaction of the ingredients of the charging provision, which are well settled. Coming to the issue of the matter being debatable, the same itself implies that the matter admits of two or more views. If that be so, the same itself constitutes a reasonable explanation, eschewing the levy of penalty . Succinctly put, section 271(1)(c) itself offers sufficient scope for non levy of penalty on the basis of the assessee advancing a plausible explanation coupled with proper disclosure; in short, a justifiable reason. Penalty proceedings are independent proceedings, i.e., a separate code in itself, backed by abundant case law by the Hon ble Apex Court settling the same. Findings in the collateral proceedings, though relevant, are not conclusive or determinative of the matter, so that the same could always be drawn upon in the penalty proceedings. Why, then, an inference be required to be drawn from the mere fact of the collateral proceedings being in further appeal? This is more so as the assessee is in the penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal is in contradiction to the decisions in Dharmshi B. Shah (supra) and Splender Construction (supra), which shall have precedence. We are accordingly unable to follow the said decision by the tribunal. In fact, the issue arising raises a very fundamental issue, indirectly addressed in these decisions, clearly on the issue under reference and, in our view answered in P. Jayappan (supra), as to whether decisions in collateral proceedings would operate to render dysfunctional separate and independent provisions of the Act, i.e., would the latter be thereby rendered inoperable or only consequential? 4.6 We, in view of the foregoing, are in full agreement with the findings of the authorities below that the assessee s explanation is both false and not bona fide and is guilty of a dishonest conduct, as noted by both the authorities below (also refer paras and 2.4 of the assessment and the impugned order respectively). The penalty, levied at ₹ 2,50,000/-, i.e., at 120% of tax sought to be evaded, as against a minimum of 100% and a maximum of 300% thereof, is accordingly upheld. We decide accordingly. 5. In the result, the assessee s appeal is dismissed. Order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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