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TMI Blog2020 (6) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a loss of Rs. 128,033,980/-. While computing the returned loss of the said amount of Rs. 128,033,979/-, the income of Rs. 307,870,463/- received by the assessee in relation to the New Mangalore Port Trust (NMPT) project was reduced on the basis that the said project was completed in F.Y. 1995-96 and accordingly in the absence of any permanent establishment (PE) in relation to the NMPT project in A.Y. 2001-02, the said amount was not taxable as per the provisions of the India and Netherlands Tax Treaty. 3. The fact is this that in November, 1994 the appellant was awarded a capital dredging contract by New Mangalore Port Trust (NMPT) in relation to developing facilities at New Mangalore Port for handling crude and POL products. Pursuant to the same the appellant duly obtained approval from the RBI to open a site office at Mangalore up to 30th August, 1996. Upon completion of the said project at New Mangalore Port in the year 1995-96 the appellant closed its site office and demobilized equipment and personnel. Further that upon completion of the said contract the appellant made claims on the said NMPT aggregating to Rs. 892,579,385/- for additional work performed. Counter claim t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of furnishing inaccurate particulars of income by the assessee which was, in turn, confirmed by the Ld. CIT(A). Hence, the instant appeal before us. At the time of hearing of the instant appeal the Ld. Senior Advocate appearing for the assessee submitted before us that while initiating the penalty proceeding, the Ld. AO has neither alleged concealment of income nor filing inaccurate particulars of income. Apart from that he took us to the note 7 which was annexed to the return of income filed by the assessee from which it appears the assessee has received gross amount of Rs. 307,870,463/- by the NMPT against the claim made by the assessee for additional work performed. However, at the time of accrual of that particular income, since, the appellant did not have any permanent establishment (PE) in India, relying upon Article 5 read with Article 7 of the India Netherlands Treaty, the said income is not taxable in India for the F.Y. 2000-01 for the said NMPT project. Thus the same was not offered to tax as submitted by the Ld. Senior Advocate appearing for the assessee. There was a complete disclosure in respect of the NMPT arbitration award which is evident from the note 7 anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of the said bad debts recovery as a mistake was found to be taken into consideration not in its proper perspective because of the particular reason that the assessee, as we find from the records before us, categorically explained that the said amount was released by DCI against a bank guarantee and was subject matter of arbitration between DCI and KPT. On a conservative basis Rs. 1,18,40,000/- was offered to tax in A.Y. 2000-01. In the previous year ended March 31, 2001, DCI has discharged the company from the above guarantee. Accordingly, the bad debt of Rs. 100 lakh has been credited to the profit and loss account. Apart from that we find from the records, as well as from the submission made by the assessee before the authorities below repeatedly that the appellant was under bona fide belief and on the interpretation of the Dutch Treaty claimed that the "arbitration award" of 30.79 crores is not taxable. The explanation has also been given by the assessee in note 7 annexed to the return of income filed by it. It is relevant to mention that Sec. 271(1)(c) of the Act provides that penalty may be levied, where in the course of any proceeding under the Act the AO is satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas which are subjective such as the status of taxability of an income, admissibility of a deduction and interpretation of law. The furnishing of inaccurate information thus relates to furnishing of factually correct details and information about income. In the present case, what has been treated as furnishing of inaccurate particulars is the income not being included to the tune of Rs. 30.79 crores received as "arbitration award" in its taxable income which was not admitted by the AO. What is correct claim and what is an incorrect claim is a matter of perspective. Raising a legal claim, even if it is ultimately found to be legally unacceptable, in our considered opinion the same cannot amount to furnishing of inaccurate particulars of income just because the AO did not accept the interpretation, such an interpretation is not rendered incorrect. Thus, in that view of the matter the case of the assessee cannot be said to be neither a case of 'furnishing of inaccurate particulars of income'. However, even assuming that the deeming fiction under Explanation 1 to Sec. 271(1)(c) can be triggered by a wrong legal claim, it cannot be the case that merely because there is wrong claim, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ona fides. It cannot always be feasible to prove the claim of bona fides to the hilt, nor, in our considered opinion, the assessee cannot be expected to do so. Whether or not the person has acted bona fide reflects the state of his mind in respect of his conduct, and, therefore, the assessee has his inherent limitations in establishing this aspect of the manner. All that the assessee can do, is to explain the circumstances in which he has acted in a particular manner and set out the related facts. The explanation for bonafides, at the cost of repetition, needs to be considered in a fair and objective manner and in the light of human probabilities. As long as the explanation given by the assessee in the light of the human probabilities, there are no factual errors or inconsistencies, and it is supported by rational supporting evidences regarding factual evidences embedded therein, if any, the bonafides should be taken as proved. We observe that the assessee's explanation regarding bonafides of the claim does not suffer from any apparent inconsistencies or factual errors and it is quite in tune with the human probabilities. We, therefore, find no reason to reject the reason as unacce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 8. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the Benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the corona virus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) may be invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country ..... X X X X Extracts X X X X X X X X Extracts X X X X
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