Income Tax Appellate Tribunal - Delhi
S.Venkatnarain,, vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'E' NEW DELHI)
BEFORE SHRI I.P. BANSAL AND SHRI A.K GARODIA
I.T.A. No.2583/Del./2005
(Assessment year: 2001-02)
ITO, Ward 24(4), Vs. Mr. S. Venkatnarayan,
New Delhi. C-2/2073, Vasant Kunj,
New Delhi.
(PAN/GIR No.AABPV7524R)
(Appellant) (Respondent)
Assessee by : Shri K.K. Raman, CA
Revenue by : Shri G.S. Sahota, Sr.DR
ORDER
PER A.K. GARODIA, AM :
The is a Revenue's appeal directed against the order of the CIT(A)-X, New Delhi dated 11.3.2005 for AY 2001-02. The only ground raised by the Revenue reads as under:
"On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the penalty levied u/s 271(1)(c) of the Income-tax Act, 1961 amounting to Rs,3,63,029/- when the assessee did not fulfill the conditions for claiming relief u/s 80RR."
2. Brief facts are that the assessee is an individual, a writer/journalist by profession and the assessee has been regularly filing his income-tax return as noted by the CIT(A) on page 2 of his order. During this year, a return of income was filed by the assessee declaring total income of Rs.55,188/- after claiming deduction of Rs.12,43,306/- u/s 80RRA of the I.T. Act, 1961. The AO noticed that he did not fulfill the conditions of section 80RRA of the Act and as such the claim of deduction u/s 80RRA was denied. The AO also initiated penalty proceedings u/s 271(1)(c) for having made an incorrect claim of deduction. During the course of penalty proceedings, It was submitted by the assessee before the AO that the assessee has wrongly mentioned the section as 80RRA whereas the correct section should be 80RR. It was also submitted that it has happened because of a typographical mistake and as all the conditions u/s 80RR were fulfilled and ITA No.2583/Del./2005 (AY : 2001-02) there was no concealment in this case. The AO did not accept the contention of the assessee that the assessee's explanation was not satisfactory and that it was a deliberate claim of wrong deduction by furnishing incorrect particulars of income. He imposed a penalty of Rs.363029/- u/s 271(1)(c) of the Act. Being aggrieved, the assessee carried the matter in appeal before the CIT(A), who has cancelled the penalty by observing as under:
"I have carefully considered the matter and the explanation offered by the appellant. There is no doubt in my mind that the appellant is entitled to deduction u/s 80RR being an eminent journalist and a writer. The explanation that due to a mistake on the part of his tax consultant the section under which he was eligible to claim the deduction was mentioned as Sec.80RRA instead of Sec.80RR is plausible and not found to be false either by the AO or by me. There appears to be no mala fide motive to make the wrong claim of deduction u/s 80RRA when the same correct deduction was available to him u/s 80RR. The amount deductible was also exactly the same. No extra benefit would accrue to the appellant if he gets the deduction u/s 80RRA instead of Sec.80RR. The explanation that it is a bona fide mistake is therefore acceptable under the given facts and circumstances of the case. There are numerous judicial decisions including those of the Hon'ble Supreme Court which have held that a bona fide mistake cannot attract the provisions of Sec.271(1)(c). As the explanation offered by the appellant has not been found to be false, I hold that a levy of penalty u/s 271(1)(c) in this case is unjustified. Therefore it is cancelled."
3. Now, the Revenue is in appeal before us. Ld.DR of the Revenue supported the penalty order whereas the Ld.AR of the assessee supported the order of CIT(A).
4. We have considered the rival submissions and perused the material available on record and have gong through the orders of the authorities below. We find that it is noted by the AO in the assessment order in the statement of the assessee recorded on oath by the AO, it was submitted by the assessee that the assessee has rendered services to various foreign parties including ITN(UK), Arab News (Saudi Arabia), The Island (Sri Lanka), Radio Lakha (South Africa) & NBC (USA). When the AO pointed out to the assessee that one of the conditions required u/s 80RRA is not fulfilled i.e. regarding prior approval from the prescribed authorities, the assessee submitted that he is ready to pay the tax and requested not to impose any penalty. On the basis of this statement of the assessee, the AO made addition in the assessment order and initiated penalty proceedings also.
2ITA No.2583/Del./2005 (AY : 2001-02)
5. Now, we examine the claim of the assessee during penalty proceedings that claim u/s 80RRA was made by typographical mistake and in fact the assessee was eligible for same amount of deduction u/s 80RR. When we examine the provisions of section 80RR and 80RRA, we find that as per the provision of section 80RR, deduction is allowable in respect of professional income from foreign sources in certain cases whereas deduction is allowable u/s 80RRA in respect of remuneration received for services rendered outside India. The basic difference is that in the first case i.e. where the assessee claimed deduction u/s 80RR, the income is received by the assessee for the professional services rendered by the assessee being an author, player writer, artist etc. whereas deduction u/s 80RRA is allowable when an Indian citizen is rendering services and receives remuneration from a foreign employer or any Indian concern for same services rendered outside India. In the second case, the additional requirement is there that the terms and conditions of the services outside India are approved in this behalf by the Central Government or the prescribed authority. There is no such requirement with regard to the claim of the assessee regarding deduction u/s 80RR. In the present case, this is a finding of the AO that this requirement was not fulfilled by the assessee to be eligible for deduction u/s 80RRA, but if this claim is considered u/s 80RR, there is no requirement of fulfilling such condition and hence, it cannot be said that a totallyfalse claim was made by the assessee. It is also worth noting that as per the details of services rendered by the assessee as noted by the AO in the assessment order, it appears that these services were not rendered by the assessee as an employee of those foreign parties and it appears that these services were rendered as professional services. On page 1 of the assessment order also, it is noted by the AO that the assessee is a syndicate journalist provides his services to many foreign media channels, in addition to the Indian counterparts. This observation of the AO in the assessment order also shows that the assessee was not rendering his services to foreign parties as an employee of those foreign parties and hence this explanation of the assessee appears bona fide that the assessee wanted to claim deduction u/s 80RR and by typographical mistake, deduction was claimed u/s 80RRA. Considering all these facts, we are of the considered opinion that the penalty was rightly deleted by the CIT(A). We find no reason to interfere in the order of the CIT(A) and we, therefore, confirm the same.
3ITA No.2583/Del./2005 (AY : 2001-02)
6. In the result, the appeal of the Revenue is dismissed.
7. Order pronounced in open court on the date of hearing i.e. on 11.01.2010 itself.
Sd/- Sd/-
(I.P.BANSAL) (A.K. GARODIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
SKB
Dated, January 11, 2010.
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-X, New Delhi.
5.CIT(ITAT), New Delhi. AR/ITAT
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