BAID MILAN INTERNATIONAL PVT. LTD.,KOLKATA vs. D.C.I.T., CIRCLE - 4(1), KOLKATA

The only issue raised by the assessee is against the confirmation of penalty of ₹1 lacs by the Ld. CIT (A) as levied by the Ld. AO u/s 271BA of the Act for violation of Provision of Section 92E of the Income-tax Act, 1961 (the Act).

The facts in brief are that the assessee filed the return of income on 17.10.2011, declaring total income at ₹2,25,19,127/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were duly issued and served upon the assessee.

After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has not entered into any international/ domestic transactions with related parties and therefore, the assessee was not under any obligation to obtain any report u/s 92E of the Income-tax Act, 1961 . It was submitted that the transactions were entered into with the associated enterprises in the preceding assessment year and only the outstanding payments were made during the year. However, the submission of the assessee did not find favour with the Ld. CIT (A) and the penalty levied u/s 271BA of the Act, was confirmed. We note that the order of Ld. CIT (A) dismissing the appeal of the assessee is without taking into consideration of these facts that there were no international/ domestic transactions entered into by the assessee during the year with the Associated Enterprises. Therefore, Provisions of Section 92E of the Act were not applicable. Moreover, the Ld. AO as well as the Ld. CIT (A) has passed a very cryptic order without discussing the facts of the case. In our opinion levying of penalty in such a manner in respect of transactions which were never executed/ entered into by the assessee during the year is bad in law

In the result, the appeal assessee is allowed.