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Income Tax Appellate Tribunal, “C” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-13, Pune dated 18.07.2017 for the assessment year 2008-09 as per the grounds of appeal on record.
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The crux of the grievance of the assessee in this appeal is with regard to the penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟).
The Ld. AR of the assessee vehemently argued that the assessee being bona-fide has never concealed income nor furnished inaccurate particulars of income and therefore, penalty u/s.271(1)(c) of the Act is not warranted. That further, referring to the assessment order Para 10, Page 4 and in the penalty order Para 6, Page 9, the Ld. AR submitted that the Assessing Officer is not specific as to which limb of the charge, he is levying penalty u/s.271(1)(c) of the Act. If the limb is not specific regarding the charge, the assessee does not gets opportunity to defend his case and therefore, as per the settled judicial principles on this count also, penalty levied should be deleted.
Per contra, the Ld. DR referred to the Section 271(1)(c) read with Explanation 7 and on that basis he prayed that the penalty levied u/s.271(1)(c) of the Act should be sustained.
The Ld. CIT(Appeals) upheld the penalty levied u/s.271(1)(c) of the Act as per detailed reasoning as appearing in his order, upholding the strictures of Explanation 7 on the part of the assessee with regard to the terms “good faith” and “with due diligence”. According to the findings of the Ld. CIT(Appeals), there was lack of “good faith” and “due diligence” on the part of the assessee.
We have perused the case records and heard the rival contentions. We have also analyzed the facts and circumstances in this case. Referring to the
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provisions of Section 271(1)(c) read with Explanation 7, the penalty will be leviable if the assessee has not worked in “good faith” or “due diligence”. Now coming to the facts of the case, the Transfer Pricing Officer (TPO) had not accepted the bench marking of international transaction done by the assessee with its AEs and had made upward adjustment to Rs.1,24,77,171/- for provision of application of engineering services. The Dispute Resolution Panel (DRP) had directed to exclude certain companies having “OP/TC” above 40%. Therefore, it is clear that the dispute is with regard to selection of comparables and in such case, every assessee is choosing comparables or rejecting comparables based on their study report and analysis. If we were to sustain the findings of the Ld. CIT(Appeals) then in every case, there will be lack of “good faith” and “due diligence” on the part of the assessee which is not correct. In this case though there may have been some differences as to comparables but there is neither “concealment of income” nor “furnishing of inaccurate particulars of income”. Therefore, penalty levied u/s.271(1)(c) of the Act is not justifiable.
In view of the matter, we set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete the penalty from the hands of the assessee.
In the result, appeal of the assessee is allowed.
Order pronounced on 29th day of July, 2019.
Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 29th July, 2019. SB
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आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeals)-13, Pune. 4. The Pr. CIT-1, Pune. , आयकर अऩीऱीय अधधकरण, “सी” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “C” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.
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Date 1 Draft dictated on 23.07.2019 Sr.PS/PS 2 Draft placed before author 29.07.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order