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आदेश/Order
Per Sanjay Garg, Judicial Member :
The present appeal has been preferred by the assessee against the order dated 04.05.2018 of the Commissioner of Income Tax (Appeals)Patiala, [hereinafter referred to as CIT(A)] relating to assessment year 2005-06 agitating confirmation of penalty u/s 271(1)(c) of the Income Tax Act, 1961 ( hereinafter referred to as 'the Act').
The appeal is barred by three days. The assessee in this respect has moved separate application for condonation of delay wherein it has been pleaded that despite due diligence, the appeal could not be filed within stipulated period and that due to the reason beyond the control of the assessee, there occurred a delay of three days.
ITA-1053/CHD/2018 A.Y. 2005-06 Page 2 of 4
Considering shortness of the delay period and the
reasons explained, delay in filing the present appeal is hereby
condoned.
Now coming to merit of the case, the ld. counsel for the
assessee has invited our attention to the impugned
assessment order of the Assessing Officer (hereinafter referred
to as ‘AO) to point out that the quantum additions were made
by the AO on account of transfer pricing adjustments. The AO
did not agree with the contention of the assessee that it was a
small turnover company and no comparables were available,
however, the TPO himself introduced 11 comparables and
made the transfer pricing adjustments. The AO also disagreed
with the method of computation of profits made by the AO and
made certain additions by adopting 35.26% of comparative
cost ratio. The ld. Counsel further submitted that the
assessee contested aforesaid additions and the matter
travelled to the Tribunal wherein the Tribunal considering
several aspects of the case has restricted addition to Rs. 14.09
lacs as against addition of Rs. 79.84 lacs made by the TPO.
The ld. Counsel has further submitted that the assessee has
given transfer pricing study after due application of mind in
good faith and with due diligence. However, due to certain
dis-agreement with the study given by the assessee, the TPO
made adjustments which were considerably reduced by the
Tribunal and that there was no act of furnishing of inaccurate
particulars of income or concealment of income on the part of
the assessee.
ITA-1053/CHD/2018 A.Y. 2005-06 Page 3 of 4
On the other hand, ld. Sr.DR has invited our attention to
Explanation-7 to Section 271 of the Income Tax Act to state
that where adjustment is made on account of transfer pricing,
same tantamount to concealment of income.
We have considered the rival submissions. We find that
as per the provisions of Explanation-7 to Section 271 of the
Act, if it is found that the claim was made by the assessee in
good faith with due diligence, then the provisions of Section
271(1)(c) of the Act will not attract. As observed above, claim
made by the assessee has not been rejected in toto rather,
after considering the submissions of the assessee, the
additions have been reduced to a large extent. It has been
held time and again that each and every addition made into
income of an assessee does not itself tantamount to the act of
furnishing of inaccurate particulars of income or concealment
of income. Considering facts and circumstances of the case,
we do not find it a fit case for levy of penalty u/s 271(1)(c) of
the Act and the same is accordingly, deleted.
In the result, appeal of the assessee is hereby allowed.
Order dictated and pronounced in the Open Court immediately on completion of hearing on 19.02.2019.
Sd/- Sd/-
( अ�नपूणा� गु�ता ) (संजय गग�) ( ANNAPURNA GUPTA) (SANJAY GARG ) लेखा सद�य/ Accountant Member �याय�क सद�य/ Judicial Member ‘Poonam’ आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�त/ CIT 3. आयकर आयु�त (अपील)/ The CIT(A) 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.
ITA-1053/CHD/2018 A.Y. 2005-06 Page 4 of 4
आदेशानुसार/ By order सहायक पंजीकार/ Assistant Registrar