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Income Tax Appellate Tribunal, DELHI BENCHES: ‘B’, NEW DELHI
Before: SHRI N.K.BILLAIYA & SMT. BEENA A PILLAI
ORDER PER BEENA A PILLAI, JUDICIAL MEMBER
Present penalty appeal has been filed by revenue against order dated 27/01/2016 passed by Ld. CIT (A)-20, New Delhi for A.Y. 2011-12, on following grounds of appeal: “I. In the facts and circumstances of the case the Ld.CIT(A) has erred in deleting the penalty u/s 271AA of the Income Tax Act, 1961 of Rs.20,94,321/-. II. That the appellant craves leave to add, amend or modify grounds of appeal at any time. Relief claimed in appeal: As per grounds of appeal and the order passed by Ld.CIT(A)-XX, New Delhi be quashed.”
Brief facts of case are as under: It has been submitted that assessee is a joint venture between M/s. B.Seenaiah & Co. Projects Ltd., and M/s. C&C Constructions Pvt. Ltd. For year under consideration. Assessee filed its return of income on 29/09/2011, declaring total income of ₹136,53,34,780/-. Vide order dated 31/03/2014 Ld.AO passed order under section 143(3) of the Income Tax Act, 1961 (the Act) and assessee’s income was assessed at returned income filed. 2.1. Thereafter vide order dated 29/09/2014 Ld. A.O. levied penalty of ₹ 20,94,321/-under section 271AA of the Act, on the ground that, assessee failed to maintain adequate documentation in respect of international transaction entered into during year under consideration. 2.3. On appeal before Ld.CIT (A), penalty levied was deleted.
3. Aggrieved by order of Ld.CIT (A), revenue is in appeal before us now. 3.1. Ld.Sr.DR placed reliance upon order of Ld.AO and submitted that under Rule 10 E assessee was required to furnish report regarding international transaction entered during year in Form 3 CEB and verified in the manner indicated. He submitted that in the language of section 92 of the Act, it is clear that report in Form 3 CEB is to be filed by specified date, that is, due date for filing of return. Ld.AO was of the opinion that documentation filed by assessee was inadequate and did not satisfy statutory requirement as per rule 10 D (1) read with section 92D (1) of the Act. He therefore rightly levied penalty under section 271AA of the Act.
3.2. On the contrary Ld.Counsel referring to paragraph 4.3.1 and 4.3.2 of impugned order by Ld.CIT(A) submitted that assessee vide letter dated 13/03/2014 furnished contemporaneous documents maintained in terms of section 92D of the Act, along with detailed write-up on said transaction. He submitted that upon consideration of these documents, Ld. AO concluded assessment under section 143(3) of the Act and returned income, accepting arm’s-length nature of international transaction entered into by assessee with its AE during year under consideration. He therefore submitted that Ld.A.O.’s action of levy of penalty under section 271AA is beyond jurisdiction and bad in law insofar as no specific direction/reference was made to initiate penalty proceedings under said section in assessment order passed under section 143(3) of the Act for aforesaid transaction. It has also been submitted that international transaction entered into by assessee was considered to be at arm’s length and no adjustment was made by Ld.AO and, therefore, there was no basis for levying penalty under section 271 AA of the Act.
We have perused submissions advanced by both sides in light of records placed before us. 4.1. Ld.CIT(A) deleted penalty by observing as under: “4.3.1. I have considered the submissions made by the appellant and also judicial citations relied upon by it. I have also considered the assessment order. Following facts have emerged:
1. 1. That the appellant has shown international transaction during the year under consideration declaring an income of Rs.1,36,53,34,780/-.
2. That the AO has accepted the return income in the assessment order passed u/s 143(3) of the Act.
That the assessee has filed details as and when asked during the assessment proceedings.
4. That the appellant has not filed Form 3CEB within the prescribed time and for this lapse penalty u/s 271BA was imposed. 4.3.2. I have considered the above mentioned facts. In order to levy penalty u/s 271AA, following conditions are required to be taken into account. fails to keep and maintain any information and document as (a) required under sub-section (1) or (2) of section 92D of the Act; or fails to report any international/specified domestic (b) transaction; or maintains or furnishes incorrect information or document. (c) In this particular case, the A.O after taking into account the evidences and submissions made by the assessee during the assessment proceedings had accepted the returned income declared by the assessee. It means that the details submitted by the assessee during assessment proceedings were found sufficient and adequate to complete the assessment proceedings and lead to acceptance of the returned income under section 143(3) of the Act. I have also taken into account judicial rulings cited by the appellant during the appellate proceedings. I have also taken into account the fact that in the penalty orders passed by the AO, there is nothing to suggest as to which particular information or document was not submitted by the assessee and what impact did it created which adversely affected in finalising the assessment proceedings. In view of the facts and circumstances of the case, I don’t find it a fit case for levying of penalty u/s 271AA of the Act. Accordingly, penalty levied u/s 271AA is deleted. Appellant’s ground of appeal is allowed.”
4.2. From the above, it is observed that assessee failed to file Form 3 CEB within prescribed period, for which Ld.AO has separately imposed penalty under section 271BA. 4.3. However, it is observed that at time of assessment, Ld.AO was in possession of these documents, based upon which, assessment order has been passed by holding international transaction to be at arm’s length.
We have perused Section 271AA of the Act, wherein penalty is leviable for failure to keep and maintain information and documents etc., in respect of international transaction or specified domestic transaction. 5.1. In facts of present case, it is observed that assessee has maintained documents/information required as per section 92D of the Act, regarding international transaction, more particularly described under Rule 10 D of Income tax Rules 1962, which has been filed before the Ld.AO in Form 3CEB, vide letter dated 13/03/2014. 5.2. Admittedly, Ld.AO accepted and took on record prescribed documents, that are submitted by assessee which forms part of paper book filed before us, more particularly placed at page 2- 152. Further, having regard to these documents Ld.AO, accepted international transaction entered into by assessee with its AE to be at arm’s length price, and no adjustment whatsoever has been made. Ld.AO has not expressed any difficulty in examining correctness of price adopted by assessee in respect of international transaction with AE. Thus in our considered opinion there is no justification for imposition of penalty under section 271 AA of the Act. We, therefore do not find any infirmity in the order of Ld.CIT(A) and the same is upheld.
Accordingly grounds raised
by revenue stands dismissed.
7. In the result appeal filed by revenue stands dismissed. Order pronounced in the open court on 14th February, 2019. Sd/- Sd/- (N.K.BILLAIYA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dt. 14th February, 2019 GMV