KENT ENGINEERING INDIA PRIVATE LIMTED ,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEAL), MUMBAI

Ground No. 5-On the facts and in the circumstances of the case and in law, without prejudice to the other grounds of appeal, the learned TPO erred in not appreciating that the arm's length price of the international transactions under dispute was computed by the Appellant in accordance with the provisions of Section 92C of the Act.

Ground No. 6-On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding /confirming the action of the Learned AO in erred in appreciating that the additions made in the assessment order is merely difference of opinion between the Appellant and the Learned AO/TPO in computing the arm's length price of the international transactions entered into by the Appellant.

Ground No. 7-On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding /confirming the action of the Learned AO erred on facts and in law in not appreciating that the Appellant has acted in good faith and with due diligence and that the conditions precedent for invoking Explanation 7 to Section 271(1)(c) did not exist on the facts of this case.

Ground No. 8-On the facts and in the circumstances of the case and in law, the learned AO and the Hon'ble CIT(A) further erred in holding that the Appellant failed to bring any material on record, which could establish that, the Appellant has furnished inaccurate particulars of its income under section 271(1)(c) of the Act.

Ground No. 9-On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding / confirming the action of the Learned AO erred in facts and circumstances of the case and in law in levying of penalty under section 271(1)(c) of the Act without establishing any mens rea on part of the Appellant without which penalty could not have been levied.

Ground No. 10-Without prejudice to the grounds 1 to 9 above, the Learned AO and the Hon'ble CIT(A) erredin calculating the penalty as Rs. 8,811,560 instead of Rs. 8,411,035. The Appellant craves leave to add, alter, amend and/or withdraw any of the above grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appealas per law.”

The learned Authorized Representative vehemently argued and 04. submitted a short paper book (in short, APB) which is kept in record.

The learned Authorized Representative first argued the legal issue 05. related to maintainability of penalty order under Section 271(1)(c) of the Act. The learned Authorized Representative invited our attention in appellate order, Para 6, which is reproduced as below: - “6. In view of the above facts, I am satisfied that the assessee has furnished inaccurate particulars of income overstating its current year's loss by Rs.2,59,23,978/- and as such, it is a fit case for imposing penalty u/s. 271(1)(c) of the Act. Accordingly, I hereby impose a minimum penalty of Rs.88,11,560/- being 100% of the amount of tax sought to be evaded by reason of concealment of particulars /furnishing of inaccurate particulars of such income. The penalty u/s 271(1)(c) is worked out at Rs. 88,11,560/- being 100% and Rs.2,64,34,680/- being 300% of the tax sought to be evaded.

The penalty order u/s. 271(1)(c) of the Income Tax Act, 1961 is passed after obtaining approval from the Jt.CIT, Range-11(2), Mumbai u/s. 274(2)(b) of the Income Tax Act, 1961, vide order no. JCIT- 11(2)/Penalty Approval/2016-17 dated 29.11.2016.”

The learned Authorized Representative further invited our attention 06. in APB page no. 59, to notice issued by the learned Assessing Officer under Section 274 read with section 271(1)(c) of the Act date of notice 12thMay, 2016, copy of the notice is duly reproduced below: - “NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT. 1961.

PEN./ PAGE NO. 2012-13

DATE 12.05.2016 ΡΑΝ ΝΟ. ΛAACR1966M TO, M/S. SNC-Lavalin Engineering India Pvt. Ltd. 2nd Floor, A Wing, Trade Star, J.B. Nagar, Kondivita Lane, Andheri-Kurla Road, Marol, Andheri (E), Mumbai- 400 059. Sir/Madam, Whereas in the course of proceedings before me for the Assessment year 2012-13 it appears that you have You are hereby requested to appear before me on 15/06/2016 at 11.45 AM/PM and show cause why an order imposing a penalty on you should not be made under Section 271(1)(c) of the Income Tax Act, 1961. If no one attends this office on the said date of hearing, the case shall be decided on the basis o material available on records.

Yours faithfully,

Sd/- (ARJU GARODIA) Jt. Commissioner of Income Tax, (OSD) Circle -11(2)(2), Mumbai”

The learned Authorized Representative argued and mentioned that in 07. the notice, U/s 274 r.w.s. 271(1)(c) of the Act which is initiated the penalty and also in the penalty order the learned Assessing Officer has not mentioned reason of penalty specifically whether the ‘concealment’ or ‘in accurate particulars of income’. The issue was duly taken care of before the learned Assessing Officer during the penalty proceedings and objection was filed. The copy of the letter of objection dated 15thJune, 2016, is annexed to page no.7 of APB. The same legal ground was agitated before the learned CIT (A) and the objection was filed by the assessee during the appellate proceedings, but none was adjudicated this legal issue. The learned Authorized Representative respectfully relied on the decision of Hon'ble Jurisdictional HC in case of Mohd. Ferhan A Sheikh Vs. JCIT 125 taxman.com 253 (Bom).

The learned Departmental Representative vehemently argued and 08. fully relied on the order of Revenue Authorities.

Order pronounced in the open court on 16.07.2024.