SAINT GOBAIN ABRASIVES INC,UNITED STATES OF AMERICA vs. ASSISTANT COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION), CIRCLE - 4(2)(1), MUMBAI

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ITA 4236/MUM/2023Status: DisposedITAT Mumbai30 April 2024Bench: the Ld. CIT(A) but without any success. 5. Representatives of both the sides were heard at length. Case records carefully perused. The undisputed fact is that the assessee is a resident of USA and being a foreign national was under a bonafide belief that it is not required to file return of income in India. It is also true that pursuant to the notice under section 148 of the Act the assessee filed its return of income declaring income of ₹.3,55,37,509/-. This income was received by the asse1 pages

AI SummaryAllowed

Facts

The assessee, a foreign company from the USA, did not file its return of income initially but did so upon receiving a notice under section 148. The Assessing Officer levied a penalty under section 271BA for failure to furnish an Accountant's Report under section 92E, as the assessee had transactions with its Indian associated enterprise. The assessee appealed this penalty to the CIT(A) but was unsuccessful.

Held

The Tribunal observed that the assessee held a bonafide belief that it was not required to file a return of income due to TDS at source. It was also noted that the assessee did furnish the report under section 92E during the assessment proceedings. Considering these facts, the Tribunal found the case unsuitable for a penalty under section 271BA.

Key Issues

Whether the penalty levied under section 271BA for non-furnishing of a report under section 92E is sustainable when the assessee acted under a bonafide belief and eventually furnished the report during assessment proceedings.

Sections Cited

271BA, 92E, 148, 143(3), 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI RAHUL CHAUDHARY, HONBLEShri Akram Khan & Shri Jinit Shah Shri Veerbhandra Mahajan

For Appellant: Shri Akram Khan &, Shri Jinit Shah, Shri Veerbhandra Mahajan

Pronounced: 30.04.2024

Date of conclusion of Hearing : 29.04.2024 Date of Pronouncement : 30.04.2024 O R D E R PER NARENDRA KUMAR BILLAIYA (AM)

This appeal by the assessee is preferred against the order of Learned Commissioner of Income-Tax (Appeals)-58, Mumbai [hereinafter in short “Ld. CIT(A)”] dated 28.09.2023 pertaining to A.Y.2011-12. (A.Y: 2011-12) Saint Gobain Abrasives Inc 2. The solitary grievance of the assessee is that the Ld. CIT(A) erred in confirming the levy of penalty under section 271BA of Income-tax Act, 1961 (in short “Act”) amounting to ₹.1,00,000/-.

Briefly stated the facts of the case are that the, assessee is a Foreign Company incorporated and resident in USA. It did not file its return of income and therefore notice under section 148 of the Act was issued by the Assessing Officer. In response to which the assessee filed its return of income. While scrutinizing the return of income the Assessing Officer noticed that the assessee had transaction with its Indian AE and therefore the assessee should have filed Accountant’s Report under section 92E in Form 3CEB. On finding that the assessee did not file the report, the Assessing Officer initiated the penalty proceedings under section 271BA for failure to furnish report under section 92E of the Act and levied penalty of ₹.1,00,000/-.

Assessee carried the matter before the Ld. CIT(A) but without any success.

Representatives of both the sides were heard at length. Case records carefully perused. The undisputed fact is that the assessee is a Page No. 2 (A.Y: 2011-12) Saint Gobain Abrasives Inc resident of USA and being a foreign national was under a bonafide belief that it is not required to file return of income in India. It is also true that pursuant to the notice under section 148 of the Act the assessee filed its return of income declaring income of ₹.3,55,37,509/-. This income was received by the assessee as Royalty which was subjected to TDS @15% as per the Article 12 of India – USA DTAA. We find that the assessment has been framed under section 143(3) r.w.s. 147 of the Act at the returned income of the assessee. This shows that no Transfer Pricing adjustment has been made by the Assessing Officer in framing the assessment.