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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND MS. SUCHITRA KAMBLE
PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP This appeal by the assessee for the assessment year 2008-09 is directed against the order of learned CIT(A)-IX, New Delhi dated 30th January, 2014.
The only ground raised by the assessee is against the levy of penalty of `34,46,519/- levied by the Assessing Officer u/s 271G of the Income-tax Act, 1961.
On the date of hearing, there was a request for adjournment from the assessee’s counsel. However, no adequate reason was given for seeking the adjournment. Therefore, the assessee’s request for adjournment is refused and the appeal is decided ex parte qua the assessee.
2 ITA-1872/Del/2014
We have heard the learned DR and perused the material placed before us. Learned DR pointed out that the penalty was levied for delay in furnishing of the information relating to international transaction. The Assessing Officer levied the penalty on the basis of observation of the Assessing Officer in the transfer pricing order. He, therefore, submitted that the order of the Assessing Officer levying the penalty u/s 271G has rightly been upheld by learned CIT(A). The same should be sustained.
We have carefully considered the submissions of the learned DR. The Assessing Officer has initiated penalty proceedings u/s 271G of the Act on the basis of the order of the Transfer Pricing Officer dated 31st October, 2011 in which he has mentioned as under:-
“In view of the functional and economic analysis of assessee and of comparables, no adverse inference is drawn in respect of the international transactions undertaken by the assessee during financial year 2007-08. The documentation under Rule 10D has been received late in this office. The Assessing Officer may initiate penalty proceedings under section 271G of the Income Tax Act, 1961.”
From the above, it is evident that the information sought for by the TPO was not only furnished by the assessee but the TPO was satisfied with such details and he has observed that no adverse inference is drawn in respect of international transaction undertaken by the assessee. Therefore, no addition was made by way of transfer pricing adjustment. However, he observed that the Assessing Officer may initiate penalty proceedings because the documents under Rule 10D have been received late in his office. The Assessing Officer, on the basis of above observation of the TPO, initiated penalty proceedings and also levied penalty u/s 271G at `34,46,519/-. From a perusal of the penalty order, we find that it is not mentioned how the information furnished by the assessee was late. The Assessing Officer
3 ITA-1872/Del/2014 has not given the date of the letter by which the information was sought, the date of the service of such letter and the date on which the information is actually furnished. The Assessing Officer levied huge penalty of more than `34 lakhs simply by observing that the information furnished by the assessee was late but how it was late has not been spelled out in the order and, if it was late, by how many days. We would like to reiterate that the assessee furnished all the required information and the TPO was fully satisfied with the correctness of this information and, therefore, no transfer pricing adjustment was made. Considering the totality of above facts, in our opinion, it is not a fit case for levy of penalty u/s 271G of the Act for the following reasons :-
(i) The Assessing Officer has not pointed out how the details furnished by the assessee were late. Thus, the penalty order is vague which is unsustainable.
(ii) Even if it is presumed that the details furnished by the assessee were delayed, it has not at all prejudiced the Revenue because the TPO has duly considered those details and was fully satisfied with the details furnished by the assessee and mentioned “In view of the functional and economic analysis of assessee and of comparables, no adverse inference is drawn in respect of the international transactions undertaken by the assessee”. Therefore, even if it is accepted that there was any delay in furnishing of the information by the assessee, it is, at the most, a technical or venial breach of the provisions of the Act, for which, ordinarily, penalty should not be levied. While taking this view, we derive support from the decision of Hon’ble Apex Court in the case of Hindustan Steel Ltd. Vs. State of Orissa – [1972] 83 ITR 26 (SC), wherein their Lordships held as under:-
“Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration
4 ITA-1872/Del/2014 of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.”
In view of the above factual and legal position, we are of the opinion that learned CIT(A) was not justified in sustaining the penalty. The same is cancelled.
In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 26.04.2016.