AUGUSTAN KNITWEAR P LTD.,COIMBATORE vs. ACIT, COIMBATORE

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-1, Coimbatore in ITA

ITA No.538/Mds/2015 :- 2 -:

No.122/14-15, dated 26.02.2015 for the assessment year 2011-2012

passed u/s.271AA and 250 of the Income Tax Act, 1961 (herein after

referred to as ‘the Act’).

The assessee has raised the grounds that the ld.CIT(A) has 2.

erred in confirming the penalty and relied on findings of the Assessing

Officer for delay in submission of information without considering the

genuine reasons and assessee has filed details before Transfer Pricing

Officer (TPO) and ALP was confirmed to be fair and correct.

The Brief facts of the case the assessee is in the business of 3.

textile garments including overseas transactions and the Assessing

Officer called for the details of international transaction u/s.92D of the

Act. In the course of assessment proceedings particulars were filed

with a delay of four days as the ld. Authorised Representative could not attend the hearing proceedings due to his son’s marriage on 12th

March, 2014 and further condonation petition was filed. The

Assessing Officer on the ground that the assessee has made petition

for extension of time not within the period of 30 days from date of

receipt of notice but subsequently levied penalty under provisions of

Sec.271AA of the Act at 2% of value of international transaction

demanded at �34.58 lakhs. Aggrieved by the order of the Assessing

ITA No.538/Mds/2015 :- 3 -:

Officer, the assessee assailed an appeal before the Commissioner of

Income Tax (Appeals).

Representative submitted that delay was reasonable and there is

sufficient cause. The Assessing Officer has overlooked circumstances

and levied penalty. The delay was not wonton and was due to non

availability of ld. Authorised Representative busy in performing his

son’s marriage and assessee company could file details called for

u/s.92D(1) of the Act only on 17.03.2014. As per the provision of

Sec.92D(3) of the Act, person after entering into international

transaction to furnish information within a period of 30 days from the

date of receipt of notice and the Income Tax Authorities can extend on

application by assessee for a further period not exceeding 30 days.

In the present case, the assessee company could not furnish the

information required within 30 days due to personal inconvenience of

the ld. Authorised Representative. But the ld. Commissioner of Income

Tax (Appeals) held that information called for by notice dated

06.02.2014 and the assessee has made an application for extension

after expiry of 30days and there is no justification in furnishing

information after said period and confirmed the order of the Assessing

ITA No.538/Mds/2015 :- 4 -:

Officer. Aggrieved by the order of the Commissioner of Income Tax

(Appeals) the assessee filed an appeal before the Tribunal.

reiterated his submissions made before the Assessing Officer and

appellate authority and substantiated his grounds. Further raised

additional ground that the provisions of Sec.271AA of the Act is not

invocable to the facts and circumstances of the assessee case and

next ground that the matter was referred to the Transfer Pricing

Officer and the assessee need not file details u/s.92D of the Act

before the Assessing Officer and ld. Departmental Representative has

not serious objection and was admitted. The ld. Authorised

Representative drew attention to the page 3 and 4 of paper book

where the ld. Authorised Representative son’s marriage invitation card

on 12.03.2014 was furnished and letter filed before Assessing Officer

on 13.03.2014 requesting time till 19.03.2014 and same was rejected.

In compliance to the show cause notice dated 10.03.2014, In penalty

proceedings the assessee submitted that the returned income was e-

filed and Attachments are not allowed, due to which details maintained

u/s.92D (1) of the Act relating to International transactions could not

be filed and also personal inconvenience of ld. Authorised

Representative because of son’s marriage arrangements. The assessee

ITA No.538/Mds/2015 :- 5 -:

has filed details of international transaction u/sec.92D(1) of the Act

and prayed for condonation of delay in filing details by letter to

Assessing Officer on 17.03.2014. Further, ld. Authorised

Representative argued that the notice u/s.92CA(2) of the Act was

issued by ld.TPO, Ward 1(1) to furnish the details of documents and

information as per the questionnaire and assessee Authorised

Representative appeared and furnished information to ld. TPO on

27.09.2014 in Transfer Pricing Proceedings. The ld. Authorised

Representative argued the additional ground that penalty provisions

u/s. Sec.271AA are leviable only when there is failure to maintain

information and documents and report of certain transaction but

assessee has maintained details called u/s.92D(1) of the Act.

Whereas provisions of Sec. 271G shall apply to failure to furnish

documents. And on comparing the provisions of Secs.271AA and

271G of the Act. Sec 271AA. Without prejudice to the provisions of Sec 271 or section 271BA, if any person in respect of an international transaction [or specified domestic transaction] (i) Fails to keep and maintain any such information and document as required by sub-section (1) or sub-section (2) of Section 92D. (ii) Fails to report such transaction which he is required to do so; or (iii) Maintains or furnished an incorrect information or document,

ITA No.538/Mds/2015 :- 6 -:

The Assessing Officer or Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of each international transaction (or specified domestic transaction) entered into by such person.

Sec.271G. If any person who has entered into an international transaction (or specified domestic transaction) fails to furnish any such information or document as required by sub-section (3) of Section 92D, the Assessing Officer [or the Transfer Pricing Officer as referred to in section 92CA) or the Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of the international transaction (or specififed domestic transaction) for each such failure]

The ld. Authorised Representative vehemently argued that the

provisions of Sec.271AA of the Act does not apply and Assessing

Officer has wrongly initiated penalty proceedings. Assessee has

complied to the directions of the ld.TPO referred at Page No.2 in

transfer pricing proceedings order u/s.92CA of Income Tax Act dated

7.1.2015. Where there is a reference of notice u/s.92A(2) and

assessee has complied the notice by filing details on 27.09.2014.

Without prejudice to the applicability of the provisions and the

circumstances evidencing that the ld. Authorised Representative was

busy in arrangements of his son’s marriage, the assessee has

submitted details with the ld.TPO in transfer pricing proceedings. If

penalty has to be leviable it should be under Sec.271G of the Act not

under Sec.271AA of the Act as there is no dispute about maintenance

ITA No.538/Mds/2015 :- 7 -:

of documents except delay in furnishing the details and relied on the

decision of Co-ordinate Bench in the case of ITO vs. PPN Power Generating Co. (P) Ltd in ITA No.774/Mds/2007, dated 21st October,

2011 and pleaded for deletion of penalty.

Contra, the ld. Departmental Representative relied on the 6.

order of the Assessing Officer and the findings of the Commissioner of

Income Tax (Appeals) and supported his arguments that penalty shall

be exercisable u/s.271AA of the Act and prayed for dismissal of appeal.

We heard the rival submissions of both the parties and 7.

perused the material on record and judicial decisions cited. The fact

that the assessee company is covered under TPO provisions and the

Assessing Officer referred the matter to the ld.TPO and based on ld.

TPO order dated 07.01.2015 passed Assessment order u/s.143(3) r.w.s

92CA(3) of the Act dt 12.03.2015. The assessee has entered

international transactions and Reported in Form 3CEB at Arm’s length

Price and there is no modification in the ALP adopted by the assessee

as per TPO order u/sec. 92A(3) dated 07.01.2015. The assessee in

response to notice could not file the details of international

transactions within a period of 30 days and adjournment letter was

ITA No.538/Mds/2015 :- 8 -:

filed by the assessee for time as the auditor of the company was busy

in arrangements of his Son’s marriage but subsequently by letter dated

17.02.2014 furnished information of international transactions. But the

ld. Assessing Officer on the ground that the assessee has not made

any application for extension of time with 30 days nor filed any details

and levied penalty u/s.271AA of the act. We on perusing order

u/s.92CA dated 07.01.2015 passed by TPO at page no.10 of paper

book at para 2, the TPO observed as under:-

‘’2. Accordingly, a notice u/s.92CA(2) was issued to the assessee on 25.06.2014, to furnish the details of documents and information called for, in an enclosed questionnaire. The assessee submitted the details called for on 27.09.2014. Shri. C.A Venkatesan, Authorised Representative of the assessee company appeared on various dates and discussed the case.

The ld. Authorised Representative filed paper book containing the

rejection of adjournment petition filed and also marriage invitation

card of ld. Authorised Representative son’s to prove that there is a

bonafide delay which is not wonton and reasonable. The ld. TPO has

not made upward adjustment of Arms Length price in order u/sec

92CA of the Act and the same was brought on record by the

Assessing Officer in the assessment order r u/s.143(3) r.w.s 144(c) of

the Act. We are of the opinion that reasons specified by the assessee

in not filing the said information u/s.92CD within 30 days looks

ITA No.538/Mds/2015 :- 9 -:

genuine considering the technicalities of Transfer Pricing as the

Auditor has to explain and clarify on international transaction to the

Assessing Officer. The factual evidence referred in paper book in

respect of marriage of ld. Authorised Representative son’s and the

Assessing Officer has rejected the adjournment petition filed stating

the reasons which is not a good practice as the Child’s marriage is a

very important occasion in parents life time. The assessee company

made an application alongwith details of international transaction and

filed the information on record with Assessing Officer. The ld.

Authorised Representative relied on Co-ordinate Bench decision of PPN

Power Generating Co. (P) Ltd in ITA No.774/Mds/2007, were held

where TPO had not recommended any revision to the value of

international transactions on the basis of supporting documents

penalty cannot be levied. We considering the apparent facts evidence

provisions of law and the genuine grounds for delay in filing the

information and also no upward revision of Arms Length Price by the

TPO and the supporting decision, direct the Assessing Officer to delete

the penalty. Since we have decided on the basis of main ground

raised by the assessee, in our opinion no necessity of adjudicating

additional ground raised by the assessee. Accordingly, the appeal of

ITA No.538/Mds/2015 :- 10 -:

the assessee is allowed.

Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (G. PAVAN KUMAR) (CHANDRA POOJARI) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated:05.02.2016 KV

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF