M/s Rakhra Technologies Pvt. Ltd., Patiala V. ACIT, Circle, Patiala

ITA 1053/CHANDI/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6495 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Transfer pricing
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH , ! '# $ % & '# , () BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER & SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1053/CHD/2018 / ASSESSMENT YEAR : 2005-06 M/S RAKHRA TECHNOLOGIES P.LTD., KARTAR VILLA, VILLAGE-RAKHRA, DISTT. PATIALA. THE ACIT, CIRCLE, PATIALA. ./ PAN NO: AACCR1663H / APPELLANT / RESPONDENT ! / ASSESSEE BY : SHRI TEJ MOHAN SINGH ' ! / REVENUE BY : SHRI MANJIT SINGH, SR.DR # $ %/ DATE OF HEARING : 19.02.2019 &'() %/ DATE OF PRONOUNCEMENT : 19.02.2019 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 04.05.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS)PATIALA, [HEREINAFTER REFERRED TO AS CIT(A)] RELATING TO ASSESSMENT YEAR 2005-06 AGITATING CONF IRMATION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 'THE ACT'). 2. THE APPEAL IS BARRED BY THREE DAYS. THE ASSESSE E IN THIS RESPECT HAS MOVED SEPARATE APPLICATION FOR CONDONAT ION OF DELAY WHEREIN IT HAS BEEN PLEADED THAT DESPITE DUE DILIGENCE, THE APPEAL COULD NOT BE FILED WITHIN STIPULATED PER IOD AND THAT DUE TO THE REASON BEYOND THE CONTROL OF THE ASSESSE E, THERE OCCURRED A DELAY OF THREE DAYS. ITA-1053/CHD/2018 A.Y. 2005-06 PAGE 2 OF 4 3. CONSIDERING SHORTNESS OF THE DELAY PERIOD AND TH E REASONS EXPLAINED, DELAY IN FILING THE PRESENT APPE AL IS HEREBY CONDONED. 4. NOW COMING TO MERIT OF THE CASE, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE IMPUGNED ASSESSMENT ORDER OF THE ASSESSING OFFICER (HEREINAF TER REFERRED TO AS AO) TO POINT OUT THAT THE QUANTUM ADDITIONS WERE MADE BY THE AO ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT S. THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE T HAT IT WAS A SMALL TURNOVER COMPANY AND NO COMPARABLES WERE AVAI LABLE, HOWEVER, THE TPO HIMSELF INTRODUCED 11 COMPARABLES AND MADE THE TRANSFER PRICING ADJUSTMENTS. THE AO ALSO DISAGREED WITH THE METHOD OF COMPUTATION OF PROFITS MADE BY T HE AO AND MADE CERTAIN ADDITIONS BY ADOPTING 35.26% OF COMPAR ATIVE COST RATIO. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE CONTESTED AFORESAID ADDITIONS AND THE MATT ER TRAVELLED TO THE TRIBUNAL WHEREIN THE TRIBUNAL CONS IDERING SEVERAL ASPECTS OF THE CASE HAS RESTRICTED ADDITION TO RS. 14.09 LACS AS AGAINST ADDITION OF RS. 79.84 LACS MADE BY THE TPO. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT THE ASSE SSEE HAS GIVEN TRANSFER PRICING STUDY AFTER DUE APPLICATION OF MIND IN GOOD FAITH AND WITH DUE DILIGENCE. HOWEVER, DUE TO CERTAIN DIS-AGREEMENT WITH THE STUDY GIVEN BY THE ASSESSEE, THE TPO MADE ADJUSTMENTS WHICH WERE CONSIDERABLY REDUCED BY THE TRIBUNAL AND THAT THERE WAS NO ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. ITA-1053/CHD/2018 A.Y. 2005-06 PAGE 3 OF 4 5. ON THE OTHER HAND, LD. SR.DR HAS INVITED OUR ATT ENTION TO EXPLANATION-7 TO SECTION 271 OF THE INCOME TAX ACT TO STATE THAT WHERE ADJUSTMENT IS MADE ON ACCOUNT OF TRANSFE R PRICING, SAME TANTAMOUNT TO CONCEALMENT OF INCOME. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER THE PROVISIONS OF EXPLANATION-7 TO SECTION 2 71 OF THE ACT, IF IT IS FOUND THAT THE CLAIM WAS MADE BY THE ASSESSEE IN GOOD FAITH WITH DUE DILIGENCE, THEN THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT WILL NOT ATTRACT. AS OBSERVED ABOVE, CLAIM MADE BY THE ASSESSEE HAS NOT BEEN REJECTED IN TOTO RATHER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ADDITIONS HAVE BEEN REDUCED TO A LARGE EXTENT. IT HAS BEEN HELD TIME AND AGAIN THAT EACH AND EVERY ADDITION MA DE INTO INCOME OF AN ASSESSEE DOES NOT ITSELF TANTAMOUNT T O THE ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF INCOME. CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND IT A FIT CASE FOR LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT AND THE SAME IS ACCORDINGLY, DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMMEDIATELY ON COMPLETION OF HEARING ON 19.02.2019. SD/- SD/- ( $ % & '# ) ( ) ( ANNAPURNA GUPTA) (SANJAY GARG ) () / ACCOUNTANT MEMBER , / JUDICIAL MEMBER POONAM *'+ ,- .-/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. * * # // CIT 4. * * # / ()/ THE CIT(A) 5. -23 4, * % *4, 67839/ DR, ITAT, CHANDIGARH 6. 38 :$/ GUARD FILE ITA-1053/CHD/2018 A.Y. 2005-06 PAGE 4 OF 4 *'+ # / BY ORDER ; ' / ASSISTANT REGISTRAR