HSBC Electronic Data Processing India P. Ltd, Hyderabad V. DCIT Circle 2(2), Hyderabad

ITA 1070/HYD/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69750 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBASHREE ANANTH KRISHNAN
• Assessee Lawyers: SAMPATH RAGHUNATHAN
• Keywords: Transfer pricing; Opportunity of being heard

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1070 & 1071/HYD/2011 ASSESSMENT YEARS 2003-2004 & 2004-2005 HSBC ELECTRONIC DATA PROCESSING INDIA PRIVATE LIMITED HYDERABAD-500 081 PAN AAACH8235M VS. DCIT, CIRCLE 2 (2) HYDERABAD (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI SAMPATH RAGHUNATHAN (A.R.) FOR RESPONDENT : SMT SUBASHREE ANANTH KRISHNAN (D.R.) DATE OF HEARING : 28-08-2013 DATE OF PRONOUNCEMENT : 28-08-2013 ORDER PER SAKTIJIT DEY, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE ORDER OF THE CIT(A)-III, HYDERABAD FOR THE ASSESSMENT YEARS 20 03-04 & 2004-05. SINCE, COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY SINGLE CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. IN THESE APPEALS, THE ASSESSEE HAS CHALLENGED THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PER USED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTH ORITIES. BRIEFLY, THE FACTS OF THE CASE ARE, FOR THE ASSESSMENT YEARS 2003-2004 AND 2004-05, ASSESSMENT ORDERS WERE PASSED DETERMINING INCOME AT A MUCH HIGHER FIGURE THAN WHAT WAS RETURNED BY THE ASSESSEE, ON ACCOUNT O F ADDITIONS MADE BASICALLY DUE TO TRANSFER PRICING ADJUSTMENTS. THOUGH THE CIT(A) GRANTED PARTIAL RELIEF FOR BOTH THE ASSESSMENT YEARS, IT HOW EVER, DID NOT SUBSTANTIALLY REDUCE THE INCOME DETERMINED. THE ASSESSEE THEREFOR E, PREFERRED APPEALS BEFORE THE ITAT AGAINST THE ORDERS PASSED BY THE CIT (A). DURING THE 2 ITA.NO.1070 & 1071/HYD/2011 HSBC ELECTRONIC DATA PROCESSING (I) LTD. PENDENCY OF THE APPEALS BEFORE THE TRIBUNAL, THE ASS ESSING OFFICER TOOK PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY PASSED ORDERS FOR BOTH THE AFORESAID ASSE SSMENT YEARS IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE PENA LTY ORDERS HAVING BEEN CONFIRMED BY THE CIT(A), THE ASSESSEE IS IN APPEAL B EFORE US. 3. IN THE COURSE OF HEARING, THE LEARNED AR SUBMITT ED THAT THE QUANTUM APPEALS, IN THE MEAN TIME, HAVE BEEN DECIDED BY THE TRIBUNAL GRANTING RELIEF TO THE ASSESSEE HENCE THE PENALTY ORDERS CANNOT BE S USTAINED. 4. WE HAVE PERUSED THE ORDERS PASSED BY THE ITAT, HYD ERABAD BENCH IN ITA.NO.420/HYD/2007 DATED 28.6.2013 FOR THE ASSESSME NT YEAR 2003-04 AND ITA.NO.76/HYD/2008 DATED 28.6.2013 FOR THE ASSES SMENT YEAR 2004- 05. AS CAN BE SEEN FROM THE AFORESAID ORDERS, FOR T HE ASSESSMENT YEAR 2003- 2004, THE ITAT WHILE ACCEPTING ASSESSEES CONTENTION WITH REGARD TO ONE OF THE COMPARABLES, VISUAL INFORMATION TECHNOLOGIES LT D AND DIRECTED THE ASSESSING OFFICER TO EXCLUDE IT, SO FAR AS THE OTHER COMPARABLES AND SOME OTHER ISSUES ARE CONCERNED, MATTER HAS BEEN REMITTE D TO THE ASSESSING OFFICER FOR DETERMINING THE ALP AFRESH IN THE LIGHT OF THE OBSERVATIONS MADE BY THE TRIBUNAL. SIMILARLY, IN CASE OF ASSESSMENT YEAR 2004-2005 ALSO, THE ISSUES RAISED RELATING TO SELECTION OF COMPARABLES HAVE BEEN REMITTED FOR FRESH CONSIDERATION OF THE ASSESSING OFFICER AND TH EREAFTER, TO DETERMINE THE ALP. THEREFORE, FOR BOTH THE ASSESSMENT YEARS, THE I SSUES IN DISPUTE RELATING TO ASSESSMENT ORDERS PASSED HAVING BEEN REMITTED TO THE FILE OF THE ASSESSING OFFICER; THE PRESENT PENALTY ORDERS PASSE D CANNOT SURVIVE. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER PASSED B Y THE CIT(A) FOR BOTH THE ASSESSMENT YEARS AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. ONLY AFTER GIVING EFFECT TO THE ORDERS OF T HE TRIBUNAL IN THE QUANTUM APPEAL, IF AT ALL IT IS WARRANTED, THE ASSESSING OF FICER MAY CONSIDER THE ISSUE OF IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. OF COURSE, IT GOES WITHOUT SAYING THAT THE ASSESSING OF FICER SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSE E, IF AT ALL HE INTENDS TO IMPOSE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3 ITA.NO.1070 & 1071/HYD/2011 HSBC ELECTRONIC DATA PROCESSING (I) LTD. 5. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2013. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 28 TH AUGUST, 2013. VBP/- COPY TO 1. HSBC ELECTRONIC DATA PROCESSING INDIA PRIVATE LIMIT ED, HSBC HOUSE, PLOT NO.8, SURVEY NO.64 (PART), HITECH CITY LA YOUT, MADHAPUR, HYDERABAD-500 081. PAN AAACH8235M 2. DCIT, CIRCLE 2(2), HYDERABAD. 3. CIT(A) - I II , HYDERABAD. 4. CIT - II , HYDERABAD 5. DR B BENCH, ITAT, HYDERABAD