ACIT, CHENNAI V. M/s. Nippo Batteries Co. Ltd., CHENNAI

ITA 1180/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58021 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C JOSEPH
• Assessee Lawyers: R VIJAY ARAGHAVAN S
• Keywords: Transfer pricing; Reasonable cause
• Section: 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS. 1180 & 1181/MDS/2011 A.Y. 2006-07 ASSESSEE BY : SHRI R. VIJAY ARAGHAVAN, ADVOCATES DEPARTMENT BY : SHRI A.C. JOSEPH, JC IT DATE OF HEARING : 05.03.2012 DATE OF PRONOUNCEMENT : 09.03.2012 THE A.C.I.T. COMPANY CIRCLE IV(4) CHENNAI (APPELLANT) VS. M/S NIPPO BATTERIES CO. LIMITED NO. 77, 4 TH FLOOR POTTIPATTI PLAZA NUNGAMBAKKAM HIGH ROAD CHENNAI 600 034. PAN NO. AAACI 2291 L (RESPONDENT 2 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : ITA NO. 1180/MDS/11 IS AN APPEAL FILED BY THE REVEN UE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-VI, CHEN NAI IN APPEAL NO. 352/10-11 DATED 29.03.11 FOR ASSESSMENT YEAR 20 06-07 DELETING PENALTY LEVIED U/S 271AA OF THE ACT. ITA NO. 1181/M DS/11 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CO MMISSIONER OF INCOME TAX(A)-VI, CHENNAI IN APPEAL NO. 351/10-11 D ATED 29.03.11 FOR ASSESSMENT YEAR 2006-07 DELETING PENALTY LEVIED U/S 271G OF THE ACT. 2. SHRI A.C. JOSEPH, LD. JCIT, D.R. REPRESENTED ON BEHALF OF THE REVENUE AND SHRI R. VIJAYARAGHAVAN, ADVOCATE, REPRE SENTED ON BEHALF OF THE ASSESSEE. 3. IN REGARD TO APPEAL IN ITA NO. 1180/MDS/2011, I T WAS SUBMITTED BY THE LD. DR THAT THE LD. CIT(A) HAD DELETED THE P ENALTY LEVIED U/S 271AA OF THE ACT ON THE GROUND THAT IN FORM 3CEB, D ETAILS RELATING TO 3 THE TYPES OF TRANSACTIONS AND THE MAINTENANCE OF RE CORDS AND INFORMATION AS PER THE ACT HAD BEEN FURNISHED AND T HAT NO SPECIFIC INSTANCE HAD BEEN POINTED OUT TO SHOW THAT THERE IS DIFFICULTY IN COMPUTING THE ARMS LENGTH PRICE IN RESPECT OF UNCON TROLLED TRANSACTIONS. IT WAS ALSO THE SUBMISSION THAT THE L D. CIT(A) DELETED THE PENALTY WHICH IS NOT ON A RIGHT FOOTING AND THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED. 4. IN REGARD TO APPEAL IN ITA NO. 1181/MDS/2011, I T WAS SUBMITTED BY THE LD. DR THAT THE LD. CIT(A) HAD DELETED THE P ENALTY ON SIMILAR GROUNDS AS PENALTY U/S 271AA OF THE ACT AS ALSO BY ACCEPTING THE CAUSE EXPLAINED BY THE ASSESSEE THAT THE SECRETARY OF THE COMPANY HAD LEFT THE COMPANY AND THE NEW SECRETARY, WHO JOI NED IN OCTOBER 2006, TOOK CONSIDERABLE TIME TO ADAPT TO THE NEW EN VIRONMENT. IT WAS ALSO THE SUBMISSION THAT THE LD. CIT(A) HAD DELETED THE PENALTIES BY HOLDING THAT THE VALUES OF INTERNATIONAL TRANSACTIO NS HAVE BEEN ACCEPTED AS GENUINE AND NO ADDITIONS HAVE BEEN MADE IN THE CASE OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED. 4 5. IN REPLY, THE LD. A.R. PLACED BEFORE US A COPY O F THE DECISION OF THE CO-ORDINATE DECISION OF THIS BENCH IN THE CASE OF M/S SSL-TTK LTD IN ITA NO. 544/MDS/2011 DATED 15.02.2012 WHEREIN IN REGARD TO LEVY OF PENALTY U/S 271G OF THE ACT HAD BEEN DELETED ON THE GROUND THAT SPECIFIC FAILURE OF THE ASSESSEE, IF ANY, HAS NOT B EEN POINTED OUT BY THE ASSESSING OFFICER AND IF THE REVENUE ALLEGES T HAT THERE HAS BEEN FAILURE OF THE ASSESSEE WITH REGARD TO PRODUCTION O F ANY OF THE RECORD, IT WAS REQUIRED TO POINT OUT WHICH RECORD IT HAD FA ILED TO PRODUCE AND WHETHER SUCH RECORD WAS ONE WHICH WAS PRESCRIBED U/ S 92D(1) OF THE ACT TO BE MAINTAINED BY AN ASSESSEE IN RESPECT OF I NTERNATIONAL TRANSACTIONS ENTERED INTO BY IT. THE CO-ORDINATE B ENCH OF THIS TRIBUNAL HAD ALSO CONSIDERED THE FACT THERE WAS NO ADJUSTMEN T TO ARMS LENGTH PRICE ADOPTED BY THE ASSESSEE IN THAT CASE ALSO. I T WAS ALSO THE SUBMISSION BY THE LD. A.R. THAT NO ADJUSTMENT HAD B EEN MADE IN THE CASE OF THE ASSESSEE HEREIN NOR HAS THE REVENUE POI NTED OUT AS TO WHICH IS THE RECORD WHICH HAS NOT BEEN MAINTAINED B Y THE ASSESSEE OR HAS NOT BEEN PRODUCED. IT WAS THE SUBMISSION TH AT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE UPHELD. 5 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF THE TPO IN THE PRESENT CASE PASSED U/S 92 OF THE ACT DATED 20.09.2009 CLEARLY SHOWS THAT NO ADJUSTMENTS HAVE B EEN MADE. A PERUSAL OF THE SHOW CAUSE NOTICES LEVIED U/S 271AA AND 271G SHOWS THAT THERE IS NO SPECIFIC INDICATION AS TO THE DOCU MENTS WHICH WERE NOT FURNISHED. IN FACT, THE ORDER OF THE TPO SHOWS THAT THE DETAILS WERE CALLED FOR AND THE ASSESSEE HAD SUBMITTED THE DETAILS. FURTHER PERUSAL OF THE ORDER OF THE TPO SHOWS THAT THE ASSE SSEE HAD BEEN ASKED TO PROVIDE THE DETAILS IN 30 DAYS. HOWEVER, THE DETAILS HAD BEEN PRODUCED WITH DELAY OF SIX MONTHS. A PERUSAL OF THE ORDER OF THE LD. CIT(A) CLEARLY SHOWS THAT THE REASON FOR DE LAY IN PRODUCING THE DOCUMENTS WAS THE RESIGNATION OF THE SECRETARY AND THIS CLAIM OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE. TH E ASSESSEE ADMITTEDLY IS A CORPORATE ENTITY. THE ASSESSEE CAN FUNCTION ONLY THROUGH ITS EMPLOYEES. IF AN EMPLOYEE LEAVES THE S ERVICES OF THE ASSESSEE COMPANY GETTING ANOTHER EMPLOYEE TO TAKE O VER THE JOB AND GET ACCLIMATIZED AND FAMILIAR TO THE FUNCTIONS ORIGINALLY DONE BY THE EARLIER EMPLOYEE WOULD TAKE TIME. THIS WOUL D BE A REASONABLE CAUSE. IT IS NOTICED THAT THE LD. CIT(A ) HAS ALSO ACCEPTED 6 THIS AS REASONABLE CAUSE. THE CLAIM OF THE ASSESSE E HAS ALSO NOT BEEN FOUND TO BE FALSE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS RIGHT IN DELETING BOTH THE PENALTIES U/S 271AA AND 271G OF THE ACT. OUR VIEW IS ALSO SUPPOR TED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF SSL- TTK LTD REFERRED TO SUPRA. IN THE CIRCUMSTANCES, B OTH THE APPEALS OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 09 TH MARCH, 2012. SD/- SD/- (N.S. SAINI) (GEORGE MATHA N) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 09 TH MARCH, 2012. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), CHENNAI (4) CIT, CHENNAI (5) D.R. (6) GUARD FILES