Emergys Software (P) Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1327/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4488 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 23-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-05-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S DEEPA
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 92B; 92E

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , J UDICIAL MEMBER I.T.A.NO S . 1326 & 1327 /MDS/2016 ASSESSMENT YEAR S :20 1 0 - 11 & 2011 - 12 M/S. EMERGYS SOFTWARE (P) LTD., 98A, 4 TH FLOOR, AURAS CORPORATE CENTRE, CHENNAI 600 004. [PAN: AAACE9458P] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(1), CHENNAI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. S. DEEPA, C.A. / RESPONDENT BY : SHRI SHIVA SRINIVAS , J CIT / DATE OF HEARING : 27 . 0 2 .201 7 / DATE OF P RONOUNCEMENT : 16 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH THE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 6 , CHENNAI DATED 2 6 . 0 2 .201 6 RELEVAN T TO THE ASSESSMENT YEAR S 20 1 0 - 11 AND 2011 - 12 , WHEREIN THE ASSESSEE HAS CHALLENGED CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271BA OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. BOTH T HE APPEALS OF THE ASSESSEE ARE FOUND TO HAVE BEEN FILED LATE BY 1 6 DAYS IN FILING THE APPEALS. BY FILING CONDONATION PETITION IN SUPPORT OF AN I.T.A. NO S . 1326 & 1327 /M/16 2 AFFIDAVIT, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT DUE TO INADVERTENCE THE APPEALS WERE NOT FILED IN TIME AND PLEADED THE DELAY WAS NEITHER WILFUL NOR WANTON AND REQU ESTED FOR CONDONING THE SHORT DELAY AND TO ADMIT THE APPEAL S FOR HEARING. THE LD. DR DID NOT SERIOUSLY OBJECT TO THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE . ACCORDINGLY, WE CONDONE THE DELAY OF 16 DAYS IN FILING THE APPEAL S AND ADMIT THE APPEAL S F OR HEARING. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN SALES OF COMPUTER SOFTWARE AND FILED ITS RETURN OF INCOME ON 04.10.2010. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 15.04.2011, DETERMINING REFUND OF .25,210/ - . THEREAFTER, THE CASE OF THE ASSESSEE HAS BEEN SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 26.08.2011 AND SERVED ON THE ASSESSEE ON 05.09.2011. IN RESPONSE THERETO, THE ASSESSEE HAS FILLED ALL DETAILS . AFTER VE RIFICATION OF DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 28.03.2013 AFTER MAKING VARIOUS ADDITIONS. 3.1 IN THE PENALTY ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD INTERNATIONAL TRANSACTION OF THE NATURE REFERRED TO IN SECTION 92B OF THE ACT, WHICH REQUIRED THAT A REPORT ON THE SAME BE FURNISHED IN ACCORDANCE WITH SECTION 92E OF THE ACT I.E., ON OR BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME AS SPECIFIED IN SECTION 139( 1) OF THE ACT. THIS MEANS THAT THE ASSESSEE OUGHT TO HAVE FILED THE REPORT BY 30.10.2010. I.T.A. NO S . 1326 & 1327 /M/16 3 HOWEVER, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS FILED THE REPORT ONLY ON 09.11.2012 I.E., A DELAY OF ALMOST TWO YEARS. A NOTICE UNDER SECTION 271BA W AS THEREFORE ISSUED ON 21.11.2012 REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY FOR FAILURE TO FILE THE REPORT UNDER SECTION 92E SHOULD NOT BE INITIATED . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF .1,00,000/ - UNDER SECTION 271BA OF THE ACT DATED 24.12.2012 FOR FAILURE TO FURNISH THE REPORT AS PER SECTION 92E OF THE ACT. 4. ON SIMILAR FACTS AND CIRCUMSTANCES, FOR THE ASSESSMENT YEAR 2011 - 12 ALSO, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271BA OF THE ACT. 5 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND CONSIDERING THE PROVISIONS OF ACT, THE LD. CIT(A) DISMISSED BOTH THE APPEALS FILED BY THE ASSESSEE. 6. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY REITERATING THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW, THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT FILING OF ATTACHMENT OF REPORT IS NO T POSSIBLE WHILE FILING RETURNS THROUGH ONLINE, THE ASSESSEE WAS UNABLE TO FILE THE REPORT ALONG WITH THE RETURN. IT WAS ALSO SUBMITTED THAT THE REPORT WAS OBTAINED WITHIN DUE DATE AND WHEN THE ASSESSEE LEARNED THAT THE I.T.A. NO S . 1326 & 1327 /M/16 4 REPORT WAS TO BE FILED MANUALLY, THE SAME WAS FILED VOLUNTARILY PRIOR TO COMPLETION OF ASSESSMENT. IT WAS FURTHER SUBMITTED THAT THERE WAS NO TRANSFER PRICING ADJUSTMENT AND MOREOVER, THERE WAS NO SUCH INTERNATIONAL TRANSACTIONS WITH AES UNREPORTED IN THE FORM 3CEB WARRANTING DEFAULT OF THE ASSESSEE AND THERE WAS ALSO NO REVENUE LOSS TO THE DEPARTMENT. IT WAS ALSO SUBMITTED THAT FORM 3CEB REPORT FOR BOTH THE ASSESSMENT YEARS WAS FILED WELL BEFORE THE COMPLETION OF THE ASSESSMENT AND PLEADED THAT PENALTY UNDER SECTION 271BA OF THE ACT IS NOT W ARRANTED FOR BOTH THE ASSESSMENT YEARS. THE LD. COUNSEL HAS P LEADED THAT DUE TO INADVERTENT MISTAKE, THE ASSESSEE SHOULD NOT BE PENALIZED AND PRAYED THAT THE PENALTY LEVIED FOR BOTH THE ASSESSMENT YEARS BE DELETED. 7. ON THE OTHER HAND, THE LD. DR STRON GLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE MAIN REASON FOR LEVYING PENALTY UNDER SECTION 271BA OF THE ACT IS THAT THE ASSESS EE HAS NOT FILED FORM 3ECB. SINCE THE ASSESSEE HAD INTERNATIONAL TRANSACTIONS IN THE NATURE REFERRED TO IN SECTION 92B OF THE ACT, WHICH ARE REQUIRED TO BE REPORTED IN FORM 3CEB, AS REQUIRED UNDER SECTION 92E OF THE ACT AND GOT THE SAME AUDITED. WHETHER TH E INTERNATIONAL TRANSACTIONS ARE LESS OR MORE, THE ASSESSEE IS REQUIRED TO DOCUMENT THE DETAILS IN FORM 3CEB AND SHOULD GET IT I.T.A. NO S . 1326 & 1327 /M/16 5 AUDITED. IN THIS CASE, AS PER THE ASSESSEE, THE TRANSFER PRICING AUDITING WAS DONE ON 08.09.2010 FOR THE ASSESSMENT YEAR 2010 - 11 AND 18.08.2011 FOR THE ASSESSMENT YEAR 2011 - 12, BUT INADVERTENTLY THE SAME WERE NOT FILED MANUALLY BEFORE DUE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, WHERE, THE ASSESSEE WAS REQUIRED TO FILE THE SAME BY 30.10.2010. IT WAS TH E SUBMISSION OF THE ASSESSEE THAT BEFORE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE HAS FILED FORM 3CEB BEFORE THE ASSESSING OFFICER AND THIS FACT WAS NOT DISPUTED BY THE DEPARTMENT. ONLY AFTER FILING THE FORM 3CEB REPORT BEFOR E THE ASSESSING OFFICER ON 09.11.2012, THE ASSESSING OFFICER, IN TURN, ISSUED NOTICE UNDER SECTION 271BA OF THE ACT ON 21.11.2012 SHOW CAUSING THE ASSESSEE FOR LEVYING PENALTY. WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS SLEPT VERY MUCH ON THE RET URN FILED BY THE ASSESSEE ON 04.10.2010 TILL FILING THE REPORT IN FORM 3CEB. IN THIS CASE, S INCE THE VALUE OF INTERNATIONAL TRANSACTIONS WITH THEIR ASSOCIATE ENTERPRISES DID NOT EXCEED .15 CRORES, THE ASSESSING OFFICER NEITHER REFERRED ASSESSEE S CASE TO THE TRANSFER PRICING OFFICER UNDER SECTION 92CA OF THE ACT NOR NOTICED NON - FILING OF FORM 3CEB AT THE TIME OF PROCESSING THE RETURN FILED BY THE ASSESSEE UNDER SECTION 143(1) OF THE ACT ON 15.04.2011. SINCE THE ASSESSEE HAS ADMITTED BEFORE THE AUTHORITIES BELOW THAT INADVERTENTLY, THE ASSESSEE COULD NOT FILE THE TP AUDIT REPORT WITHIN DUE DATE , BUT FILED BEFORE COMPLETION OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND MOREOVER, THERE WAS NO UNREPORTED I.T.A. NO S . 1326 & 1327 /M/16 6 TRANSACTIONS WITH AES NOTICED BY THE ASSESSING WARRANTING ANY REVENUE LOSS TO THE DEPARTMENT, WE ARE OF THE CONSIDERED OPINION THAT LEVY OF PENALTY UNDER SECTION 271BA IS WARRANTING. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THE REVENUE HAS DISCOVERED NON FILING OF 3CEB RE PORT AND THEREBY THE ASSESSMENT WAS REOPENED AND INCOME ESCAPED ASSESSMENT WAS BROUGHT TO TAX. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT EITHER WHILE PROCESSING THE RETURN UNDER SECTION 143(1) OF THE ACT OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT THE ASSESSING OFFICER HAS RAISED A QUERY OF NON FILING OF FORM 3CEB, BUT THE ASSESSEE HAS, THOUGH BELATEDLY, VOLUNTARILY FILED THE FORM 3CEB BEFORE THE ASSESSING OFFICER FOR VERIFICATION. UNDER THE ABOVE FACTS AND CIRCUMSTAN CES, WE DELETE THE PENALTY LEVIED UNDER SECTION 271BA OF THE ACT FOR BOTH THE ASSESSMENT YEARS. 9 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED ON THE 16 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCO UNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 16 . 0 5 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.