M/s. Mahashian Di Hatti (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 1491/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3567 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Transfer pricing; Bonafide belief
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1491/DEL/2016 A.Y. : 2009-10 M/S MAHASHIAN DI HATTI (P) LTD., 9/44, KIRTI NAGAR INDUSTRIAL AREA, NEW DELHI (PAN: AAACM4165F) VS ACIT, CENTRAL CIRCLE - 25, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VINOD BINDAL, CA DEPARTMENT BY : MS. ASHIMA NEB, SR. DR ORDER PER H.S. SIDHU : JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 30.12.2015 PASSED BY THE LD. CIT(A)-44, NEW DELHI FOR ASSTT. YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS. 10,000/- U/S. 271(1)(B) OF THE ACT BY IGNORING THAT THE JUSTIFIED REASONS FOR NON-COMPLIANCE WERE DULY EXPL AINED. THUS THE PENALTY LEVIED MUST BE DELETED. 2 2. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUTE, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT U/S. 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS T HE ACT) WAS COMPLETED ON 06.03.2013 AT ASSESSED INCOME OF RS. 81,67,88,076/- AS AGAINST THE RETURNED INCOME OF RS. 76,07,05,730/-. THE ADDITIONS MADE I NCLUDED THE INCREASE OF RS. 2,18,25,568/- DETERMINED BY TPO WHILE PASSING ORDER U/S. 92CA(3) OF THE I.T. ACT IN ASSESSING THE ARMS LENGTH PRICE (ALP). ACCOR DINGLY, AN ORDER U/S. 92CA(3) OF THE ACT WAS PASSED BY THE TPO ON 17.01.2013. T HEREAFTER, THE AO HAS LEVIED THE PENALTY U/S. 271(1)(B) OF THE ACT ON TH E BASIS OF RECOMMENDATION MADE BY THE TPO FOR NON SUBMISSION OF DETAILS AS R EQUIRED BY THE TPO VIDE SHOW CAUSE NOTICES DATED 04.12.2012. THE TPO HAS A SKED THE ASSESSEE COMPANY THE SHOW CAUSE NOTICES DATED 04.12.2012 HO WEVER NOBODY ATTENDED ON THE SAID APPOINTED DATE NOR ANY ADJOURNMENT WAS SOUGHT. SUBSEQUENTLY, FINAL OPPORTUNITY WAS GIVEN BY THE TPO VIDE LETTER DATED 26.12.2012 TO BE COMPLIED BY 27.12.2012. IN REPLY TO THIS NOTICE DATED 26.12. 2012, THE ASSESSEE SUBMITTED A LETTER STATING THAT SHOW CAUSE NOTICE DATED 04.12 .2012 WAS NOT RECEIVED. THEREFORE, NO APPEARANCE COULD BE MADE U/S. 271(1)( B) FOR TWO DEFAULT OF NOTICES ISSUES ON 04.12.2012 AND 26.12.2012. THE PENALTY PROCEEDINGS U/S. 3 271(1)(B) OF THE ACT WAS INITIATED ON 06.03.2013 FI XING THE DATE OF COMPLIANCE ON 20.3.2013. SHOW CAUSE PENALTY NOTICES WERE ISSUED O N 28.5.2013, 31.7.2013 AND 10.9.2013. IN RESPONSE TO THE SAME, THE AO COU LD NOT ACCEPT THE CONTENTION OF THE ASSESSEE OF NOT RECEIVING THE SHOW CAUSE NO TICE DATED 4.12.2012 AND IMPOSED THE PENALTY OF 20,000/- (RS. 10,000/- FOR EACH OF 2 NON-COMPLIANCES I.E. ON 04.12.2012 AND 26.12.2012 RESPECTIVELY) VI DE ORDER DATED 13.9.2013 PASSED U/S. 271(1)(B) OF THE I.T. ACT, 1961. 3. AGAINST THE AFORESAID PENALTY ORDER, ASSESSEE A PPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-44, NEW DELHI, WHO VIDE IMPUGNED ORDER DATE 30.12.2015 HAS PARTLY ALLOWED THE APPEA L OF THE ASSESSEE BY CONFIRMING THE DEFAULT FOR 04.12.2012. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 5. LD. COUNSEL OF THE ASSESSEE REITERATED THE CON TENTION RAISED IN THE GROUNDS OF APPEAL AND STATED THAT IN RESPECT OF TPOS LETTER DATED 26.12.2012, THE ASSESSEE FILED ITS REPLY ON 27.12.2012 STATING THAT IT HAS NOT RECEIVED THE SHOW CAUSE NOTICE DATED 4.12.2012 AND THEREFORE, NO APPEARANCE COULD BE MARKED ON 14.12.2012. HE FURTHER STATED THAT JUS T ON NEXT DATE ON 28.12.2012 IT WAS EXPLAINED BY THE COUNSEL OF THE ASSESSEE TO TH E TPO THAT A NEW RECEPTIONIST HAD INDEED TAKEN THE DELIVERY OF THE SAID NOTICE BU T FAILED TO UNDERSTAND ITS IMPORTANCE AND DID NOT PASS IT ON A CONCERNED PERSO N DEALING WITH INCOME TAX MATTERS. 4 6. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS AVAILABLE WITH US. WE FIND CONSIDERABLE COGENCY IN THE SUBMIS SIONS OF THE LD. COUNSEL OF THE ASSESSEE FOR NON-COMPLIANCE OF THE NOTICE IN DISPUT E AND WE ARE OF THE VIEW THAT THE REASONS FOR NON-COMPLIANCE OF NOTICES SEEMS TO BE GENUINE AND JUSTIFIED. HENCE, THE ASSESSEES CONDUCT WAS NOT CONTUMACIOUS TO WARRANT LEVY OF PENALTY. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE LEVY OF PENALTY OF RS. 10,000/- IS LIABLE TO BE DELETED. 8. IN THIS REGARD, WE PLACE RELIANCE OF THE HONBLE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26, WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A S TATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL N OT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACT ED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED M ERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCE S. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE TH E PENALTY WILL BE JUSTIFIED IN 5 REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FR OM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND PRECEDENT, WE DELETE THE LEVY OF PENALTY OF RS. 10,000/- AND QUASH THE O RDERS OF THE AUTHORITIES BELOW. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/02/2018. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 01/02/2018 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES