Deputy Commissioner of Income-tax, Circle - 1 (2), Pune V. Francois Compressors India Private Ltd, Pune

ITA 1504/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3889 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-12-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 13-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: SHARAD A SHAH
• Keywords: Transfer pricing; Principle of natural justice; International transaction; Reasonable cause
• Section: 92D; 13; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, J UDICIAL M EMBER . / I TA NO. 1504 /PUN/20 17 / ASSESSMENT YEAR : 2012 - 13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(2), PUNE. ....... / APPELLANT / V/S. FRANCOIS COMPRESSOR S INDIA PVT. LTD. GAT NO.147/1 (NEW), PIRANGUT, VILLAGE LAVALE ROAD, TAL. MU L SHI, PUNE - 412 115 PAN : AABCF0496K / RESPONDENT REVENUE BY : SHRI S.P WALIMBE A SSESSEE BY : SHRI SHARAD A SHAH / DATE OF HEARING : 27.05 .202 1 / DATE OF PRONOUNCEMENT : 31. 05 .2021 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF THE LD. CIT( APPEALS) - 13, PUNE DATED 08.03.2017 FOR THE ASSESSMENT YEAR 2012 - 13 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD : 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN DELETING THE PENALTY LEVIED U/S.271G OF THE I.T. ACT. 2 ITA NO. 1504 /PUN/20 17 A.Y. 2012 - 13 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE GROUND IN FAVOUR OF THE ASSESSEE IGNORING THE PROVISIONS OF SECTION 92D OF THE ACT AS WELL AS R ULE 10D OF THE INCOME TAX RULES. 4. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. CIT(A) MAY BE VACATED AND THAT OF THE AO RESTORED. 5. THE APPELLANT CRAVES TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE G ROUND OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 2. IN THIS CASE, THE ASSESSEE HA D ENTERED INTO INTERNATIONAL TRANSACTIONS AND IN RESPECT THEREOF, HE WAS SUPPOSED TO FURNISH CERTAIN DOCUMENTS SPECIFIED U/S.92D OF THE ACT R.W. R. 10D OF THE INCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) . THAT HOWEVER, THE ASSESSEE DID NOT FURNISH THOSE DOCUMENTS IRRESPECTIVE OF OPPORTUNITIES BEING PROVIDED TO HIM . THE ASSESSING OFFICER WHILE ISSUING NOTICE U/S.2 74 R.W. S. 271G OF ACT IN RESPECT OF SEC TION 92D(3) OF THE ACT HAD SHOW - CAUSED WHY PENALTY U/S.271G OF THE ACT SHOULD NOT BE LEVIED. THE ASSESSEE HAD NOT ATTENDED PENALTY PROCEEDING S BEFORE THE ASSESSING OFFICER AND THEREFORE, DID NOT FURNISH ANY EXPLANATIO N BEFORE ASSESSING OFFICER REGARDING THE ISSUE OF PENALTY LEVIED U/S.271G OF THE ACT. 3. THAT WHEN THE MATTER TRAVELLED BEFORE THE LD. CIT(APPEALS), THE ASSESSEE VIDE ITS SUBMISSIONS HAD EXPLAINED THAT HE WAS PREVENTED FROM NOT FILING THE REQUISITE DOCUM ENTS AS REQUIRED U/S.92D R.W. R. 10D BECAUSE OF VARIOUS REASONABLE CAUSES. THE ASSESSEE IN ITS SUBMISSIONS HAS EXPLAINED THOSE REASONABLE CAUSES BEFORE THE LD. CIT(APPEALS) WHICH IS ON RECORD. MORE SPECIFICALLY, THE ASSESSEE HA D CONTENDED THAT EVEN THOUGH THEY HAD NOT FILED REQUISITE DOCUMENTS BEFORE THE ASSESSING OFFICER BUT NONETHELESS ALL THOSE DOCUMENTS WERE FILED BEFORE THE TRANSFER PRICING OFFICER (TPO) AND THERE AFTER , THE TPO IN HIS ORDER DATED 29.01.2016 U/S. 92C(3) OF TH E ACT HA D ACCEPTED 3 ITA NO. 1504 /PUN/20 17 A.Y. 2012 - 13 THE VALUE OF INTERNATIONAL TRANSACTIONS WITH REGARD TO ARM'S LENGTH PRI CE (ALP) OF THE ASSESSEE AND THE SAID WAS NOT DISTURBED BY THE TPO. THE ASSESSEE HAD FURTHER SUBMITTED THAT THE BASIC PURPOSE FOR FURNISHING THE DOCUMENTS SPECIFIED U/S.92D R.W. R. 10D IS TO JUSTIFY THE ALP WITH REGARD TO INTERNATIONAL TRANSACTIONS ENTERED INTO DURING THE YEAR UNDER CONSIDERATION BY THE ASSESSEE AND WHEN THAT HAS BEEN DETERMINED AND HAS NOT BEEN DISTURBED BY THE TPO'S ORDER THEN NON FILING OF SUCH DOCU MENTS BEFORE THE ASSESSING OFFICER IS MERE LY A TECHNICAL HITCH FOR WHICH NO PREJUDICE IS CAUSED TO THE REVENUE. 4. THAT FURTHER THE ASSESSEE HAD CONTENDED THAT THE PRINCIPLES OF NATURAL JUSTICE DEMANDS THAT THE NOTICE ISSUED TO THE ASS ESSEE FOR PROCEE DING S U/S.274 R.W. R. 271G IN RESPECT OF SECTION 92D(3) OF THE ACT THAT SUCH NOTICE SHOULD CONTAIN THE NAMES OF THE SPECIFIC DOCUMENTS WHICH THE ASSESSING OFFICER REQUIRES THE ASSESSEE TO FILE BEFORE HIM. THAT HOWEVER, IN THE SAID NOTICE ISSUED TO THE ASSE SSEE NOTHING WAS SPECIFICALLY MENTIONED BY THE ASSESSING OFFICER. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LEORY SOMER & CONTROLS (INDIA) (P) LTD. (2014) 360 ITR 532 (DEL.) HAS HELD THAT NOTICE ISSUED U/S. 92D(3) OF THE ACT SHOULD SPECIFY INFO RMATION OR DOCUMENTS WHICH WAS REQUIRED TO BE SUBMITTED BY THE ASSESSEE. IN ABSENCE OF BASIC DETAILS OR FACT ORDER OF PENALTY U/S.271G OF THE ACT CANNOT BE SUSTAINED. THE LD. CIT(APPEALS) IN HIS ORDER HAS OBSERVED THAT IT IS CORRECT STATEMENT OF FACT THAT THE TPO HAD PASSED ORDER IN FAVOUR OF THE ASSESSEE WITHOUT DISTURBING THE ALP OF THE INTERNATIONAL TRANSACTIONS. MEANING THEREBY THAT ALL THE REQUISITE DETAILS AND DOCUMENTS WERE FILE D BEFORE HIM AND AS SUCH THERE WA S NO PREJUDICE CAUSE D TO THE REVENUE. T HAT FURTHER THE ASSESSING OFFICER IN HIS NOTICE ISSUED FOR PENALTY PROCEEDING U/S.271G OF THE ACT HAS NOT SPECIFIED WHAT ARE THE REQUISITE DOCUMENTS TO BE FURNISHED BY THE ASSESSEE BEFORE HIM 4 ITA NO. 1504 /PUN/20 17 A.Y. 2012 - 13 AND THE LD. CIT(APPEALS) ALSO HAS ACCEPTED THE SUBMISSIONS ON RE ASONABLE CAUSES ENUMERATED IN THE SUBMISSIONS OF THE ASSESSEE. 5. WE HAVE PERUSED ALL THE RELEVANT DOCUMENTS PLACED BEFORE US AND HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE ASSESSMENT ORDER AND THE ORDER OF THE LD.CIT( APPEALS) ALONG WITH RELEVANT DOCUMENTS ANNEXED BEFORE US IN THE PAPER BOOK, MORE SPECIFICALLY THE PENALTY NOTICE ISSUED U/S.274 R.W.S 271G IN RESPECT OF SECTION 92D(3) OF THE ACT, DECISION OF THE HON'BLE DELHI HIGH COURT (SUPRA.) AND THE EXPLANATION OF REA SONABLE CAUSES BY THE ASSESSEE. WE FIND THAT THE FINDING OF THE LD.CIT(APPEALS) IS IN ORDER. THE TPO HAS ACCEPTED THE ALP OF THE ASSESSEE IN RESPECT OF THE INTERNATIONAL TRANSACTIONS. THE BASIC REQUIREMENTS OF THE PROVISION FOR FILING DOCUMENTS U/S.92D R.W . R. 10D OF THE RULES IS WITH REGARD TO ENABLING THE DEPARTMENT FOR DETERMINATION OF THE SAID ALP. IN ANY CASE WHEN THE ASSESSING OFFICER HAS REFERRED THE MATTER TO THE TPO ULTIMATELY ALL THE DOCUMENTS WOULD HAD TO BE EXAMINED BY THE TPO AND IN THIS CASE H E HAS DONE THAT. THEREFORE, NON - FILING OF SUCH DOCUMENTS BEFORE THE ASSESSING OFFICER IS A MERE TECHNICAL HITCH WHICH HAS NOT CAUSED ANY PREJUDICE TO REVENUE 6. THEREAFTER, WHEN WE PERUSE THE NOTICE FOR PENALTY PROCEEDING S , THERE ALSO, THERE IS NO MENT ION OF ANY SPECIFIC DOCUMENTS THAT ARE REQUIRED TO BE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. TAKING THE GUIDANCE OF THE HON'BLE DELHI HIGH COURT (SUPRA.) WITHOUT NAM ING THOSE DOCUMENTS THERE CANNOT BE ANY IMPOSITION OF PENALTY U/S.271G OF THE ACT. IN OUR OPINION, THE PRINCIPLES OF NATURAL JUSTICE DEMANDS IN RESPECT OF THE RIGHT OF DEFENSE FOR THE ASSESSEE WHATEVER PROC EEDINGS ARE TO BE DONE BY ANY QUASI - JUDICIAL AUTHORITY, THE FIRST STEP IS THE ISSUANCE OF NOTICE TO THE ASSESSEE AND IN THAT S AID NOTICE ALL THE RELEVANT DETAILS SHOULD BE THERE SO THAT THE ASSESSEE GETS 5 ITA NO. 1504 /PUN/20 17 A.Y. 2012 - 13 AN OPPORTUNITY TO PREPARE HIS DEFENSE AND UNFORTUNATELY IN THIS CASE, IT WAS NOT DONE. FOR THIS REASON ALSO PENALTY U/S.271G OF THE ACT IS NOT IMPOSABLE. THAT FURTHER SECTION 27 3B OF THE ACT PROVIDES FOR REASONABLE CAUSE AND IF THAT IS JUSTIFIED, PENALTY /S. 271G OF THE ACT MAY NOT BE IMPOSED AND WHEN THIS OPPORTUNITY IS GIVEN TO THE ASSESSEE BY THE STATU T ES ITSELF AND T HE ASSESSEE HAS EX PLAINED THE REASONABLE CAUSES WHICH WAS AC CEPTED BY THE LD. CIT(APPEAL) AND AFTER PERUSING SUCH REASONS, WE ARE IN CONFORMITY WITH THE FINDINGS OF THE LD.CIT(APPEALS). THE LD. DR COULD NOT BRING OUT ANY EVIDENCES OR PLACE ON RECORD ANY MATERIAL SUGGESTING NO REASONABLE CAUSE IN RESPECT OF THE ASSESSEE. IN VIEW THEREOF, WE DON'T FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(APPEAL) AND THE SAME IS UPHELD. THE RELIEF PROVIDED TO THE ASSESSEE IS HEREBY SUSTAINED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON 31 ST DAY OF MA Y , 20 2 1 . S D/ - S D/ - INTURI RAMA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 31 ST MAY , 202 1 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 13, PUNE. 4. THE PR. CIT - 1, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // T RUE C OPY // / PRIVATE SECRETARY , / ITAT, PUNE . 6 ITA NO. 1504 /PUN/20 17 A.Y. 2012 - 13 DATE 1 DRAFT DICTATED ON 27.05.2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 31.05 .202 1 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER