DCIT, CHENNAI V. M/s. Rev IT Systems P. Ltd., CHENNAI

ITA 166/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2496 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Keywords: Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEBER AND SHRI S.S. GODARA, JUDICIAL MEMBER] I.T.A.NO.166/MDS/2013 ASSESSMENT YEAR : 2007-2008 THE DEPUTY COMMISSIONER OF INCOME TAX COMPANY CIRCLE V(2) CHENNAI 600 034 . VS M/S. REV IT SYSTEMS P. LTD 4 TH AND 5 TH FLOOR, TEK MEADOWS BLOCK 3, 51, OLD MAHABALIPURAM ROAD, SHOLINGANALLUR, CHENNAI 600 119. [PAN AABCR 9490H ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. T.N. BETGERI, JCIT. RESPONDENT BY : SHRI. S.P. CHIDAMBARAM, ADV. DATE OF HEARING : 01-05-2013 DATE OF PRONOUNCEMENT : 03-05-2013 O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI, DA TED 31-10-2012 IN ITA NO.77/2011-2012, FOR ASSESSMENT YEAR 2007- 08, IN PROCEEDINGS UNDER SECTION 271AA OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. I.T.A.NO.166/MDS /2013 :- 2 - 2. THE GRIEVANCE OF THE REVENUE IN THE PRESENT CASE I S THAT CIT(A) HAS WRONGLY DELETED THE PENALTY IMPOSED IN ASSESSEE S CASE UNDER SEC.271AA OF THE ACT. IN THE COURSE OF HEARING, DR REPRESENTING REVENUE VEHEMENTLY ARGUED FOR ACCEPTANCE OF THE APP EAL. 3. THE ASSESSEE CHOOSE TO RELY ON CIT(A) ORDER AND PRA YS FOR ITS CONFIRMATION. IN SUPPORT, IT ALSO CITES LAW CASE O F ITAT, CHENNAI I.E. ACIT VS M/S. PENTASOFT TECHNOLOGIES LTD (2011) 145 TTJ 99. 4. CONCISE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY RENDERING I.T. ENABLED SERVICES. IT HAD FILED ITS RETURN ON 31.10.2007 AND ASSESSMENT UNDER SEC.143(3) OF THE ACT WAS FI NALIZED VIDE ORDER DATED 28.01.2011 WITHOUT ANY ADDITION MADE THEREIN. HOWEVER, PENALTY PROCEEDINGS WERE INITIATED UNDER SEC.271AA OF THE ACT FOR WANT OF COMPLIANCE OF SEC. 92D(1) OF THE ACT I.E. FAILURE TO MAINTAIN BOOKS OF ACCOUNTS. 5. IN PENALTY PROCEEDINGS, ASSESSEE PLEA WAS THAT INST EAD OF PROFIT SPLIT METHOD, TPO HAD ADOPTED TNMM. HOWEVER, BY REJ ECTING THE SAME, VIDE ORDER DATED 28.7.2011 PENALTY WAS LEVIED AT THE RATE OF 2% OF VALUE OF INTERNATIONAL TRANSACTIONS OF H2,53, 12,3423/- I.E. H5,06,24,468/- ON THE ASSESSEE. THE ASSESSING OFF ICER ALSO HELD IN I.T.A.NO.166/MDS /2013 :- 3 - THE PENALTY ORDER THAT THE ASSESSEE HAD NOT MAINTAI NED ITS BOOKS OF ACCOUNTS. 6. IN APPEAL, CONTENTIONS OF THE ASSESSEE WERE THAT IN THE ASSESSMENT PROCEEDINGS, DIFFERENT METHOD HAD BEEN A PPLIED (SUPRA) WHICH DID NOT LEAD TO ANY ADJUSTMENT. THE SAME STA NDS ACCEPTED ACCEPTED BY THE CIT(A) IN THE LIGHTOF CASE LAW CITE D HEREIN ABOVE (SUPRA). THEREFORE, THE REVENUE IS IN APPEAL. 7. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. ADMITTEDLY, DESPITE THE FACT THAT IN ASSESSMENT PRO CEEDINGS ASSESSEES METHOD HAD BEEN REJECTED, NO ADJUSTMENT WAS MADE. IN THIS BACKDROP, THE QUESTION WHICH IS SOUGHT TO BE RAISE D BY THE REVENUE IS THAT THE ASSESSEES FAILURE IN MAINTAINING ACCOUNTS WARRANTS IMPOSITION OF PENALTY, DOES NOT DESERVE ACCEPTANCE IN VIEW OF THE CASE LAW CITED (AUTHORED BY ONE OF US I.E. SHRI. ABRAHAM P. GEORG E, ACCOUNTANT MEMBER), WHEREIN IT HAD BEEN HELD THAT IN THE ABSEN CE OF ANY ADJUSTMENT, FAILURE IN MAINTAINING BOOKS IS BENIGN ONE. IN REBUTTAL, MERE PLEA OF THE REVENUE THAT ITS APPEAL IS PENDIN G IN THE HONBLE HIGH COURT IS HARDLY A JUSTIFIABLE GROUND TO ADOPT A DIFFERENT APPROACH. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. I.T.A.NO.166/MDS /2013 :- 4 - ORDER PRONOUNCED ON FRIDAY, THE 3RD OF MAY, 201 3, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER DATED: 3RD MAY, 2013. K.V COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR.