M/s. Mayar India Limited, New Delhi V. DCIT, New Delhi

ITA 1872/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7861 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA SENIOR
• Keywords: Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 1872/DEL/2014 1872/DEL/2014 1872/DEL/2014 1872/DEL/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2008 2008 2008 2008 - -- - 09 0909 09 M/S MAYAR INDIA LIMITED, M/S MAYAR INDIA LIMITED, M/S MAYAR INDIA LIMITED, M/S MAYAR INDIA LIMITED, PLOT NO.A, BASANT LOK PLOT NO.A, BASANT LOK PLOT NO.A, BASANT LOK PLOT NO.A, BASANT LOK COMMUN COMMUN COMMUN COMMUNITY CENTRE, ITY CENTRE, ITY CENTRE, ITY CENTRE, VASANT VIHAR, VASANT VIHAR, VASANT VIHAR, VASANT VIHAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 057. 110 057. 110 057. 110 057. PAN : AAACM8246P. PAN : AAACM8246P. PAN : AAACM8246P. PAN : AAACM8246P. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -6(1), 6(1), 6(1), 6(1), C.R. BUILDING, C.R. BUILDING, C.R. BUILDING, C.R. BUILDING, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 002. 110 002. 110 002. 110 002. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE. RESPONDENT BY : SHRI P. DAM KANUNJNA, SENIOR DR. DATE OF HEARING : 07.04.2016 07.04.2016 07.04.2016 07.04.2016 DATE OF PRONOUNCEMENT : 26.04.2016 26.04.2016 26.04.2016 26.04.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2008-09 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-IX, NE W DELHI DATED 30 TH JANUARY, 2014. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS AGAINS T THE LEVY OF PENALTY OF `34,46,519/- LEVIED BY THE ASSESSING OFF ICER U/S 271G OF THE INCOME-TAX ACT, 1961. 3. ON THE DATE OF HEARING, THERE WAS A REQUEST FOR ADJOURNMENT FROM THE ASSESSEES COUNSEL. HOWEVER, NO ADEQUATE REASON WAS GIVEN FOR SEEKING THE ADJOURNMENT. THEREFORE, THE ASSESS EES REQUEST FOR ADJOURNMENT IS REFUSED AND THE APPEAL IS DECIDED EX PARTE QUA THE ASSESSEE. ITA-1872/DEL/2014 2 4. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL PLACED BEFORE US. LEARNED DR POINTED OUT THAT THE PENALTY WAS LEVIED FOR DELAY IN FURNISHING OF THE INFORMATION RELATING TO INTERNATIONAL TRANSACTION. THE ASSESSING OFFICER LEVIED THE PENA LTY ON THE BASIS OF OBSERVATION OF THE ASSESSING OFFICER IN THE TRANSFE R PRICING ORDER. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE ASSESSIN G OFFICER LEVYING THE PENALTY U/S 271G HAS RIGHTLY BEEN UPHELD BY LEARNED CIT(A). THE SAME SHOULD BE SUSTAINED. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED DR. THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEED INGS U/S 271G OF THE ACT ON THE BASIS OF THE ORDER OF THE TRANSFER PRICI NG OFFICER DATED 31 ST OCTOBER, 2011 IN WHICH HE HAS MENTIONED AS UNDER:- IN VIEW OF THE FUNCTIONAL AND ECONOMIC ANALYSIS OF ASSESSEE AND OF COMPARABLES, NO ADVERSE INFERENCE I S DRAWN IN RESPECT OF THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE DURING FINANCIAL YEAR 20 07-08. THE DOCUMENTATION UNDER RULE 10D HAS BEEN RECEIVED LATE IN THIS OFFICE. THE ASSESSING OFFICER MAY INITIATE PENALTY PROCEEDINGS UNDER SECTION 271G OF THE INCOME TAX AC T, 1961. 6. FROM THE ABOVE, IT IS EVIDENT THAT THE INFORMATI ON SOUGHT FOR BY THE TPO WAS NOT ONLY FURNISHED BY THE ASSESSEE BUT THE TPO WAS SATISFIED WITH SUCH DETAILS AND HE HAS OBSERVED THA T NO ADVERSE INFERENCE IS DRAWN IN RESPECT OF INTERNATIONAL TRAN SACTION UNDERTAKEN BY THE ASSESSEE. THEREFORE, NO ADDITION WAS MADE B Y WAY OF TRANSFER PRICING ADJUSTMENT. HOWEVER, HE OBSERVED THAT THE ASSESSING OFFICER MAY INITIATE PENALTY PROCEEDINGS BECAUSE THE DOCUME NTS UNDER RULE 10D HAVE BEEN RECEIVED LATE IN HIS OFFICE. THE ASS ESSING OFFICER, ON THE BASIS OF ABOVE OBSERVATION OF THE TPO, INITIATE D PENALTY PROCEEDINGS AND ALSO LEVIED PENALTY U/S 271G AT `34 ,46,519/-. FROM A PERUSAL OF THE PENALTY ORDER, WE FIND THAT IT IS NO T MENTIONED HOW THE INFORMATION FURNISHED BY THE ASSESSEE WAS LATE. TH E ASSESSING OFFICER ITA-1872/DEL/2014 3 HAS NOT GIVEN THE DATE OF THE LETTER BY WHICH THE I NFORMATION WAS SOUGHT, THE DATE OF THE SERVICE OF SUCH LETTER AND THE DATE ON WHICH THE INFORMATION IS ACTUALLY FURNISHED. THE ASSESSING O FFICER LEVIED HUGE PENALTY OF MORE THAN `34 LAKHS SIMPLY BY OBSERVING THAT THE INFORMATION FURNISHED BY THE ASSESSEE WAS LATE BUT HOW IT WAS LATE HAS NOT BEEN SPELLED OUT IN THE ORDER AND, IF IT WAS LA TE, BY HOW MANY DAYS. WE WOULD LIKE TO REITERATE THAT THE ASSESSEE FURNIS HED ALL THE REQUIRED INFORMATION AND THE TPO WAS FULLY SATISFIED WITH TH E CORRECTNESS OF THIS INFORMATION AND, THEREFORE, NO TRANSFER PRICING ADJ USTMENT WAS MADE. CONSIDERING THE TOTALITY OF ABOVE FACTS, IN OUR OPI NION, IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271G OF THE ACT FOR THE FOL LOWING REASONS :- (I) THE ASSESSING OFFICER HAS NOT POINTED OUT HOW T HE DETAILS FURNISHED BY THE ASSESSEE WERE LATE. THUS, THE PEN ALTY ORDER IS VAGUE WHICH IS UNSUSTAINABLE. (II) EVEN IF IT IS PRESUMED THAT THE DETAILS FURNIS HED BY THE ASSESSEE WERE DELAYED, IT HAS NOT AT ALL PREJUDICED THE REVE NUE BECAUSE THE TPO HAS DULY CONSIDERED THOSE DETAILS AND WAS FULLY SAT ISFIED WITH THE DETAILS FURNISHED BY THE ASSESSEE AND MENTIONED IN VIEW OF THE FUNCTIONAL AND ECONOMIC ANALYSIS OF ASSESSEE AND OF COMPARABLES, NO ADVERSE INFERENCE IS DRAWN IN RESPECT OF THE INTERN ATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE . THEREFORE, EVEN IF IT IS ACCEPTED THAT THERE WAS ANY DELAY IN FURNISHING OF THE INFORMATIO N BY THE ASSESSEE, IT IS, AT THE MOST, A TECHNICAL OR VENIAL BREACH OF TH E PROVISIONS OF THE ACT, FOR WHICH, ORDINARILY, PENALTY SHOULD NOT BE LEVIED . WHILE TAKING THIS VIEW, WE DERIVE SUPPORT FROM THE DECISION OF HONBL E APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA [1972] 83 ITR 26 (SC), WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO P ERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSI DERATION ITA-1872/DEL/2014 4 OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIM UM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO I MPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FI DE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNE R PRESCRIBED BY THE STATUTE. 7. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION, WE ARE OF THE OPINION THAT LEARNED CIT(A) WAS NOT JUSTIFIED IN SU STAINING THE PENALTY. THE SAME IS CANCELLED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 26.04.2016 . SD/- SD/- ( (( ( SUCHITRA KAMBLE SUCHITRA KAMBLE SUCHITRA KAMBLE SUCHITRA KAMBLE ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S MAYAR INDIA LIMITED, M/S MAYAR INDIA LIMITED, M/S MAYAR INDIA LIMITED, M/S MAYAR INDIA LIMITED, PLOT NO.A, BASANT LOK COMMUNITY CENTRE, PLOT NO.A, BASANT LOK COMMUNITY CENTRE, PLOT NO.A, BASANT LOK COMMUNITY CENTRE, PLOT NO.A, BASANT LOK COMMUNITY CENTRE, VASANT VIHAR, NEW DELHI VASANT VIHAR, NEW DELHI VASANT VIHAR, NEW DELHI VASANT VIHAR, NEW DELHI 110 057. 110 057. 110 057. 110 057. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -6(1), C.R. BUILDING, NEW DELHI 6(1), C.R. BUILDING, NEW DELHI 6(1), C.R. BUILDING, NEW DELHI 6(1), C.R. BUILDING, NEW DELHI 110 002. 110 002. 110 002. 110 002. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR