DCIT, Circle - 8(1), Kolkata, Kolkata V. M/s. EIH Ltd., Kolkata

ITA 1992/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1817 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: ROHAN PODDAR
• Keywords: Transfer pricing; International transaction
• Section: 92E

Judgement Text

1 ITA NO. 1992/KOL/2 017 A.Y. 2011-2012 M/S. EIH LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 1992/KOL/2017 ASSESSMENT YEAR: 2011-2012 DEPUTY COMMISSIONER OF INCOME TAX,................. .........................APPELLANT CIRCLE-8(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA-700 069 -VS.- M/S. EIH LIMITED,.................................. .......................................RESPONDENT 4, MANGOE LANE, KOLKATA-700 001 [PAN:AAACE 6898 B] APPEARANCES BY: SHRI P.K. SRIHARI, CIT, D.R. , FOR THE APPELLANT SHRI ROHAN PODDAR, ADVOCATE, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : OCTOBER 31, 2018 DATE OF PRONOUNCING THE ORDER : NOVEMBER 22, 2018 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, KOLKATA DA TED 06.07.2017 WHEREBY HE CANCELLED THE PENALTY OF RS.8,68,77,800/ - IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271AA OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF RUNNING HOTELS. THE RETURN OF INCOM E FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 28.09.2011 DECLARI NG TOTAL INCOME OF RS. NIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS NOTICED BY THE ASSESSING OFFICER THAT THE REPORT UNDER SECTION 92E WAS NOT FILED BY THE 2 ITA NO. 1992/KOL/2 017 A.Y. 2011-2012 M/S. EIH LIMITED 2 ASSESSEE-COMPANY WITHIN THE DUE DATE OF FILING OF I NCOME-TAX RETURN INSPITE OF THE FACT THAT IT HAD ENTERED INTO INTERN ATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES DURING THE YEAR UNDER CO NSIDERATION. HE, THEREFORE, REQUIRED THE ASSESSEE TO FILE SUCH REPOR T. AFTER THE INITIAL DELAY, THE ASSESSEE-COMPANY FINALLY FURNISHED THE COPY OF TRANSFER PRICING REPORT IN FORM NO. 3CEB AS REQUIRED UNDER SECTION 9 2E OF THE ACT ON 13.03.2014. THE SAID REPORT WAS STATED TO HAVE BEEN DRAWN UP ON 28.11.2011. ON THE BASIS OF THE INFORMATION CONTAIN ED IN THE SAID REPORT, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD FA ILED TO REPORT THE INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTE RPRISES AND HAD ALSO FURNISHED INCORRECT INFORMATION IN THE RETURN OF IN COME WITH REFERENCE TO THE SAID TRANSACTIONS. HE ACCORDINGLY INVOKED THE P ROVISIONS OF SECTION 271AA AND IMPOSED A PENALTY OF RS.8,68,77,800/- BEI NG 2% OF THE VALUE OF INTERNATIONAL TRANSACTIONS OF THE ASSESSEE-COMPA NY WITH ITS ASSOCIATED ENTERPRISES. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER UND ER SECTION 271AA WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE-COMPANY, THE LD. CIT(APPEALS) CANCELLED TH E PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271AA ON THE GR OUND THAT THE AMENDMENT MADE IN SECTION 271AA BY THE FINANCE ACT, 2012 W.E.F. 1 ST JULY, 2012 WAS APPLICABLE FROM A.Y. 2012-13 AND NOT TO A.Y. 2011-12. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE PENALTY IN THIS CASE WAS IMPOSED BY THE ASSESSING OFFICER UNDE R SECTION 271AA OF THE ACT, THE PROVISIONS OF WHICH AS APPLICABLE TO T HE YEAR UNDER CONSIDERATION WERE AS UNDER:- 3 ITA NO. 1992/KOL/2 017 A.Y. 2011-2012 M/S. EIH LIMITED 3 271AA- PENALTY FOR FAILURE TO KEEP AND MAINTAIN INFORMATION AND DOCUMENT IN RESPECT OF INTERNATIONAL TRANSACTIONS WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 271, IF ANY PERSON FAILS TO KEEP AND MAINTAIN ANY SUCH INFORMATION AND DOCUMENT AS REQUIRED BY SUB-SECTION (2) OF SECTION 92D, THE ASSESSING OFFICER OR COMMISSIONER (APPEALS) MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SUM EQUAL TO TWO PER CENT OF THE VALUE OF EACH INTERNATIONAL TRANSACTION ENTERED INTO BY SUCH PERSON. THE PROVISIONS OF SECTION 271AA WERE SUBSEQUENTLY A MENDED BY THE FINANCE ACT, 2012 W.E.F. 01.07.2012 AND THE PROVISI ONS SO AMENDED READ AS UNDER:- WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 271 , IF ANY PERSON IN RESPECT OF AN INTERNATIONAL TRANSACTION- (I) FAILS TO KEEP AND MAINTAIN ANY SUCH INFORMATION AND DOCUMENT AS REQUIRED BY SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 92D; (II) FAILS TO REPORT SUCH TRANSACTION WHICH HE IS REQUIRED TO DO SO; OR (III) MAINTAINS OR FURNISHES AN INCORRECT INFORMATION OR DOCUMENT, THE ASSESSING OFFICER OR COMMISSIONER (APPEALS) MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SU M EQUAL TO TWO PER CENT OF THE VALUE OF EACH INTERNATIONAL TRANSACTION ENTERED INTO BY SUCH PERSON. 5. A PERUSAL OF THE PENALTY ORDER PASSED BY THE ASS ESSING OFFICER IN THE PRESENT CASE SHOWS THAT THE PENALTY UNDER SECTI ON 271AA WAS IMPOSED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE FOR A.Y. 2011- 12 FOR THE FAILURE OF THE ASSESSEE TO REPORT THE IN TERNATIONAL TRANSACTIONS AND ALSO TO FURNISH INCORRECT INFORMATION IN THE RE TURN OF INCOME WITH REFERENCE TO SUCH INTERNATIONAL TRANSACTIONS. THE S AID DEFAULTS ALLEGEDLY COMMITTED BY THE ASSESSEE FOR THE YEAR UNDER CONSID ERATION, I.E. A.Y. 2011-12, HOWEVER, WERE NOT COVERED BY THE PROVISION S OF SECTION 271AA AS APPLICABLE TO THE SAID YEAR AND THE SAME WERE CO VERED ONLY BY THE PROVISIONS OF SECTION 271AA AS AMENDED BY THE FINAN CE ACT, 2012 W.E.F. 01.07.2012. SINCE THE SAID PROVISIONS AS AMENDED BY THE FINANCE ACT, 4 ITA NO. 1992/KOL/2 017 A.Y. 2011-2012 M/S. EIH LIMITED 4 2012 W.E.F. 01.07.2012 WERE NOT RETROSPECTIVE IN NA TURE AND WERE APPLICABLE FROM A.Y. 2012-13, WE FIND OURSELVES IN AGREEMENT WITH THE LD. CIT(APPEALS) THAT THE PENALTY IMPOSED BY THE ASSESS ING OFFICER BY RELYING ON THE AMENDED PROVISIONS OF SECTION 271AA WAS NOT SUSTAINABLE. WE ACCORDINGLY UPHOLD THE IMPUGNED ORDER OF THE LD. CI T(APPEALS) CANCELLING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271AA AND DISMISS THIS APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 22, 2018. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VICE-P RESIDENT (KZ) KOLKATA, THE 22 ND DAY OF NOVEMBER, 2018 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA-700 069 (2) M/S. EIH LIMITED, 4, MANGOE LANE, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-16, KOLK ATA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.