Rieter India Pvt. Ltd., Gurgaon V. ACIT, New Delhi

ITA 2115/DEL/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5284 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Initiation of penalty proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 2115 / DEL /20 1 2 / ASSESSMENT YEAR : 20 0 5 - 0 6 M/S.RIETER INDIA PRIVATE LIMITED, 3 RD FLOOR, BUILDING NO.9, TOWER B, DLF CYBER CITY, PHASE III, GURGAON 122002 . / APPELLANT PAN: AA AC R 3556P VS. THE ASST. C OMMISSIONER OF INCOME - TAX, CIRCLE 1 5 ( 1 ), NEW DELHI . / RESPONDENT ASSESSEE BY : SHRI RAJENDRA AGIWAL REVENUE BY : SHRI RAJEEV KUMAR , CIT / DATE OF HEARING : 30 .0 7 . 201 8 / DATE OF PRONOUNCEMENT: 30 . 0 7 .201 8 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT(A) - XVIII , NEW DELHI , DATED 14.02.2012 R ELATING TO ASSESSMENT Y EAR 200 5 - 0 6 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT) . ITA NO. 2115 /DEL/20 1 2 M/S. RIETER INDIA PVT . LTD. 2 2. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED ON ACCOUNT OF TP ADJUSTMENT. HE FURTHER POINTED OUT THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN THE QUANTUM APPEAL HAS DELETED THE TP ADJUSTMENT, HENCE THERE IS NO BASIS FOR THE AFORESAID LEVY OF PENALTY FOR FURNISHING INACCURATE PARTICULA RS OF INCOME. HE ALSO POINTED OUT THAT PENALTY WAS INITIATED FOR CONCEALMENT OF INCOME IN RESPECT OF ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES BUT LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . 4. TH E LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED ON ACCOUNT OF TP ADJUSTMENT MADE IN THE CASE OF ASSESSEE. HOWEVER, THE TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN ITA NO.114/DEL/2008, RELATING TO ASSESSMENT YEAR 2002 - 03, ORDER DATED 20.09.2017 HAS DELETED THE TP ADJUSTMENT EVEN FOR ASSESSMENT YEAR 2005 - 06. ONCE THE ADDITION WHICH WAS THE BASIS FOR LEVYING PENALTY HAS BEEN DELETED, THERE IS NO MERIT IN LEVY OF PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. ITA NO. 2115 /DEL/20 1 2 M/S. RIETER INDIA PVT . LTD. 3 6. IT MAY FURTHER BE POINTED OUT THAT PENALTY LEVIED IN THE PRESENT CASE IS OTHERWISE ALSO NOT SUSTAINABLE ON JURISDICTIONAL ISSUE, WHEREIN THE ASSESSING OFFICER WHILE RECORDING SATISFACTION FOR INITIATING PENALTY PROCEEDINGS HAD INITIATED THE SAME FOR DEF AULT OF CONCEALMENT OF INCOME. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, JUDGMENT DATED 05.01.2017. THE HONBLE BOMBAY HIGH COURT AFTER REFERRING TO THE DECISION OF THE HON'BLE SUPREME COURT IN ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC) AND THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. M/S . MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565 (KAR) HAS HELD THAT SATISFACTION OF THE ASSESSING OFFICER HAS TO BE WITH REGARD TO ONE OF TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS, WOULD NOT WARRANT / PERMIT PENALTY BEING IMPOSED FOR OTHER BREACHES. PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE LEVIED ONLY IN RESPECT OF EITHER OF TWO LIMBS I.E. EITHER FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSIN G OFFICER AFTER MAKING ADDITIONS IN THE HANDS OF ASSESSEE HAS TO RECORD SATISFACTION IN THIS REGARD AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE ACT HAS NOT BEEN SATISFIED BY THE ASSESSEE AND ACCORDINGLY, GIVE HIM SHOW CAUSE NOTICE BY RECORDING SATISFACTIO N OF VIOLATING EITHER OF THE LIMBS . THE ASSESSING OFFICER IN THE PRESENT CASE HAD RECORDED SATISFACTION FOR DEFAULT OF CONCEALMENT OF INCOME BUT LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME, WHICH IS NOT WARRANTED. HENCE, ON JURISDICTIO NAL ISSUE ALSO, NO PENALTY IS LEVIABLE AGAINST THE ASSESSEE. CONSEQUENTLY, WE ALLOW ITA NO. 2115 /DEL/20 1 2 M/S. RIETER INDIA PVT . LTD. 4 THE ISSUE IN FAVOUR OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 7 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH D AY OF JULY , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH JULY , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - XVIII, NEW DELHI ; 4. THE CIT - V, NEW DELHI ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE