Ensim India Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 1(2), Pune

ITA 339/PUN/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7185 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 12-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAVAN
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 271(1)(c); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 339 /PUN/20 18 / ASSESSMENT YEAR : 2008 - 09 ENSIM INDIA PVT. LTD. 201 - 24, 2 ND FLOOR, SUKHWANI PRESTIGE, NDA PASHAN, BAVDHAN, PUNE - 411 021. PAN : AAACE7989B ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(2), PUNE. / RESPONDENT A SSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI B.Y. CHAVAN / DATE OF HEARING : 23 .0 7 .2019 / DATE OF PRONOUNCEMENT : 29 .0 7 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 13, PUNE DATED 18.07.2017 FOR THE ASSESSMENT YEAR 2008 - 09 AS PER THE GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 339 /PUN/20 18 A.Y. 2008 - 09 2. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO THE PENALTY LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE ASSESSEE BEING BONA - FIDE HAS NEVER CONCEALED INCOME N OR FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREFORE, PENALTY U/S.271(1)(C) OF THE ACT IS NOT WARRANTED. THAT FURTHER, REFERRING TO THE ASSESSMENT ORDER PARA 10, PAGE 4 AND IN THE PENALTY ORDER PARA 6, PAGE 9, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER IS NOT SPECIFIC AS TO WHICH LIMB OF THE CHARGE, HE IS LEVYING PENALTY U/S.271(1)(C) OF THE ACT. IF THE LIMB IS NOT SPECIFIC REGARDING THE CHARGE, THE ASSESSEE DOES NO T GET S OPPORTUNITY TO DEFEND HIS CASE AND THEREFORE, AS PER THE SETTLED JUDICIAL PRINCIPLES ON THIS COUNT ALSO, PENALTY LEVIED SHOULD BE DELETED. 4. PER CONTRA, THE LD. DR REFERRED TO THE SECTION 271(1)(C) READ WITH EXPLANA TION 7 AND ON THAT BASIS HE PRAY ED THAT THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT SHOULD BE SUSTAINED. 5. THE LD. CIT(APPEALS) UPHELD THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT AS PER DETAILED REASON ING AS APPEARING IN HIS ORDER, UPHOLDING THE STRICTURE S OF EXPLANATION 7 ON THE PART OF THE ASSESSEE WITH REGARD TO THE TERMS GOOD FAITH AND WITH DUE DILIGENCE. ACCORDING TO THE FINDINGS OF THE LD. CIT(APPEALS), THERE WAS LACK OF GOOD FAITH AND DUE DILIGENCE ON THE PART OF THE ASSESSEE. 6. WE HAVE PERUSED THE CASE RECORDS AND HEAR D THE RIVAL CONTENTIONS. WE HAVE ALSO ANALYZED THE FACTS AND CIRCUMSTANCES IN THIS CASE. REFERRING TO THE 3 ITA NO. 339 /PUN/20 18 A.Y. 2008 - 09 PROVISIONS OF SECTION 271(1)(C) READ WITH EXPLANATION 7, THE PENALTY WILL BE LEVIABLE IF THE ASSESSEE HA S NOT WORKED IN GOOD FAITH OR DUE DILIGENC E. NOW COMING TO THE FACTS OF THE CASE, THE TRANSFER PRICING OFFICER (TPO) HAD NOT ACCEPTED THE BENCH MARKING OF INTERNATIONAL TRANSACTION DO NE BY THE ASSESSEE WITH ITS AES AND HAD MADE UPWARD ADJUSTMENT TO RS.1,24,77,171/ - FOR PROVISION OF APPLICATION OF ENGINEERING SERVICES. THE DISPUTE RESOLUTION PANEL (DRP) HAD DIRECTED TO EXCLUDE CERTAIN COMPANIES HAVING OP/TC ABOVE 40%. THEREFORE, IT IS CLEAR THAT THE DISPUTE IS WITH REGARD TO SELECTION OF COMPARABLES AND IN SUCH CASE, EVERY ASSESSEE IS CHOOSING COMPARABLES OR REJECTING COMPARABLES BASED ON THEIR STUDY REPORT AND ANALYSIS. IF WE WE RE TO SUSTAIN THE FINDINGS O F THE LD. CIT(APPEALS) THEN IN EVERY CASE, THERE WILL BE LACK OF GOOD FAITH AND DUE DILIGENCE ON THE PART OF THE ASSESSEE WHICH IS NOT CORRECT . IN THIS CASE THOUGH THERE MAY HAVE BEEN SOME DIFFERENCE S AS TO COMP ARABLES BUT THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, PENALTY LEVIED U/S.271(1)(C) OF THE ACT IS NOT JUSTIFIABLE. IN VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON 29 TH DAY OF JU LY , 201 9 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 29 TH JU LY , 2019 . SB 4 ITA NO. 339 /PUN/20 18 A.Y. 2008 - 09 / 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, C BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 5 ITA NO. 339 /PUN/20 18 A.Y. 2008 - 09 DATE 1 DRAFT DICTATED ON 23 .0 7 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29 .0 7 .201 9 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