Augustan Knitwear P Ltd., Coimbatore V. ACIT, Coimbatore

ITA 538/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8131 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R DURAI
• Assessee Lawyers: T BANUSEKAR
• Keywords: Transfer pricing; International transaction; Condonation of delay

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO. 538/MDS/2015 # % &% / ASSESSMENT YEAR : 2011-12 M/S. AUGUSTAN KNITWEAR P. LTD 3/127A, MANICKAMPALAYAM KUNNATHUR PUDUR POST, KOVILPALAYAM, COIMBATORE 641 107. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1) COIMBATORE. [PAN AABCM 4119Q ] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. T. BANUSEKAR, C.A +,'( ) * /RESPONDENT BY : SHRI. R. DURAI PANDIAN, IRS, JCIT. ! ) - / DATE OF HEARING : 18-01-2016 ./& ) - / DATE OF PRONOUNCEMENT : 05-02-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, COIM BATORE IN ITA ITA NO.538/MDS/2015 :- 2 -: NO.122/14-15, DATED 26.02.2015 FOR THE ASSESSMENT YEAR 2011-2012 PASSED U/S.271AA AND 250 OF THE INCOME TAX ACT, 19 61 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED THE GROUNDS THAT THE LD.CIT (A) HAS ERRED IN CONFIRMING THE PENALTY AND RELIED ON FIND INGS OF THE ASSESSING OFFICER FOR DELAY IN SUBMISSION OF INFORMATION WIT HOUT CONSIDERING THE GENUINE REASONS AND ASSESSEE HAS FILED DETAILS BEF ORE TRANSFER PRICING OFFICER (TPO) AND ALP WAS CONFIRMED TO BE FAIR AND CORRECT. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE IS IN THE BUSINESS OF TEXTILE GARMENTS INCLUDING OVERSEAS TRANSACTIONS AN D THE ASSESSING OFFICER CALLED FOR THE DETAILS OF INTERNATIONAL TRA NSACTION U/S.92D OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS PART ICULARS WERE FILED WITH A DELAY OF FOUR DAYS AS THE LD. AUTHORISED RE PRESENTATIVE COULD NOT ATTEND THE HEARING PROCEEDINGS DUE TO HIS SONS MARRIAGE ON 12 TH MARCH, 2014 AND FURTHER CONDONATION PETITION WAS F ILED. THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE H AS MADE PETITION FOR EXTENSION OF TIME NOT WITHIN THE PERIOD OF 30 D AYS FROM DATE OF RECEIPT OF NOTICE BUT SUBSEQUENTLY LEVIED PENALTY UNDER PROVISIONS OF SEC.271AA OF THE ACT AT 2% OF VALUE OF INTERNATIONA L TRANSACTION DEMANDED AT ?34.58 LAKHS. AGGRIEVED BY THE ORDER OF THE ASSESSING ITA NO.538/MDS/2015 :- 3 -: OFFICER, THE ASSESSEE ASSAILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT DELAY WAS REASONABLE AND THERE IS SUFFICIENT CAUSE. THE ASSESSING OFFICER HAS OVERLO OKED CIRCUMSTANCES AND LEVIED PENALTY. THE DELAY WAS NOT WONTON AND W AS DUE TO NON AVAILABILITY OF LD. AUTHORISED REPRESENTATIVE BUSY IN PERFORMING HIS SONS MARRIAGE AND ASSESSEE COMPANY COULD FILE DETA ILS CALLED FOR U/S.92D(1) OF THE ACT ONLY ON 17.03.2014. AS PER T HE PROVISION OF SEC.92D(3) OF THE ACT, PERSON AFTER ENTERING INTO I NTERNATIONAL TRANSACTION TO FURNISH INFORMATION WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF RECEIPT OF NOTICE AND THE INCOME TAX AUTHOR ITIES CAN EXTEND ON APPLICATION BY ASSESSEE FOR A FURTHER PERIOD NOT EX CEEDING 30 DAYS. IN THE PRESENT CASE, THE ASSESSEE COMPANY COULD NO T FURNISH THE INFORMATION REQUIRED WITHIN 30 DAYS DUE TO PERSONAL INCONVENIENCE OF THE LD. AUTHORISED REPRESENTATIVE. BUT THE LD. COM MISSIONER OF INCOME TAX (APPEALS) HELD THAT INFORMATION CALLED FOR BY N OTICE DATED 06.02.2014 AND THE ASSESSEE HAS MADE AN APPLICATION FOR EXTENSION AFTER EXPIRY OF 30DAYS AND THERE IS NO JUSTIFICATIO N IN FURNISHING INFORMATION AFTER SAID PERIOD AND CONFIRMED THE OR DER OF THE ASSESSING ITA NO.538/MDS/2015 :- 4 -: OFFICER. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE FILED AN APPEAL BEFORE THE T RIBUNAL. 5. BEFORE THE TRIBUNAL, THE LD. AUTHORISED REPRESENTAT IVE HAS REITERATED HIS SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER AND APPELLATE AUTHORITY AND SUBSTANTIATED HIS GROUNDS. FURTHER RAISED ADDITIONAL GROUND THAT THE PROVISIONS OF SEC.271AA OF THE ACT IS NOT INVOCABLE TO THE FACTS AND CIRCUMSTANCES OF THE ASS ESSEE CASE AND NEXT GROUND THAT THE MATTER WAS REFERRED TO THE TRA NSFER PRICING OFFICER AND THE ASSESSEE NEED NOT FILE DETAILS U/S .92D OF THE ACT BEFORE THE ASSESSING OFFICER AND LD. DEPARTMENTAL R EPRESENTATIVE HAS NOT SERIOUS OBJECTION AND WAS ADMITTED. THE LD. AUT HORISED REPRESENTATIVE DREW ATTENTION TO THE PAGE 3 AND 4 O F PAPER BOOK WHERE THE LD. AUTHORISED REPRESENTATIVE SONS MARRI AGE INVITATION CARD ON 12.03.2014 WAS FURNISHED AND LETTER FILED BEFOR E ASSESSING OFFICER ON 13.03.2014 REQUESTING TIME TILL 19.03.2014 AND S AME WAS REJECTED. IN COMPLIANCE TO THE SHOW CAUSE NOTICE DATED 10.03. 2014, IN PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE RETURNE D INCOME WAS E- FILED AND ATTACHMENTS ARE NOT ALLOWED, DUE TO WHICH DETAILS MAINTAINED U/S.92D (1) OF THE ACT RELATING TO INTERNATIONAL T RANSACTIONS COULD NOT BE FILED AND ALSO PERSONAL INCONVENIENCE OF LD. A UTHORISED REPRESENTATIVE BECAUSE OF SONS MARRIAGE ARRANGEMEN TS. THE ASSESSEE ITA NO.538/MDS/2015 :- 5 -: HAS FILED DETAILS OF INTERNATIONAL TRANSACTION U/SE C.92D(1) OF THE ACT AND PRAYED FOR CONDONATION OF DELAY IN FILING DETAI LS BY LETTER TO ASSESSING OFFICER ON 17.03.2014. FURTHER, LD. AUT HORISED REPRESENTATIVE ARGUED THAT THE NOTICE U/S.92CA(2) O F THE ACT WAS ISSUED BY LD.TPO, WARD 1(1) TO FURNISH THE DETAILS OF DOCUMENTS AND INFORMATION AS PER THE QUESTIONNAIRE AND ASSESSEE A UTHORISED REPRESENTATIVE APPEARED AND FURNISHED INFORMATION T O LD. TPO ON 27.09.2014 IN TRANSFER PRICING PROCEEDINGS. THE LD. AUTHORISED REPRESENTATIVE ARGUED THE ADDITIONAL GROUND THAT PENALTY PROVISIONS U/S. SEC.271AA ARE LEVIABLE ONLY WHEN THERE IS FA ILURE TO MAINTAIN INFORMATION AND DOCUMENTS AND REPORT OF CERTAIN TRA NSACTION BUT ASSESSEE HAS MAINTAINED DETAILS CALLED U/S.92D(1) OF THE ACT. WHEREAS PROVISIONS OF SEC. 271G SHALL APPLY TO FAI LURE TO FURNISH DOCUMENTS. AND ON COMPARING THE PROVISIONS OF SEC S.271AA AND 271G OF THE ACT. SEC 271AA . WITHOUT PREJUDICE TO THE PROVISIONS OF SEC 271 OR SECTION 271BA, IF ANY PERSON IN RESPECT OF AN IN TERNATIONAL TRANSACTION [OR SPECIFIED DOMESTIC 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 FURNISHED AN INCORRECT INFORMATION OR DOCUMENT, ITA NO.538/MDS/2015 :- 6 -: 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 TRA NSACTION (OR SPECIFIED DOMESTIC TRANSACTION) ENTERED INTO BY SU CH PERSON. SEC.271G . IF ANY PERSON WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION (OR SPECIFIED DOMESTIC TR ANSACTION) FAILS TO FURNISH ANY SUCH INFORMATION OR DOCUMENT A S REQUIRED BY SUB-SECTION (3) OF SECTION 92D, THE ASSESSING OF FICER [OR THE TRANSFER PRICING OFFICER AS REFERRED TO IN SECT ION 92CA) OR THE COMMISSIONER (APPEALS) MAY DIRECT THAT SUCH PER SON SHALL PAY, BY WAY OF PENALTY, A SUM EQUAL TO TWO PE R CENT OF THE VALUE OF THE INTERNATIONAL TRANSACTION (OR SPEC IFIFED DOMESTIC TRANSACTION) FOR EACH SUCH FAILURE] THE LD. AUTHORISED REPRESENTATIVE VEHEMENTLY ARGUED THAT THE PROVISIONS OF SEC.271AA OF THE ACT DOES NOT APPLY A ND ASSESSING OFFICER HAS WRONGLY INITIATED PENALTY PROCEEDINGS. ASSESSEE HAS COMPLIED TO THE DIRECTIONS OF THE LD.TPO REFERRED A T PAGE NO.2 IN TRANSFER PRICING PROCEEDINGS ORDER U/S.92CA OF INCO ME TAX ACT DATED 7.1.2015. WHERE THERE IS A REFERENCE OF NOTICE U/S .92A(2) AND ASSESSEE HAS COMPLIED THE NOTICE BY FILING DETAILS ON 27.09.2014. WITHOUT PREJUDICE TO THE APPLICABILITY OF THE PROV ISIONS AND THE CIRCUMSTANCES EVIDENCING THAT THE LD. AUTHORISED RE PRESENTATIVE WAS BUSY IN ARRANGEMENTS OF HIS SONS MARRIAGE, THE AS SESSEE HAS SUBMITTED DETAILS WITH THE LD.TPO IN TRANSFER PRICI NG PROCEEDINGS. IF PENALTY HAS TO BE LEVIABLE IT SHOULD BE UNDER SEC. 271G OF THE ACT NOT UNDER SEC.271AA OF THE ACT AS THERE IS NO DISPUTE ABOUT MAINTENANCE ITA NO.538/MDS/2015 :- 7 -: OF DOCUMENTS EXCEPT DELAY IN FURNISHING THE DETAI LS AND RELIED ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ITO VS. PPN POWER GENERATING CO. (P) LTD IN ITA NO.774/MDS/2007, DAT ED 21 ST OCTOBER, 2011 AND PLEADED FOR DELETION OF PENALTY. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUPPORTED HIS ARGUMENTS TH AT PENALTY SHALL BE EXERCISABLE U/S.271AA OF THE ACT AND PRAYED FOR DISMISSAL OF APPEAL. 7. WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND JUDICIAL DECISIO NS CITED. THE FACT THAT THE ASSESSEE COMPANY IS COVERED UNDER TPO PROV ISIONS AND THE ASSESSING OFFICER REFERRED THE MATTER TO THE LD.TPO AND BASED ON LD. TPO ORDER DATED 07.01.2015 PASSED ASSESSMENT ORDER U/S.143(3) R.W.S 92CA(3) OF THE ACT DT 12.03.2015. THE ASSESSEE HAS ENTERED INTERNATIONAL TRANSACTIONS AND REPORTED IN FORM 3C EB AT ARMS LENGTH PRICE AND THERE IS NO MODIFICATION IN THE ALP ADOPT ED BY THE ASSESSEE AS PER TPO ORDER U/SEC. 92A(3) DATED 07.01.2015. TH E ASSESSEE IN RESPONSE TO NOTICE COULD NOT FILE THE DETAILS OF I NTERNATIONAL TRANSACTIONS WITHIN A PERIOD OF 30 DAYS AND ADJOURN MENT LETTER WAS ITA NO.538/MDS/2015 :- 8 -: FILED BY THE ASSESSEE FOR TIME AS THE AUDITOR OF TH E COMPANY WAS BUSY IN ARRANGEMENTS OF HIS SONS MARRIAGE BUT SUBSEQUEN TLY BY LETTER DATED 17.02.2014 FURNISHED INFORMATION OF INTERNATIONAL T RANSACTIONS. BUT THE LD. ASSESSING OFFICER ON THE GROUND THAT THE ASSESS EE HAS NOT MADE ANY APPLICATION FOR EXTENSION OF TIME WITH 30 DAYS NOR FILED ANY DETAILS AND LEVIED PENALTY U/S.271AA OF THE ACT. WE ON PER USING ORDER U/S.92CA DATED 07.01.2015 PASSED BY TPO AT PAGE NO. 10 OF PAPER BOOK AT PARA 2, THE TPO OBSERVED AS UNDER:- 2. ACCORDINGLY, A NOTICE U/S.92CA(2) WAS ISSUED T O THE ASSESSEE ON 25.06.2014, TO FURNISH THE DETAILS OF DOCUMENTS AND INFORMATION CALLED FOR, IN AN ENCLOSE D QUESTIONNAIRE. THE ASSESSEE SUBMITTED THE DETAILS CALLED FOR ON 27.09.2014. SHRI. C.A VENKATESAN, AUTHORISE D REPRESENTATIVE OF THE ASSESSEE COMPANY APPEARED ON VARIOUS DATES AND DISCUSSED THE CASE. THE LD. AUTHORISED REPRESENTATIVE FILED PAPER BOOK CONTAINING THE REJECTION OF ADJOURNMENT PETITION FILED AND ALSO MARRIAGE INVITATION CARD OF LD. AUTHORISED REPRESENTATIVE SONS TO PRO VE THAT THERE IS A BONAFIDE DELAY WHICH IS NOT WONTON AND REASONABLE. THE LD. TPO HAS NOT MADE UPWARD ADJUSTMENT OF ARMS LENGTH PRICE IN ORDER U/SEC 92CA OF THE ACT AND THE SAME WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER R U/S.14 3(3) R.W.S 144(C) OF THE ACT. WE ARE OF THE OPINION THAT REASONS SPECIF IED BY THE ASSESSEE IN NOT FILING THE SAID INFORMATION U/S.92CD WITHIN 30 DAYS LOOKS ITA NO.538/MDS/2015 :- 9 -: GENUINE CONSIDERING THE TECHNICALITIES OF TRANSFER PRICING AS THE AUDITOR HAS TO EXPLAIN AND CLARIFY ON INTERNATION AL TRANSACTION TO THE ASSESSING OFFICER. THE FACTUAL EVIDENCE REFERRED I N PAPER BOOK IN RESPECT OF MARRIAGE OF LD. AUTHORISED REPRESENTATIV E SONS AND THE ASSESSING OFFICER HAS REJECTED THE ADJOURNMENT PETI TION FILED STATING THE REASONS WHICH IS NOT A GOOD PRACTICE AS THE CHI LDS MARRIAGE IS A VERY IMPORTANT OCCASION IN PARENTS LIFE TIME. THE ASSESSEE COMPANY MADE AN APPLICATION ALONGWITH DETAILS OF INTERNATIO NAL TRANSACTION AND FILED THE INFORMATION ON RECORD WITH ASSESSING OFFI CER. THE LD. AUTHORISED REPRESENTATIVE RELIED ON CO-ORDINATE BEN CH DECISION OF PPN POWER GENERATING CO. (P) LTD IN ITA NO.774/MDS/2007 , WERE HELD WHERE TPO HAD NOT RECOMMENDED ANY REVISION TO THE V ALUE OF INTERNATIONAL TRANSACTIONS ON THE BASIS OF SUPPORTI NG DOCUMENTS PENALTY CANNOT BE LEVIED. WE CONSIDERING THE APPARE NT FACTS EVIDENCE PROVISIONS OF LAW AND THE GENUINE GROUNDS FOR DELAY IN FILING THE INFORMATION AND ALSO NO UPWARD REVISION OF ARMS LEN GTH PRICE BY THE TPO AND THE SUPPORTING DECISION, DIRECT THE ASSESSI NG OFFICER TO DELETE THE PENALTY. SINCE WE HAVE DECIDED ON THE BASIS O F MAIN GROUND RAISED BY THE ASSESSEE, IN OUR OPINION NO NECESSITY OF ADJUDICATING ADDITIONAL GROUND RAISED BY THE ASSESSEE. ACCORDI NGLY, THE APPEAL OF ITA NO.538/MDS/2015 :- 10 -: THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO538/MDS/2015 IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 5TH DAY OF FEBRUARY , 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 0 / DATED:05.02.2016 KV 1 ) +#-23 43&- / COPY TO: 1 . '( / APPELLANT 3. ! 5- () / CIT(A) 5. 3 89 +#-# / DR 2. +,'( / RESPONDENT 4. ! 5- / CIT 6. 9:% ; / GF