DCIT CEN CIR 1(1), MUMBAI V. EDELWEISS FINANCIAL SERVICES LTD, MUMBAI

ITA 5719/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4943 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Transfer pricing; International transaction; Reasonable cause; Arm length price; Set aside
• Section: 273B; 92D; 201; 274; 143(2); 2; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5719/M/2017 ASSESSMENT YEAR: 2012-13 DCIT CENTRAL CIRCLE -1(1), R.NO.903, 9 TH FLOOR, OLD CGO (ANNEXE), M.K. ROAD, MUMBAI - 400020 VS. M/S. EDELWEISS FINANCIAL SERVICES LTD., 4 TH FLOOR, EDELWEISS HOUSE, OFF C.S.T. ROAD, KALINA, SANTACRUZ (EAST), MUMBAI 400 098 PAN: AAACE1461E (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI JITENDRA JAIN, A.R. SHRI RAVIKANT PATHAV, A.R. REVENUE BY : SHRI R. MANJUNATHA SWAMY, D.R. DATE OF HEARING : 05.09.2019 DATE OF PRONOUNCEMENT :22.10.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 30.06.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: (I) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY U/S. 271G OF THE ACT BY STATING THAT THE PERIOD OF SIXTY DAYS SHOULD BE COUNTED FROM THE DATE OF RE CEIPT OF NOTICE U/S. 92D(3) AND NOT NOTICE U/S. 92CA(2) OF THE ACT,' (II) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S. 2 71G OF THE ACT BY STATING THAT THERE NO TRANSFER PRICING ADJUSTMENT WHEN IT IS MENTIONED IN THE ACT THAT PENALTY @ 2% OF ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 2 INTERNATIONAL TRANSACTION ENTERED INTO BY THE ASSES SEE IS TO BE LEVIED IN CASE THE ASSESSEE FAILS TO FURNISH THE DETAILS WITHIN SIXTY DAYS.' (III) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY BY HOLDING TH AT THE CHANGE OF CONSULTANT AS A REASONABLE CAUSE U/S. 273B OF THE ACT FOR DELAY OF THE SUBMISSION OF DETAILS WHEN THE LETTER OF AUTHORITY WAS GIVEN TO THE CONSULTANT ON 24.09.2015.' 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED, 3. THE APPELLANT CRAVES LEAVE TO AMEND OR AL TER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE COMMON ISSUE CHALLENGED IN ALL THE THREE GRO UNDS IS AGAINST THE DELETION OF PENALTY OF RS.7.00 CRORE BY LD. CIT(A) AS LEVIED BY THE AO UNDER SECTION 271G OF THE ACT. 4. THE FACTS IN BRIEF ARE THAT A REFERENCE UNDER SE CTION 92CA(1) OF THE ACT, 1961 DATED 10.11.2004 WAS RECEI VED ON 10.11.2014 FROM THE AO. THE AO MADE A REFERENCE T O TPO FOR DETERMINATION OF ARM LENGTH PRICE (HEREINAFTER REFE RRED TO AS ALP) WITH REGARD TO ALL TRANSACTIONS REPORTED IN FORM 3C EB FILED BY THE ASSESSEE. DURING THE PROCEEDINGS UNDER SECTION 92CA, A NOTICE WAS ISSUED ON 11.11.2014 TO THE ASSESSEE CAL LING FOR THE DETAILS WITH RESPECT TO INTERNATIONAL TRANSACTIONS. THEREAFTER, ANOTHER NOTICE WAS ISSUED ON 06.05.2015 CALLING FOR THE SAID DETAILS WHEN THE ASSESSEE DID NOT FILE THESE APPEAL S. THE TPO AGAIN ISSUED NOTICE ON 06.11.2015 BUT DESPITE SEVER AL NOTICES, THE ASSESSEE FAILED TO FURNISH THE DOCUMENTS AS PER THE PROVISIONS OF SECTION 92DE(III) OF THE ACT. THUS TH E PROVISIONS OF 271G OF THE ACT WERE INVOKED FOR NON FILING OF INFORMATIONS/DETAILS. THE TPO PASSED THE ORDER UND ER SECTION 92CA(III) OF THE ACT ON 29.01.2016 WHEREIN HE INITI ATED THE PENALTY PROCEEDINGS UNDER SECTION 270G ON 08.02.201 6 BY ISSUING NOTICE UNDER SECTION 274 READ WITH SECTION 271G OF THE ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 3 ACT. IT IS PERTINENT TO STATE THAT NO TP ADJUSTMENT WAS MADE BY THE TPO IN RESPECT OF INTERNATIONAL TRANSACTIONS EN TERED INTO BY THE ASSESSEE WITH ITS ASSOCIATED ENTERPRISES. THE ASSESSEE REPLIED TO THE NOTICE VIDE LETTER DATED 08.03.2016 AND 18.03.2016 BY SUBMITTING AS UNDER: 2. THE ASSESSEE VIDE THEIR LETTER DATED 8 TH MARCH 2016 AND 18 TH AUGUST 2016 HAS SUBMITTED AS UNDER; A) AS PER SECTION 92D(3J OF THE I.T. ACT 1961, THE ASS ESSEE IS REQUIRED TO FURNISH ANY INFORMATION OR DOCUMENT IN RESPECT OF A N INTERNATIONAL TRANSACTION OR SPECIFIED DOMESTIC TRANSACTION AS PR ESCRIBED UNDER SUBSECTION (1) OF SECTION B) 92D WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF REC EIPT OF A NOTICE ISSUED IN THIS REGARD. PROVIDED THAT THE AO OR THE CIT(A) MAY ON AN APPLIC ATION MADE BY SUCH PERSON EXTEND THE PERIOD OF 30 DAYS BY A FURTHER PERIOD NOT EXCEEDING 60 DAYS. THE ASSESSEE SUBMITS THAT NOTICE WAS RECEIVED ON 6T H NOVEMBER 2015 AND THE ASSESSEE FILED THE DETAILS ON 23RD DECEMBER AFTER REQUESTING FOR FURTHER TIME ON 18TH NOVEMBER 2015. PLEAS OF REASONABLE CAUSE: AS PER SECTION 273B OF T HE ACT NO PENALTY CAN BE IMPOSED FOR FAILURE OF THE PERSON TO FURNISH DOC UMENTS IN TIME, IF SUCH FAILURE IS PROVED TO BE DUE TO A REASONABLE CA USE. IN THIS REGARDS, THE ASSESSEE SUBMITS THAT THE ASSE SSEE HAD A CHANGE OF TAX CONSULTANT IN THE PERIOD JUNE TO OCTOBER 2015. THE NEW TAX CONSULTANTS WERE APPOINTED AT THE END OF OCTOBER 20 15 AND THEY TOOK SOME TIME TO INSPECT THE RECORDS AND REPRESENT. C) THE ASSESSEE HAS ALSO SUBMITTED THAT THERE WAS NO I NTENTION OF NOT SUBMITTING THE INFORMATION/DOCUMENTATION ALREADY MA INTAINED BY THE ASSESSEE UNDER RULE 10D OF THE IT. RULES 1962. THE ASSESSEE THEREFORE REQUESTS THAT AS THERE WAS REASONABLE CAUSE FOR FIL ING THE DETAILS IMMEDIATELY ON RECEIPT OF NOTICE, THE PENALTY PROCE EDINGS SHOULD BE DROPPED. D) THE ASSESSEE HAS RELIED ON THE FOLLOWING DECISIONS I) ITAT DECISION IN THE CASE OF DY.CIT COMPANY CIRCLE IV(1) CHENNAI V/S MAGICK WOODS EXPORTS (P) LTD (2012)25 TAXMANN.COM - 20(CHENNAI) WHEREIN IT WAS HELD THAT SINCE DEFAULT AS TO LATE F ILING OF DETAILS WAS EXPLAIN DELAY CAUSED IN FILING DETAILS, AND MOREOVE R TPO HAD NOT SUGGESTED ANY ADJUSTMENT IN ALP REPORTED BY ASSESSE E, THE PENALTY IMPOSED U/S 271G R.W.S. 92D IS TO BE DELETED. II) THE ASSESSEE HAS ALSO RELIED ON THE DELHI HC DECISION IN THE CASE OF CIT II V/S JHONSON OF THE ACT WAS THAT BASED ON THE DOCUMENTATION FILED BY THE ASSESSEE NO ADDITION WAS MADE TO THE VALUE O F INTERNATIONAL TRANSACTION ENTERED BY THE ASSESSEE. ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 4 5. THEREAFTER THE TPO, AFTER REJECTING THE CONTENTI ONS OF THE ASSESSEE AND AFTER ANALYZING THE PROVISIONS OF SECT ION 92D, RULE10D, RULE 10C , FINALLY IMPOSED A PENALTY @ 2% OF VALUE OF INTERNATIONAL TRANSACTION AT RS.7,76,68,773/- UNDER SECTION 271G OF THE ACT BY OBSERVING AS UNDER: 17. FROM THE DISCUSSION ABOVE, IT IS EVIDENT THAT THE TPO HAS CALLED FOR SPECIFIC DETAILS WITHIN THE MEANING OF SECTION 92D{3) OF INC OME TAX ACT, 1961 BY ISSUING NOTICES DATED 11/11/2014. 06/05/2015 AND 11/11/2015 AND THE DETAILS CALLED FOR WERE NOT FILED WITHIN 30 DAYS. THERE DOES NOT EXIST ANY REASONABLE CAUSE FOR NO FURNISHING THE DETAILS CALLED FOR EVEN AFTER MORE T HAN 11 MONTHS AFTER ISSUE OF FIRST NOTICE DTD. NOVEMBER 2014. 18. FURTHER DUE TO LATE SUBMISSION BEFORE THE TPO, THE TPO IS LEFT WITH VERY LITTLE TIME TO EXAMINE THE DETAILS AND CONDUCT AN INDEPTH STUDY TO DRAW A CONCLUSION WITH RESPECT TO THE ARM'S LENGTH PRICE. AS PER THE SCHEME OF TRANSFER PRTANG AUDI HE TPO IS REQUIRED TO EXAMINE WHETHER THE METHOD AN D THE DATA CHOSEN BY THE ASSESSEE TO DETERMINE THE ALP ARE IN ACCORDANCE WIT H THE PROVISIONS OF THE ACT INCLUDING THE CHOICE OF THE MOST APPROPRIATE METHOD . IF IT COMES TO A FINDING THAT .T N NOT SO, HE HAS TO DETERMINE THE ALP HIMSELF BASED ON THE MATERIAL OR INFORMATION OR DOCUMENTS AVAILABLE WITH HIM. THIS WOULD INCLUDE DOING DATABASE SEARCHES FINDING OUT APPROPRIATE UNCONTROLLED TRANSACTIONS, CHOOSE THE MOST APPROPRIATE METHOD AND THEN DETERMINE THE ALP. THIS EXERCISE IS TIME CONSUMING AS WELL AS RIGOROUS. THERE IS NO PROVISION FOR THE BEST JUDGEM ENT ASSESSMENT OR ESTIMATED DETERMINATION OF ALP BY THE TPO. IT IS PERHAPS, FOR THIS REASON THAT STATUTORY TIME LIMIT HAS BEEN PROVIDED FOR IN SECTION 92D(3) FOR F URNISHING THE DOCUMENTS MAINTAINED BY THE ASSESSEE UNDER RULE 10D(1) AND 10 0(3) UNLIKE THE PROVISIONS OF INCOME TAX ASSESSMENT UNDER SECTION 143(2) AND 142( 1). THE DELAY IN THE SUBMISSIONS THWARTS THE EFFORTS OF THE TPO IN PROPE RLY AND FULLY EVALUATING THE ANALYSIS DONE BY THE ASSESSEE AND IN DETERMINING TH E ALP HIMSELF IF ASSESSEE'S ANALYSIS IS NOT FOUND CORRECT. 19. BASED ON THE ABOVE FACTS & CIRCUMSTANCES OF THE CASE AND FOR THE REASONS DISCUSSED ABOVE, I AM SATISFIED THAT THE CASE SQUAR ELY ATTRACTED THE PENALTY PROCEEDING U/S 271G OF THE INCOME TAX DUE TO THE FA CT THAT THE ASSESSEE HAD CLEARLY VIOLATED THE LAWFUL REQUIREMENT UNDER SECTION 92 D( 3) AS TO FURNISH DOCUMENTATION AS CALLED FOR BY THE TPO. THE TOTAL VALUE OF RELEVA NT INTERNATIONAL TRANSACTIONS UNDER CONSIDERATION IN THIS CASE BEING FOREIGN CURRENCY L OAN AND INTEREST RECEIVED FROM AE AMOUNTING TO RS:388,34,38,641/- THE VALUE OF 2% INTERNATIONAL TRANSACTION COMES OUT TO BE,RS.7,76,68,7737- HENCE BEING SATISF IED, I HEREBY LEVY PENALTY OF A SUM RS.7,76,68.773/- U/S271GOF THE INCOME TAX ACT, 1961. 6. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A), AF TER TAKING INTO ACCOUNT THE SUBMISSIONS AND CONTENTIONS OF THE LD. A.R. OF ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 5 THE ASSESSEE, DELETED THE PENALTY AS IMPOSED BY DCI T(TP) U/S 271G OF THE ACT BY OBSERVING AND HOLDING AS UNDER I HAVE PERUSED THE PENALTY ORDER U/S 92CA(3) AND U /S 271G OF THE ACT PASSED BY THE TPO, WRITTEN SUBMISSION AND PAPER BOOK FILED BY THE APPELLANT. THERE IS NO DISPUTE WITH THE FACT AS EMERGING FROM TPO'S ORDER AND DETAILS AND SUBMISSION FILED BY THE APPELLANT. THE FIRST CONTENTION OF THE APPEL LANT IS THAT PERIOD OF SIXTY DAYS HAVE TO BE COUNTED FROM THE RECEIPT OF NOTICE ISSUE D U/S 92D(3) OF THE ACT. THE AO HAS CONSIDERED THIS ISSUE IN PARAGRAPH 6 AND 17 OF THE PENALTY ORDER PASSED U/S 271G OF THE ACT WHEREIN THE AO HAS STATED THAT THE APPELLANT HAS NOT SUBMITTED THE DETAILS FOR THE PERIOD OF NOTICE DATED 11.11.20 14 U/S 92CA(3) OF THE ACT. THUS, THE QUESTION FOR CONSIDERATION BEFORE ME IS AS TO S IXTY DAYS IS TO BE COMPUTED FROM WHICH NOTICE EITHER 92CA(3) OR 92D(3) OF THE ACT?. IN ORDER TO DECIDE THE ABOVE ISSUE, THE PROVISION OF TRANSFER PRICING ASSESSMENT HAS BEEN REFERRED. THE TRANSFER PRICING ASSESSMENT AS EXPLAINED IN THE ACT STATES T HAT ONCE THE CASE IS REFERRED TO THE TPO; HE WILL SERVE A NOTICE U/S 92CA(2) OF THE ACT TO THE ASSESSEE TO CALL FOR BASIC AND GENERAL DETAILS PERTAINING TO THE INTERNA TIONAL TRANSACTION ENTERED INTO BY HIM WITH ITS AES. IF, ON PERUSAL OF THE INFORMATION OR DOCUMENTS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE ISSUED U/S 92CA(2) O F THE ACT, THE TPO IS SATISFIED THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE I S AT ARM'S LENGTH PRICE THEN IT IS END TO THE MATTER. HOWEVER, IF THE TPO IS NOT SATIS FIED WITH THE DETAILS SUBMITTED BY THE ASSESSEE, THEN HE NEEDS TO ISSUE NOTICE U/S 92D (3) OF THE ACT ASKING FOR THE SPECIFIC DETAILS TO BE FILED BY THE ASSESSEE. IF CO NTENTION OF THE AO IS TO BE ACCEPTED THAT THE DETAILS HAVE TO BE FILED WITHIN THE SIXTY DAYS FROM THE ISSUE OF NOTICE U/S 92CA(2) OF THE ACT, THEN THERE IS NO USE OF SECTION 92D(3) OF THE ACT IN THE TRANSFER PRICING ASSESSMENT. THE LEGISLATURE IN THEIR OWN WI SDOM HAS DRAFTED THE LAW IN SUCH A WAY THAT FIRST COLLECT THE BASIS OR GENERAL INFOR MATION OF THE TRANSACTION BY SERVING NOTICE U/S 92CA(2) OF THE ACT AND SUBSEQUENTLY IF F URTHER DETAILS ARE REQUIRED THEN THE TPO IS REQUIRED TO ISSUE ANOTHER NOTICE U/S 92D (3) OF THE ACT ASKING THE SPECIFIC DETAILS FROM THE ASSESSEE. MY ABOVE VIEW IF FULLY S UPPORTED BY THE FOLLOWING DECISIONS REFERRED IN DETAIL IN WRITTEN SUBMISSION OF THE APPELLANT: - CIT VS JOHNSON MATTHEY INDIA (F) LTD [2015- 22 9 TAXMANN 0453 DELHI) - ACIT VS GLOBAL ONE INDIA PVT. LTD \53 SOT 0106 PEL] - PCIT VS LEROY SOMER & CONTROL (INDIA) P. LTD F ITA 1330/PEV2011] - CARGILL INDIA (P) LTD VS DCIT[110ITD 0616 DEL ITAT] ON READING OF PROVISION IN THE ACT AND JUDGMENTS QU OTED ABOVE, I AM OF THE VIEW THAT THE PERIOD OF SIXTY DAYS HAVE TO BE COUNTED FR OM THE NOTICE ISSUED U/S 92D(3) OF THE ACT. THE AO'S ACTION OF COUNTING THE SIXTY D AYS FROM THE NOTICE U/S 92CA(2) OF THE ACT IS CONTRARY TO THE PROVISIONS OF THE ACT. T HEREFORE/ THE AO'S ACTION IS QUASHED AND THE APPEAL OF THE APPELLANT IS ALLOWED ON THIS POINT ONLY. HOWEVER, FOR THE COMPLETENESS OF THE ORDER, THE OTHER ARGUMENTS OF THE APPELLANT ARE ALSO CONSIDERED. NEXT CONTENTION OF THE APPELLANT IS THAT PENALTY U/ S 271G OF THE ACT CANNOT BE LEVIED AS THERE IS NO TP ADJUSTMENT AND THE APPELLA NT'S TRANSACTION HAVE BEEN ACCEPTED AT THE ARMS LENGTH PRICE DETERMINED BY THE APPELLANT. THIS ASPECT HAS BEEN CONSIDERED BY THE TPO IN PARAGRAPH 15.2 OF THE PENALTY ORDER PASSED U/S ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 6 271G OF THE ACT. THE APPELLANTS CONTENTIONS HAVE BE EN CONSIDERED IN THE LIGHT OF OBSERVATION MADE BY THE TPO IN THE PENALTY ORDER PA SSED U/S 271G OF THE ACT. THE APPELLANT HAS CORRECTLY EXPLAINED THAT SECTION 271G OF THE ACT HAS BEEN INSERTED TO CURB THE PRACTICE OF TAX AVOIDANCE WHICH IS EVIDENT FROM THE FINANCE ACT, 2001. I FOUND FORCE IN THE SUBMISSION OF THE APPELLANT THAT THERE IS NO TP ADJUSTMENT IN THE CASE OF THE APPELLANT AND THE TRANSACTION OF THE AP PELLANT WITH AES HAVE BEEN ACCEPTED AT THE ARMS LENGTH PRICE DETERMINED BY THE APPELLANT; THUS, THERE IS NO TAX EVASION IN THE CASE OF THE APPELLANT. ON PERUSA L OF THE DOCUMENTS ON RECORD AND FINANCE ACT, 2001 I AM OF THE CONSIDERED VIEW T HAT SECTION 271G OF THE ACT HAVE BEEN INSERTED AS A MEASURE TO CURB TAX AVOIDAN CE. IN THE CASE OF APPELLANT, SINCE THE TRANSACTION HAVE BEEN ACCEPTED AT ALP DEC IDED BY THE APPELLANT, THERE IS NO TAX EVASION ON THE PART OF THE APPELLANT; HENCE, THE AO HAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S 271G OF THE ACT. MY ABOVE I S ALSO SUPPORTED BY THE FOLLOWING JUDICIAL PRECEDENTS: - CIT VS TOHNSON MATTHEY INDIA (P) LTD [2015- 22 9 TAXMANN 0453 DELHI] - PCIT VS MAGICK WOOD EXPORTS (P) LTD [53 SOT 02 93 CHENL - MAVAR INDIA LIMITED (ITA NO. 1872FDEL/2014) - ANNAPURNA BUSINESS SOLUTIONS V. ACIT [2012117 TA XMANN.COM 125 (HYD.) IN VIEW OF THE ABOVE PROVISION IN THE LAW AND JUDIC IAL PRONOUNCEMENTS I AM OF THE VIEW THAT PENALTY LEVIED BY THE TPO IS GROSSLY UNJU STIFIED AS THERE IS NO ADJUSTMENT IN THE TRANSACTION DONE BY THE APPELLANT WITH ITS A E. NEXT CONTENTION OF THE APPELLANT WAS THAT ALL THE D ETAILS OF THE TRANSACTION HAVE BEEN FURNISHED DURING THE ASSESSMENT PROCEEDING OF 2011-12. AS PER RULE 10D(4) IF THE TRANSACTION HAVE EFFECT OVER THE YEARS, THEN TH E ASSESSEE IS NOT REQUIRED TO MAINTAIN FRESH DOCUMENTATION SEPARATELY IN RESPECT OF EACH PREVIOUS YEAR UNLESS THERE IS ANY SIGNIFICANT CHANGE IN THE NATURE OF TE RMS OF THE INTERNATIONAL TRANSACTION. THE FACTS OF THE APPELLANTS CASE THAT IT HAS GIVEN THE FOREIGN CURRENCY LOAN TO ITS AES IN THE PRECEDING YEAR ON WHICH IT H AS CHARGED THE INTEREST @ 3.78% WHEREAS IN THE PRESENT YEAR UNDER CONSIDERATION THE RATE OF INTEREST CHARGED FROM THE AES ARE 9.80 % TO 10.54%. IN ORDER TO FALL IN P ROVISION OF RULE 10D(4) OF THE RULES THE CONDITIONS NEEDS TO BE SATISFIED ARE THAT THERE MUST BE NO SIGNIFICANT CHANGE IN (I) NATURE OF TRANSACTIONS (II) TERMS OF TRANSACTION AND (III) ASSUMPTION MADE. THE VARIATION IN THE INTEREST RATE CLEARLY SU GGEST THAT THERE IS CHANGE IN THE TERMS OF THE TRANSACTION; THEREFORE, THE APPELLANT IS NOT ENTITLED TO THE BENEFIT OF RULE 10D(4) OF THE RULES. THE APPELLANTS CONTENTION TO THIS EFFECT IS REJECTED. THE APPELLANT, IN THE ALTERNATIVE AND WITHOUT PREJU DICE/ ALSO SUBMITTED THAT IT COULD NOT FILE DETAILS DUE TO VARIOUS REASONABLE CAUSES S UCH AS (I) CHANGE IN CONSULTANT (II) CHANGE IN EMPLOYEES / EXECUTIVE (III) COMPLIANCE WI TH COMPANIES ACT 2013 AND TAX CONSULTANT (IV)STATUTORY COMPLIANCE IN NOVEMBER 201 5. THE TPO HAS CONSIDERED THE ISSUE OF REASONABLE CAUSE IN PARAGRAPH 7, 8,12,13,1 7 AND 18 OF THE PENALTY ORDER U/S 271G OF THE ACT. ON PERUSAL OF THE DETAILED REA SONS GIVEN IN THE WRITTEN SUBMISSION BY THE APPELLANT I AM OF THE VIEW THAT T HE APPELLANT WAS PRECLUDED BY THE VARIOUS VALID REASONS TO NOT FILE THE DETAILS B EFORE THE TPO. I AM OF THE CONSIDERED VIEW THAT IN ABSENCE OF EXECUTIVE FAMILI AR WITH THE TRANSACTION WHO WERE INVOLVED AT THE TIME TO TRANSFER PRICING AUDIT , IT IS DIFFICULT TO FILE INFORMATION AND DOCUMENTS BEFORE THE TPO. I'M ALSO OF THE VIEW THAT IN ABSENCE OF A WELL VERSED ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 7 CONSULTANT, IT IS VERY DIFFICULT TO REPRESENT THE C ASE BEFORE THE DEPARTMENTAL AUTHORITIES. I AM ALSO CONVINCED WITH THE REASONAB LE CAUSE THAT THE APPELLANT WAS BUSY WITH INCOME TAX RETURNS AND TRANSFER PRICING R EPORT IN THE MONTH OF NOVEMBER, 2015. THE NON-FILING OF RETURNS, TAX AUDI T REPORT AND TRANSFER PRICING REPORT HAS SEVERE CONSEQUENCES IN THE INCOME TAX LA W; THEREFORE, THE APPELLANT HAS RIGHTLY GIVEN THE FIRST PRIORITY TO THAT THE TR ANSFER PRICING ASSESSMENT WERE GETTING TIME BARRED. ON STUDY OF TPO'S ORDER IN JUX TAPOSITION WITH THE SUBMISSION OF THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT THE APPELLANTS CASE IS COVERED U/S 273B OF THE ACT (I.E. THE APPELLANT COULD NOT FILE THE DETAILS DUE TO REASONABLE CAUSE); THEREFORE, THE PENALTY LEVIED BY THE TPO IS DELETED. MY ABOVE VIEW IS FULLY SUPPORTED BY THE FOLLOWING DECISIONS: - PCIT V. MAGICK WOODS EXPORTS (P.) LTD. [20121 25 TAXMANN.COM 20 (CHENNAI) - CARGILL INDIA PRIVATE LIMITED VS PCIT U110 ITD 0616 DEL ITAT] - GILLETTE INDIA LTD. VS. ACIT (IT A NO. 598/TF/ 2012) IN VIEW OF THE ABOVE FACTS AND JUDICIAL PRONOUNCEME NTS, I AM OF THE VIEW THAT THE TPO HAS UNJUSTIFIED IN LEVYING THE PENALTY U/S 271G OF THE ACT; THEREFORE, THE PENALTY LEVIED BY THE TPO IS DELETED. THE LD. D.R. SUBMITTED BEFORE US THAT THE PENALTY A S IMPOSED BY THE AO UNDER SECTION 271G OF THE ACT FOR FAILING TO FURNISH DOCUMENTS REQUIRED UNDER SECTION 92D(3) OF THE ACT HAS WRONGLY BEEN DELETED BY THE LD. CIT(A) WITHOUT APPR ECIATING THE FACT THAT ASSESSEE DESPITE THREE OPPORTUNITIES GRAN TED BY THE LD. TPO HAS FAILED TO FURNISH THE DOCUMENTS AS REQUIRED BY THE TPO. UNDER THESE FACTS THE PENALTY HAS RIGHTLY BEEN IIMP OSED UNDER SECTION 271G OF THE ACT. THE LD. D.R. SUBMITTED TH AT THE TPO HAS CALLED FOR SPECIFIC DETAILS FROM THE ASSESSEE V IDE THREE NOTICES DATED 11.11.2014, 06.05.2015 AND 11.11.2015 AND THE DETAILS CALLED FOR WERE NOT FURNISHED WITHIN 30 DAY S. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED ANY REASONABLE CAUSE FOR NOT COMPLYING WITH THE NOTICES NY NOT FURNISHING THE DETAIL EVEN AFTER 11 MONTHS AFTER TH E ISSUE OF THE NOTICE DATED 11.11.2014. THE LD. D.R. SUBMITTED TH AT IN THE TRANSFER PRICING ISSUES THE TPO IS REQUIRED TO EXAM INE WHETHER THE METHOD AND DATA CHOSEN BY THE ASSESSEE TO DETER MINE ALP ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 8 ARE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HOWEVER, THE ASSESSEE HAS NOT CO-OPERATED AND THUS FAILED TO FUR NISH THESE INFORMATION WITHIN THE STATUTORY TIME LIMIT AS PROV IDED IN SECTION 92D(3) AS MAINTAINED BY THE ASSESSEE UNDER RULE 10D (I) AND 10D(III). THUS, THE FAILURE ON THE PART OF THE ASS ESSEE HAS RESULTED INTO PUTTING THE TPO IN GREAT JEOPARDY IN PROPERLY AND CORRECTLY EVALUATING THE INTERNATIONAL TRANSACTIONS . THE LD. D.R. FINALLY SUBMITTED THAT UNDER THESE CIRCUMSTANCES, T HE TPO HAS RIGHTLY IMPOSED THE PENALTY EQUAL TO 2% OF THE VALU E OF THE INTERNATIONAL TRANSACTIONS WHICH WORKED OUT TO RS.7,76,68,773/-. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) HAS COMPLETELY MIS-APPRECIATED THE FACTS OF THE CAS E AND DELETED THE ADDITION BY TAKING THE PERIOD OF DEFAULT FROM T HE NOTICE ISSUED UNDER SECTION 92D(3) INSTEAD OF 92CA(II) OF THE ACT AND THEREFORE THE LD. D.R. PRAYED THAT THE LD. CIT(A) H AS COMPLETELY MISCONSTRUED THE FACTS OF THE CASE AND DELETED THE ADDITION BY TAKING THE PERIOD FROM THE NOTICE ISSUED UNDER SECT ION 92D3 INSTEAD OF 92CA(II) OF THE ACT AND THEREFORE THE LD . D.R. PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE A ND THAT OF THE AO MAY BE RESTORED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED ORDER OF THE LD. CIT(A). IN THIS CASE THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS FOREIGN AE AND HAS REPORTED ALL THE TRANSACTIONS IN FORM NO.3CEB. THE AO REFER RED THE MATTER UNDER SECTION 92CA(I) OF THE ACT TO THE TPO FOR DETERMINING THE ARM LENGTH PRICE OF ALL THE TRANSAC TIONS REPORTED IN FORM 3CEB AND THEREAFTER THE TPO ISSUED THREE NOTICES TO THE ASSESSEE ON VARIOUS DATES AS UNDER: ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 9 (1) 11.11.2014 UNDER SECTION 92CA(II) OF THE ACT (2) 06.05.2015 UNDER SECTION 92CA(II) OF THE ACT (3) 06.11.2015 UNDER SECTION 92D3 OF THE ACT. THE LD TPO IMPOSED THE PENALTY U/S 271G OF THE ACT BY TAKING 60 DAYS FROM THE DATE OF THE FIRST NOTICES ISSUED U NDER SECTION 92CA(II) . THE LD. CIT(A) HAS CALCULATED THE 60 DAY S FROM THE DATE OF NOTICE ISSUED UNDER SECTION 92D OF THE ACT. THE LD. CIT(A) ALSO NOTED THAT IF THE 60 DAYS ARE RECKONED FROM THE DATE OF ISSUE OF NOTICE UNDER SECTION 92CA OF THE ACT TH EN THE PROVISION OF SECTION 92D(III) WOULD BECOME REDUNDAN T AND OTIOUS. THE LD. CIT(A) HAS RELIED ON A SERIES OF D ECISIONS AS HAS BEEN REPRODUCED HEREINABOVE IN THE REPRODUCTION OF OPERATIVE PART OF LD. CIT(A)S ORDER CONSIDERING THE PROVISIO N OF THE SECTION 92CA(III), 92D(III). WE ARE IN AGREEMENT WITH THE L D. CIT(A) THAT PERIOD OF 60 DAYS ARE TO BE RECKONED FROM THE DATE OF ISSUE OF NOTICE UNDER SECTION 92D(III) OF THE ACT. 8. ON THE SECOND ISSUE RAISED BY THE AR THAT THERE IS NO TRANSFER PRICING ADJUSTMENT MADE BY THE TPO AND THE REFORE THE LEVY OF PENALTY @ 2% ON TOTAL VALUE OF INTERNATIONA L TRANSACTION CAN NOT BE IMPOSED. WE OBSERVE THAT LD. CIT(A) HAS RIGHTLY APPRECIATED THE FACT THAT THE SECTION 271G OF THE A CT HAS BEEN INSERTED ON THE STATUTE BOOK TO CURB THE TAX AVOID ANCE AND THEREFORE WHEN THERE IS NO TP ADJUSTMENT MADE BY TH E TPO THERE IS NO TAX EVASION AND CONSEQUENTLY THE PENALT Y WAS RIGHTLY DELETED ON THIS COUNT ALSO. 9. ON THE ISSUE OF REASONABLE CAUSE WE ARE QUITE CO NVINCED WITH THE CONTENTIONS OF THE LD. A.R. THAT EVEN IF T HE PERIOD OF 60 DAYS IS CONSIDERED FROM THE DATE OF NOTICES ISSUED UNDER SECTION ITA NO.5719/M/2017 M/S. EDELWEISS FINANCIAL SERVICES LTD. 10 92CA(III) EVEN THEN THE ASSESSEE CAN NOT BE ATTRIBU TED THE DELAY IN FILING THE DETAILS BEYOND 60 DAYS AS THERE EXIST ED A REASONABLE CAUSE FOR THE SAME WHICH HAS BEEN COMPREHENSIVELY E XPLAINED AND DEALT WITH BY THE LD. CIT(A). WE NOTE THAT THE RE HAS BEEN A CHANGE IN THE TAX CONSULTANT OF THE ASSESSEE AND CH ANGE IN EMPLOYEES AND VARIOUS OTHER STATUTORY COMPLIANCES I N NOVEMBER, 2015 AND THE DELAY HAS BEEN EXPLAINED TO BE BEYOND THE CONTROL OF THE ASSESSEE. IN OUR OPINION, LD. C IT(A) HAS RIGHTLY APPRECIATED THE DELAY TO BE ON ACCOUNT OF R EASONS WHICH WERE DULY EXPLAINED AND JUSTIFIED BY THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF LD. CIT(A) ON THIS ACCOUNT A LSO. 10. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINE D TO UPHOLD THE ORDER OF LD. CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.10.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.