Juvalia Sales P.Ltd, New Delhi V. Addl.CIT, Special Range-5, New Delhi

ITA 7201/DEL/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2183 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Reasonable cause
• Section: 143(3); 92D; 92E; 271D; 271E; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH CNEW DLEHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A.NOS.7201 & 7202/DEL/2018 ASSESSMENT YEAR: 2014-15 M/S JUVALIA SALES P. LTD., VS ADDL.COMMISSI ONER OF INCOME-TAX, D-119, LAJPAT NAGAR-1, RANGE-5, NEW DELHI. NEW DELHI. PAN : AACCJ9530H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K. SAMPATH, ADVOCATE RESPONDENT BY: SHRI SANDEEP KUMAR, CIT DR DATE OF HEARING: 23/09/2019 DATE OF ORDER : 18/11/2019 ORDER PER K. NARASIMHA CHARY, J.M. THE ASSESSEE HAS FILED TWO APPEALS AGAINST THE ORDE RS BOTH DATED 29.8.2018 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-36, NEW DELHI {FOR SHORT CIT(A)} U/S 271AA AND 271BA IN A PPEAL NOS. 251/17-18 AND 252/17-18 RESPECTIVELY FOR ASSTT. YEAR 2014-15 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF SALE AND PURCHASE OF ARTIFICIAL JEWELLERY BY WAY OF E-COMMERCE (ONLINE) OR OTHERWISE. FOR THE ASSESSMENT YEAR 2014-15, THEY HA VE FILED THEIR RETURN 2 OF INCOME ON 30.9.2014 DECLARING A LOSS OF RS.35,92 ,71,623/-. SINCE THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION WITH THE ASSOCIATED ENTERPRISES (AES), DETERMINATION OF ARMS LENGTH PRICE (ALP) WAS REFERRED TO THE TRANSFER PRICING OFFICER (LD. TPO). LD. TPO PASSED THE ORDER DATED 5.10.2017 UNDER SECTION 92CA(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) WITHOUT DRAWING ANY ADVERSE INFERENCE I N RESPECT OF THE INTERNATIONAL TRANSACTION/SPECIFIED DOMESTIC TRANSA CTION UNDERTAKEN BY THE ASSESSEE DURING THE FINANCIAL YEAR 2013-14. 3. LEARNED ASSESSING OFFICER OBSERVED THAT THE AES ARE COVERED BY SECTION 92BA OF THE ACT WHICH IS COVERED BY TP REGU LATION AND THE ASSESSEE COMPANY IS A STATUTORILY REQUIRED TO FILE REPORT FROM AN ACCOUNTANT IN FORM NO.3CEB AND SHALL BE VERIFIED IN THE MANNER INDICATED THEREIN. ACCORDING TO THE LEARNED ASSESSING OFFICER THE ASSESSEE COMPANY HAD FAILED TO FILE THE AUDIT REPORT IN FORM NO.3CEB AND DOCUMENTATION UNDER SECTION 92D OF THE ACT AND ALSO TO FILE THE R EPORT UNDER SECTION 92E OF THE ACT. A SHOW CAUSE NOTICE WAS ISSUED TO TO TH E ASSESSEE REQUIRING HIM EXPLAIN THE LAPSE BY 22.5.2017, BUT, ACCORDING TO THE LEARNED ASSESSING OFFICER THE ASSESSEE FILED THE REPLY ON 2 5.5.2017. 4. IN THE REPLY, ASSESSEE PLEADED THAT THAT THEY AP POINTED M/S I.R.& ASSOCIATES, CHARTERED ACCOUNTANT TO CONDUCT THE AUD IT, FILE REPORT UNDER SECTION 92E OF THE ACT AND A COPY OF TAX AUDIT REPO RT IN FORM NO.3CEB WAS FILED ALONG WITH THE REPLY FILED ON 22.5.2017. ASSE SSEE FURTHER PLEADED THAT THE MISTAKE WAS UNINTENTIONAL WITHOUT ANY MALA FIDE INTENTION AND THERE IS A REASONABLE CAUSE FOR SUCH LAPSE. LEARNED ASSESSING OFFICER, HOWEVER, RECORDED THAT THE ASSESSEE COMPANY FAILED TO STATE ANY SPECIFIC CAUSE WHICH RESULTED IN NON-COMPLIANCE WITH THE PRO VISIONS OF SECTION 92 3 BA OF THE ACT AND THEREFORE THE ASSESSEE IS LIABLE TO PAY PENALTY OF RS. 34,14,052/-UNDER SECTION 271 AA OF THE ACT FOR VIOL ATING THE STATUTORY REQUIREMENT UNDER SECTION 92D OF THE ACT, AND A SUM OF RS. 1 LAKH OF PENALTY UNDER SECTION 271 BA OF THE ACT FOR VIOLATI NG THE STATUTORY REQUIREMENT UNDER SECTION 92E OF THE ACT. 5. ASSESSEE PREFERRED SEPARATE APPEALS CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271AA AND SECTION 271BA OF TH E ACT BEFORE THE LD. CIT(A). LD. CIT(A) BY ORDERS DATED 29.8.2018 DISMIS SED BOTH THE APPEALS HOLDING THAT THE SUBMISSIONS FILED BY THE ASSESSEE WERE CONSIDERED AND NOT FOUND ACCEPTABLE, AND THE CASE LAW CITED ARE DI STINGUISHABLE IN FACTS. RECORDING SO, LD. CIT(A) HELD THAT THERE WAS NO REA SON TO INTERFERE WITH THE ASSESSMENT ORDER, AND CONSEQUENTLY DISMISSED BO TH THE APPEALS. 6. AGGRIEVED BY THE IMPUGNED ORDERS, THE ASSESSEE P REFERRED THESE APPEALS. IT IS ARGUED BY THE LD. AR THAT IN THIS MA TTER THE BREACH OF LAW IS ONLY TECHNICAL AND VENIAL IN NATURE INASMUCH AS IT IS FACTUALLY INCORRECT TO SAY THAT THE ASSESSEE DID NOT KEEP AND MAINTAINED T HE INFORMATION AND DOCUMENTS REQUIRED BY RULE 10D OF THE INCOME TAX RU LES, 1962 (THE RULES). HE SUBMITTED THAT THE ORDER OF THE LD. TPO CLEARLY SHOWS THAT THE ASSESSEE HAD MAINTAINED THE DOCUMENTATION UNDER SEC TION 92D OF THE ACT AND THE SAME WAS PRODUCED BEFORE THE LD. TPO. F URTHER, AS AGAINST THE OBSERVATIONS OF THE LEARNED ASSESSING OFFICER T HAT THE TRANSFER PRICING STUDY IS ALSO GROSSLY INCOMPLETE INSOFAR AS IT RELA TES TO THE PAYMENT OF PURCHASE AND SALES FROM AND TO THE AES, NO ADVERSE COMMENT WAS FOUND IN THE REPORT OF THE LD. TPO. LD. AR REITERATED BEF ORE US THE STAND THAT WAS TAKEN BEFORE THE LD. CIT(A) AND SUBMITTED THAT IN THIS MATTER THE DUE DATE FOR SUBMISSION OF THE REPORT WAS 30.11.2014 WH EREAS THE REPORT IN 4 FORM 3CEB WAS OBTAINED ON 15.10.2014 ITSELF, BUT ON LY DUE TO INADVERTENCE AND FAILURE ON THE PART OF THE CHARTER ED ACCOUNTANTS, THE SAME COULD NOT BE FILED WITHIN DUE DATE, WHEREAS HA VING REALISED THE MISTAKE, THE ASSESSEE FILED THE REPORT BY 7.12.2016 SUCCESSFULLY AS IS EVIDENCED BY THE COPY OF DASHBOARD OF INCOME TAX SI TE. IT IS ONLY 10 MONTHS THEREAFTER, LD. TPO PASSED THE ORDER DATED 5 .10.2017 UNDER SECTION 92CA(3) OF THE ACT BASED ON WHICH THE LEARN ED ASSESSING OFFICER PASSED THE ORDER UNDER SECTION 143(3) OF THE ACT ON 27.12.2017. 7. THE SUM AND SUBSTANCE OF THE ARGUMENT OF THE LD. AR IS THAT AS A MATTER OF FACT THE ASSESSEE KEPT AND MAINTAINED THE REQUISITE INFORMATION UNDER RULE10 D OF THE RULES, SUBMITTED THE SAME BEFORE THE LD. TPO AND HE ALSO SUBMITTED THE AUDIT REPORT ALON G WITH THE INCOME-TAX RETURN, BUT ONLY LAPSE THAT TOOK PLACE WAS THAT THE AUDIT REPORT COULD NOT BE FILED BEFORE THE DUE DATE AND HAVING REALISED TH E MISTAKE, THEY DID IT ALMOST ONE YEAR BEFORE THE PASSING OF THE ORDER UND ER SECTION 143(3) OF THE ACT. ON THIS BASIS, IT IS SUBMITTED THAT THE BR EACH IS ONLY TECHNICAL AND VENIAL IN NATURE AND DOES NOT CALL FOR THE PENALTY UNDER SECTION 271AA AND 271BA OF THE ACT. 8. HE SUBMITTED THAT IN SECTION 271 AA AND SECTION 271 BA OF THE ACT, THE LEGISLATURE USED THE WORDS MAY DIRECT AN D IN ITS WISDOM THE LEGISLATURE DID NOT USE THE WORD SHALL, AND THERE FORE, IT IS NOT MANDATORY FOR THE LEARNED ASSESSING OFFICER TO LEVY THE PENALTY AND IT IS DISCRETIONARY, HE MAY NOT LEVY THE PENALTY ALSO. HE CITED BEFORE US THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F MALIK RAM VS. STATE OF RAJASTHAN, AIR 1961 SC 1575 FOR THE PRINCIPLE TH AT THE WORD MAY ALSO INCLUDES MAY NOT. HE PLACED RELIANCE ON THE DECIS ION OF THE KOLKATA 5 BENCHES OF THE TRIBUNAL IN THE CASE OF M/S JJ EXPOR TS LTD VS. DCIT IN ITA NO. 315/KOL/2010 BY ORDER DATED 07.01.2011 IN SUPPO RT OF HIS CONTENTION THAT WHEN ALL THE INFORMATION AND EVIDENCES WERE AV AILABLE BEFORE THE AUTHORITIES FOR COMPLETING THE ASSESSMENT UNDER SEC TION 143(3) OF THE ACT AND THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDI TED UNDER SECTION 44 AB OF THE ACT, IF A REASONABLE CAUSE IS SHOWN BY TH E ASSESSEE, NO PENALTY COULD BE LEVIED OR SUSTAINED. HE FURTHER PLACED REL IANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF HINDUSTAN STE EL VS. STATE OF ORISSA, 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSIN G PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT O F A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMP OSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONS CIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILUR E TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRI BED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 9. PER CONTRA, LD. DR HEAVILY PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT EVEN BEFORE TH E ASSESSING OFFICER, THE ASSESSEE ADMITTED THE DEFAULT IN FILING TAX AUD IT REPORT IN FORM NO.3CEB AND DOCUMENTATION UNDER SECTION92D OF THE A CT AND ALSO FAILED 6 TO STATEOR SUBSTANTIATE THAT THERE WAS REASONABLE C AUSE FOR NOT FILING THE AUDIT REPORT IN FORM NO.3CEB, AND, THEREFORE, HAVIN G SATISFIED THAT THE ASSESSEE HAD NOT COMPLIED WITH THE STATUTORY REQUIR EMENT UNDER SECTION 92D AND 92EOF THE ACT, THE LEARNED ASSESSING OFFICE R RIGHTLY LEVIED THE PENALTY AND THE LD. CIT(A) RIGHTLY JUSTIFIED IN SUS TAINING THE SAME. 10. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT WAS PLEADED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAD MAINTAINED THE DOCUMENTATION UNDER SECTION 92D OF THE ACT AND THE SAME WAS PRODUCED BEFORE THE LD. TPO, BASED ON WHICH THE LD.TPO DETERMINED THE ALP WITHOUT MAKING ANY ADVERSE COMMENT AND, THEREFORE, THERE IS NO TRUTH IN THE LE ARNED ASSESSING OFFICER SAYING THAT THE TRANSFER PRICING STUDY WAS ALSO GROSSLY INCOMPLETE. LD. CIT(A) DID NOT ADVERT TO THIS ASPECT AT ALL IN HIS ORDER AND EVEN BEFORE US ALSO REVENUE IS UNABLE TO CONTROVERT THE SAME. 11. IT COULD BE SEEN FROM THE RECORD, THE ADMITTED FACTS ESTABLISH THAT THE ASSESSEE FILED THE INCOME TAX RETURN ON 30.9.20 14, AND THOUGH THE DUE DATE FOR FILING THE AUDIT REPORT WAS 30.11.2014 , THEY FILED THE SAME ON 7.12.2016. THE STATEMENT OF THE ASSESSEE THAT WH ILE FILING THE RETURN OF INCOME, THE ASSESSEE ENCLOSED THE AUDIT REPORT. FURTHER, WHEN THE ASSESSEE FILED THE REPORT ON 7.12.2016, LD.TPO PASS ED THE ORDER ON 25.9.2017 AND THE ASSESSMENT UNDER SECTION 143(3) O F THE ACT WAS COMPLETE ON 27.12.2017. ITIS, THEREFORE, CLEAR THAT AS ON THE DATE OF PASSING OF THE TP ORDER AS WELL AS THE ORDER UNDER SECTION 143(3) OF THE ACT, ALL THE REQUISITE DOCUMENTS WERE AVAILABLE BEF ORE THE AUTHORITIES AND BASED ON SUCH DOCUMENTS ONLY, THE ASSESSMENT WAS DO NE. IT IS PERTINENT 7 TO NOTE THAT NO ADVERSE COMMENT WAS MADE BY THE LD. TPO ABOUT THE DOCUMENTATION OR PRODUCTION THEREOF. 12. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A CASE WHERE THE ASSESSEE DID NOT KEEP AND MAIN TAIN THE REQUISITE INFORMATION AND DOCUMENTS AS SPECIFIED UNDER RULE 1 0D OF THE RULES, BUT IS ONLY A CASE OF BELATED FILING OF THE AUDIT REPOR T. 13. IN THE CASE OF M/S JJ EXPORTS LTD VS. DCIT IN I TA NO. 315/KOL/2010 BY ORDER DATED 07.01.2011 THE KOLKATA BENCH OF THE TRIBUNAL HELD THAT WHEN ALL THE INFORMATION AND EVIDENCES WERE AVAILAB LE BEFORE THE AUTHORITIES FOR COMPLETING THE ASSESSMENT UNDER SEC TION 143(3) OF THE ACT AND THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDI TED UNDER SECTION 44 AB OF THE ACT, IF A REASONABLE CAUSE IS SHOWN BY TH E ASSESSEE, NO PENALTY COULD BE LEVIED OR SUSTAINED. RELEVANT OBSERVATIONS OF THE TRIBUNAL NEED TO BE EXTRACTED AND THOSE READ THUS, - THERE IS NO DISPUTE THAT THE REQUIRED AUDIT REPORT U/S. 92E WAS NOT FILED WITHIN THE PRESCRIBED TIME, RESULTING IN PENALTY AC TION U/S. 271BA OF THE ACT. ACCORDING TO THE ASSESSEE, IT WAS DUE TO BONA FIDE AND TECHNICAL MISTAKE THAT SUCH DEFAULT COMMITTED ONLY FOR THE FI RST YEAR OF ITS INTERNATIONAL TRANSACTIONS. IT IS A WELL-SETTLED PR INCIPLE AS LAID DOWN BY THE VARIOUS COURTS THAT THE WORD 'MAY' EMPLOYED IN PENAL PROVISIONS OF THE ACT MAY BE INTERPRETED AS DISCRETIONARY AND THA T DISCRETION IS LIMITED WITHIN THE MEANING OF SUCH PROVISIONS PROVIDING THE PROCEDURE THREROF. THE PROVISIONS GIVE DISCRETION TO THE TAXING AUTHOR ITY NOT TO IMPOSE PENALTY HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE. THE A.O. HAS BEEN CONFERRED UPON WITH THE INHERENT DISC RETION IN THE MATTER OF IMPOSING PENALTY. IN OUR CONSIDERED OPINION, TAX AUTHORITY IS TO SEE WHAT INFORMATION AND DOCUMENTS ARE RELEVANT FOR DET ERMINING THE ALP BEFORE ISSUING NOTICE U/S. 92E OF THE ACT. IN THIS CONNECTION, WE MAY REFER TO SEC. 92D WHICH SPEAKS OF MAINTENANCE AND KEEPING OF INFORMATION & DOCUMENT BY PERSONS ENTERING INTO AN INTERNATIONAL TRANSACTION. SUB- CLAUSE (3) OF THAT SECTION READS AS UNDER :- 8 'THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS ) MAY, IN THE COURSE OF ANY PROCEEDING UNDER THIS ACT, REQUIRE ANY PERSO N WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION TO FURNISH ANY IN FORMATION OR DOCUMENT IN RESPECT THEREOF, AS MAY BE PRESCRIBED UNDER SUB- SECTION (1), WITHIN A PERIOD OF THIRTY DAYS FROM THE DATE OF RECEIPT OF A NOTICE ISSUED IN THIS REGARD:' AS STATED ABOVE, THE ASSESSEE DURING COURSE OF ASSE SSMENT PROCEEDING HAD FILED THE REPORT OF THE ACCOUNTANT I N FORM 3CEB AS PER SEC. 92E OF THE ACT IN RESPECT OF ITS INTERNATIONAL TRANSACTIONS AND ON THE BASIS OF WHICH THE A.O. HIMSELF DETERMINED THE ALP OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THEREFORE, ALL THE IN FORMATION AND EVIDENCES WERE WELL WITH THE A.O. FOR COMPLETING TH E ASSESSMENT U/S. 143(3) OF THE ACT. FURTHER, IT IS ALSO NOT DISPUTED THAT THE ASSESSMENT YEAR UNDER CONSIDERATION WAS THE FIRST YEAR OF ASSE SSEE'S INTERNATIONAL BUSINESS AND THAT BEING SO, AS POINTED OUT BY THE L EARNED COUNSEL FOR THE ASSESSEE, THERE MAY BE REASONABLE GROUND FOR SUCH L APS IN NOT GETTING THE ACCOUNTS AUDITED U/S. 92E AND FILING OF THE SAM E WITHIN THE PRESCRIBED TIME. IT IS ALSO PERTINENT TO MENTION HE RE THAT FOR THE SUBSEQUENT YEARS, THERE HAD BEEN NO SUCH DEFAULT AS COMMITTED IN THE FIRST YEAR OF ITS INTERNATIONAL BUSINESS. FURTHER, THE ASSESSEE'S ACCOUNTS ARE DULY AUDITED U/S. 44AB OF THE ACT AND THERE IS NO SUCH DEFAULT AS OCCURRED IN RESPECT OF INTERNATIONAL BUSINESS. CONS IDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISS IONS OF THE PARTIES, WE ARE OF THE OPINION THAT THE DELAY IN SUBMISSION OF THE REPORT U/S. 92E OF THE ACT WITHIN THE PRESCRIBED TIME BY THE ASSESS EE WAS DUE TO A REASONABLE CAUSE AND, THEREFORE, PENALTY IS NOT SUS TAINABLE ON THIS GROUND. MOREOVER, THE PENALTY HAS BEEN IMPOSED ON M ERE TECHNICAL GROUND. IN VIEW OF SETTLED LAW, NO PENALTY IS IMPOS ABLE FOR TECHNICAL OR VENIAL DEFAULT. 6.1. AT THE TIME OF HEARING, THE LD . DEPARTMENTAL REPRESENTATIVE FILED A COPY OF JUDGMENT IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA), WHEREIN IT HAS BEEN HELD THAT THAT THE TR IBUNAL IS DUTY BOUND TO RECORD TANGIBLE AND COGENT REASONS FO R UPSETTING THE ORDERS PASSED BY THE TAX AUTHORITIES IN PENALTY MAT TERS U/S. 271D AND 271E OF THE ACT. SECTIONS 271D AND 271E ARE DIRECTED IN RESPECT OF PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS O F SEC. 269SS AND 269T IF A PERSON ACCEPTS OR REPAYS ANY LOAN OR DEPOSIT I N CASH, AS THE CASE MAY BE. IN SUCH CASES, THERE IS NO REQUIREMENT OF SPECI AL INFORMATION AS IS REQUIRED IN THE CASE OF INTERNATIONAL TRANSACTION, REQUIRING THE ASSESSEE TO FURNISH REPORT OF THE ACCOUNTANT ABOUT SUCH INTE RNATIONAL TRANSACTIONS. THE TRIBUNAL FURTHER HELD THAT,- 9 FURTHER, AS PER SEC. 271BA, THE A.O. MAY DIRECT AN ASSESSEE TO PAY BY WAY OF PENALTY OF RS. 1 LAKH ON HIS FAILURE TO FURN ISH REPORT U/S. 92E OF THE ACT. THEREFORE, THE POWER OF THE A.O. IS DISCRE TIONARY, WHICH IS BASED ON FACTS AND CIRCUMSTANCES OF EACH CASE. 14. IN HINDUSTAN STEEL VS. STATE OF ORISSA, 83 ITR 26, HONBLE APEX COURT HELD THAT EVEN IF A MINIMUM PENALTY IS PRESCR IBED, THE AUTHORITIES COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. IT IS RELEVANT TO EXTRACT THE OBSERVATIONS OF THE HONBLE COURT, WHICH ARE AS FOLLOWS: - AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EIT HER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMA CIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PEN ALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETH ER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIA LLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO I MPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN TH ERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 15. IN THE PRECEDING PARAGRAPHS, WHILE APPRECIATING THE FACTS, WE NOTICED THAT THE ASSESSEE DID NOT ACT DELIBERATELY IN DEFIANCE OF LAW NOR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST , NOR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION, BUT AS A MAT TER OF FACT HAVING OBTAINED THE 3CEB REPORT BY 15.10.2014, THEY DO NOT STAND TO GAIN BY WITHHOLDING IT FROM FILING TILL 7.12.2016. THERE IS NOTHING BEFORE US TO SUGGEST ANYTHING FALSITY TO THE STATEMENT OF THE ASSESSEE THAT IT IS ONLY BECAUSE OF THE MISTAKE COMMITTED BY M/S I.R & ASSOCIATES, 10 THE DELAY IN FILING SUCH REPORT OCCURRED. WE ARE OF THE CONSIDERED OPINION THAT THERE IS ONLY A TECHNICAL OR VENIAL BR EACH OF THE PROVISIONS OF THE ACT IN THIS MATTER. WE, THEREFORE , WHILE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL (SUPRA) AND ALSO THE DECISI ON OF THE TRIBUNAL IN THE CASE OF M/S JJ EXPORTS LTD (SUPRA) HOLD THAT IN THIS PARTICULAR SET OF FACTS AND CIRCUMSTANCES, IT WOULD BE DIFFICU LT TO SUSTAIN LEVY OF PENALTY ON TWO COUNTS, NAMELY, UNDER SECTION 271AA AND SECTION 271BA OF THE ACT. CONSEQUENTLY, WE ALLOW THE GROUND S OF APPEAL AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPU GNED PENALTY. 16. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 18 TH NOVEMBER, 2019. SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 18 TH NOVEMBER, 2019 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, DELHI