Bartronics India Ltd., Hyd, Hyderabad V. DCIT, Circle-1(2), Hyd, Hyderabad

ITA 794/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6142 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KONDA RAMESH
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Transfer pricing; International transaction; Reasonable cause
• Section: 92B; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 794/HYD/2015 ASSESSMENT YEAR: 2010-11 BARTONICS INDIA LTD., HYDERABAD PAN AAACB 8231 F VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 1(2), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI KONDA RAMESH DATE OF HEARING 06-01-2016 DATE OF PRONOUNCEMENT 22-01-2016 O R D E R PER P. MADHAVI DEVI, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 30/03/2015 OF LD. CIT(A) - 1, HYDERABAD, UPHOLDING THE PENALTY LEVIED BY THE AO U/S 271G OF THE IT ACT, FOR THE ASSESSMEN T YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY, WHICH IS ENGAGED IN PROVIDING SOFTWARE DEVELOPMENT SOLUTIONS TO ITS A.E., FILED ITS RETURN OF INCOME BEFORE THE AO. AS THE ASSESSEE HAD INTERNATIONAL TRANSACTIONS WITH ITS AE, THE AO REFERRED THE ASSES SEES CASE TO THE TRANSFER PRICING OFFICER FOR DETERMINATION OF ARMS LENGTH PRICE. THE TPO PROPOSED ADJUSTMENT U/S 92CA OF THE ACT AND THE AO PASSED THE DRAFT ASSESSMENT ORDER IN ACCORDANCE WITH THE SAME. AGGRIEVED BY THE SAME, ASSESSEE COMPANY FILED APPEAL BEFORE THE DRP AND THE DRP VIDE THEIR ORDER DATED 24/12/2014 U/S 144C OF T HE ACT, DIRECTED THE TPO TO CONSIDER THE INTEREST RATE AT LIBOR + 2% AS AGAINST 2 ITA NO. 794 /HYD/2015 BARTRONICS INDIA LTD. 12.25% ADOPTED BY THE TPO. FOLLOWING THE SAID DIREC TIONS, THE TPO VIDE HIS ORDER DATED 05/12/2015 DETERMINED THE SHOR TFALL IN THE TP ADJUSTMENT AND PROPOSED ADDITION OF RS. 11,83,41,25 5/- AND THE FINAL ASSESSMENT WAS, ACCORDINGLY, MADE. 3. IN THE MEANWHILE, THE TPO INITIATED PENALTY PROC EEDINGS U/S 271G OF THE ACT BY ISSUANCE OF A NOTICE DATED 10/06 /2013 FOR NON- SUBMISSION OF INFORMATION REQUIRED BY HIM. ASSESSEE REPLIED THAT THE ASSESSEE BEING A LISTED COMPANY, IS REQUIRED TO DIS CLOSE AUDITED RESULTS WITHIN 60 DAYS FROM THE END OF THE FY AND S INCE ALL ITS ACCOUNTS PERSONNEL ARE ENGAGED IN THE FINALIZATION OF ACCOUNTS, THE COMPANY IS UNABLE TO SUBMIT ANY INFORMATION WITHIN THE STIPULATED TIME. HOWEVER, THE TPO WAS NOT SATISFIED AND LEVIE D PENALTY U/S 271G @ 2% OF THE VALUE OF THE INTERNATIONAL TRANSAC TIONS. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT(A), WHO CONFIRMED THE ORDER OF THE TPO AND THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING THE JURISDICTION OF THE TPO I N LEVYING PENALTY U/S 271G OF THE ACT. 5. THE MAIN ARGUMENT OF THE ASSESSEE IS THAT THE TP O HAS NO JURISDICTION TO INITIATE PENALTY PROCEEDINGS U/S 27 1G OF THE ACT. TO THIS EFFECT, THE ASSESSEE HAS RAISED ADDITIONAL GROUND B EFORE US VIDE LETTER DATED 16/09/2015. SINCE IT IS A LEGAL GROUND THAT T HE SAME IS ADMITTED AND ADJUDICATED AS UNDER: 6. IN SUPPORT OF THE ASSESSEES CONTENTION, THE LEA RNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON VARIOUS JUDGMENTS AND, MORE PARTICULARLY, THE DECISION OF THE ITAT, HYDERABAD B ENCH IN THE CASE OF M/S REMY ELECTRICALS INDIA LTD. IN ITA NO. 872/HYD/ 2011, ORDER DATED 20/07/2012, WHEREIN THE TRIBUNAL AT PARA 3 OF ITS O RDER HAS HELD AS UNDER: 3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. SECTION 271G PROVIDES FOR IMPOSITION OF PE NALTY FOR FAILURE TO FURNISH 3 ITA NO. 794 /HYD/2015 BARTRONICS INDIA LTD. INFORMATION OR DOCUMENTS UNDER S. 92B OF THE ACT. THE LANGUAGE IN SECTION 271G SPECIFICALLY PROVIDES THAT THE PENALTY ORDER HAS TO BE PASSED BY THE AO OR THE CIT (A). WE FIND FORCE IN THE CONTENTION OF THE LEARNED AR FOR THE ASSESSEE THAT THE TPO CANNOT BE TERMED AS AO FOR T HE PURPOSE OF SECTION 271G. WE FIND NO INFIRMITY IN THE REASONING OF THE CIT (A) IN THIS REGARD. EVEN ON MERIT ALSO, THE CIT (A) AFTER ELABORATELY DISCUSSING ON THE FACT, HAS COME TO A CATEGORICAL FINDING THAT PENALTY U/S 271 G IS NOT AUTOMATIC. IF THE ASSESSEE SHOWS A REASONABLE CAUSE, THEN NO PENALTY CAN BE IMPOSED. THE CIT (A) AFTER CONSIDERING THE EXPLANATION SUBMITTE D BY THE ASSESSEE FOUND THAT THERE IS REASONABLE CAUSE IN NOT SUBMITTING T HE DOCUMENTS WITHIN THE SPECIFIED TIME. FROM THE ORDER OF THE CIT (A), IT IS CLEAR THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE CAUSE FOR NOT SUBMITT ING THE REQUIRED DOCUMENTS WITHIN THE SPECIFIED TIME BEFORE THE TPO . ON THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A) IN DELETING THE PENALTY. WE THEREFORE UPHOLD THE SAME AND REJECT THE GROUNDS RAISED BY THE REVENUE. 6.1 IN THE CASE BEFORE US ALSO, IT IS THE TPO AND N OT THE AO, WHO HAS INITIATED AND LEVIED THE PENALTY. SINCE THE FAC TS OF THE PRESENT CASE BEFORE US ARE SAME, AND THE TPO HAS WITHOUT JU RISDICTION, LEVIED PENALTY U/S 271G, RESPECTFULLY FOLLOWING THE DECISI ON OF THE COORDINATE BENCH IN THE CASE OF M/S REMY ELECTRICALS INDIA LTD . (SUPRA), WE SET ASIDE THE ORDER OF CIT(A) AND DELETE THE PENALTY OF RS. 35,14,139/- LEVIED U/S 271G OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2016. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER J UDICIAL MEMBER HYDERABAD, DATED: 22 ND JANUARY, 2016 KV 4 ITA NO. 794 /HYD/2015 BARTRONICS INDIA LTD. COPY TO:- 1) M/S BARTRONICS INDIA LTD., C/O P. MURALI & CO., CAS., 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) DCIT - 1(2), HYDERABAD. 3) CIT(A)- 1, HYDERABAD 4) CIT - 1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.