SARENS HEAVY LIFT INDIA (P) LTD,NEW DELHI V. DCIT CIRCLE-22(1), NEW DELHI

ITA 2702/DEL/2019

AI Insights

The case involves Sarens Heavy Lift India Pvt. Ltd., the appellant, contesting a penalty imposed by the Deputy Commissioner of Income Tax, Circle-22(1), New Delhi, under section 271AA of the Income Tax Act, 1961, for the assessment year 2012-13. The penalty, amounting to INR 13,61,930, was challenged on grounds that the assessee had adequately disclosed all necessary information in their transfer pricing report and that the difference in transaction values with their Associated Enterprise was due to legitimate reasons such as differing bases of valuation (CIF vs. FoB). The Tribunal's decision hinged on the applicability of the law at the time of record maintenance and the reasonable explanation provided by the assessee for the discrepancies noted by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474521 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: ANANYA KAPOOR
• Keywords: Transfer pricing; International transaction
• Section: 92D

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G” BENCH: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.2702/Del/2019 [Assessment Year : 2012-13] Sarens Heavy Lift India Pvt.Ltd., F-90/25 Okhla Industrial Area Phase-1, New Delhi-110020 PAN-AAMCS9036P vs DCIT Circle-22(1) New Delhi APPELLANT RESPONDENT Appellant by Ms. Ananya Kapoor, Adv. Shri Utkarsa Kumar Gupta, Adv. & Shri Tarun Chanana, Adv. Respondent by Shri Sahil Kumar Bansal, Sr.DR Date of Hearing 20.03.2025 Date of Pronouncement .03.2025 ORDER PER PRADIP KUMAR KEDIA, AM : The captioned appeal has been filed at the instance of the assessee seeking to assail the First Appellate order dated 28.01.2019 passed by Commissioner of Income Tax (A)-XXV, New Delhi [“CIT(A)”] under s. 250(6) of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 29.08.2017 passed under s. 271AA of the Act pertaining to assessment year 2012-13. 2. As per the grounds of appeal, the assessee seeks to challenge the imposition of penalty amounting to INR 13,61,930/- under s. 271AA of the Act. 3. We have considered the rival submissions on the challenge arising in the present appeal. 4. The assessee has raised several points to assail the imposition of penalty under s. 271AA of the Act vis: (i) The assessee has made adequate disclosure in its transfer pricing report in Form 3CEB and the return of income filed for the relevant AY and has not ITA No.2702/Del/2019 Page | 2 furnished any incorrect information or documents. The penalty has been imposed and upheld by invoking clause (iii) to s.271AA(1) of the Act as can be seen from the penalty order itself. As per clause (iii) to sub-clause (1) to s.271AA, the penalty under s. 271AA is inter-alia liable to be imposed where the assessee maintains or furnishes incorrect information or documents. This sub-clause (iii) has been inserted w.e.f 01.07.2012 and is not applicable to record maintained prior thereto; (ii) the difference in the value of the international transaction carried with its Associated Enterprise (“AE”) is on account of insurance and freight expenses. Whereas the capital goods have been supplied by the AE on Free on Board (“FoB”) basis, the assessee has recorded the same on CIF basis resulting in difference in the transaction value. Thus, transaction has been correctly accounted for and disclosed in the terms of s. 92D of the Act. 5. On perusal of the records, we find prima facie merit in the plea of the assessee towards inapplicability of s. 271AA in the facts of the case having regard to the erstwhile position of law. The AO has referred to clause (iii) to sub-clause (1) to s. 271AA of the Act. The aforesaid clause was inserted w.e.f 01.07.2012 whereas the information cited is based on records maintained prior to the substitution of s. 271AA of the Act. The obligation placed by newly substituted s. 271AA expanding the obligation of the assessee were not existing at the time of preparation of records. This ground alone is sufficient to drop the penalty of strict nature. 6. Besides, the imposition of penalty under s. 271AA is not automatic and dependent upon the discretion of the AO. Needless to say that such statutory discretion requires to be exercised in a fair and objective manner having regard to the totality of circumstances. In the present case, the assessee has offered an explanation towards the difference in the value of international transactions owing to insurance and freight on the capital goods. The explanation offered towards difference appears plausible and accounts for the difference in the valuation. Thus, statutory discretion ought to have been exercised in favour of the assessee. ITA No.2702/Del/2019 Page | 3 7. Thus, on both counts, the assessee is exonerated from imposition of penalty under s. 271AA of the Act. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 26th March, 2025. Sd/- Sd/- (VIKAS AWASTHY) JUDICIAL MEMBER (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER *Amit Kumar, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "