TMI Blog2014 (4) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... arely applies to facts of present case – No infirmity in order of CIT (A) in deleting penalty imposed u/s 271(1)(c ) of Act – Decided against Revenue. - ITA No.1491/Hyd/2012 - - - Dated:- 25-10-2013 - B. RAMAKOTAIAH AND SAKTIJIT DEY, JJ. For the Appellant : M.H. Naik. For the Respondent : Deepak Chopra. ORDER PER : SAKTIJIT DEY This appeal by the department is directed against the order dated 19-7-2012 of CIT (A)-II, Hyderabad pertaining to the assessment year 2004-05. 2. The grievance of the department in the present appeal is with regard to the action of the CIT (A) in deleting penalty imposed u/s 271(1)(c) of the Act of an amount of Rs.89,89,172/-. 3. Briefly the facts are the assessee a private limited company filed its return for the impugned assessment year declaring nil income after claiming deduction u/s 10A of the Act. During the scrutiny assessment proceedings, the Assessing Officer noticing that the assessee had entered into International Transaction with its AE referred the matter to the TPO for determining the ALP of International Transaction. The TPO after considering the TP study made by the assessee and other materials gathered by him det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of law, no penalty can be leviable. An addition made to the income returned will not necessarily mean that there is a concealment of income or furnishing inaccurate particulars so as to attract the provisions of section 271(1)(c ) of the Act. It was submitted that the assessee has neither concealed its income nor furnished any inaccurate particulars of income. The assessee had undertaken the economic analysis for determination of ALP in accordance with the provisions of the statute and based on the transfer pricing study undertaken by an independent external consultant. It was concluded that the price received by the assessee in respect of International Transaction with its AE is within the ALP. Therefore, the assessee cannot be attributed with the intention of concealing of income or furnishing of inaccurate particulars of income for attracting the provisions of section 271(1)(c) of the Act. In support of such contention, the assessee relied upon various judicial precedents including the decision of Hon'ble supreme Court in case of Reliance Petro Products Ltd. (322 ITR 158). The Assessing Officer however was not convinced with the explanation submitted by the assessee and procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng aggrieved of the aforesaid order of the CIT (A), the department is in appeal before us. 8. The learned Departmental Representative strongly arguing for imposition of penalty u/s 271(1)(c ) of the Act contended that the adjustment to ALP determined by the TPO having been confirmed by the Income-tax Appellate Tribunal, concealment of income and or furnishing of inaccurate particulars of income to the extent by the assessee is true. Hence imposition of penalty u/s 271(1)(c ) of the Act is justified. 9. The learned authorised representative for the assessee while strongly supporting the order of the CIT (A) submitted that the rejection of the TP report by the TPO is merely on the basis of difference of opinion being entertained by the assessing officer and not due to any conscious attempt on the part of the assessee to mislead or misdirect correct computation of income by furnishing inaccurate particulars or not furnishing adequate information. It was submitted that the TPO has rejected the TP report of the assessee basically on the issue of use of multiple year data and by applying certain additional filters for rejecting some of the comparables selected by the assessee. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a difference of opinion in respect of interpretation of the statute there cannot be concealment of income. It may be noted that in the case of CIT v. Reliance Petro products (P.) Ltd. [2010] 322 ITR 158, the Hon'ble Supreme Court held that the mere making of a claim which is not sustainable in law by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. To attract penalty the details supplied in the return must not be accurate, not exact nor correct or according to the truth or erroneous; where there is no finding that no details supplied by the assessee in its return or found to be incorrect or erroneous or false, there is no question of inviting the penalty u/s. 271(1)(c). 5.2 On the issue of penalty u/s. 271(1)(c) Explanation-7, the Hon'ble Mumbai Tribunal after analyzing the provisions held that : "10 The grounds on which the ALP determination by the assessee has been rejected are thus reasonably debatable. Lack of good faith and due diligence cannot be inferred when the grounds on which ALP determined by the assessee has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elaborately discussed and well as reasoned order of the CIT (A), the TPO has not rejected the methodology adopted in the TP report submitted by the assessee obtained from an external expert. The difference in ALP arose only on account of difference of opinion between the assessee and TPO with regard to the use of multiple year data and selection of certain companies as comparables. Therefore, in our view the CIT (A) is correct in holding that the difference in the value of ALP was due to difference of opinion with regard to certain issues in the context of interpretation of statutory provisions and not due to lack of good faith and due diligence. The issues on the basis of which the ALP shown by the assessee has been rejected are debatable, hence cannot be said to be leading to concealment of income or furnishing inaccurate particulars of income when the assessee has obtained the TP report from an external expert. In these circumstances, in our view the CIT (A) was justified in deleting the penalty u/s 271(1)(c) of the Act. The ratio laid down by the Income-tax Appellate Tribunal, Mumbai Bench in case of RBS Equities India Limited (supra) squarely applies to the facts of the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X
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