TMI Blog2015 (1) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... of, the penalty proceedings are not sustainable. Hence, we uphold the order of the ld. CIT(A) deleting the penalty. - Decided in favour of assessee. - ITA No. 598/JP/2012, C.O. No. 49/JP/2012 - - - Dated:- 16-1-2015 - Shri R. P. Tolani And Shri T. R. Meena,JJ. For the Petitioner : Mrs. Rolee Agarwal, CIT - DR For the Respondent : Shri P.C. Parwal , CA ORDER Per R. P. Tolani, JM This is an appeal filed by the Revenue against the order of the ld. CIT(A)- II Jaipur dated 26-03-2012 for the assessment year 2006-07. The assessee has filed the cross objection. 2.0 The solitary ground raised by the Revenue in its appeal is as under:- That the ld. CIT(A) has erred in law as well as on the facts and circumstances of the case in deleting penalty of ₹ 2,16,47,823/- imposed u/s 271G of the I.T. Act, 1961 3.0 During the course of hearing the ld. AR of the assessee in its C.O. has not pressed the Ground No. 1 (b) which is dismissed being not pressed, leaving only Ground No. 1 (a) of the assessee is that order passed u/s 271G is barred by limitation. 4.0 Brief facts of the case are that the assessee submitted Form No. 3CEB. In spite of internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case vis-a-vis A.R. of the assessee's reply dated 21-04-2011 and found it not convincing. It is pertinent to mention here that as per Form _No.3_68 grounds of appeal furnished by the assessee and a copy of the same received from Hon'ble ITAT, Jaipur, the issue of assessee company before Hon'ble ITAT Jaipur the issue of initiation of penalty proceedings u/s 271G of I.T. Act, 1961 has not been agitated by the assessee company before Hon'ble ITAT , Jaipur . The issue of adjustments made by the TPO is irrelevant in these penalty proceedings. The assessee was under the obligation to furnish all the relevant informations and documents maintained u/s 92D(1) of it read with rules 10D(1) (3) of Income-tax Rules alongwith a copy of transfer pricing study report and T.P. documentations as called for by the Addl. CIT (TPO-I), Jaipur by issue of notice u/s 92CA(2) and 92D(3) of I.T. Act. The findings of the TPO that the T.P. documentation was not furnished have not been controverted by the assessee in the penalty proceedings u/s 271G. Thus it is an admitted fact that the T.P. documentation was not filed by the assessee before the TPO even after several opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessee in CO on limitation issue. 10.0 Ld. CIT(DR) is heard who supported the order of AO contending that it was the obligation of the assessee to file relevant TP documents in time. As it failed to comply with relevant notices in time for compliance, penalty has been rightly imposed by the AO. Apropos assessee s CO it is pleaded that the ground about limitation was not raised in memo of appeal before CIT(A). Without such ground or a request of additional ground before CIT(A), intelligently mentioned few lines in his written submission which have been reproduced by ld. CIT(A) without passing any order thereon. Thus this ground of C.O. does not arise out of the order of ld. CIT(A). Hence there is no merit is assessee s CO. 11.0 Ld counsel for the assessee contends that relevant provisions of law are as under:- Section 92 D Maintenance, and keeping of information and document by persons entering into an international transaction. (1) Every person who has entered into an international transaction 1259dg[or specified domestic transaction] shall keep and maintain such information and document in respect thereof, as may be prescribed. (2) Without prejudice to the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the TPO. However without appreciating the record ld. TPO directed the AO to initiate penalty proceedings, similarly no specification about the nature of non-compliance at all has been given. (iv) The assessee vide letter dated 28-01-2012 requested that ADIT (TPO) to specific which documents were not furnished by the assessee. The ACIT Circle- 2, Alwar vide order dated 27-02-2012 merely stated some facts from the commencement of the assessment proceedings explaining general provisions and only information to the effect that TP study report was filed as late as on 20-07-2009. The assessee explained that relevant queries were in the process being asked and TPO had to consider TP Study report. Thus relevant information was on record. (v) Reliance is placed on ITAT Delhi Bench Judgement in the case of Cargill India (P) Ltd. vs. DCIT (supra) which has deleted the penalty on similar type of facts and it has been relied on by the ld. CIT(A) which held as under: It is clear from the consideration of r. 10D and its various sub-rules, that documents and information prescribed under the rule is voluminous and it would only be in rarest cases that all the clauses of sub-rules wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be filed along with the return. Thirdly, the TPO before proceeding to determine ALP has above basic and initial information of international transactions carried by the assessee. The TPO is thereafter required to serve notice under sub-s. (2) of s. 92CA. The statutory scheme envisages that the TPO shall serve a notice requiring the taxpayer to produce evidence in support of his computation of ALP. Therefore, an opportunity to prove that its ALP is correct has to be allowed to the taxpayer. It is mandatory requirement of the regulations. Thereafter notices under s. 92D(3) may be issued requiring the taxpayer to furnish information on specified points , depending upon the facts of the case. Where heavy penalty is attracted for non-compliance, it has to be shown that the notice under s. 92D(3) is complied, both in letter and in the spirit of the statute. This conclusion is based on the scheme and the clear language used in the regulations. Under sub-s. (2) of s. 92CA, evidence in support of ALP would ordinarily include information and documents referred to in sub-s. (3) of s. 92D which are prescribed in various clauses of r. 10D(1). Documents and information prescribed are req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92CA(3) or some other provision of the Act irrespective of the title or label given to such a notice. Relevant information can be sought under notice under s. 92CA(3) also. Further, there is no restriction of furnishing prescribed information in response to notice under s. 92CA(2) to support the computation of ALP by the taxpayer. However, there is no authority under s. 92D(3) with the TPO to require the taxpayer to furnish non-specified information or such information or document already filed by the taxpayer or use of the provision without asking the taxpayer to support first its ALP of international transactions. The case of any person other than the taxpayer for notice under s. 92D(3) stands on a different footing than of the taxpayer to whom notice under s. 92CA(2) has been issued. Further, under s. 92D(3), it will not be possible to call for, all the information prescribed under r. 10D including supporting information and documents mentioned in sub-r. (3) in a routine or a casual manner without application of mind as to what specific information is required to achieve the purpose of the regulations. Information which has already been furnished by the taxpayer either in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting provision of s. 92D and calling upon the assessee to file information and documents latest by 21st Nov., 2005. The said notice also had all infirmities noted in the first notice. In the light of what is discussed above relating to requirement of valid notice under s. 92D(3) abovementioned notices cannot be treated as valid and legal to justify application of provision under s. 271G and levy of penalty of more than ₹ 40 crores. These are omnibus notices issued without application of mind and without considering documents already placed by the taxpayer on record and without consideration as to which of the specific clauses of sub-r. (1) or other sub-rules was attracted or which relevant information was needed in this case. Under s. 92D(3), AO or CIT(A) is authorized to require prescribed information but here both prescribed and unprescribed information like balance sheet, P L a/c, computation of income, etc. was also required to be furnished from the taxpayer before the taxpayer could file evidence under s. 92CA(2). Not only primary documents necessary to support the computation of ALP of taxpayer, but also supporting documents detailed in sub-r. (3) of r. 10D were require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings are held to be vitiated and liable to be cancelled.-Amrit Foods vs. CCE 2005 (190) ELT 433 (SC) applied. The taxpayer had filed information bona fidely according to its understanding of regulations and legal guidance received by it. The AO failed to refute any of the claim and recorded no finding on the reasonable cause pleaded by the taxpayer. In other words it was not held that the delay was without a reasonable cause. The same position continue unaltered in appellate proceedings before the CIT(A). The case pleaded by the taxpayer was neither examined nor refuted before upholding the levy of penalty. Provision of s. 271G is to be read along with provision of s. 273B. The penalty under s. 271G can be imposed only if the default is held to be proved to be without reasonable cause. Once a reasonable cause for delay is pleaded then it has to be examined in accordance with law. No attempt has been made by the Revenue to look into, examine or refute the claim of reasonable cause put forth by the taxpayer. The case, therefore, cannot be taken to have been rejected. The penalty has been imposed without considering application of s. 273B which overrides provisions of s. 271G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, imposing penalty. In these circumstances, there is no merit in the present appeal. 14.0 The asseess s case falls squarely in the above judgments. In view of above facts and circumstances of this case penalty has been rightly deleted the penalty. 15.0 Apropos assessee s CO it is pleaded that penalty proceedings are time barred. 16.0 We have heard the rival contentions and perused the material available on the record. It clearly emerges that during TP proceedings no intimation was given to the assessee alleging any delayed filing of TP report. There is no allegation of any specific non-compliance. The assessee on receipt of show cause notice reverted back to TPO asking for details of alleged non-compliance. In reply, the TPO instead detailing the nature of allegation again made a vague assertions that assessee's case was liable for penalty u/s 271G of the Act. From the record, we are unable to comprehend as to what exact nature of non-compliance is made by the assessee. It is trite law that in penalty proceedings, the assessee needs to be made aware of the exact nature of charge which is leveled against him. This is so because the assessee is suppose to give a repl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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