2012 (9) TMI 1042 - AT - Income Tax

Summary

Issues involved: Appeals against deletion of penalties u/s 271G and 271AA of the Income Tax Act 1961 for the assessment year 2005-06.

Issue 1: Penalty u/s 271G

The assessee, a company engaged in manufacturing/sale of dry cells, faced penalty proceedings under section 271G for failure to furnish information and documents within the stipulated time. The Assessing Officer imposed a penalty of Rs. 35,77,200, citing contravention of the Act's provisions. However, the Commissioner of Income Tax (Appeals) deleted the penalty, considering the company's explanations and circumstances beyond its control, such as the sudden departure of the Company Secretary affecting document submission timelines. The Commissioner found that the details furnished were sufficient, no revenue loss occurred, and the company had reasonable cause for the delay. The Coordinate Bench order supported the deletion of the penalty, emphasizing the reasonable cause for the delay due to the employee turnover.

Issue 2: Penalty u/s 271AA

Similarly, penalty proceedings were initiated under section 271AA against the assessee for failure to maintain information and documents as required under section 92D of the Act. The Assessing Officer imposed the same penalty as under section 271G. The Commissioner of Income Tax (Appeals) also deleted this penalty, noting that the company had furnished details in time, maintained records as per the Act, and no revenue loss was incurred. The Commissioner held that the company had reasonable cause for the delay and directed the Assessing Officer to delete the penalty of Rs. 35,77,200 levied u/s 271AA.

In both cases, the Revenue challenged the deletion of penalties by the Commissioner of Income Tax (Appeals) under section 271G and 271AA. The arguments raised by both parties were duly considered, and it was observed that there were no adjustments in the international transactions of the assessee. The circumstances leading to the delay in document submission were deemed beyond the company's control, specifically due to the sudden departure of the Company Secretary. The Coordinate Bench order supported the deletion of penalties, emphasizing the reasonable cause for the delay. Consequently, the appeals of the Revenue were dismissed, affirming the deletion of penalties by the Commissioner of Income Tax (Appeals).