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2014 (1) TMI 1282 - AT - Income TaxImposition of Penalty u/s 271BA of the Act – Bonafide belief on non-applicability of section 92B of the Act – Investment made in subsidiary companies – Condonation of delay on the reasonable cause for non-obtaining of report u/s 92E of the Act – Held that:- As per the wording of section 271BA, the AO may direct the concerned person to pay the penalty - The word 'may' used in the section denotes that it is the discretion of the AO to impose or not to impose the penalty - This discretion is subject to the restrictions as imposed by Section 273B of the Act - The word 'may' also includes the word 'may not' – Relying upon Malik Ram v. State of Rajasthan [1961 (4) TMI 84 - SUPREME COURT] - the words "may approve" in the section, properly construed, must also include "may not approve" - The AO did not consider the explanation of reasonable cause of bonafide belief given by the assessee in its failure to furnish the report under Section 92E in time - Even CIT(A) did not bother to look into or consider the said explanation given by the assessee - The authorities below failed to take note of provisions of Section 273B as well as the use of word 'may' in Section 271BA. The explanation given by the assessee is satisfactory to the effect that the delay in furnishing the report under Section 92E was not intentional, rather due to mistaken bonafide belief that the transaction involving the investment of money in equity shares of its subsidiary company by the assessee-company was not within the scope of International transactions as defined under Section 92B of the Act - As soon as, the assessee-company came to know that it was required to furnish the report under Section 92E, it filed the same before the AO - The explanation put forth by the assessee-company falls within the scope of phrase "reasonable cause" as provided under Section 273B of the act – thus, the penalty imposed upon the assessee set aside – Decided in favour of Assessee.
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