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2023 (10) TMI 1243 - DELHI HIGH COURTPenalty u/s 271AA - failure to make disclosers as required u/s 92E - related party - shareholding structure of assessee - reasonable cause u/s 273B - HELD THAT:- Tribunal, in our opinion, while examining the veracity of the view taken both by the AO and the CIT(A), has adopted the correct approach. A perusal of the chart would show that one of the joint venture partners i.e., SUCG, is controlled by the State Assets Supervision and Administration Commission [“SASAC”]. The record shows that SASAC holds 100% shares in SUCG. There is a downstream control by SASAC of SPMCECL.The record also shows that the two joint venture partners i.e., L&T and SUCG holds shares in the ratio of 68:32 in SPMCECL. L&T, thus, has a dominant control in the joint venture. Besides this, as to whether SPMCECL was a related party is an issue qua which there can possibly be more than one view. Assessee has taken a stand that the legal advice that it received seems to indicate that it was not a related party. CIT(A) has done its own analysis of the Chinese Law and concluded that it was a related party to the transaction and hence required disclosure. One can only say that insofar as Chinese Law is concerned, it is a matter of fact which could only be ascertained, at the very least, by having an expert in Chinese Law being produced as a witness. We agree with Mr Sethi that the reasonable cause defence which is statutorily ingrained in Section 273B of the Act, perhaps, is the basis of the conclusion reached by the Tribunal. Section 273B of the Act, which refers to various penalty provisions, [including Section 271AA] clearly provides that no penalty is imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions, if he proves there was a reasonable cause for the said failure. Tribunal, in our opinion, has taken recourse to the correct approach.
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