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TMI Blog2011 (1) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271BA of the IT Act, 1961 on the ground that the assessee had failed to obtain as well as furnish the audit report under section 92E of the Act on or before the due date of filing the return of income and that there being reasonable cause for such alleged delay in penalty so imposed by the AO and confirmed by learned CIT (A) is liable to be deleted. The action of the CIT(A) is wholly unreasonable, uncalled for and bad in law," 2. The assessee company is engaged in the business of manufacturing and export of silk fabrics, garments, woollen fabrics, etc. During the previous year relevant to the assessment year under consideration, the assessee-company had entered into for the first time an international transaction for export of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant mainly submitted that the appellant for the first time entered into such transactions and that in subsequent years the audit report was filed within time-limit and that the accountant was not keeping to the best of his health and ultimately left the organization and that the Courts including jurisdictional High Court held that the penalty provisions are 'discretionary' in nature. I have carefully considered the submissions and the case law relied on by the appellant. I am not convinced with the appellant's arguments. On the other hand, the AO made out a case based on a good reasoning for levying a penalty. As observed by the AO, the appellant had the support and guidance of taxation experts and hence the contention that it was not full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into by the assessee with its associated enterprise were at arm's length price (ALP) as envisaged in section 92C of the Act. However, the relevant report under section 92E was furnished with the AO during assessment proceeding and the AO did not reject the said audit report and method of accounting and on the basis of the said audit report completed the assessment under section 143(3) of the Act, thereby making some disallowances/additions. He submitted that thereafter for the subsequent assessment years the assessee has been filing the required audit report under section 92E in prescribed form within the due date. He further pointed out that the assessee never had any intention of evading any tax as the foreign company had paid tax @ 34 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant and setting forth such particulars as may be prescribed." From the above, it is evident that an assessee who has entered into an international transaction shall obtain a report from an accountant and furnish the same before the AO on or before the specified date, i.e., the date of filing return under section 139(1). section 271BA of the Act reads as under : "27IBA. If any person fails to furnish a report from an accountant as required by s. 92E, the AO may direct that such person shall pay, by way of penalty, a sum of one hundred thousand rupees." It is thus evident that penalty under section 271BA can be levied if any person fails to furnish a report from the accountant as required under section 92E of the Act. There is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of a notice issued in this regard." As stated above, the assessee during course of assessment proceeding had filed the report of the accountant in Form 3CEB as per section 92E of the Act in respect of its international transactions and on the basis of which the AO himself determined the ALP of the assessee for the year under consideration. Therefore, all the information and evidences were well with the AO for completing the assessment under section 143(3) of the Act. Further, it is also not disputed that the assessment year under consideration was the first year of assessee's international business and that being so, as pointed out by the learned counsel for the assessee, there may be reasonable ground for such lapse in not getting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of international transaction, requiring the assessee to furnish report of the accountant about such international transactions. Further, as per section 271BA, the AO may direct an assessee to pay by way of penalty of Rs. 1 lakh on his failure to furnish report under section 92E of the Act. Therefore, the power of the AO is discretionary, which is based on facts and circumstances of each case. That being so, as we have already held that the assessee was prevented by reasonable cause, that decision relied upon by the learned Departmental Representative would not be applicable to the facts of the assessee's case. In view of the above, we delete the penalty of Rs. 1,00,000 sustained by the learned CIT(A) under section 271BA of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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