9911796707
TMI Blog2016 (4) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... section 250(6) passed by the Commissioner of Income-tax (Appeals), XVII ["CIT(A)"], is bad in law and void-ab-initio. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in confirming the penalty levied by Assistant Commissioner of Income-tax, Circle 14(1), New Delhi ("AO") under section 271(1)(c) of the Act without recording adequate satisfaction during the course of assessment proceedings. 3. On the facts and circumstances of the case and in law, the CIT(A) / AO erred in levying penalty under section 271(1)(c) in relation to transfer pricing additions made in the assessment order. 4. On the facts and circumstances of the case and in law, the learned CIT(A) / AO has erred in holding that the appellant has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al loan repayable on demand. Being repayable on demand, it would mean that the loan is re-negotiated on an annual basis. The assessee preferred an appeal before the Tribunal and the Tribunal vide order dated 30.10.2009 dismissed the appeal of the assessee and decided the issue in the favour of the revenue. 5. The AO issued the penalty notice u/s 271(1)(c) of the Act. After considering the submissions of the assessee, the AO came to the conclusion that it was fit case for levy of penalty and accordingly he levied the penalty. For the sake of the convenience, the relevant portion of the AO's findings is reproduced as under: "......The assessee has advances two foreign currency loans to its associate enterprises (AEs) in January/February ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tify the imposition of penalty in a given case. The assessee contended that it neither failed to offer explanation nor the explanation given by the assessee was found to be false. The assessee submitted that since in terms of Explanation 1 to Sec. 271(1)(c) of the Act the claim of assessee being bonafide duly supported by judicial pronouncement and having being appropriately disclosed, the presumption u/s 271(1)(c) stands rebutted. The assessee also relied upon various judicial pronouncements/decisions. The assessee's contentions are duly considered. The assessee's arguments in respect of loan transaction were not found acceptable by the TPO and the same were held as debt and not equity. In appeal also the assessee's contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving inaccurate particulars of income while filling return. The Hon'ble Court held that "the penalty in that section is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability, as is the case in the matter of prosecution under section 276C." In view of this, it was assessee's burden to prove that he was not guilty of concealment or giving inaccurate particulars of income, in which he failed. In view of the above discussion it is a fit case for imposition of penalty u/s 271(1)(c) of the I.T. Act, 1961 for furnishing inaccurate particulars of its income to the extent of Rs. 1,38,94,980/-." 6. Aggrieved, the assessee filed an appeal before the first appellate authority and the CIT (A) co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below and relied on their orders. 10. We have heard both the parties and perused the records. It is well settled that the finding in the assessment proceedings alone cannot be the sole basis to justify the imposition of penalty. Transfer pricing at the nascent stage where the assessee acts bonafidely, and in good faith, exercising due diligence compute prices charged or paid in international transaction and computes in accordance with the provisions contained in section 92C and in the manner prescribed under that section, then no penalty can be levied even if the T.P. adjustment made by the TPO has been confirmed by the Tribunal. So, when the issue agitated by the assessee has been admitted as a substantial question of law by the Hon'ble H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take note that in the case of Liquid Investment: ITA 240 of 2009, the Hon'ble jurisdictional Delhi High Court deleted the penalty levied by the assessing officer on the ground that the substantive appeal (being appeal under section 260A of the Act against the disallowance made in quantum proceedings) had been admitted by the High Court. "Both the CIT(A) as well as the ITAT have set aside the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act. 1961 on the ground that the issue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment whereunder deduction under Section 14A of the Act was prescribed to the appellant. The appellant has preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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