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TMI Blog2013 (8) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law the Ld. CIT(A) has erred in not appreciating the fact that Section 271AA doesn't require a period of 30 days to be given from the date of show cause & imposition of penalty and that adequate opportunity was given to the assessee to furnish the requisite information. 4. Whether in the fact and circumstances of the case and in law the Ld. CIT(A) has failed to consider the contention raised by the Assessing Officer by letter dated 24.11.2009, 04.01.2010 and 22.02.2010." 3. The issue raised in the appeal filed by the Revenue is against the deletion of penalty levied u/s 271AA of the Income Tax Act amounting to Rs. 8,06,932/-. 4. The brief facts of the case are that the assessee had furnished return of income declaring total income of Rs. 55887/-. The case of the assessee was picked up for scrutiny. The assessee was engaged in the business of testing of software for its associate enterprise Raicolnc aba QASource based in USA. The assessee had earned total receipts of Rs. 4,03,06,611/- from its associate enterprise. The said amount received by the assessee as per the Assessing Officer was on account of international transaction as defined in section 92B of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated under para 6 at page 3 to 8 of the appellate order in which the assessee explained the proceedings before the Assessing Officer from date to date and also pointed out that the counsel for the assessee had appeared on 24.11.2008 and submitted the requisite documents on record which have not been considered by the Assessing Officer. Specific report on the objections highlighted by the learned counsel for the assessee were called for from the Assessing Officer by the CIT (Appeals) vide office letter dated 17.12.2009 and the contents of the said letter are reproduced under para 7 at page 5 of the appellate order. In reply the Assessing Officer vide letter dated 4.1.2010 made submissions which are incorporated under para 8 at pages 5 and 6 of the appellate order. Further opportunity was sought by the Assessing Officer to explain the case and the matter was fixed on 17.2.2010 on which date both the learned A.R. for the assessee and the Assessing Officer were present and as per the CIT (Appeals) the technical issues were discussed. The Assessing Officer was confronted that minimum period of 30 days was prescribed u/s 92D(3) of the Act and the same was not given to the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any application of mind. (ix) Since this order was to be approved by the JCIT, Range-6, Chandigarh, the approval was given on 5.12.08 meaning thereby that the order passed on 21.11.08 was approved on 5.12.08 and dispatched on 12.12.08. (x) No opportunity of being heard was granted to the assessee as envisaged in section 274(1) of the Income Tax Act, 1961, before imposition of penalty." 6. The CIT (Appeals) vide para 12 held as under : "12. The Assessing Officer's contention that since the notice was served on 8.11.08 and penalty imposed on 12.12.08, the assessee got the requisite time and opportunity is not tenable since firstly the notice required him to produce the books and documents within 5 days instead of 30 days extendable to 60 as provided u/s 92-D of the Act and secondly as already detailed, the draft penalty order was prepared on 21.11.08 which was approved by the JCIT on 5.12.08. Furthermore, the assessee was not given reasonable opportunity of being heard before imposition of penalty." 7. In view thereof, the CIT (Appeals) held that "neither mandatory timelines have been adhered to while imposing penalty in this case, nor was any opportunity granted to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgill India (P) Ltd. Vs. DCIT, 110 ITD 616/7 DTR (Del)(Trib) 210 2) ACIT Vs. Smith & Newphew Healthcare Pvt. Ltd. 48 SOT 607 (Mum)/16 Taxman 5 (Mum-Trib) 3) DCIT Vs. M/s Leroy Somer & Controls(India)(P)Ltd. ITA No.1330/Del/2011 - A.Y.2005-06 4) ACIT Vs. M/s Global One India Pvt. Ltd. ITA Nos.5164 & 5165/Del/2011 - A.Y. 2005-06 10. We have heard the rival contentions and perused the record. The perusal of the order levying penalty under section 271AA of the Act passed by the Assessing Officer and the photocopy of order sheet entries reflect the undermentioned position : a) On 10.10.2008 queries were raised by the Assessing Officer including furnishing of complete working of arms length price for transaction with associate concern alongwith concerned documents as per Rule 10 D of the Income Tax Rules. b) On 21.10.2008 the counsel for the assessee appeared and he was asked to provide details including the details of working of arms length price. The hearing was adjourned to 31.10.2008. c) On 31.10.2008, the counsel attended and was again asked to file complete details as per order-sheet entry dated 21.10.2008. The hearing was adjourned to 3.11.2008. d) On 3.11.2008 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08. o) On 24.12.2008 the learned counsel appeared and the case was discussed. p) On 29.12.2008 the order was passed. 11. The photocopies of the order-sheet entries have been furnished on record by the learned D.R. for the Revenue. 12. The assessee has also furnished Paper Book in which it has annexed Form No.3CEB alongwith annexure 1 to 12 of the Paper Book, copies of the replies dated 7.11.2008, 12.11.2008, 14.11.2008, 17.11.2008, 24.11.2008 alongwith copies of transfer pricing report are annexed at pages 13 to 19 of the Paper Book. Thereafter the copies of the written submissions furnished before the CIT (Appeals) are annexed. The learned A.R. for the assessee pointed out that the Tribunal in ITA No.1115/Chd/2008 and ITA No.116/2009, vide order dated 29.4.2011 had held that in the captioned assessment year the international transaction between the assessee and its associated enterprise was at arm's length price. The copy of the said order of the Tribunal is placed at page 108 to 151 of the Paper Book. 13. Now coming to the relevant provisions section 92D of the Act, we find that under section 92D of the Act it is provided that where a person, who had entered into an intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o per cent of the value of each international transaction entered into by such person." 14. In the facts of the present case, admittedly, the assessee had entered into international transactions with associate concern. In view of the such international transaction, the assessee was to keep and maintain the information and documents as prescribed under Rule 10D of the Income Tax Rules, which in turn is authorized by section 92D(1) of the Act. From the perusal of the documents furnished by the assessee in the Paper Book filed before us we find that the assessee had furnished audit report in Form No. 3CEB which is dated 5.7.2006 and is placed at pages 1 to 12 of the Paper Book. In the annexure to the said audit report, the particulars relating to international transactions were furnished. The assessee had also furnished the information in respect of its transaction with Raicolnc aba QASource, the associate concern in Annexure-A. The name and address of the associate enterprise alongwith brief description of the business carried out is furnished. In Annexure-B of Form No.3CEB, the assessee had detailed international transaction carried out by the assessee for the financial year 2005-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 10D of Income Tax Rules reflects that documents and information prescribed under Rule 10D of Income Tax Rules are voluminous and various clauses are prescribed under Sub-Rule(1) thereof, and all such clauses are not applicable to a given case. 16. The Delhi Bench of the Tribunal in Cargill India (P) Ltd. Vs. DCIT (supra) held as under: "The documents and information prescribed under rule 10D is voluminous and it would only be in rarest cases, that all the clauses of sub-rules would be attracted. It is not possible to casually ask for information under all the clauses. It is likely that in some cases, the assessee need not carry any analysis of functions performed, risk assumed and assets employed; there may be an exactly similar uncontrolled transaction with independent unconnected party to establish that transaction was an arm's length transaction. In such a case, clause (e) of rule 10D(1) would have no application and no information under this clause need be maintained or produced before the tax authorities. Likewise, there might be no necessity to carry economic analysis, take forecasts, budgets or other financial estimates of business. International transaction involved m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the international transactions carried on by the assessee. The requirement of law is not to maintain each and every document but maintain such documents as depending upon the facts and circumstances of the international transactions carried on by the assessee. Consequently, the application of all or more clauses of Sub Rules would not be attracted. In view thereof where the Assessing Officer has show caused the assessee to file details/documents maintained as per Rule 10D of Income Tax Rules without specifying any particulars itself, we find no merit in the order of the Assessing Officer levying penalty under section 271AA of the Act, holding the assessee not to have maintained certain documents. Further the Assessing Officer has levied the said penalty under section 271AA of the Act as the assessee had defaulted in not maintaining details as per clause (g),(h) & (l) of Form No.10D, which as explained by the learned A.R. for the assessee, were not to be maintained by the assessee. 18. Another aspect of the proceedings before the Assessing Officer levying penalty under section 271AA of the Act reflect that the penalty proceedings were initiated by another officer, who proposed the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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