TMI Blog2016 (6) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... he return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing of inaccurate “particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provisions of section 271 (1) (c) of the Act, the penalty provisions cannot be invoked. The Revenue has wrongly invoked the provisions in the present case. The CIT (A) has misconstrued the facts of the case for the reason that he has not understood the American system of dates and for that purpose the entire matter went for a toss. In the given facts of the case, we are of the view that the penalty levied by AO and sustained by CIT (A) cannot be upheld and hence, the same is deleted. - Decided in favour of assessee - ITA No. 8151/Mum/2010 - - - Dated:- 15-6-2016 - Sri Mahavir Singh, JM And Sri Ramit Kochar, AM For the Appellant : Ms. Priyanka Gada Mr. Paras Savlee, ARs For the Respondent : Shri Aarshi Prasad, DR ORDER Per Mahavir Singh, JM This appeal by the assessee is arising out of the order of the CIT (A)-10, Mumbai passed in appeal No.CIT (A)-10/ADIT (IT) 3(1)/IT-20/06- 07 dated 23-09-2010. Assessment was framed by the ADIT(IT), Circle 3 (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings the assessee further submitted some details and the AO has not considered the same by observing as under:- Assessee vide its representative s letter dt. 14.03.2006 has submitted certain details of expenses. But it is difficult to consider the same at this stage . Accordingly, the AO levied penalty u/s 271(1) (c) of the Act, amounting to ₹ 33,56,773/-. Aggrieved, the assessee preferred appeal before CIT (A). Before CIT (A) also the assessee filed details of expenses to the extent of US $ 122306, which were forwarded by him being additional evidences to the AO for his comments. The AO submitted his remand report negating the claim of the assessee. The CIT (A) confirmed the levy of penalty by observing as under:- 1.4 I have considered the facts and gone through the penalty order passed by the AO and also the submissions made by the Appellant before me. The Assessment order was passed on 18.03.2004. A perusal of the assessment order reveals that the AO had found that appellant has raised management fee invoices of USD 622,117.58 as against which it has furnished details of expenses of USD 471497.93 vide letter dated 13.3.2004. As per order sheet notings dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. This view is also supported from the fact that notice issued under section 133 (6) of the Act on the address given in the invoices have returned UNserved. This also leads to infer that explanation is not bonafide and claim is not genuine. The claim of the AR that it was sent on wrong address cannot absolve the responsibility of the appellant. The AR was well aware that a Remand Report has been called for from the AO, therefore he could have assisted the AO in this regard but no efforts on this direction appears to have been made. I find that the appellant has approached to AAR in the past years for the ruling that it had not PE in India hence its income is not taxable in India. However the Hon ble AAR held that the appellant had PE in India and income attributable to Indian operation is taxable in India. Therefore, it could not be believed that the appellant does not have any income in India. The appellant has shown NIL income in India on the ground that expenditure incurred is cost to cost basis. However, such claim cannot be accepted in absence of any transfer pricing study report. No Transfer Pricing Report been brought to my furnished to support the claim. It is further se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim was produced). The CIT (A) forwarded the additional evidences to the AO for his comments vide letter dated 15-01-2009 bearing No.CITA.XXXIII/Int. Tax/IT/30-G/06-07. Relevant part of the above letter i.e. Para 6 and 7, which is given at assessee s paper book at page 53, reads as under:- 6. The appellant has also submitted that it filed supporting evidences for expenses to the extent of US $ 26500 before the A. O. during the penalty proceedings. This fact is also mentioned on Page No.2 of the penalty order. The appellant has furnished supporting evidences before me to the extent of US $122306. Subsequent to the assessment proceedings, the appellant has filed supporting documents to the extent of US $ 148806 against the disallowance of US $ 150619.75. The appellant submitted that since assessment proceedings and penalty proceedings are different, the evidences submitted during the penalty proceedings should have been examined in the penalty proceedings. The appellant also submitted that the required documents could not be filed in time with the A. O. during the assessment proceedings because of constraint of time and difficulty in locating the documents in U. S. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and needs to be rejected . 7. In view of the above learned Counsel for the assessee explained that in the remand report, the AO took a plea for rejecting the evidences that notice issued u/s 133(6) of the Act to USA office was returned un-served. The assessee explained that the AO failed to appreciate that the office of the assessee was at the given address- General Motors Overseas Corporation 300 Reliance Center Detroit Michigan USA and not, what is mentioned by the AO in his remand report. She explained that had the AO sent the letter at the address mentioned in all the correspondence with Income Tax Department, the same would have reached in the right hand and even no opportunity to rebut this notice, returned un-served, has been given to the assessee. She also assails the order of CIT (A) and the reasoning given therein that CIT (A) confirmed levy of penalty only on the ground that the invoice raised are dated 03.09.2001, whereas accounting period of the assessee closes on 31-03- 2001. She explained that CIT (A) failed to appreciate that the invoice was in American Format i.e. MM/DD/YY. According to her, the invoice was raised on 9th March 2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is clear that it is not a case of concealment of income or furnishing of inaccurate particulars of income as the case may be because neither the AO nor CIT (A) has appreciated the facts of the case during penalty proceedings or during appellate proceedings. The meaning of the term particulars used in section 271 (1) (c) of the Act would embrace the details of the clam made. Where no information is given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing of inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provisions of section 271 (1) (c) of the Act, the penalty provisions cannot be invoked. The Revenue has wrongly invoked the provisions in the present case. The CIT (A) has misconstrued the facts of the case for the reason that he has not understood the American system of dates and for that purpose the entire matter went for a toss. In the given facts of the case, we are of the view that the penalty levied by AO and sustained by CIT (A) cannot be upheld and hence, the same is deleted. 11. In the result, the appeal of the assessee is allowed. Order pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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