Income Tax Appellate Tribunal - Hyderabad
Bartronics India Ltd., Hyd, Hyderabad vs Assessee on 22 January, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No. 794/Hyd/2015
Assessment Year: 2010-11
Bartonics India Ltd., Hyderabad vs. Dy. Commissioner of Income-
tax, Circle - 1(2), Hyderabad
PAN - AAACB 8231 F
(Appellant) (Respondent)
Assessee by : Shri P. Murali Mohan Rao
Revenue by : Shri Konda Ramesh
Date of hearing 06-01-2016
Date of pronouncement 22-01-2016
O RDE R
PER P. MADHAVI DEVI, J.M.:
This appeal by assessee is directed against the order dated 30/03/2015 of ld. CIT(A) - 1, Hyderabad, upholding the penalty levied by the AO u/s 271G of the IT Act, for the assessment year 2010-11.
2. Brief facts of the case are that the assessee company, which is engaged in providing software development solutions to it's A.E., filed its return of income before the AO. As the assessee had international transactions with its AE, the AO referred the assessee's case to the Transfer Pricing Officer for determination of arm's length price. The TPO proposed adjustment u/s 92CA of the Act and the AO passed the draft assessment order in accordance with the same. Aggrieved by the same, assessee company filed appeal before the DRP and the DRP vide their order dated 24/12/2014 u/s 144C of the Act, directed the TPO to consider the interest rate at LIBOR + 2% as against 2 ITA No. 794 /Hyd/2015 Bartronics India Ltd.
12.25% adopted by the TPO. Following the said directions, the TPO vide his order dated 05/12/2015 determined the shortfall in the TP adjustment and proposed addition of Rs. 11,83,41,255/- and the final assessment was, accordingly, made.
3. In the meanwhile, the TPO initiated penalty proceedings u/s 271G of the Act by issuance of a notice dated 10/06/2013 for non- submission of information required by him. Assessee replied that the assessee being a listed company, is required to disclose audited results within 60 days from the end of the FY and since all its accounts personnel are engaged in the finalization of accounts, the company is unable to submit any information within the stipulated time. However, the TPO was not satisfied and levied penalty u/s 271G @ 2% of the value of the international transactions.
4. Aggrieved, assessee preferred an appeal before the CIT(A), who confirmed the order of the TPO and the assessee is in appeal before us challenging the jurisdiction of the TPO in levying penalty u/s 271G of the Act.
5. The main argument of the assessee is that the TPO has no jurisdiction to initiate penalty proceedings u/s 271G of the Act. To this effect, the assessee has raised additional ground before us vide letter dated 16/09/2015. Since it is a legal ground that the same is admitted and adjudicated as under:
6. In support of the assessee's contention, the learned counsel for the assessee has relied upon various judgments and, more particularly, the decision of the ITAT, Hyderabad Bench in the case of M/s Remy Electricals India Ltd. in ITA No. 872/Hyd/2011, order dated 20/07/2012, wherein the Tribunal at para 3 of its order has held as under:
"3. We have heard rival contentions and perused the material on record. Section 271G provides for imposition of penalty for failure to furnish 3 ITA No. 794 /Hyd/2015 Bartronics India Ltd.
information or documents under s. 92B of the Act. The language in section 271G specifically provides that the penalty order has to be passed by the AO or the CIT (A). We find force in the contention of the learned AR for the assessee that the TPO cannot be termed as AO for the purpose of section 271G. We find no infirmity in the reasoning of the CIT (A) in this regard. Even on merit also, the CIT (A) after elaborately discussing on the fact, has come to a categorical finding that penalty u/s 271G is not automatic. If the assessee shows a reasonable cause, then no penalty can be imposed. The CIT (A) after considering the explanation submitted by the assessee found that there is reasonable cause in not submitting the documents within the specified time. From the order of the CIT (A), it is clear that the assessee has been able to explain the cause for not submitting the required documents within the specified time before the TPO. On the aforesaid view of the matter, we do not find any infirmity in the order of the CIT (A) in deleting the penalty. We therefore uphold the same and reject the grounds raised by the Revenue."
6.1 In the case before us also, it is the TPO and not the AO, who has initiated and levied the penalty. Since the facts of the present case before us are same, and the TPO has without jurisdiction, levied penalty u/s 271G, respectfully following the decision of the coordinate bench in the case of M/s Remy Electricals India Ltd. (supra), we set aside the order of CIT(A) and delete the penalty of Rs. 35,14,139/- levied u/s 271G of the Act.
7. In the result, appeal of the assessee is allowed.
Pronounced in the open court on 22 nd January, 2016.
Sd/- Sd/-
(S. RIFAUR RAHMAN) (P. MADHAVI DEVI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 22 nd January, 2016
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ITA No. 794 /Hyd/2015
Bartronics India Ltd.
Copy to:-
1) M/s Bartronics India Ltd., C/o P. Murali & Co., CAs., 6-3-655/2/3, 1 st Floor, Somajiguda, Hyderabad - 500 082
2) DCIT - 1(2), Hyderabad.
3) CIT(A)- 1, Hyderabad
4) CIT - 1, Hyderabad
5) The Departmental Representative, I.T.A.T., Hyderabad.