Income Tax Appellate Tribunal - Mumbai
Netesoft India Ltd., Mumbai vs Department Of Income Tax on 23 May, 2013
आयकर अपीलीय अिधकरण,
अिधकरण बी खंडपीठ मुंबई
INCOME TAX APPELLATE TRIBUNAL,MUMBAI -'B' BENCH.
सव[ौी डȣ.मुमोहन
डȣ मुमोहन,उपाÚय¢
मुमोहन उपाÚय¢ / एवं ौी राजेÛि,ले
ि लेखा सदःय
Before S/Sh.D.Manmohan,Vice-President & Rajendra,Accountant Member
आयकर अपील सं./ITA No. 8259/M/2011,िनधा[
िनधा[रण वष[ /Assessment Year 2007-08
Income tax officer,8(2)(3), M/s.Netsoft India Ltd. 401-
R.N.213/216 Aaykar Bhavan, 402 /405-406, Bdlg.2,Sector 1 ,
M K Road,Mumbai-40012- Vs. Millenium Park, Mahape,
Navi Mumbai.
PAN: AACN9543J
(अपीलाथȸ /Appellant) (ू×यथȸ / Respondent)
अपीलाथȸ ओर से / Appellant by :Mohit Jain
ू×यथȸ कȧ ओर से/Respondent by :Deepak N Kanabar
सुनवाई कȧ तारȣख / Date of Hearing :23.05.2013
घोषणा कȧ तारȣख / Date of Pronouncement :29.05.2013
आयकर अिधिनयम,1961
अिधिनयम कȧ धारा 254(1)क
के अÛतग[ त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
PER RAJENDRA, A.M.
Challenging the order dt.30.09.2011 of the CIT(A)-17,Mumbai,Assessing officer (AO) has raised following Grounds of Appeal:
1."On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the penalty of Rs 11,10,970/- u/s.271 G of the Act, without appreciating the facts of the case.
2.The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the A.O. be restored.
3.The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary."
2.Assessee-company,engaged in the business of information technology, filed its return of income on 25.10.2007 declaring total income of Rs.10,78,390/-.AO finalized the assessment order u/s.143(3) of the Act on 30.11.2009,determining the total income at Rs.10.78 lakhs. During the course of assessment proceedings AO initiated penalty proceedings u/s. 271G of the Act. After considering the submissions of the assessee AO held that the chartered accountant's report was not obtained, that the provisions of section 92A were applicable in the case of assessee company, that assessee had submitted during the course of assessment proceedings that only sub section E,F,H,I and M of section 92A were not applicable, that assessee had not replied about applicability or non applicability of the rest of the sub-sections of section 92A, that the submissions of the assessee that CA's report was not obtained under a belief that section 92A was not applicable and acceptable, that the assessee had not maintained the documents and information as required u/s. 92D r.w.r. 10D of the I. T Rules, that value of international transaction was exceeding Rs.1 Crore, that as per rule 10D r.w.s.92D & 271AA,that assessee had to maintain and keep prescribed information and documents, that assessee has failed to do so. He levied a penalty of Rs. 11.10 lakhs u/s.271G r.w.s.271AA of the Act.
2.1.Against the order of the AO assessee preferred an appeal before the First Appeal Authority (FAA).After considering the submissions of the assessee and the penalty order he held that during the assessment proceedings AO had not asked the assessee to furnish information which it was required to maintain under Rule 10D(1),that no notice u/s. 92D(3) was issued by him, that AO had queries with respect to transfer pricing and same were covered u/s.92D(1),that no show cause notice was issued u/s.271AA/271BA.Relying upon the case of Cargill India Pvt. Ltd, delivered by the Delhi Tribunal (110 ITD 616) he held before imposing penalty u/s.271G there should be a specific notice under 92D(3) of the Act, that said notice should specify the information to be produced as prescribed by Rule 10D,that penalty u/s. 271D could be imposed only if an assessee failed to furnish such details.
2.2.Before us, Departmental Representative (DR) relied upon the order of the AO. Authorised Representative(AR) submitted that Penalty u/s. 271AA was leviable for failure to maintain information as required section 92D(1) and (2),that AO had not confronted the assessee on this account, that all information with regard to section 92D(1) had been maintained and the assessee had prepared to produce the same, that AO had failed to give a notice u/s. 92D(3) and has also not specified the documents or information required, as specified in Rule 10D(1). 2.3.We have heard the rival submissions and perused the material before us. It will be useful to discuss the provisions of section 92 of the Act for better understanding of the law for levying penalty for failure to report/audit international transaction. Sub-section (1) of 92D, prescribes the information and documents which are to be maintained by every assessee who has entered into an international transaction, within the meaning of section 92B. Sub section (2) prescribes the period for which this information is to be maintained, and sub section (3) specifies that, as and when required by the AO or the FAA, the information prescribed has to be produced within 30 days of the requisition. Section 92E states that, every person who enters into an international transaction should file a report from a Chartered Accountant in Form 3CEB, as prescribed by Rule 10E. Failure to maintain the information prescribed by sub section (1) & (2) would entail penalty u/s. 271AA. Failure to furnish the information on demand by the AO entails penalty u/s. 271G. Failure to comply with the provisions of section 92E results in penalty to be imposed u/s. 271BA. Clearly, all the three penalties operate in very different fields. One cannot substitute for another. Various provisions of section 271 are penal in nature and have to applied for specific omission or commission. Not only, this proper hearing has to take place before an assessee is visited by penalty. Proper hearing includes a notice by the AO to the assessee to inform him as what is his fault in complying the provisions of the Act and to consider the reply of the assessee. Without following these basics penalty cannot be imposed. We find that AO had not issued notice of the alleged default committed by the assessee and thus it was unaware as which are the provision of the Act that he has not observed with regard to international transaction. Penalty order could have been quashed only on this basis. But, FAA has discussed the merits of the case also. He has given a clear finding that for the alleged failure of the assessee penalty u/s.271G should not have been levied. Satisfaction recorded by the AO in the assessment order, while initiating penalty proceedings u/s. 271G, was to the effect that the assessee had failed to maintain documents and information as required u/s. 92D(1) and it had failed to get its accounts audited, as required u/s 92E.In our opinion for the said defaults AO should have initiated penalty proceedings u/s 271AA/271 BA. In these circumstances setting aside penalty levied u/s.271G of the Act, by the FAA has to be upheld.
Effective ground of appeal is decided against the AO As a result, appeal filed by the AO stands dismissed.
पǐरणामतः िनधा[ǐरती अिधकारȣ कȧ अपील िनरःत कȧ जाती है .
Order pronounced in the open court on 29th May,2013
आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांक मई,2013 को कȧ गई ।
Sd/- sd/-
(डȣ.
डȣ.मुमोहन/
मुमोहन D.Manmohan) राजेÛि/
(राजे ि Rajendra)
उपाÚय¢ /Vice-President लेखा सदःय /Accountant Member
मुंबई/Mumbai,Ǒदनांक/Date: 29.5.2013
TNMM
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. Assessee /अपीलाथȸ
2. Respondent /ू×यथȸ
3. The concerned CIT (A) /संबƨ अपीलीय आयकर आयुƠ
4. The concerned CIT /संबƨ आयकर आयुƠ
5. DR "B" Bench, ITAT, Mumbai /ǒवभागीय ूितिनिध बी खंडपीठ,आ.अ.Ûयाया.मुंबई
6. Guard File/गाड[ फाईल स×याǒपत ूित //True Copy// आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai