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1 - 9 of 9 (0.44 seconds)Section 92D in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income Tax vs M/S.Ssl-Ttk Ltd on 5 August, 2021
4.6 Moreover,section271G penalty is discretionary, not automatic
and mandatory. It is imposed only where there is substantive and
unjustifiable non-compliance.The intention behind the section is not to
Page |8
ITA No. 3621/Mum/2024
A.Y. 2016-17
Thyssenkrupp Industrial Solutions AG
penalize every minor failure, but to ensure genuine, prompt, and
complete compliance to facilitate proper and fair evaluation of transfer
pricing arrangements, and to deter non-compliance or attempts to
conceal facts.Courts have repeatedly held that penalties should not be
levied merely for technical or procedural lapses, especially when bona
fide compliance is demonstrated.Several courts have interpreted these
rules and sections to mean that penalties under Section 271G should
only be imposed when there is a substantive and unjustifiable default-
not for mere technical lapses, especially when substantial compliance is
demonstrated. Reliance in this regard was placed on the decisions in the
cases of PCIT v/s. MMTC Ltd. 95 taxmann.com 419 (Delhi), CIT vs.
Leroy Somer & Controls-360 ITR 532(Delhi)and CIT vs. SSL TTK ltd. -
MANU/TN/5589/2021 (Madras).These decisions confirm that the
objective of section 271G is fulfilled, if the main documentation and
transfer pricing study are produced, aligning with the spirit of Rule
10D(3) and section 92D(3). It is submitted that several Tribunal
decisions (including Mumbai Tribunal) following the above High Court
decisions have upheld this principle.
Section 273B in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income Tax-Ii vs Leroy Somer & Controls (I) Pvt Ltd on 6 February, 2009
4.6 Moreover,section271G penalty is discretionary, not automatic
and mandatory. It is imposed only where there is substantive and
unjustifiable non-compliance.The intention behind the section is not to
Page |8
ITA No. 3621/Mum/2024
A.Y. 2016-17
Thyssenkrupp Industrial Solutions AG
penalize every minor failure, but to ensure genuine, prompt, and
complete compliance to facilitate proper and fair evaluation of transfer
pricing arrangements, and to deter non-compliance or attempts to
conceal facts.Courts have repeatedly held that penalties should not be
levied merely for technical or procedural lapses, especially when bona
fide compliance is demonstrated.Several courts have interpreted these
rules and sections to mean that penalties under Section 271G should
only be imposed when there is a substantive and unjustifiable default-
not for mere technical lapses, especially when substantial compliance is
demonstrated. Reliance in this regard was placed on the decisions in the
cases of PCIT v/s. MMTC Ltd. 95 taxmann.com 419 (Delhi), CIT vs.
Leroy Somer & Controls-360 ITR 532(Delhi)and CIT vs. SSL TTK ltd. -
MANU/TN/5589/2021 (Madras).These decisions confirm that the
objective of section 271G is fulfilled, if the main documentation and
transfer pricing study are produced, aligning with the spirit of Rule
10D(3) and section 92D(3). It is submitted that several Tribunal
decisions (including Mumbai Tribunal) following the above High Court
decisions have upheld this principle.
The Commissioner Of Income Tax (Tds) vs Mr.Thomas Muthoot on 11 January, 2013
"12.Be that as it may, it is not a case of total failure, but it may be a case of
belated compliance. The learned Senior Standing Counsel appearing for the
respondent submitted that no leniency is required to be extended to the
assessee and in fact, on an individual assessee, the High Court of Kerala did
not show any indulgence with regard to the penalty, which was imposed
under Section 271C and Section 273B of the Act in the case of CIT v. Thomas
Muthoot reported in (2015) 61 taxmann.com 76 (Kerala). The assessee
pleaded that he was under the bonafide belief that under Section 194A, they
were not liable to deduct tax at source on the interest paid by a partner to the
firm and thus, pleaded ignorance of the statutory liability to deduct tax. This
plea was held to be not acceptable and not bonafide. We find, factually the
case cannot be compared with that of the case on hand, where there are
several distinguishing factual features, which would go to justify the decision
taken by the Tribunal affirming the order passed by the CIT(A). Though we
have held that the explanation offered by the assessee stating that they are a
novice to transfer pricing transactions, which is not prima facie acceptable,
but the conduct of the assessee in complying with 12 items out of 16 items as
called for by the TPO can be considered to be reasonable and the act cannot
be held to be an unreasonable act, but can be considered as a reasonable act
of an organization acting with prudence under normal circumstances
without negligence or inaction or want of bonafides. There is no finding
recorded by the Assessing Officer that the conduct of the assessee lacks
bonafide or there was supine indifference on the part of the assessee in not
producing the records called for by the TPO, despite notice and despite fixing
time frame and not furnishing all the details was on account of inaction
leading to failure on the part of the assessee to invoke Section 271G of the Act.
Therefore, we are of the view that on facts, the Tribunal rightly held in
favour of the assessee by affirming the order passed by the CIT(A)."
Section 271C in The Income Tax Act, 1961 [Entire Act]
Section 194A in The Income Tax Act, 1961 [Entire Act]
Article 12 in Constitution of India [Constitution]
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