TMI Blog2017 (11) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... nses or advances/balances written off. The assessee has duly disclosed these amounts in its profit/loss account and has also submitted details thereof during the assessment proceedings. The only reason the penalty was imposed was that the lower authorities did not accept the explanation of the assessee and imposed penalty for concealment of income. Thus, the bona fides of the assesssee cannot be doubted in such circumstances. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon’ble Apex Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) Assessee appeal allowed. - ITA No. 2647/Del/2016 - - - Dated:- 31-10-2017 - SHRI G.D. AGRAWAL, HON BLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Salil Kapoor, Ms Ananya Kapoor, Advocates For The Respondent : Shri Atiq Ahmad, Sr. DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER This appeal has been filed by the assessee against the order of the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing heard on the charges on which penalty were imposed. 6. That the disallowance of claim of the appellant proposed by the TPO of ₹ 3,31,83,409/- were due to different interpretation adopted by him. The assessee has computed ALP in good faith and application of a different basis by the TPO in computing ALP higher than assessee does not amount to concealment of particulars by the assessee or furnishing of inaccurate particulars of Income. 7. That the addition on account of disallowance of balance written off of ₹ 2,81,738 addition on account of disallowance of advances written off of ₹ 3,47,022/- are not called for and complete disclosure of the same has been made by the assessee. 8. That the addition on account of disallowance of Misc. Expenses of ₹ 2,33,267/- should not be considered as no opportunity was given to the assessee to explain his position for this disallowance. The expenses incurred were for business purposes and are allowable expenses. The AO has failed to establish any concealment of income or furnishing of inaccurate income on behalf of the Appellant. 9. That the Addition/disallowance should not be considered at par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustment and the assessee had not appealed against it. 3.1 On the penalty imposed on corporate tax addition, the Ld. AR submitted that the additions pertained to writing off of advances and disallowances of miscellaneous expenses without the Assessing Officer recording any basis of a case of concealment or furnishing inaccurate particulars of income. It was also submitted that the evidences and details regarding corporate tax additions were filed before both the lower authorities but the same were not considered. The Ld. AR also placed reliance on the following judicial precedents:- i) Tristar Intech (P) Ltd. vs ACIT in ITA No. 1457/D/2010 of ITAT Delhi ii) DCIT vs RBS Equities India Ltd. in ITA No. 2570/MUM/2010 of ITAT Mumbai iii) ACIT vs Boston Scientific India Pvt. Ltd. in ITA No. 1062/D/2013 of ITAT Delhi iv) CIT vs Manjunatha Cotton Ginning Factory reported in 359 ITR 565 (Karnataka) of the Hon ble Karnataka High Court v) Chintels India Ltd. vs ACIT in ITA No.3791- 93/Del/2016 of ITAT Delhi vi) Mitsui Prime Advanced Composites India Pvt. Ltd. vs DCIT in ITA No. 550/Del/2016 of ITAT Delhi vii) Pr. Commissioner of Income Tax vs Verizon India Pvt. Ltd. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make adjustment with respect to idle capacity amounting to ₹ 2,46,46,065/- and of ₹ 1,56,32,267/- with respect to intra group services by taking the ALP of intra group services at nil. 5.1 It is seen that the Assessing Officer, while imposing the penalty, simply relied on the addition/adjustment made by the TPO and did not examine in detail as to whether penalty was imposable on such adjustments or not. On appeal, the Ld. CIT (A) also noted that the assessee had not acted in good faith while computing the ALP. The Ld. CIT (A) also took note of the fact that the assessee had not preferred any appeal against the ALP adjustment and, therefore, the assessee had accepted that the ALP had not been computed correctly by him and as such, the penalty was imposable. 5.2 The main argument of the Ld. AR against the levy of penalty on the difference in determination of ALP is that it is a debatable issue and, therefore, the penalty cannot be sustained. The scheme of Explanation 7 to section 271(1)( c) of the Act makes it clear that the onus on the assessee is only to show that the ALP was computed by the assessee in accordance with the scheme of section 92 C of the Act in go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of section 92C in good faith and with due diligence and accordingly, the conditions precedent for invoking Explanation 7 to section 271(1)(c) did not exist on the facts of the instant case. We also find that the assessee s case is covered by the order of the ITAT Mumbai Bench in the case of DCIT vs RBS Equities India Ltd. in ITA No. 2570/MUM/2010 in which the penalty u/s 271(1)(c) had been deleted in a somewhat similar circumstance. If we accept the contentions of the department that addition on account of transfer pricing adjustment invariably means absence of good faith and due diligence, then each and every case involving transfer pricing adjustment would call for imposition of penalty us/ 271(1)(c) of the Act. ITAT Delhi had also taken a similar view on identical facts in case of Mitsui Prime Advanced Composites India Pvt. Ltd. in ITA No. 550/Del/2016 and had deleted the penalty imposed u/s 271(1)(c) of the Act. The Hon'ble High Court of Delhi has also upheld this order of the ITAT on the appeal of the department in ITA No. 913/2016 vide order dated 17.01.2017. Further, the Hon'ble High Court of Delhi has held in the case of Principal Commissioner of Income Tax vs Ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision would suggest that in order to be covered, there has to be concealment of particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of income. That is not the case of the Revenue either. However, the Ld. Counsel for the revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of income. As per Law Lexicon, the meaning of the word particular is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word particulars used in the section 271 (1) (c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The learned counsel argued that submitting an incorrect claim in law for the expenditure on interest would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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