2011 (9) TMI 155 - AT - Income Tax

Levy of penalty u/s 271D - Delay in submission of some documentation. - Failure to maintain necessary documents prescribed under Rule 10D read with section 92D(3) of the Income-tax Act. - CIT (A) concluded that penalty is uncalled for. - In the penalty order passed by the AO there is nothing to suggest as to which particular information or document was submitted by the assessee belatedly nor the exact nature of default has been brought out. In these circumstances we are of the opinion that above mentioned notice cannot be treated as valid and legal to justify application of provision u/s 271G of the Act and levy of penalty of Rs. 22, 20, 100/-. The omnibus notice issued without application of mind and without considering documents already placed by the assessee and without considering as to which specific clause of sub-rule (1) or other sub rules was attracted or which relevant information was needed in this case cannot be treated as a valid notice for the purpose of sec. 271G of the Act. - Held that - in the light of view taken in Cargil India Private Ltd (2008 -TMI - 64345 - ITAT DELHI-C ) especially when the Revenue have not placed before us any material controverting the aforesaid findings of learned CIT(A) so as to enable us to take a different view in the matter we are not inclined to interfere.

Summary

Issues Involved:
1. Validity of the penalty imposed under Section 271G of the Income-tax Act.
2. Adequacy and specificity of the notice issued under Section 92D(3) of the Income-tax Act.

Detailed Analysis:

1. Validity of the Penalty Imposed Under Section 271G:
The Revenue challenged the deletion of a penalty amounting to Rs. 22,20,100/- levied by the Assessing Officer (AO) under Section 271G of the Income-tax Act. The penalty was imposed due to the delay in submission of certain documentation by the assessee. The AO initiated penalty proceedings based on the recommendation of the Transfer Pricing Officer (TPO). However, the learned CIT (A) cancelled the penalty, noting that the TPO had no grievances regarding the information or documents furnished by the assessee and had accepted the Transfer Pricing Report. The CIT (A) referred to the case of Cargil India Private Ltd., where it was stated that the AO cannot levy a penalty without explaining the default in detail. The Tribunal upheld the CIT (A)'s decision, emphasizing that the penalty was uncalled for and not in accordance with the facts and law.

2. Adequacy and Specificity of the Notice Issued Under Section 92D(3):
The Tribunal examined whether the notice issued under Section 92D(3) was valid and specific. The notice issued by the TPO asked the assessee to furnish information and documents maintained as prescribed under Rule 10D of the Income-tax Rules, 1962, without specifying any particular information. The Tribunal noted that the notice was vague and lacked the necessary specificity required under Section 92D(3). The Tribunal emphasized that the notice should require specific information and not be a blanket request for all documents. The Tribunal found that the notice was issued in a casual manner without examining the records of the assessee or the nature of the international transactions. The Tribunal concluded that the notice was invalid, and therefore, the penalty under Section 271G could not be justified.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT (A)'s decision to delete the penalty imposed under Section 271G. The Tribunal found that the notice issued under Section 92D(3) was vague and lacked specificity, rendering it invalid. Consequently, the penalty imposed based on such a notice was deemed unjustified. The Tribunal emphasized the need for specific and well-considered notices to ensure compliance and avoid undue burdens on the assessee.