2014 (1) TMI 888 - AT - Income Tax

Deletion of Penalty 271G of the Act Specific information not asked by TPO u/s 92D(3) of the Act Held that - The decision in Cargill India (P.) Limited. Versus Deputy Commissioner Of Income-tax, Circle 3(1), New Delhi. 2008 (2) TMI 453 - ITAT DELHI-C followed - there has to be a specific requisition under section 92 D(3), with due application of mind, for furnishing of information and it is only when such a requisition is not complied with that penalty under section 271 G can be levied - there is no such specific requisition in the case which has not been complied with - There is no restriction of furnishing prescribed information in response to notice u/s 92CA(2) of the Act to support the computation of ALP by the taxpayer - there was no authority u/s 92D(3) with the T.P.O. to require the taxpayer to furnish non specified information or such information or document already filed by the taxpayer or use of the provision without asking the taxpayer to support first its ALP of International transactions. There is no point in requiring the same information again or require un-prescribed information u/s 92D(3) and cast additional burden on the taxpayer - it would no more remain valid notice u/s 92D(3)/271G of the Act - Once no specific requisition has been issued under section 92 D(3) for furnishing of specific particulars, there is no question of its remaining uncomplied with - there is no occasion for imposition of penalty under section 271G of the Act Decided against Revenue.

Summary

Issues Involved:
Challenge to correctness of CIT(A)'s order on penalty under section 271 G of the Income Tax Act, 1961 for the assessment year 2005-06 based on the requirement of specific information under section 92D(3).

Detailed Analysis:

Issue 1: Challenge to CIT(A)'s Order
The Assessing Officer challenged the correctness of the CIT(A)'s order regarding the penalty under section 271 G of the Income Tax Act, 1961 for the assessment year 2005-06. The appellant contended that the CIT(A) erred in law by holding that the Transfer Pricing Officer (TPO) did not request specific information from the assessee as required under section 92D(3) of the Income Tax Act, 1961, and in deleting the penalty based on this ground.

Issue 2: Requirement of Specific Requisition
The key point of contention was whether a specific requisition under section 92D(3) was necessary for imposing a penalty under section 271 G. The representatives agreed that there was no evidence on record to show that any specific requisition was made under section 92D(3) which was not complied with. The CIT(A) had found that the penalty was initiated under section 271 G for non-reporting in Form 3 CEB, but it was clarified that the scope of section 271 G does not cover non-reporting in Form 3 CEB.

Issue 3: Precedent and Legal Interpretation
Referring to a precedent set by a coordinate bench of the Tribunal in the case of Cargill India (P.) Ltd., it was established that a specific requisition under section 92D(3) must be issued and not complied with for the penalty under section 271 G to be levied. It was emphasized that the Assessing Officer or CIT (Appeals) can only require prescribed information under section 92D(3) and not non-prescribed information. The judgment highlighted the importance of the application of mind before issuing notices under section 92D(3) to avoid imposing additional burdens on taxpayers.

Conclusion:
Based on the legal interpretation and precedent, the Tribunal found that there was no specific requisition under section 92D(3) that had not been complied with in this case. Therefore, the penalty under section 271 G could not be imposed. The Tribunal approved the CIT(A)'s findings and declined to interfere in the matter, ultimately dismissing the appeal.

This detailed analysis of the judgment highlights the legal intricacies surrounding the requirement of specific information under section 92D(3) for the imposition of penalties under section 271 G of the Income Tax Act, 1961.