2015 (1) TMI 432 - HC - Income Tax

Penalty u/s 271G - filing of document within two months before Transfer pricing officer (TPO) - Doubt whether assessee complied with obligation as per Rule 10D - Silence on part of TPO - Penalty based on assumption - Held that - The total value of the international transactions was ₹ 65,91,48,060/-. This figure was not disturbed. It can be inferred that as per documentation filed, no addition was required. In spite of the Assessing Officer not being factually sure and certain, whether or not there was violation of Section 92D of the Act read with Rule 10D of the Rules, penalty @ 2% of the value of international transactions of ₹ 1,31,82,960/- was imposed. Penalty cannot be imposed unless and until the Assessing Officer is sure and certain that there was a violation. Ambiguity or doubt in the mind of the Assessing Officer does not justify imposition of penalty, when the actus reas itself is not proved and established. The penalty order is self contradictory. Commissioner of Income Tax (Appeals) deleted the penalty, which order has been affirmed by the Tribunal. The Commissioner of Income Tax (Appeals) specifically recorded a finding that the documentation was filed by the assessee within the extended period of 30 days, i.e., within 60 days, and hence, no penalty was leviable. - Revenue has taken a different stand, which was possibly not taken before the Tribunal. It is stated that the documentation filed with the letter dated 16th May, 2007 did not enclose documentations to be maintained under Rule 10D of the Rules. It is clear that this was not the stand taken by the Revenue before the Tribunal and it was not the stand or ground taken by the Assessing Officer while imposing penalty. - No merit in appeal - Decided against Revenue.

Summary

Issues:
1. Condonation of delay in re-filing.
2. Imposition of penalty under Section 271G of the Income Tax Act, 1961.

Analysis:
1. Condonation of Delay:
The respondent-assessee sought condonation of a 395-day delay in re-filing, which was allowed by the court upon the respondent's counsel's statement of no objection. This issue was resolved promptly.

2. Imposition of Penalty under Section 271G:
The appeal challenged the penalty imposed under Section 271G of the Income Tax Act, 1961. The Assessing Officer had penalized the assessee for an alleged failure to comply with Section 92D(3) of the Act. The Tribunal and the Commissioner of Income Tax (Appeals) found in favor of the assessee, stating that the relevant documents were filed within the stipulated period. The Tribunal emphasized that the statutory compliance was duly met, as the documents were submitted within two months of the notice by the Transfer Pricing Officer.

3. The Assessing Officer's uncertainty regarding the facts was highlighted. Despite the respondent's compliance and submission of necessary documentation within the extended time frame, the Assessing Officer raised concerns based on a lack of corroboration from the Transfer Pricing Officer. The Assessing Officer's assumptions were deemed unjustified and mere surmises, leading to a self-contradictory penalty order.

4. The Tribunal and the Commissioner of Income Tax (Appeals) concurred that the penalty was unwarranted as the documentation was filed within the prescribed time limit. The Tribunal affirmed that the penalty could not be imposed without certainty of a violation, emphasizing that ambiguity or doubt did not justify such penalties. The Commissioner specifically noted that the documentation was submitted within the extended period, rendering the penalty unjustifiable.

5. The court dismissed the appeal, noting that the Revenue's differing stand in the grounds of appeal, not raised before the Tribunal, lacked merit. The court upheld the findings of the Commissioner of Income Tax (Appeals) and the Tribunal, emphasizing the timely submission of documentation within the extended period, leading to the dismissal of the appeal.