2017 (5) TMI 1624 - HC - Income Tax

Penalty levied u/s 271G r.w.s 274 - when the assessee deliberately avoided the production of T.P. documentation as required u/s 92D - Held that - Identical issue has been decided today in the case of same assessee in Commissioner of Income Tax vs. Bumi Hiway (I) P.LTD 2014 (9) TMI 321 - DELHI HIGH COURT reference was not made to any particular or specific date by which assessee was required to submit the documents; or whether the same were furnished within 30 days or within the extended period of 30 days thereafter - Penalty u/s 271G cannot be imposed in this manner. A specific finding should be recorded on the date by which the assessee was required to furnish documents and whether documents were furnished, if not which documents were not furnished and whether any extension of time was granted by the TPO and if the required documents were then actually filed - The penalty order is bereft and devoid of the details and shows lack of application of mind - TPO had indicated that the AO might initiate proceedings u/s 271G but he also did not refer to date of notice, date of furnishing of information/documents etc. - Decided in favour of the assessee and against the department.

Summary

Issues:
Challenge to Tribunal's order dismissing revenue's appeal regarding penalty under Section 271G read with Section 274.

Analysis:
The appellant challenged the Tribunal's decision dismissing the revenue's appeal regarding the cancellation of penalty under Section 271G read with Section 274. The substantial question of law raised was whether the Tribunal was justified in canceling the penalty of ?2,16,47,823 when the assessee failed to produce Transfer Pricing (T.P.) documentation as required under Section 92D. The judgment referred to a similar case involving the same assessee where it was held that the penalty under Section 271G cannot be imposed without specific details such as the date by which documents were required, whether any extensions were granted, and if the documents were actually furnished. The Commissioner of Income Tax (Appeals) had deleted the penalty in that case due to lack of specific findings in the penalty order. The judgment highlighted the importance of documenting the timeline of document submissions and any extensions granted. The absence of crucial details in the penalty order indicated a lack of application of mind, leading to the dismissal of the revenue's appeal.

The judgment emphasized that the penalty order lacked essential details such as the date of notice, date of document submission, and any extensions granted by the Transfer Pricing Officer. It was noted that the Assessing Officer did not provide specific information on the documents requested, their submission dates, or any extensions granted. The judgment highlighted a specific instance where details were requested on 12.06.2008 and were fully complied with on 25.06.2008 and 23.07.2008, within the specified time frame. However, the Assessing Officer's order imposing the penalty did not discuss the compliance with the requested details. The judgment concluded that without a thorough examination of the document submission timeline and compliance, the appeal lacked merit, resulting in its dismissal.

In light of the detailed analysis and the precedent set in a similar case involving the same assessee, the judgment favored the assessee and ruled against the revenue department. The decision was based on the lack of specific findings and essential details in the penalty order, indicating a failure to apply the necessary legal considerations. Consequently, the appeal challenging the cancellation of the penalty under Section 271G read with Section 274 was dismissed summarily.