9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 1186 - AT - Income TaxLevy of penalty under section 271BA - assessee has failed to comply with the requirement of the provisions of section 92E - Held that - No plausible reason put forth by the assessee to establish how it was prevented by reasonable and sufficient cause from getting the Audit Report in Form 3CEB prepared by a Accountant in the prescribed proforma and filing the same before the concerned authority within the time specified, as stipulated under section 92E of the Act. Transactions of share investment, as entered into by the assessee in the case on hand, clearly fall within the ambit of the provisions of section 92E of the Act since the international transaction of investment in share capital of the assessee by the NRI Director of the assessee company falls within the ambit of section 92E of the Act. As laid out therein, it is mandatory for the person entering into an international transaction to file the Audit Report in Form 3CEB, duly prepared by an Accountant, setting out the particulars of such international transactions before the concerned authority within the time prescribed. In our considered view, the failure on the part of the assessee to furnish the Audit Report in Form 3CEB from an Accountant in the prescribed proforma within the prescribed period, without reasonable cause, is a clear violation of the provisions of section 92E of the Act and we therefore uphold the levy of penalty under section 271BA of the Act as it is clearly warranted in the factual and legal matrix of the case on hand. - Decided against assessee.
Issues Involved:
1. Applicability of Section 92E of the Income Tax Act, 1961. 2. Requirement to file Audit Report in Form 3CEB. 3. Levy of penalty under Section 271BA for failure to file the Audit Report. 4. Consideration of judicial pronouncements and their relevance to the case. Issue-wise Detailed Analysis: 1. Applicability of Section 92E of the Income Tax Act, 1961: The primary issue was whether the provisions of Section 92E were applicable to the assessee for the relevant year. The assessee argued that Section 92E was not applicable since the company only allotted shares to an individual Non-Resident Indian (NRI) and did not engage in any other transactions. However, the Tribunal held that the transactions of share investments fall within the scope of Section 92E. It stated that any person entering into an international transaction must obtain and furnish a report from an accountant in the prescribed form by the specified date. 2. Requirement to file Audit Report in Form 3CEB: The Tribunal noted that the assessee failed to file the Audit Report in Form 3CEB, which is mandatory under Section 92E for international transactions. The assessee's contention that it was under the belief that filing the audit report was not required for share application money transactions was not accepted. The Tribunal emphasized that the transactions of investments in shares of the company are expressly covered under Section 92E, and the failure to furnish the audit report was attributable to the gross negligence of the assessee. 3. Levy of penalty under Section 271BA for failure to file the Audit Report: The Tribunal upheld the penalty of ?1,00,000/- levied under Section 271BA due to the assessee's failure to file the Audit Report in Form 3CEB. The Tribunal referred to the provisions of Section 271BA, which state that if a person fails to furnish a report from an accountant as required by Section 92E, the Assessing Officer (AO) may direct that such person shall pay a penalty of ?1,00,000/-. The Tribunal found no reasonable cause for the assessee's failure to file the report and held that the penalty was justified. 4. Consideration of judicial pronouncements and their relevance to the case: The assessee cited the judgment of the Hon'ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd. vs. ACIT, where it was held that the provisions of Chapter X are not applicable to international transactions of issuance of equity shares by a resident company. However, the Tribunal found this case factually different and not relevant to the issue of penalty under Section 271BA. The Tribunal noted that in the Vodafone case, the Form 3CEB report was filed, and the issue was related to the adjustment of the Arm's Length Price (ALP) by the Transfer Pricing Officer (TPO). In contrast, the present case involved the failure to file the required audit report, which attracted the penalty under Section 271BA. Conclusion: The Tribunal dismissed the appeal, upholding the penalty of ?1,00,000/- under Section 271BA for the assessee's failure to file the Audit Report in Form 3CEB as mandated by Section 92E. The Tribunal emphasized that the transactions of share investments fall within the ambit of Section 92E, and the failure to furnish the audit report without reasonable cause warranted the penalty. The Tribunal drew support from the findings in the case of IL&FS Maritime Infrastructure Company Ltd. vs. ACIT, where it was held that share investment transactions require filing an audit report, and failure to do so attracts a penalty under Section 271BA.
|
