2019 (6) TMI 280 - AT - Income Tax

Penalty u/s 271BA - non furnishing of Report u/s 92E - assessee did not upload the Form No. 3CEB alongwith the return - whether failure to upload the Report was not intentional? - proof of bonafide mistake - HELD THAT - In the facts of the present case admittedly the assessee failed to upload Form No. 3CEB in terms of the statutory requirement. The Statute requires in terms of Section 92E that the report from an Accountant be filed in regard to the international transactions or specified domestic transactions. Law makers have used the words may and not shall thereby making their intentions clear in as much that levy of penalty is discretionary and not automatic. The said conclusion is further justified by Section 273B of the Income Tax Act 1961. We find that nothing has been placed before us to show that either the assessee is a habitual defaulter or that no explanation has been offered or for that matter the explanation offered is false. No plausible reasons have been given by the Revenue why the explanation offered cannot be accepted. It is seen that the ld. CIT(A) has proceeded as though the levy of penalty is automatic. In the facts of the present case we find that admittedly the assessee has failed to upload electronically Form No. 3CEB. Accepting the bonafide explanation consistently offered we accept the same as an unintentional bonafide mistake. Being satisfied by the explanation offered by the assessee after considering the position of law as applicable we hold that it was a case of bonafide mistake - Decided in favour of assessee.

Summary

Issues:
1. Correctness of order dated 04.05.2018 of CIT(A)-2 Ludhiana pertaining to 2014-15 assessment year.
2. Imposition of penalty for non-uploading/filing of Form 3CEB electronically.

Analysis:

Issue 1: Correctness of CIT(A) order
The appellant challenged the CIT(A) order on various grounds, including the alleged contravention of provisions of S. 250(6) of the Income Tax Act, 1961. The appellant contended that the CIT(A) erred in confirming the penalties imposed by the Ld. AO for non-uploading of Form 3CEB electronically. The appellant's representative argued that the failure to upload the form was unintentional, as it was the first year such a responsibility was imposed on the assessee. The representative cited several legal precedents to support the argument that the penalty order should be quashed due to the bonafide nature of the mistake. The Senior DR, however, supported the impugned order.

Issue 2: Imposition of penalty for non-uploading of Form 3CEB
The Tribunal noted that the assessee failed to upload Form No. 3CEB as required by Section 92E of the Income Tax Act, which mandates the filing of a report by an accountant for international transactions. The relevant penalty provision under Section 271BA allows for the imposition of a penalty of one hundred thousand rupees for failure to furnish the report. However, the Tribunal observed that the law makers used "may" instead of "shall" in the provision, indicating that the levy of penalty is discretionary, not automatic. The Tribunal further highlighted Section 273B, which exempts penalties if a reasonable cause is proven. In this case, the Tribunal found the assessee's explanation of ignorance regarding the legal requirement to be consistent and bonafide. The Tribunal also noted that no adjustments were proposed by the Transfer Pricing Officer based on the report. Consequently, the Tribunal held that the failure to upload the form was an unintentional bonafide mistake and quashed the penalty order.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the penalties imposed for non-uploading of Form 3CEB electronically.