2023 (4) TMI 696 - HC - Income Tax

Penalty u/s 271AA - scope of amended Section 271AA - failure of the assessee to report the intentional transactions and also to furnish incorrect information in the return of income with reference to such international transactions - HELD THAT - As seen that the AO wrongly applied the amended Section 271AA which is effective from the assessment year 2012-13. That apart, for the delay in furnishing an information, the same could be covered under Section 271G of the Act. However, the AO dropped the proposal to impose penalty under Section 271G of the Act. Further, for non-filing of Form-3CEB as per Section 92E of the Act within the due date of filing the return, the Assessing Officer had already levied penalty under Section 271BA of the Act. Decided against revenue.

Summary

Issues involved:
The appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal 'B' Bench, Kolkata for the assessment year 2011-12.

Issue 1: Application of amended provision under Section 271AA of the Income Tax Act

The main issue in this case was whether the penalty could have been imposed under Section 271AA as per the amendment by the Finance Act, 2012, effective from 01.07.2012, for the assessment year 2011-12. The Tribunal held in favor of the assessee stating that the amended provisions were not retrospective and were applicable from A.Y. 2012-13. Therefore, the penalty imposed by the Assessing Officer under the amended provisions of section 271AA was not sustainable. The Commissioner of Income Tax (Appeals) also clarified that the delay in furnishing information should have been covered under Section 271G of the Act, and not under Section 271AA as wrongly applied by the Assessing Officer.

The order passed by the Commissioner of Income Tax (Appeals) provided further clarification that the Assessing Officer wrongly applied the amended Section 271AA, effective from AY 2012-13, for the assessment year 2011-12. The delay in furnishing information should have been addressed under Section 271G of the Act, which the Assessing Officer had dropped. Additionally, for the non-filing of Form-3CEB as per Section 92E of the Act within the due date, a penalty had already been levied under Section 271BA of the Act. The Tribunal rightly affirmed the order passed by the CIT(A), and it was concluded that the penalty imposed under Section 271AA was not justified. Consequently, the appeal was dismissed, and the substantial question of law was answered against the revenue.