2024 (5) TMI 102 - AT - Income Tax

Levy of penalty u/s 271BA - assessee failure to furnish report u/s 92E, though assessee had transaction with its Indian AE - assessee is a Foreign Company incorporated and resident in USA and it did not file its return of income and therefore notice u/s 148 of the Act was issued - income was received by the assessee as Royalty which was subjected to TDS @15% as per the Article 12 of India USA DTAA - HELD THAT - Assessee was under a bonafide belief that it was not required to file any return of income as its income has been subjected to tax deducted at source. We find that the assessee did furnish report under section 92E of the Act during the course of the scrutiny assessment proceedings itself - we do not find this to be a fit case for the levy of penalty under section 271BA - Decided in favour of assessee.

Summary

Issues involved:
The issue involved in this case is the levy of penalty u/s 271BA of the Income-tax Act, 1961 on the assessee for failure to furnish a report under section 92E of the Act.

Summary:

Issue 1: Levy of Penalty u/s 271BA

The appeal by the assessee was against the order of the Learned Commissioner of Income-Tax (Appeals) confirming the levy of penalty under section 271BA of the Income-tax Act, 1961 amounting to Rs. 1,00,000. The assessee, a Foreign Company incorporated and resident in the USA, did not file its return of income initially. Upon scrutiny, it was found that the assessee had transactions with its Indian AE and should have filed an Accountant's Report under section 92E in Form 3CEB. The penalty was imposed for failure to furnish this report. The Tribunal noted that the assessee, being a foreign national, was under a bona fide belief that it was not required to file a return of income in India. The assessment was framed without any Transfer Pricing adjustment, and the assessee did furnish the report under section 92E during the scrutiny assessment proceedings. Considering these facts, the Tribunal held that it was not a fit case for the levy of penalty under section 271BA and directed the Assessing Officer to delete the penalty.

Issue 2: Validity of Assessment

The assessee also raised grounds challenging the validity of the assessment. However, since this legal issue was not contested seriously, the Tribunal did not find any reason to adjudicate on this issue. Consequently, the penalty was deleted, and the appeal filed by the assessee was allowed.

*Order pronounced in the open court on 30th April, 2024.*