2024 (12) TMI 759 - AT - Income Tax

Penalty u/s 271G - non-compliance to the notice u/s 92D(3) - HELD THAT - Assessee has made the compliance after the expiry of statutory period of 60 days, as the Assessee responded to the notice dated 18.12.2018 by filing its response along with part details/documents on 25.03.2019, therefore considering the delay of 38 days as miniscule and the peculiar facts and circumstances of the case in totality as the Assessee is a foreign based company and was in the process of appointing new authorized representative and therefore sought further time by filing its letter dated 04.01.2019 but the AO extended the time only up to 10.01.2019 admittedly a shorter period which resulted into noncompliance, however subsequently the Assessee complied with the notices by filling relevant details/documents specifically on 25-03- 2019. Accordingly, the reasons submitted for non-compliance by the Assessee prima facie appears to be bonafide and unintentional and therefore considering the reasons for the minuscule delay in filing of the relevant documents, as reasonable and inadvertent, we are inclined to delete the penalty under consideration. Thus, the penalty under consideration is deleted. Appeal filed by the Assessee stands allowed.

Summary

Issues:
Penalty under section 271G of the Income Tax Act for non-compliance with notice u/s 92D(3) - Whether penalty justified or not.

Detailed Analysis:

Issue 1:
The appeal was against the order passed by the Ld. Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961 for the A.Y. 2016-17, regarding penalty proceedings initiated under section 271G of the Act for non-compliance with notice u/s 92D(3).

Analysis 1:
The Assessee was issued a notice under section 92CA(2)/92D(3) to provide details for ALP determination of international transactions. The Assessee failed to comply within the statutory time limit of 60 days, leading to penalty proceedings being initiated. The Assessee argued against the penalty, claiming no willful intent to defraud and readiness to cooperate. However, the AO levied the penalty due to non-compliance within the prescribed time limit.

Issue 2:
Whether the penalty imposed under section 271G of the Act was justified based on the Assessee's submissions and compliance timeline.

Analysis 2:
The Ld. Commissioner upheld the penalty, stating that the Assessee's delay in submission was not reasonable, especially as the company was managed by qualified tax professionals. The Assessee's failure to provide all requested information/documents within the stipulated time period was deemed non-compliant, justifying the penalty.

Issue 3:
The Assessee challenged the penalty before the Tribunal, citing cases where no TP adjustments were made as grounds for penalty deletion.

Analysis 3:
The Tribunal considered the timeline of compliance and submissions by the Assessee. Despite the delay in filing details, the Tribunal found the reasons for non-compliance to be reasonable and inadvertent. The Tribunal noted the Assessee's efforts to comply after the expiry of the statutory period and the peculiar circumstances of the case, leading to the deletion of the penalty.

Conclusion:
The Tribunal allowed the appeal, deleting the penalty imposed under section 271G of the Income Tax Act. The Tribunal found the Assessee's reasons for non-compliance to be reasonable and unintentional, considering the delay as minuscule in light of the circumstances. The decision was pronounced in favor of the Assessee on 31.07.2024.