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2016 (4) TMI 957 - AT - Income TaxPenalty u/s 271G - Penalty for failure to furnish information or document under section 92D - Held that - Substantial compliance before the order of the Ld. TPO and failure of the revenue to point out specifically which information was not provided by Assessee in time and most importantly based on the documentation provided by the Assessee no adjustment is proposed by the TPO and further the penalty is levied for non-furnishing TP Study Report which is not a specified document under Rule 10D in time though available before passing of the order we cancel the penalty levied u/s 271G - Decided in favour of assessee
Issues Involved:
1. Legality of the penalty imposed under Section 271G of the Income Tax Act, 1961. 2. Compliance with the provisions of Section 92D and Rule 10D of the Income Tax Rules, 1962. 3. Jurisdiction and validity of the penalty imposed by the Assessing Officer (AO). 4. Reasonable cause for non-furnishing of Transfer Pricing (TP) study report within the prescribed time. Detailed Analysis: 1. Legality of the Penalty Imposed under Section 271G: The assessee challenged the penalty of ? 2,85,00,100/- imposed under Section 271G of the Income Tax Act, 1961, arguing that the order passed by the CIT(A) confirming the penalty was "bad in law." The Tribunal noted that the penalty was levied due to the assessee's failure to furnish the TP study report within the specified time, despite repeated requests from the AO. However, the Tribunal found that the assessee had substantially complied with the requirements by providing the necessary details before the finalization of the assessment order. The Tribunal concluded that the penalty was not justified as there was no specific violation of the provisions of Section 92D or Rule 10D. 2. Compliance with the Provisions of Section 92D and Rule 10D: The Tribunal examined whether the assessee complied with the provisions of Section 92D and Rule 10D, which require maintaining and furnishing information and documents related to international transactions. The Tribunal observed that the assessee had submitted some information within 30 days and additional details within 60 days, as required by the TPO. The Tribunal found that the assessee had provided all relevant details before the completion of the order under Section 92CA(3) by the TPO. The Tribunal also noted that the TPO's order did not specify which documentation was lacking, thereby supporting the assessee's compliance claim. 3. Jurisdiction and Validity of the Penalty Imposed by the AO: The Tribunal scrutinized the jurisdiction and validity of the penalty imposed by the AO. It was highlighted that the AO initiated penalty proceedings under Section 271G due to the alleged non-compliance with the TP study report submission. However, the Tribunal found that the TPO's order did not clearly indicate the specific documents that were not furnished within the prescribed time. The Tribunal cited the Delhi High Court's judgment in CIT Vs. Jonson Mathey India Pvt. Ltd., which emphasized the need for specific findings on the dates and details of the required documents. The Tribunal concluded that the penalty order lacked such specific findings, rendering it invalid. 4. Reasonable Cause for Non-Furnishing of TP Study Report: The Tribunal considered whether there was a reasonable cause for the assessee's failure to furnish the TP study report within the prescribed time. The assessee argued that the TP study report was not a specified document under Rule 10D and that there was substantial compliance with the requirements. The Tribunal noted that the assessee had requested an extension of time and had eventually provided the necessary details. The Tribunal referred to the Delhi High Court's judgment in CIT Vs. Bumi Hiway Pvt. Ltd., which held that substantial compliance with Rule 10D is sufficient. The Tribunal concluded that the assessee had provided the required information before the TPO's order and that the penalty was unjustified. Conclusion: The Tribunal, after considering the rival contentions and relevant judgments, concluded that the assessee had made substantial compliance with the provisions of Rule 10D. The Tribunal found that the penalty imposed under Section 271G was not justified due to the lack of specific findings on the required documents and the reasonable cause for the delay. Therefore, the Tribunal canceled the penalty of ? 2,85,00,100/- levied by the AO and confirmed by the CIT(A). The appeal filed by the assessee was allowed.
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