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TMI Blog2014 (1) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... on Malik Ram v. State of Rajasthan [1961 (4) TMI 84 - SUPREME COURT] - the words "may approve" in the section, properly construed, must also include "may not approve" - The AO did not consider the explanation of reasonable cause of bonafide belief given by the assessee in its failure to furnish the report under Section 92E in time - Even CIT(A) did not bother to look into or consider the said explanation given by the assessee - The authorities below failed to take note of provisions of Section 273B as well as the use of word 'may' in Section 271BA. The explanation given by the assessee is satisfactory to the effect that the delay in furnishing the report under Section 92E was not intentional, rather due to mistaken bonafide belief that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed time limit and the penalty levied u/s 271BA may be deleted. 3. On the acts and circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in rejecting the claim of the appellant and there was a reasonable cause in delay in obtaining the report u/s 92E of the Income Tax Act, 1961. The appellant therefore prays that penalty levied u/s 271BA is bad in law and may be deleted." 3. The brief facts of the case are that the return of income was filed by the assessee-company on 23.09.2009. Subsequently, on 19.08.2011, the assessee- company filed transfer pricing report in Form No. 3CEB dated 16.08.2011 wherein International transactions of Rs. 143,89,81,125/- were reported. The AO initiated penalty proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has brought our attention to the order of the AO passed under Section 271BA to contend that the AO had failed to consider the explanation of assessee of his reasonable cause of bonafide belief that transaction of investment in equity shares of subsidiary company did not fall within the scope of Section 92B. On the other hand, the learned DR, before us, has submitted that penalty had been imposed by the AO due to technical default in submitting the report as per Section 92E of the Act by the assessee-company and there was no discretion available to the AO for not imposing the penalty. 5. We have considered the rival submissions made by the learned representative of the parties before us. 6. In case of 'International transactions' as def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure." 7. Now, coming to the case in hand, it may be observed that as per the wording of section 271BA, the AO may direct the concerned person to pay the penalty. The word 'may' used in the section denotes that it is the discretion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in time. Even, the learned CIT(A) did not bother to look into or consider the said explanation given by the assessee. The authorities below have imposed the penalty holding that the same is mandatorily imposable under the provisions of Section 271BA of the Act. The authorities below failed to take note of provisions of Section 273B as well as the use of word 'may' in Section 271BA. 8. We are satisfied with the explanation given by the representative of the assessee to the effect that the delay in furnishing the report under Section 92E was not intentional, rather due to mistaken bonafide belief that the transaction involving the investment of money in equity shares of its subsidiary company by the assessee-company was not within the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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