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TMI Blog2014 (4) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... e outstanding demand of Rs. 1.55 crores by way of penalty under section 271(1)(c) of the Income-tax Act, 1961 ("the Act"), for the assessment year 2004-05. The petitioner is engaged in the business of export of computer software and providing information technology enabled services. The petitioner had in its return of income for the assessment year 2004-05 filed on November 1, 2004, declared a total income of Rs. 56.60 lakhs. In its Form 3CEB, the petitioner had, inter alia, declared an amount of Rs. 5.86 crores paid as marketing expenses to its associated enterprises, namely, Deloitte Consulting LLP. The aforesaid expenses was thus referred by the Assessing Officer to the Transfer Pricing Officer. However, in the meantime, for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax. The order of the Assessing Officer has been upheld in quantum proceedings right up to the Tribunal. The petitioner is in appeal before the High Court from the order of the Tribunal in quantum proceedings. The appeal is pending. However, the entire amount of tax has been paid. Thereafter, by an order dated March 30, 2012, the Assessing Officer imposed a penalty of Rs. 2.05 crores upon the appellant under section 271(1)(c) of the Act for the assessment year 2004-05. Being aggrieved, the petitioner filed an appeal to the Commissioner of Income-tax (Appeals) and also an application for stay under section 220(6) of the Act before the Assessing Officer and, thereafter, before the Commissioner of Income-tax. However, both the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer and in appeal as well as by the Tribunal . . . In the present case, both the Assessing Officer as well as the Commissioner of Income-tax have failed to exercise their jurisdiction in accordance with law. The Commissioner of Income-tax adverted to the fact that the quantum appeal had been rejected by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. That in itself would not amount to a valid justification for imposition of a penalty. Before a penalty is imposed, the requirements of section 271 must be established. Accordingly, it would have been open to the court to set aside the impugned order in its entirety and to remand the proceedings back to the Assessing Officer for fresh consideration. However, sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the petitioner had contended that the petitioner had filed the original return for the assessment year 2004-05 on November 1, 2004, and the revised return was filed on March 29, 2006. It is pointed out that the revised return was filed in March, 2006, after the Transfer Pricing Officer by order dated February 10, 2005, for the assessment year 2002-03 did not accept the claim for marketing expenses paid to its associated enterprises. It is further submitted that in respect of the assessment year 2004-05, the Transfer Pricing Officer has passed an order on August 10, 2006, and based on it that the Assessing Officer passed an order on December 15, 2006. The petitioner had challenged the order dated December 15, 2006, before the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Tribunal has not at all considered prima facie merits of the petitioner's case and, therefore, no deposit/payment of penalty was called for in the facts of the present case. It is submitted on behalf of the petitioner that the petitioner has paid full tax amount for the assessment year 2004-05. The assessee's quantum appeals under section 260A of the Act are still pending before this court. Therefore, till that appeal is decided, it cannot be conclusively said that the petitioner had made any concealment of income or had furnished inaccurate particulars of income. On the other hand, Mr. Suresh Kumar, learned counsel for the Revenue, supports the impugned order. It is submitted that the Tribunal has merely directed the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit the amount if the authority wants the assessee to so deposit. (d) The authority concerned will also examine whether the time to prefer an appeal has expired. Generally, coercive measures may not be adopted during the period provided by the statute to go in appeal. However, if the authority concerned comes to the conclusion that the assessee is likely to defeat the demand, it may take recourse to coercive action for which brief reasons may be indicated in the order. (e) We clarify that if the authority concerned complies with the above parameters while passing orders on the stay application, then the authorities on the administrative side of the Department like respondent No. 2 herein need not once again give reasoned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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