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TMI Blog2017 (9) TMI 1339X X X X Extracts X X X X X X X X Extracts X X X X ..... for completing the assessment. Further, on application by the assessee, the AO can extend the period for submission by further period of 30 days. In the given case, AO has not issued any notice, however, AO opined that it is not necessary to issue notice but order sheet notice/entry also amounts to notice issued u/s 92D(3). We find that the assessee has in fact filed the relevant information as soon as it is brought to the notice and AO has completed the assessment without making any adjustment. It shows that the assessee has complied with the provisions of section 92D(3). Considering the facts on record and other judicial pronouncements relied on by the assessee, we are inclined to accept the contention of ld. AR and in our opinion, penalty u/s 271G is uncalled for and accordingly, it is deleted. - Decided in favour of assessee. - ITA Nos. 737, 738, 739 And 740/Hyd/2016 - - - Dated:- 7-7-2017 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri K. Gopal For The Revenue : Shri H. Phani Raju ORDER PER S. RIFAUR RAHMAN, A.M.: These four appeals pertain to the assessee are directed against the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld report them. Ignorance of law is no excuse, more so when the assessee engages qualified professionals for audit and representations. (b) Obtaining permission for payment of royalty from RBI or any other government authority is a totally different process and there is no exception u/s 92E or rule IDE for such a case. The assessee cannot decide for itself that report in form 3CEB is not necessary. (c) If the case were not to be selected under scrutiny, the fact that form no. 3CEB was not filed could not have been noticed. Even during the scrutiny proceedings, the report was not filed. Therefore there is deliberate default. (d) The adjustment to ALP is not a criterion to determine whether there is default or not. It is quite unlikely that the Department would have noticed that there are international transactions because 3CEB report is the only source from which the Department would get' to know the same. On account of the default of the assessee, this opportunity was deprived to the Department. (e) The argument that earlier officers were accepting the case without filing of report in form 3CEB is not acceptable. Merely because an officer is ignorant of' law or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee has not got any material to contradict the conclusions drawn by the AO, the penalty levied by the AO u/s 271BA was confirmed by the CIT(A). 7. Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1. The Ld. Commissioner of Income-tax (Appeals)-2, Hyderabad [hereinafter. referred to as CIT(A) ] erred in confirming the action of the Ld. A.O. in levying penalty of ₹ 1,00,000/- under section 271BA of the Act without appreciating the fact and circumstances of the case. The Appellant, therefore, submits that the levy of penalty under section 271BA may be deleted. 2. The Ld. CIT(A) failed to appreciate that the Appellant was under the bona fide belief that the report under section 92E is not required as it has paid the royalty after obtaining the RBI approval. Hence, levy of penalty amounting to ₹ 1,00,000/- under section 271BA is unjustified and the same may be deleted. 3. The Ld. CIT(A) further failed to appreciate that the Appellant has furnished an explanation for not furnishing the audit report under section 92E on time and the same has not found to be false. Hence, levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 92D(3). d) Reliance was placed on the decision of ITAT, Hyderabad bench in the case of Annapurna Business Solutions (2012) (17 Taxmann.com 125), wherein it was held that when the assessee furnished all particulars on the basis of which the assessing officer could determine the ALP, no penalty can be levied u/s 271G. e) Reliance was also placed on the decision of ITAT, Chennai Bench in the case of Magic Woods Exports Pvt Ltd (2012) (25Taxmann.com) where in it was held that delay in filing details of international transactions was justifiable when the AO did not make additions to ALP and penalty cannot be levied. 14. After considering the facts and submissions of the AR, the AO made the following observations: (a) The assertion that no notice was issued u/s 92D(3) is incorrect. Section 92D(3) does not prescribe any format for notice. Notice does not mean that a separate letter has to be issued. An order sheet noting is also a notice. In the present case, such notice was issued on 04-02-13 and the assessee filed report on 12-02-13. Therefore, the argument that there was paucity of time is also an argument of convenience. In fact, for the purpose of filing 3CEB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed the penalty levied by the AO on the ground that the AR of the assessee has not got any material to contradict the conclusions drawn by the AO. 16. Aggrieved by the order of the CIT(A), the assesse is in appeal before us raising the following grounds of appeal: 1. The Ld. Commissioner of Income-tax (Appeals)-2, Hyderabad [hereinafter referred to as the CIT(A) erred in confirming the action of the Ld. A.O. in levying the penalty of ₹ 4,23,634/- under section 271G of the Income Tax Act, 1961 [hereinafter referred to as the Act ] without appreciating the fact and circumstances of the case. The Appellant, therefore, prays that the levy of penalty under section 271G of the Act is not justified and the same may be deleted. 2. The Ld. CIT(A) failed to appreciate that the Appellant has furnished all the information and particulars before the Ld. A.O. to enable him to determine the Arm Length Price and the same was accepted by the Ld. A.O. without finding it incorrect. Thus, the penalty of ₹ 4,23,634 levied under section 271G of the Act is unjustified and the same may be deleted. 3. Without prejudice to the above the Ld. CIT(A) failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271G 92D(3), penalty can be levied only when AO issues notice u/s 92D(3) and assessee fails to furnish information for completing the assessment. Further, on application by the assessee, the AO can extend the period for submission by further period of 30 days. In the given case, AO has not issued any notice, however, AO opined that it is not necessary to issue notice but order sheet notice/entry also amounts to notice issued u/s 92D(3). We find that the assessee has in fact filed the relevant information as soon as it is brought to the notice and AO has completed the assessment without making any adjustment. It shows that the assessee has complied with the provisions of section 92D(3). Considering the facts on record and other judicial pronouncements relied on by the assessee, we are inclined to accept the contention of ld. AR and in our opinion, penalty u/s 271G is uncalled for and accordingly, it is deleted. 19.1 As the facts and issue in AY 2011-12 are materially identical to that of AY 2010-11, following the conclusions drawn therein, we delete the penalty levied u/s 271G and allow the grounds raised by the assessee. 20. In the result, both the appeals under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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