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TMI Blog2019 (11) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] held that, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed the statue, the competent authority may not impose the penalty. Though there is a delay on the part of the assessee to file the requisite documents but ultimately documents have been filed and assessment has been framed and moreover no malafide on the part of the assessee not to comply with the provisions contained under section 92D (3) has come on record and as such, penalty levied in this case is not sustainable on merits also. Penalty levied by the TPO and confirmed by the CIT (A) is not sustainable on account of jurisdictional error, hence penalty order is quashed - Decided in favour of assessee. - ITA No.1415/Del./2017 - - - Dated:- 18-11-2019 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri K.M. Gupta, Advocate For the Revenue : Shri Sanjay I. Bara, CIT DR ORD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Ground NO.4 and 4.1. and in alternate, the Hon'ble CITCA) erred in not quashing the order passed under section 271G of the Act by TPO as without jurisdiction and bad in law as the powers of the Ld. TPO to pass order under section 271G of the Act were provided by the Finance Act 2014 with effect from 01.10.2014 and would not be applicable for failure to comply with provisions of Section 92D(3) of the Act before the amendment in Finance Act 2014. 3. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee is engaged into the business of distribution of diagnostic and laboratory equipment products of its group company, having its office located in New Delhi. During the year under assessment, assessee dealt with clinic diagnostics, life science research, informatics saddler, process separation, life science education and food/animal environment testing. During the year under assessment, assessee entered into international transactions as recorded in Form 3CEB as under Nature of Transaction Value (in INR) Name of the AE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue authorities below in the light of the facts and circumstances of the case. 8. Undisputedly. Ld. TPO passed the order under section 92A(3) making an adjustment of ₹ 5,60,22,884/-. It is also not in dispute that notice dated 16.09.2013 was issued by the TPO u/s 92CA (2)/92D(3) calling upon the assessee to file documents as required u/s 10D of the Income-Tax Rules, 1963. It is also not in dispute that the assessee has filed requisite documents before the ld. TPO on 10.09.2014. It is also not in dispute that notice u/s 271G of the Act was issued on 23.03.2015 to which assessee has filed submissions for non-imposition of the penalty on 15.04.2015 and ultimately penalty order has been passed on 27.04.2015. It is also not in dispute that the penalty order was passed by the ld. TPO for alleged default committed prior to the amendment in section 271G of the Act by the Finance (No.2) Act, 2014 with effect from October 1, 2014. 9. In the backdrop of the aforesaid undisputed facts circumstances of the case and orders passed by the lower Revenue authorities the sole question arises for determination in this case is:- as to whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO, was acted upon on 25.03.2014. The mere circumstance that the AO did not choose to act upon, it did not mean that the cause for imposing penalty was postponed within the period when the power was expanded under amendment to Section 271G of the Act. 5. The revenue s contention in these proceedings -in defence of the penalty imposed is that the first notice was not proceeded with. The TPO deemed it appropriate to give a second chance and issued fresh notice to the assessee on 05.12.2014 after the amendment was brought into force w.e.f 01.10.2014.When he issued the notice, the TPO possessed the power. The consequent imposition of penalty on was warranted and within the jurisdiction. Learned counsel for the Revenue relies upon Securities and Exchange Board of India vs. Classic Credit Ltd., JT 2017 (9) SC 558, to say that the amendment to Section 271Gmerely changed the forum but did not in any way confer fresh jurisdiction on a new authority. 6. In Brij Mohan (supra), the Supreme Court articulated the correct position in the case of assessments and the law applicable with respect to jurisdiction and other substantive proposition on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reiterated it. The assessee s contention was that the concealment exercise being penal in nature, committed when the return was filed and cognizance taken by the authority, by virtue of the subsequent amendment, was not legal. It was in these circumstances that the Court held that the penalty for concealment of particulars of income for furnishing inaccurate particulars would be upon the assessing authority for satisfaction in that regard. 9. The reliance on Securities and Exchange Board of India (supra) (by Revenue) in the opinion of this Court is insubstantial. The amendment to the Securities and Exchange Board of India Act empowers the Sessions Court to entertain, take cognizance and try offences under that enactment; either of those offences were triable by the Magistrate. The Supreme Court repelled the submissions made on behalf of the accused/opposite party of prejudice. The arguments made on their behalf was that the Magistrates were empowered to try summarily offences, that was the subject matter of the complaint and other proceedings before them and that this had led to the approval of valuable rights und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustainable because undisputedly assessee has submitted documents on the basis of which ld. TPO has proposed the adjustment and no prejudice whatsoever is caused to the Revenue. Hon ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa 83 ITR 26 (SC) held that, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed the statue, the competent authority may not impose the penalty. 17. So, we are of the considered you that though there is a delay on the part of the assessee to file the requisite documents but ultimately documents have been filed and assessment has been framed and moreover no malafide on the part of the assessee not to comply with the provisions contained under section 92D (3) has come on record and as such, penalty levied in this case is not sustainable on merits also. 16. In view of what has been discussed above, we are of the considered view that penalty levied by the TPO and confirmed by the ld. CIT (A) is not sustainable on account of jurisdictional error, hence penalty order is qu ..... 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