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TMI Blog2023 (10) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the instant case. Reliance as placed on the judgment of Oriental Structural Engineers [ 2015 (3) TMI 102 - DELHI HIGH COURT] wherein it was held dismissing the appeals, that the concurrent findings were that the joint venture was formed only to secure the contract, in terms of which the scope of each joint venture partner's task was distinctly outlined. Further, the entire work was split between the two joint venture partners, they completed the task through sub-contracts and were responsible for the satisfaction of the National Highways Authority of India. Therefore, the Tribunal did not fall into error of law, in holding that the joint venture was not an association of persons liable to be taxed on that basis. Hence, we hold that the AO has fallen into error in determining the profit @ 8% and also invoking the provisions of Section 40A(2)(b) and the ld. CIT(A) has also erred in determining the profit of the assessee @ 3.78% equal to the profit of one of the parties to the JV. Penalty u/s 271G - AO held that the assessee has failed to maintain the required documents as per the provisions of Section 92B with Rule 10 of the I.T. Rules, 1962 - HEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 041/- and Rs. 1,75,600/- representing the total income declared by the assessee). That on the facts of the case and under the law, the disallowance sustained by the Id CIT(A) to the extent of Rs. 54,43,447/-, is unjustified. 3. In ITA No. 4873/Del/ 2019, following grounds have been raised by the assessee: 1. That the penalty order passed by the ld AD u/s 271G on 08.02.2017 is liable to be quashed, because it was not passed in accordance with law. In response to show case notice t. 20.12.2016 (fixing compliance for 27.12.2016), the assessee had filed a letter dt. 26.12.2016 explaining the issues with the help of supporting Without asking for any further clarification /documents, the id AD had passed the order on 29.12.2016 [against which, the assessee had filed an appeal on 30.01.2017 which was disposed at by the it CIT(A) on 25.07.2018). During the pendency of appeal, the Id AO had passed the penalty order u/s 271G on 08.02.2017, while mentioning that by not filing the requisitioned documents, the assessee had violated the provisions of section 92D and thus it is fit case for imposing u/s 271G. 2. That the penalty order passed by the ld AO u/s 271G on 08.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Professional/Consultancy Fees 4657019 Audit Fees 139972 Bank Charges 56180 337 Printing Stationery 400 Interest on TDS 5188 Sundry Balances written off 70 Net Profit 170416 The assessee JV had filed its ITR declaring total income of Rs. 1,75,600/- (Rs. 1,70,416/- plus Rs. 5,188/- being the amount disallowable). The AO had passed the assessment order dated 29.12.2016 u/s 143(3) in the status of AOP, determining the total income at Rs. 1,20,77,763/- while making disallowance u/s 40A(2)(b) at Rs. 1,18,92,163/-. The AO had formed a view that the assessee JV had suppressed its profit by making excessive payment to TPPL. To work out the amount to be disallowed u/s 40A(2)(b), the AO had applied the net profit rate of 8% on the SubContract Expenses (net) of Rs. 14,86,52,038/- (Rs.15,02,04,381/- less Rs. 15,52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt findings were that the joint venture was formed only to secure the contract, in terms of which the scope of each joint venture partner's task was distinctly outlined. Further, the entire work was split between the two joint venture partners, they completed the task through sub-contracts and were responsible for the satisfaction of the National Highways Authority of India. Therefore, the Tribunal did not fall into error of law, in holding that the joint venture was not an association of persons liable to be taxed on that basis. 10. Hence, we hold that the Assessing Officer has fallen into error in determining the profit @ 8% and also invoking the provisions of Section 40A(2)(b) and the ld. CIT(A) has also erred in determining the profit of the assessee @ 3.78% equal to the profit of one of the parties to the JV. ITA No. 4873/Del/2019 Penalty u/s 271G: 11. Facts of the case are as under: The assessee M/s TAPI Prestressed Products Ltd. ('TPPL') and M/s JITF Water Infrastructure Ltd. ('JWIL') had entered into an agreement to form a Joint Venture (JV) with the specific purpose of bidding for construction of 318 MLD 70 MGD Sewage Pumping Stati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure. 16. Provisions of Section 273B are as under: Penalty not to be imposed in certain cases. 273B. Notwithstanding anything contained in the provisions of clause (b) of sub- section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, section 271H, section 271-I, section 271J, 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. 17. We find that the case of the assessee is squarely covered by the judgment of Hon'ble Delhi High Court in CIT Vs. Leroy Somer and Controls (India) Pvt. Ltd. [360 ITR 532] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6] wherein the Hon'ble Apex Court held as under: An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. 19. Since neither the AO (during the course of assessment proceedings) nor the ld. CIT (A) during the course of appellate proceedings had required the assessee to furnish any specific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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