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2024 Supreme(Online)(ITAT) 2054
INCOME TAX APPELLATE TRIBUNAL (CHANDIGARH BENCH)
SHRI VIKRAM SINGH YADAV, AM, SHRI PARESH M. JOSHI, JM
Yamuna Power & Infrastructure Ltd. – Appellant
Versus
The DCIT – Respondent
Income Tax Appeal No. ITA NO. 1229/Chd/2019
For the Appellant:Shri Sudhir Sehgal, Advocate
For the Respondent: Shri Dharam Vir, JCIT, Sr. DR
Penalty under section 271AA for non-reporting of transactions may not be imposed if the failure results from reliance on professional advice without malice or intent to mislead.
Headnote:(A) Income Tax Act, 1961 - Sections 271AA and 92A to 92D - Penalty for non-reporting of specified domestic transactions - The appellant’s failure to report transactions was based on professional advice, leading to consideration that the omission was technical, not malafide. As the TPO found no adverse impact on transfer pricing, no penalty warranted. (Paras 7, 8, 10, 11)
(B) Penalty - Sections 273B - Reasonable cause and lack of willful default - The appellant acted on advice from professionals and previous audits without adverse findings, justifying non-reporting due to bona fide belief. (Paras 9, 10)
| Table of Content |
|---|
| 1. overview of the facts leading to the appeal. (Para 1 , 2) |
| 2. arguments presented by the appellant regarding compliance and professional reliance. (Para 3) |
| 3. court's observations on the regulatory requirements and consequences of non-compliance. (Para 4 , 6 , 7 , 8) |
| 4. understanding of the basis for penalty imposition under section 271aa and reliance on professional advice. (Para 9) |
| 5. final ruling regarding the appeal outcome and penalty. (Para 10 , 11) |
आदेश/Order
PER VIKRAM SINGH YADAV, A.M. :
This is an appeal filed by the assessee against the order of the Ld. CIT(A), Panchkula dt. 19/06/2019 wherein the assessee has challenged the action of the Ld. CIT(A) in sustaining the levy of penalty under section 271AA amounting to Rs. 5,55,887/- for alleged default in not reporting the specified domestic transaction in Form No. 3CEB.
2. Briefly the facts of the case are that the assessee company filed its return of income declaring total income of Rs. 1,44,79,523/- which was subsequently revised and thereafter the case of the assessee was selected for scrutiny and notices were issued.
2.1 During the course of assessment proceedings, the AO referred the matter to the Transfer Pricing Officer (TPO) for determining the Arms Length Price in respect of International transactions and specified domestic transactions entered into by the assessee with Associate Enterprises. Thereafter, the TPO examined the Transfer Pricing documentation which contained the functional and economic analysis of the assessee and the comparables and no adverse inference was drawn in respect of International and Specified Domestic Transactions so undertaken by the assessee in terms of his order passed under section 92CA(3) dt. 28/09/2017. At the same time, the TPO in his order has stated that the assessee has not reported transactions, relating to purchase amounting to Rs. 2,35,34,333/-, rent paid amounting to Rs. 60,000/- and remuneration paid to Directors amounting to Rs. 42,00,000/-, in Form 3CEB and it was stated that the AO shall examine the initiation of penalty proceedings under section 271AA for not reporting the said transaction in Form No. 3CEB.
2.2 The AO, thereafter, concluded the assessment proceedings vide order passed under section 143(3) dt. 03/11/2017 wherein the assessed income was determined at Rs. 2,53,88,510/- and referring to the order passed by the TPO under section 92CA(3), the AO stated that the facts have been examined and it has been found that the assessee has not reported transactions relating to rent paid, Directors remunerations and Purchase in Form 3CEB and accordingly the penalty proceedings under section 271AA were separately initiated against the assessee for not reporting the said transaction in Form No. 3CEB.
2.3 During the course of penalty proceedings, the notices were issued and considering the submissions filed by the assessee but not finding the same acceptable, the AO held the assessee to be liable for penalty under section 271AA and levied the penalty of Rs. 5,55,887/- @ 2% of the total specified domestic transactions amounting to Rs. 2,77,94,337/-.
2.4 As per the AO, the assessee has entered into following specified domestic transactions with related parties namely purchase made from M/s Yamuna Insutech Private Limited amounting to Rs. 2,35,34,337/-, rent paid to SS Sardana (HUF) amounting to Rs. 60,000/-, remuneration paid to Shri Sanjeev Sardana (Director) amounting to Rs. 30,00,000/-, and remuneration paid to Director, Shri Rajeev Sardana amounting to Rs, 12,00,000/-.
2.5 As per the AO, the assessee did not furnish the details of related parties transactions in Form 3CEB and even didn’t furnish the copy of the relevant ledger account during the course of penalty proceedings inspite of being asked from time to time, otherwise the assessee could have proved bonafides of the transactions by putting on record the ledger account as well as bank accounts co-relating the purchases with respective payments have been ma
