2012 (3) TMI 521 - AT - Income Tax

Tribunal Upholds Deletion of Penalties for Late Document Submission

A.C.I.T. Versus M/s Nippo Batteries Co. Limited

The Tribunal dismissed both appeals of the Revenue, upholding the decisions of the ld. CIT(A) to delete the penalties u/s 271AA and 271G for Assessment ... Penalty levied u/s 271G and 271AA - Held that:- A perusal of the show cause notices levied u/s 271AA and 271G shows that there is no specific indication as to the documents which were not furnished. In fact, the order of the TPO shows that the details were called for and the assessee had submitted the details. Further perusal of the order of the TPO shows that the assessee had been asked to provide the details in 30 days. However, the details had been produced with delay of six months. Perusal of the order of the ld. CIT(A) clearly shows that the reason for delay in producing the documents was the resignation of the secretary and this claim of the assessee has not been found to be false. The assessee admittedly is a corporate entity. The assessee can function only through its employees. If an employee leaves the services of the assessee company getting another employee to take over the job and get acclimatized and familiar to the functions originally done by the earlier employee would take time. This would be a reasonable cause. It is noticed that the ld. CIT(A) has also accepted this as reasonable cause. The claim of the assessee has also not been found to be false. In these circumstances, we are of the view that the ld. CIT(A) was right in deleting both the penalties u/s 271AA and 271G of the Act. Appeals of the Revenue are dismissed. Issues:1. Appeal against deletion of penalty u/s 271AA of the Act for Assessment Year 2006-07.2. Appeal against deletion of penalty u/s 271G of the Act for Assessment Year 2006-07.Analysis:1. The first issue pertained to the appeal against the deletion of penalty u/s 271AA of the Act for Assessment Year 2006-07. The Revenue contended that the penalty was wrongly deleted by the ld. CIT(A) based on the submission that the details required for computing the arms length price in uncontrolled transactions were furnished in Form 3CEB, and no specific instance was provided to demonstrate difficulty in such computation. The Revenue argued that the deletion of penalty was unjustified. However, the Tribunal noted that the order of the TPO did not indicate any specific documents that were not provided by the assessee. The delay in producing documents was attributed to the resignation of the company secretary, which was considered a reasonable cause. The Tribunal upheld the decision of the ld. CIT(A) in deleting the penalty u/s 271AA, citing the absence of false claims by the assessee and the reasonable cause for the delay.2. The second issue involved the appeal against the deletion of penalty u/s 271G of the Act for Assessment Year 2006-07. The Revenue argued that the penalty was wrongly deleted by the ld. CIT(A) based on similar grounds as the penalty u/s 271AA, accepting the explanation provided by the assessee regarding the delay in producing documents. The Tribunal observed that no adjustments were made by the TPO and that the delay in document submission was due to the transition period after the resignation of the company secretary, which was considered a reasonable cause. The Tribunal upheld the decision of the ld. CIT(A) in deleting the penalty u/s 271G, emphasizing the absence of false claims by the assessee and the accepted reasonable cause for the delay.In conclusion, the Tribunal dismissed both appeals of the Revenue, upholding the decisions of the ld. CIT(A) to delete the penalties u/s 271AA and 271G for Assessment Year 2006-07. The Tribunal found the reasons for delay in document submission, attributed to the resignation of the company secretary, to be valid and reasonable, thereby supporting the deletion of penalties. The decision was also backed by a previous ruling of the Tribunal in a similar case.