Tribunal dismisses penalty levy for Section 271BA but deletes penalty under Section 271G.

The appeals regarding the levy of penalty under Section 271BA for the assessment years 2010-11 and 2011-12 were dismissed as the Tribunal upheld the penalty imposed by the Assessing Officer. However, the appeals concerning the penalty under Section 271G for the same assessment years were allowed by the Tribunal, which deleted the penalty considering compliance by the assessee during assessment proceedings.

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Issues Involved:
1. Levy of penalty under Section 271BA of the Income Tax Act.
2. Levy of penalty under Section 271G of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271BA:

The appeals ITA Nos. 737 & 740/Hyd/2016 pertain to the levy of penalty under Section 271BA for the assessment years (AYs) 2010-11 and 2011-12. The assessee failed to furnish the report in Form No. 3CEB as required under Section 92E read with Rule 10E. The Assessing Officer (AO) initiated penalty proceedings and observed that the obligation to furnish the report is compulsory and ignorance of law is no excuse. The AO noted that obtaining permission for payment of royalty from RBI or other authorities does not exempt the assessee from filing Form 3CEB. The AO also rejected the argument that previous officers accepted the non-filing of the report, stating that successors can implement the law correctly. The AO concluded that the failure to file the report was a deliberate default, and the penalty of Rs. 1,00,000/- was levied.

The assessee contended before the Commissioner of Income-tax (Appeals) [CIT(A)] that it was under a bona fide belief that the report was not required due to RBI approval and that the non-filing was not intentional. However, the CIT(A) upheld the AO's decision, noting that the assessee did not provide any material to contradict the AO's conclusions.

The assessee appealed to the Tribunal, reiterating the arguments made before the CIT(A). The Tribunal found that mere ignorance and bona fide belief are not reasonable causes to delete the penalty. The Tribunal upheld the CIT(A)'s order, confirming the penalty levied by the AO for AYs 2010-11 and 2011-12, and dismissed the appeals.

2. Levy of Penalty under Section 271G:

The appeals ITA Nos. 738 & 739/Hyd/2016 pertain to the levy of penalty under Section 271G for AYs 2010-11 and 2011-12. During scrutiny proceedings, the AO required the assessee to file the Transfer Pricing (TP) study maintained under Section 92D(3) read with Rule 10D. The assessee filed the report, but the AO found it non-compliant with Rule 10D requirements and initiated penalty proceedings. The AO observed that no specific notice format is prescribed under Section 92D(3) and that an order sheet noting is sufficient. The AO also noted that the method adopted for the TP study was incorrect and that the assessee did not provide comparables for the "CUP" method.

The AO concluded that the assessee's failure to file a proper TP study deprived the Department of necessary information, and a penalty of Rs. 4,23,634/- was levied. The CIT(A) confirmed the penalty, noting that the assessee did not provide any material to contradict the AO's conclusions.

The assessee appealed to the Tribunal, arguing that no specific notice was served and that the information was furnished during assessment proceedings. The Tribunal found that the AO did not issue a notice under Section 92D(3) and that the assessee complied with the provisions by filing the required information. The Tribunal noted that the AO completed the assessment without making any adjustments, indicating compliance by the assessee. The Tribunal, considering the facts and judicial pronouncements, deleted the penalty under Section 271G for AYs 2010-11 and 2011-12, and allowed the appeals.

Conclusion:

- Appeals in ITA Nos. 737 & 740/Hyd/2016 (Section 271BA) are dismissed.
- Appeals in ITA Nos. 738 & 739/Hyd/2016 (Section 271G) are allowed.

Pronounced in the open court on 7th July, 2017.

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