TaxTMI 
TaxTMI 
2012 (12) TMI 237
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....s return of income for the Assessment Year 2006-07 on 29.11.2006 declaring a loss of Rs. 4,52,05,744/-. The return was selected for scrutiny and the assessment order was passed under Section 143(3) read with S.92CA(3) of the Income Tax Act, 1961 on 22.2.2010. A transfer pricing adjustment of Rs. 2,25,67,539/- was made. The Assessing Officer before finalizing the assessment proceedings initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. Show cause notice dated 22.2.2010 was served on the assessee. On 28.5.2010 the assessee filed his reply. The Assessing Officer after considering the reply, vide order dt. 28.6.2010 levied penalty under Section 271(1)(c) by holding that the assessee furnished inaccurate particula....
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....ts and the circumstances of the case and in law, the Hon'ble Commissioner of Income Tax (Appeals) has erred in upholding the order of the ld. AO that the appellant has furnished inaccurate documentation and failed to provide a bonafide explanation in respect of the addition made to the returned income." 2. Ld. Sr. Advocate Mr. S. Venkatraman submitted that no penalty can be levied on T.P. adjustment, when certain comparables are included and certain other comparables are excluded. As per the Ld. Counsel addition of certain samples and deletion of certain samples, which caused variation, is no ground for levy of penalty. He submitted that as the assessee was having a loss, it did not file any appeal on the T.P. adjustment. He filed th....
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....omparable was not thrown up by any search process performed on Prowess or Capitaline. This company was just added to the list of comparables without any reason and only with the object of furnishing inaccurate particulars. He similarly relied on other portions of the Commissioner of Income Tax (Appeals)'s order and submitted that it cannot be laid down when some comparables are included and other comparables are excluded no penalty can be levied. He vehemently contended that the facts of each case has to be looked into. He submitted that the assessee has not proved its bonafide. He distinguished the case laws relied upon by the assessee. In reply, the ld. counsel for the assessee reiterated its contention that the entire exercise was bo....
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....alty or to drop the proceedings. 6. There cannot be any dispute on the broad propositions of law canvassed by the assessee's counsel, as these are supported by certain case laws. The propositions are, (a) Just because the assessee accepted the transfer pricing adjustment, no penalty can be levied; (b) No penalty can be levied when the assessee's explanation is bonafide; (c) Penalty cannot be levied when there are two possible views; (d) Penalty cannot be levied when the issue in question is debatable. 7. We have to consider whether on the facts and circumstances of the case on hand, these propositions can be applied. The assessee in this case has used multiple year data in computing the arm&....
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....judicating the appellant for Assessment Year 2005-06, this Bench of the Tribunal has come to a conclusion that the First Appellate Authority has rightly deleted the following companies as comparables:- (a) TCE Consulting Engineers Ltd. (b) Engineers India Ltd. (c) Rights Ltd. (d) Water and Power Consultancy Services. 10. Thus deletion of these comparables cannot be aground for imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961. As far as selection of Besant Raj International Ltd. is concerned as a comparable, the TPO has accepted the same in the earlier AYs. Be as it may, selection of comparables is a subjective exercise. The assessee has seriously contested the conclusions drawn....