TaxTMI 
TaxTMI 
2023 (9) TMI 1784
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....the Income Tax Act, 1961 [ in short 'the Act']. Both the impugned orders are of even date i.e. 10/09/2014. Since, the facts germane to the issue in appeals are identical, the appeals are taken up for adjudication together and are decided by this common order. 2. For the sake of convenience the appeals are decided in the sequence of Assessment Years. ITA NO.7492/MUM/2014- A.Y.2004-05: 3. Shri Yogesh Thar appearing on behalf of the assessee submitted that penalty u/s. 271(1)(c) of the Act has been levied in respect of Transfer Pricing adjustments. He contended that during the period relevant to assessment year under appeal, the assessee had entered into international transactios with overseas Associated Enterprises (AEs) in r....
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....d that there is possibility of inflation of expenses in respect of AEs as well as non AEs. He made adjustment only in respect of AEs only and left the attribution of expenses to non-AEs on the Assessing Officer The Assessing Officer while passing the assessment order made no adjustment in respect of non AE expenditure. He initiated penalty under section 271(1)(c) of the Act in respect of the adjustment made by the TPO. 3.1 The ld. Authorized Representative of the assessee pointed that in so far as merits of the TP adjustment are concerned, they have been upheld by the Tribunal in ITA NO.7470/Mum/2011 vide order dated 03/04/2023. 3.2 The ld. Authorized Representative of the assessee raised multiple propositions against levy of penalty ....
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....an 322(SC). 3.4 The third proposition against levy of penalty u/s. 271(1)(c) of the Act advanced by ld. Authorized Representative of the assessee is, that no penalty can be levied on addition made on adhoc /estimation basis. To support this proposition he placed reliance on the following decisions: (i) Vinod Obroi v. ITO, ITA No.5779/Del/2019. (ii) ACIT v. Vision Research & Management (P) Ltd. 63 taxmann.com 8 Lucknow-Trib) (iii) CIT v. Norton Electronics Systems (P). Ltd. 41 taxmann.com 280( Allh) (iv) Naresh Chand Agarwal v. CIT, 38 taxmann.com 397 (Allh) (v) Dressr-Rand India (P) Ltd. v. DCIT, 37 taxmann.com 328(Mum-Trib) (vi) CIT v. Arjun Prasad Ajit Kumar, 214 CTR 355 (Allh) 3....
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....se we find that the Assessing Officer has initiated penalty proceedings u/s. 271(1)(c) of the Act in respect of T.P adjustment Rs.2.30 crores. A perusal of the T.P order dated 22/12/2006 reveals that TPO has accepted the TNMM as the most appropriate method adopted by the assessee. The TPO has also accepted the comparables selected by the assessee to benchmark its international transaction. The TPO has not disputed the quantum of international transactions disclosed by the assessee, either. The TPO has rejected adjustment made by the assessee in respect of AMC margins, cost savings on differential duties and incidental expenses, Extraordinary replacement costs. and indigenization cost. The aforesaid adjustment made by the assessee were part ....
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....taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every return....
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....e no addition for non-AEs. Penal provisions under section 271(1)(c) of the Act cannot be invoked on estimation and adhoc additions. There has to be a specific findings highlighting concealment of income or furnishing inaccurate particulars of income. Additions made on estimations cannot form basis for levy of penalty. To support this proposition reliance is placed on the decision in the case of CIT vs. Norton Electronic Systems Pvt. Ltd.(supra) and Naresh Chand Agarwal vs. CIT (supra). There are several other decisions supporting similar view by different Hon'ble High Courts and various benches of the Tribunal. Thus, the penalty levied u/s. 271(1)(c) of the Act in the instant case is unsustainable on this ground as well. 8. In the re....