M/s. India Medtronic Pvt. Ltd.,, Baroda v. The ACIT., Circle-1(2),, Baroda

ITA 1608/AHD/2006 | 2003-2004
Pronouncement Date: 13-01-2010 | Result: Allowed

Appeal Details

RSA Number 160820514 RSA 2006
Bench Ahmedabad
Appeal Number ITA 1608/AHD/2006
Duration Of Justice 3 year(s) 6 month(s) 21 day(s)
Appellant M/s. India Medtronic Pvt. Ltd.,, Baroda
Respondent The ACIT., Circle-1(2),, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 13-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 13-01-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 2003-2004
Appeal Filed On 22-06-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI T K SHARMA AND N S SAINI) ITA NO.1608/AHD/2006 (ASSESSMENT YEAR:- 2003-04) M/S INDIA MEDTRONIC PVT. LTD. 919/2 GIDC MAKARPURA BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(2) BARODA [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI S N SOPARKAR SENIOR ADVOCATE WITH SHRI YOGESH SHAH RESPONDENT BY: - SHRI B S GAHLOT CIT DR O R D E R PER N S SAINI (ACCOUNTANT MEMBER) : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME-TAX (APPEALS) DATED 12-04-2006 FOR THE ASSES SMENT YEAR 2003-04 RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I BARODA HAS ERRED IN NOT HOLDING THE NOTICE ISSUED BY THE LEARN ED ASSESSING OFFICER U/S 271G OF INCOME-TAX ACT 1961 AS BAD IN LAW AND HENCE VOID AB INITIO AND CONSEQUENTLY THE ORDER DATED 15 -12-2005 PASSED BY HIM ALSO TO BE BAD IN LAW. 2 WITHOUT PREJUDICE TO GROUND NO.1 ABOVE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I BARODA HAS ERRED IN CONFIRMING LEVY OF PENALTY OF RS.1 86 34 316/- U/S 271G OF INCOME- TAX ACT 1961. 2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS DECIDED THE ABOVE GROUNDS OF APPEAL AS UNDER: 2 3 THE APPELLANT-COMPANY IS ENGAGED IN THE TRADING OF MEDICAL EQUIPMENTS. DURING THE YEAR THE APPELLANT-COMPANY E NTERED INTO A NUMBER OF INTERNATIONAL TRANSACTIONS. AS PER SECTION 92E I NCOME-TAX ACT 1961 [THE ACT FOR SHORT] EVERY PERSON WHO ENTERS INTO INTER NATIONAL TRANSACTIONS SHALL OBTAIN REPORT FROM AN ACCOUNTANT AND FURNISH THE SAME ON OR BEFORE THE SPECIFIED DATE IN THE PRESCRIBED FORM DULY SIGN ED BY THE ACCOUNTANT. AS PER SECTION 92D(3) IN RESPECT OF ANY SUCH PERSON WH O HAS ENTERED INTO INTERNATIONAL TRANSACTIONS THE LEARNED ASSESSING O FFICER MAY REQUIRE SUCH PERSON TO FURNISH ANY INFORMATION OR DOCUMENT AS PR ESCRIBED IN SECTION 92D(1) WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF ISSUE OF THE NOTICE. IN THIS CASE THE LEARNED ASSESSING OFFICER REQUIRED T HE APPELLANT TO FURNISH REPORT IN FORM 3CEB VIDE THE NOTICE DATED 19 TH SEPTEMBER 2005. THE REPORT IN FORM 3CEB PERTAINS TO THE INFORMATION IN RESPECT OF INTERNATIONAL TRANSACTIONS. SUBSEQUENTLY DETAILS OF INTERNATIONAL TRANSACTIONS WERE ALSO CALLED FOR ON 24 TH OCTOBER 2005 VIDE NOTICE U/S 142(1). THIS NOTICE WAS RECEIVED ON 26 TH OCTOBER 2005. AT SR. NO.18 OF THE NOTICE THE APP ELLANT WAS REQUIRED TO FURNISH DETAILS OF INTERNATIONAL TR ANSACTIONS ENTERED INTO. THE DETAILS CALLED FOR WERE NAME AND ADDRESS OF THE PARTIES NATURE OF TRANSACTIONS VALUE OF TRANSACTIONS ARMS LENGTH P RICE AND METHOD ADOPTED TO COMPUTE THE ARMS LENGTH PRICING GIVING THE BASI S FOR ADOPTING THE METHOD AND PARAMETERS TAKEN IN THIS RESPECT. 4 IT WAS THE SECOND TIME DETAILS OF INTERNATIONAL TRANSACTIONS HAD BEEN CALLED FOR. THE APPELLANT -COMPANY REQUEST ED FOR ADJOURNMENT FOR A WEEK BY FILING A LETTER AND THEREAFTER FILED SOME PAPERS ON 22 ND NOVEMBER 2005. THESE PAPERS CONTAINED NEITHER THE NAMES AND NOR THE ADDRESSES OF THE PARTIES CONCERNED. SUBSEQUENTLY O N 14 TH DECEMBER 2005 A ONE PAGE DETAIL GIVING NAME OF THE PARTY ADDRESS AMOUNT OF TRANSACTION AND NATURE OF TRANSACTION WAS SUBMITTED. THIS DETAI L ALSO WAS NOT COMPLETE AS ALL THE ITEMS CALLED FOR BY NOTICE U/S 142(1) IS SUED ON 19 TH SEPTEMBER 2005 AND 24 TH OCTOBER 2005 HAD NOT BEEN SUBMITTED. SECTION 92D( 3) SPECIFIES THAT ANY DETAILS RELATING TO INTERNATIONA L TRANSACTIONS CAN BE CALLED FOR AND THEY WOULD HAVE TO BE SUBMITTED WITH IN 30 DAYS. 5 IN THIS REGARD THE APPELLANT S REPRESENTATIVE H AS TAKEN THE PLEA THAT IN THE ORDER THE LEARNED ASSESSING OFFICE R HAS LEVIED A PENALTY OF RS.1 86 34 316/- ON THE GROUND THAT THE APPELLANT HAS FAILED TO FURNISH INFORMATION CALLED FOR BY NOTICE DATED 24 TH OCTOBER 2005. IT IS STATED THAT THE NOTICE DATED 24 TH OCTOBER 2005 WHICH WAS RECEIVED BY THE APPELLANT ON 26 TH OCTOBER 2005 SPECIFIED THAT THE DETAILS REQUIRED WERE TO BE SUBMITTED BEFORE THE AO ON 8 TH NOVEMBER 2005. THE APPELLANT FURTHER SUBMITS THAT VIDE LETTER DATED 7 TH NOVEMBER 2005 THEY HAVE REQUESTED ADJOURNMENT AND ADJOURNMENT WAS GRANTED TILL 11 TH NOVEMBER 2005. 6 REFERRING TO THE IMPUGNED ORDER THE APPELLANT S REPRESENTATIVE SEEKS TO POINT OUT THE PENALTY OF RS .1.86 CRORES HAS BEEN LEVIED ON THE GROUND THAT THERE WAS A FAILURE TO FU RNISH INFORMATION REQUESTED BY ITEM NO.18 OF NOTICE U/S 142(1) DATED 24 TH OCTOBER 2005 3 WITHOUT ANY REASONABLE CAUSE. THE APPELLANT S REPR ESENTATIVE HAS ALSO POINTED OUT THAT THE OPERATIVE PHRASE IN SECTION 92 D(3) IS WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF RECEIPT OF A NOTICE. A COMPARISON HAS BEEN CARRIED OUT WITH NOTICE U/S 148 WHEREIN THE OPERATI VE WORDS ARE WITHIN SUCH PERIOD (**) AS MAY BE SPECIFIED IN THE NOTICE . THE WORDS IN THE BRACKETS WERE NOT BEING LESS THAN 30 DAYS WHICH H AVE BEEN OMITTED BY THE FINANCE (2) ACT 1996 WITH RETROSPECTIVE EFFECT FROM 1-4-1989. BY CARRYING OUT THIS COMPARISON IT IS THE CONTENTION O F THE APPELLANT S REPRESENTATIVE THAT THE NOTICE IS BAD IN LAW HENCE VOID AB INITIO IN VIE OF THE FACT THAT THE LEARNED ASSESSING OFFICER HAS TO GIVE TIME OF 30 DAYS WHEREAS ONLY 14 DAYS TIME WAS GRANTED BY HIM. IT I S FURTHER SUBMITTED THAT THE PHRASE WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE APPEARING IN SECTION 148 ALLOWS THE LEARNED ASSESSI NG OFFICER FLEXIBILITY IN RESPECT OF GIVING TIME TO THE APPELLANT TO FURNISH HIS RETURN OF INCOME. IN OTHER WORDS HE CAN GIVEN DAYS TIMES OR MONTHS TIM E. THE APPELLANT S REPRESENTATIVE FURTHER CONTENDS THAT IN CONTEXT OF SECTION 92D(3) THE ACT DOES NOT GRANT SUCH FLEXIBILITY TO THE LEARNED ASSE SSING OFFICER AND HE SHOULD HAVE ASKED FOR THE DETAILS TO BE PROVIDED WI THIN A PERIOD OF 30 DAYS FROM THE DATE OF RECEIPT OF THE NOTICE. IT IS CONTE NDED THAT HE CANNOT ALLOW LESS THAN THIRTY DAYS IN THE NOTICE. RELIANCE HAS B EEN PLACED ON THE DECISION IN THE CASE OF CIT VS. EKBAL & CO. 13 ITR 154 (BOM) WHEREIN IT WAS HELD THAT SECTION 22(2) OF THE INDIAN INCOME-TAX ACT WHI CH PROVIDES THAT A NOTICE MAY BE SERVED ON AN APPELLANT REQUIRING HIM TO FUR NISH A RETURN OF HIS INCOME WITHIN SUCH PERIOD NOT BEING LESS THAN THI RTY DAYS GIVES THE APPELLANT AN INTERVAL OF THIRTY CLEAR DAYS FROM TH E DATE OF THE RECEIPT OF THE NOTICE TO THE DATE ON WHICH RETURN IS TO BE FURNISH ED. UNDER SECTION 22(2) OF THE I.T. ACT 1922 A NOTICE REQUIRING AN APPELLANT TO FURNISH A RETURN OF HIS INCOME WITHIN THIRTY DAYS OF THE RECEIPT THEREOF IS NOT A VALID NOTICE WITHIN THE MEANING OF THE SECTION 22(2). FURTHER CO MMENT IN THE JUDGMENT FROM STONE C.J. WAS THAT WHEREAS WITHIN THIRTY D AYS IS WITHIN TWO POINTS OF TIME ONE AT WHICH THE PERIOD BEGINS AND THE OTHER AT WHICH IT EXPIRES NOT LESS THAN THIRTY DAYS IS OUTSIDE THE SE TWO POINTS OF TIME. IT IS THEREFORE POINTED OUT THAT THE COURT HAS HELD IN N O UNCERTAIN TERMS THAT THE EXPRESSION WITHIN THIRTY DAYS AND NOT LESS THAN THIRTY DAYS ARE TWO DIFFERENT THINGS. IT IS FURTHER SUBMITTED THAT BOMB AY HIGH COURT IN THE AFORESAID CASE HELD TO THE EFFECT THAT WHEN THE ACT ENVISAGED GIVING NOTICE OF NOT LESS THAN THIRTY DAYS AND IF NOTICE IS GIVEN TO FURNISH THE RETURN WITHIN THIRTY DAYS THE SAME IS NOT A VALID NOTICE. APPLYI NG THE SAME RATIONALE TO THIS CASE THE APPELLANT SUBMITS THAT WHEN SECTION 92D OF THE ACT PRESCRIBES THAT THE DETAILS OF INTERNATIONAL TRANSACTIONS ARE TO BE PROVIDED WITHIN A PERIOD OF THIRTY DAYS AND WHEN THE LEARNED ASSESSI NG OFFICER ASKS TO PROVIDE THE SAME IN FOURTEEN DAYS THE NOTICE CALLI NG FOR THE INFORMATION WOULD CERTAINLY NOT MEET WITH THE REQUIREMENT OF TH E SECTION AND THEREBY RENDERING THE NOTICE TO BE NOT A VALID ONE. RELIANC E HAS ALSO BEEN PLACED ON GUJARAT HIGH COURT DECISION IN THE CASE OF CIT V S. NANALAL TRIBHOVANDAS (1975) 100 ITR 734 WHEREIN IT HAS BEEN HELD THAT UNDER SECTION 34 READ WITH THE PROVISO TO SECTION 22(2) T HE NOTICE IN CONNECTION WITH THE REASSESSMENT PROCEEDINGS MUST CALL UPON TH E PERSON CONCERNED TO 4 FILE A RETURN WITHIN SUCH PERIOD NOT BEING LESS THA N THIRTY DAYS. THEREFORE THE NOTICES WHICH WERE RECEIVED BY THE APPELLANT O N APRIL 1 1954 CALLING UPON THE APPELLANT TO FILE THE RETURNS ON OR BEFOR E APRIL 15 1954 WERE NOT IN ACCORDANCE WITH LAW. THE VALIDITY OF THE NOTICES UNDER SECTION 34 GOES TO THE VERY BASIS OF THE JURISDICTION OF THE INCOME-TA X OFFICER TO ENTERTAIN REASSESSMENT PROCEEDINGS UNDER SECTION 34 AND IN T HE ABSENCE OF SUCH NOTICES THE INCOME-TAX OFFICER HAS NO JURISDICTION TO INITIATE REASSESSMENT PROCEEDINGS. IF IN FACT THE INCOME-TAX OFFICER HAD NO JURISDICTION TO INITIATE REASSESSMENT PROCEEDINGS OR TO PASS ANY ORDER IN RE ASSESSMENT PROCEEDINGS THEN THE FACT THAT THIS PARTICULAR CON TENTION WAS NOT URGED AT AN EARLIER STAGE WAS BESIDE THE POINT. A DIRECTION CANNOT BE GIVEN BY THE APPELLATE ASSISTANT COMMISSIONER UNDER SECTION 31 W HICH WILL GO TO THE EXTENT OF CONFERRING JURISDICTION ON THE INCOME-TAX OFFICER WHERE HE IS NOT LAWFULLY SEIZED OF JURISDICTION. THEREFORE THE APP ELLATE ASSISTANT COMMISSIONER WAS COMPETENT TO ENTERTAIN THE APPELLA NT S OBJECTION IN REGARD TO THE VALIDITY OF THE NOTICES UNDER SECTION 34. THE ASSESSMENTS UNDER SECTION 34 WERE BAD IN LAW. 7 I HAVE CONSIDERED THE SUBMISSIONS MADE IN RESPEC T OF THIS GROUND AND ALSO HEARD THE AO ON THE SUBJECT AND CONSIDERED THE RIVAL SUBMISSIONS. THE PHRASE APPLIED IN THE SECTION 22(2) OF THE INDI AN INCOME-TAX ACT 1922 SPECIFIES FURNISHING OF RETURN WITHIN SUCH PERIOD NOT BEING LESS THAN THIRTY DAYS. THE PHRASE IN SECTION 148 OF THE INCOME-TAX ACT 1961 SPECIFIES THAT THE RETURN OF INCOME IS TO BE FILED WITHIN SUCH PE RIOD AS MAY BE SPECIFIED IN THE NOTICE. IN THIS SECTION THE EARLIER COMPULS ION PLACED UPON THE AO BY THE WORDS NOT BEING LESS THAN THIRTY DAYS HAS BEE N REMOVED W.E.F. 1-4- 1989. LASTLY THE PHRASE APPLIED IN SECTION 92D IS WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF RECEIPT OF NOTICE. AS SUCH T HERE IS A CLEAR INDICATION THAT THE AO IS TO CALL FOR INFORMATION U/S 92D(3) A LLOWING A PERIOD OF LESS THAN THIRTY DAYS AS HAS BEEN INDICATED BY THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF CIT VS. EKBAL & CO. (SUPRA). THE PHR ASE WITHIN A PERIOD OF THIRTY DAYS INDICATES A POINT OF TIME WITHIN THE TW O POINTS OF TIME WHEREAS THE PHRASE NOT BEING LESS THAN THIRTY DAYS INDICATE S OF POINT OF TIME OUTSIDE THE TWO POINTS OF TIME. THE INTENTION OF THE LEGISL ATURE IS CLEAR THAT THE INFORMATION CALLED FOR IS TO BE FURNISHED WITHIN A SHORT PERIOD OF TIME. FURTHER THE PROVISO TO SECTION 92D(3) STRENGTHENED THIS VIEW THAT THE LEGISLATIVE INTENT WAS THAT THE AO SHOULD OBTAIN TH E INFORMATION IN THE SHORTEST POSSIBLE TIME. THE PROVISO SAYS THAT THE A O MAY ON AN APPLICATION MADE BY THE APPELLANT EXTENT THE PERIOD OF THIRTY DAYS BY A FURTHER PERIOD NOT EXCEEDING 30 DAYS. THE WHOLE TONE AND TENOR OF THE SECTION IS TO OBTAIN INFORMATION WITHIN THE SHORTEST POSSIBLE TIME. THER EBY EVEN THE AO IS NOT EMPOWERED TO GIVE THE APPELLANT UNLIMITED OR LONG PERIOD OF ADJOURNMENTS FOR FURNISHING THE DETAILS OF THE INTERNATIONAL TRA NSACTIONS. FURTHER IT IS SEEN THAT THE WORDING OF SECTION 22(2) OF THE INCOM E-TAX ACT 1922 WAS WITHIN THE SUCH PERIOD NOT BEING LESS THAN THIRTY DAYS. HERE THERE WAS NO FLEXIBILITY WITH THE AO TO SPECIFY ANY TIME LIMI T LESS THAN THIRTY DAYS WHEREAS IN SECTION 92D(3) THE WORDS USED ARE WITHI N A PERIOD OF THIRTY DAYS FROM DATE OF RECEIPT OF THE NOTICE. IT IS TH EREFORE CLEAR THAT THE AO IS 5 EMPOWERED TO SPECIFY ANY TIME SPAN WITHIN THIRTY DA YS. THERE IS A CLEAR OMISSION OF THE PHRASE NOT BEING LESS THAN THIRTY DAYS. IN VIEW OF THE ABOVE IT IS HELD THAT THE RELIANCE PLACED ON THE C ASE LAW DOES NOT HELP THE APPELLANT . SINCE THE AO HAS SPECIFIED A PERIOD WIT HIN A PERIOD OF THIRTY DAYS THE NOTICE IS HELD TO BE VALID. 8 EVEN IF FOR A MOMENT THE APPELLANTS CONTENTION I S ACCEPTED THAT THE PERIOD MENTIONED IN THE NOTICE IS NOT EXACTLY AS PE R THE PROVISIONS OF SECTION 92D(3) IT IS CLEARLY A CASE THAT FALLS UND ER THE AMBIT OF SECTION 292B. NO NOTICE CAN BE HELD TO BE INVALID IF SUCH N OTICE IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTEN T AND PURPOSE OF THIS ACT. THE INTENTION OF INSERTING THIS SECTION BY TAXATION LAWS (AMENDMENT) ACT 1975 W.E.F. 1-10-1975 WAS TO PROVIDE AGAINST PURELY TECHNICAL OBJECTION WITHOUT SUBSTANCE COMING IN THE WAY OF THE VALIDITY OF THE ASSESSMENT PROCEEDINGS ETC. (CIRCULAR NO.179 DATED 30 TH SEPTEMBER 1975). THIS DEFECT IF AT ALL IT IS TO BE HELD AS SUCH IS TO TALLY FALLING WITH THE SCOPE OF SECTION 292B. IT WAS HELD IN THE CASE OF CIT VS. K SARASWATHI AMMAL (1984) 146 ITR 486 (MAD) THAT A COMPOSITE NOTICE AS KING THE APPELLANT TO PAY THE OUTSTANDING ADVANCE TAX AND STATING THAT ON FAILURE TO PAY THE APPELLANT HAS TO SHOW CAUSE WHY PENALTY UNDER SECT ION 221(1) SHOULD NOT BE IMPOSED. IT WAS HELD THAT HAVING REGARD TO THE P URPORT OF THE NOTICE AND KEEPING IN VIEW THE PROVISIONS OF SECTION 292B THE COMPOSITE NOTICE WAS A VALID ONE. 9 FURTHER AS MENTIONED ABOVE THE PROVISO TO SECTION 92D(3) CLEARLY INDICATES THE LEGISLATIVE INTENT IS TO PROVIDE AS S HORT A TIME AS POSSIBLE THEREBY RESTRICTING THE AO FROM GIVING MORE THAN TH IRTY DAYS EXTRA TIME EVEN ON AN APPLICATION BY THE APPELLANT WHATEVER BE THE CIRCUMSTANCES. SINCE THE NOTICE ISSUED BY AO IS IN SUBSTANCE AND E FFECT IN CONFORMITY WITH THE INTENT AND PURPOSE OF THE ACT IT IS HELD TO BE VALID. 10 THE SECOND GROUND TAKEN BY THE APPELLANT IS WIT HOUT PREJUDICE TO THE FIRST IS THAT THE LEARNED ASSESSI NG OFFICER HAS LEVIED A PENALTY OF RS.1 86 34 316/- BY NOT CONSIDERING THE DETAILS SUBMITTED. IT IS SUBMITTED THAT NOTWITHSTANDING THE ISSUANCE OF NOTI CE ALLOWING LESSER PERIOD THAN WHAT IS GRANTED UNDER THE ACT THE LEAR NED ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THAT THE DETAILS OF INTER NATIONAL TRANSACTIONS HAVE BEEN SUBMITTED TO HIM WITHIN A PERIOD OF THIRT Y DAYS ALLOWED BY THE STATUTE. FURTHER IT IS SUBMITTED THAT THE LEARNED A SSESSING OFFICER OUGHT TO HAVE CONSIDERED THE REQUEST TO GRANT TIME AS REQUES TED IN THE LETTER OF 18 TH NOVEMBER 2005 REFERRED TO BY THE LEARNED ASSESSING OFFICER IN HIS ORDER WHEREBY A REQUEST TO GRANT A WEEKS TIME WAS MADE O N ACCOUNT OF THE FACT THAT THE PERSON RESPONSIBLE FOR COLLATING THE INFOR MATION REGARDING INTERNATIONAL TRANSACTIONS HAD RESUMED THE WORK AFT ER DIWALI VACATIONS ON MONDAY I.E. 14 TH NOVEMBER 2005. IT IS ALSO SUBMITTED THAT THIS BEI NG THE FESTIVE SEASON MANY EMPLOYEES TEND TO GO ON LEAVE A ND THEREFORE THE APPELLANT WAS PREVENTED BY REASONABLE CAUSE IN NOT BEING ABLE TO FURNISH THE INFORMATION CALLED FOR WITHIN THE STIPULATED TI ME. IT IS FURTHER STATED THAT 6 THE INFORMATION WAS FURNISHED ON 22 ND NOVEMBER 2005. THE APPELLANT S REPRESENTATIVE HAS ALSO PLACED RELIANCE IN THE CASE OF HINDUSTAN STEEL LTD. V. STATE OF ORISSA 83 ITR 26 WHEREIN IT IS HELD TH AT THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVIS IONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE O FFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 11 FURTHER RELIANCE HAS ALSO BEEN PLACED ON GUJARA T HIGH COURT IN THE CASE OF CIT VS. HARSIDDH CONSTRUCTION PVT. LTD. 244 ITR 417 WHEREIN IT HAS BEEN HELD THAT PENALTY WILL NOT BE I MPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOS ED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF A LL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRI BED THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELI EF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE S TATUTE. 12 I HAVE GONE THROUGH THE RIVAL SUBMISSIONS MADE THE ASSESSING OFFICER HAS SPECIFICALLY STATED THAT THE APPELLANT FAILED TO FURNISH THE INFORMATION REQUIRED IN RESPECT OF INTERNATIONA L TRANSACTIONS WITHIN THE SPECIFIED DATE. A PERUSAL OF THE RECORDS REVEALS TH AT THE ASSESSING OFFICER HAD FIRST CALLED FOR THE DETAILS REGARDING INTERNAT IONAL TRANSACTIONS WHEN HE ISSUED A NOTICE U/S 142(1) DATED 19 TH SEPTEMBER 2005 TO FURNISH THE ACCOUNTANTS REPORT WHICH IS PREPARED IN FORM NO.3C EB. THERE WAS HOWEVER NO COMPLIANCE FOR WHICH NO DOUBT THE APPEL LANT HAS BEEN SEPARATELY PENALIZED. HOWEVER IT IS AS EARLY AS 19 TH SEPTEMBER 2005 THAT THE DETAILS RELATING TO INTERNATIONAL TRANSACTIONS WERE CALLED FOR. SUBSEQUENTLY A NOTICE U/S 142(1) DATED 24 TH OCTOBER 2005 ALSO CALLED FOR THE DETAILS REGARDING INTERNATIONAL TRANSACTIONS. A CCORDING TO THE APPELLANT COMPLIANCE TO THIS NOTICE WAS MADE ON 22 ND NOVEMBER 2005. ON PERUSAL OF THE RECORDS IT IS SEEN THAT THE INFORMATION SUPP LIED ON 22 ND NOVEMBER 2005 IS NEITHER COMPLETE AS PER THE REQUIREMENT SPE CIFIED BY THE ASSESSING OFFICER NOR IS IT IN A READABLE FORM. EVEN THE NAME AND ADDRESS OF THE PARTIES CONCERNED (WHICH IS THE BASIC AND PRIMARY I NFORMATION REQUIRED) HAVE NOT BEEN GIVEN. SUBSEQUENTLY ON 14 TH DECEMBER 2005 NAME & ADDRESS OF THE PARTIES AND AMOUNT OF TRANSACTION HA S BEEN GIVEN BUT AGAIN THE INFORMATION IS INCOMPLETE IN SO FAR AS IT IS TO TALLY SILENT ON THE POINT OF ARMS LENGTH PRICE AND BASIS OF ADOPTING THE SAME. THEREFORE THE INFORMATION CALLED FOR ON 19 TH SEPTEMBER 2005 AND SUBSEQUENTLY CALLED FOR ON 24 TH OCTOBER 2005 HAS NOT BEEN FULLY SUBMITTED EVEN ON 14 TH DECEMBER 2005. THE PERIOD RANGES OVER ALMOST THREE MONTHS T HE APPELLANT HAS NOT BEEN ABLE TO SHOW REASONABLE CAUSE EVEN BEFORE ME A S TO WHY THE INFORMATION COULD NOT BE SUPPLIED WHEN THE PERIOD A FFORDED UNDER THE SECTION IS WITHIN THIRTY DAYS. FURTHER IT IS SEEN THAT THE ASSESSING OFFICER HAS LEVIED THE PENALTY MUCH BEYOND THE PERIOD OF TH IRTY DAYS AND THE EXCUSE 7 PUT FORTH BY THE APPELLANTS REPRESENTATIVE THAT TH E STAFF IS AWAY ON HOLIDAY DUE TO DIWALI FESTIVAL CANNOT BE ACCEPTED AS A REAS ONABLE CAUSE PREVENTING IT FROM FULFILLING THE STATUTORY OBLIGATIONS EVEN A S LATE AS 14-12-2005 I.E. A MONTH AND A HALF AFTER DIWALI. 13 IT HAS BEEN HELD IN THE DECISION OF AZADI BACHAO ANDOLAN V. UNION OF INDIA 252 ITR 471 THAT THE WORD REASONABLE HA S IN LAW THE PRIMA FACIE MEANING OF REASONABLE WITH REGARD TO THOSE CIRCUMST ANCES OF WHICH THE ACTOR CALLED ON TO ACT REASONABLY KNOWS OR OUGHT TO KNOW. REASONABLE CAUSE CAN BE REASONABLY SAID TO BE A CAUSE WHICH PR EVENTS A MAN OF ORDINARY PRUDENCE AND AVERAGE INTELLIGENCE ACTING UNDER NORMAL CIRCUMSTANCES WITHOUT NEGLIGENCE OR INACTION OR WA NT OF BONA FIDES. SUBSEQUENTLY BY ANOTHER DECISION OF THE HONBLE DEL HI HIGH COURT IN WOODWARD GOVERNORS INDIA (P) LTD. REPORTED IN 253 ITR 745 THE DEFINITION OF REASONABLE CAUSE HAS BEEN GIVEN AS BELOW : REASONABLE CAUSE AS APPLIED TO HUMAN ACTION IS T HAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTELLIGE NCE AND ORDINARY PRUDENCE. IT CAN BE DESCRIBED AS PROBA BLE CAUSE. IT MEANS AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES WHICH ASSUMING THEM TO BE TRUE WOUL D REASONABLY LEAD ANY ORDINARY PRUDENT AND CAUTIOUS M AN PLACED IN THE POSITION OF THE PERSON CONCERNED TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. THE CAUSE SHOWN HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS WITHOUT SUBSTANCE OR FOUNDAT ION THE PRESCRIBED CONSEQUENCES FOLLOWS. 14 IF THE TESTS INHERENT IN THESE JUDGMENTS REGARDI NG REASONABLE CAUSE WERE TO BE APPLIED THE APPELLANT WOULD BE FO UND TO BE WANTING TO THE EXTENT THAT THE EXCUSE OF THE FESTIVAL WAS NOT A VALID ONE BEYOND THE 5 TH NOVEMBER 2005. THE NOTICE HAD BEEN RECEIVED BY 26 TH OCTOBER 2005. IT IS OBVIOUS THAT IT WAS NOT TAKEN SERIOUSLY THERE APPE ARS TO HAVE BEEN NO ACTION IN THIS REGARD TILL THE 14 TH NOVEMBER 2005. SOME UNCOORDINATED INCOMPLETE INFORMATION IS FILED ON 22 ND NOVEMBER 2005 FURTHER INFORMATION IS FILED ON 14 TH DECEMBER 2005 WHICH AGAIN IS INCOMPLETE. THE INORDINATELY LONG TIME TAKEN IN FILING INCOMPLE TE DETAILS HAS TO BE FURTHER SEEN IN LIGHT OF THE FACT THAT THE ASSESSME NT WOULD BECOME BARRED BY LIMITATION ON 31 ST MARCH 2005 OF WHICH THE APPELLANT WAS WELL AWARE. THE DETAILS WHICH ARE CLAIMED TO HAVE BEEN SUBMITTED ON 22 ND NOVEMBER 2005 SIMPLY CONSISTS OF THE DOWN LOAD OF THE ENTIRE INTE RNATIONAL TRANSACTIONS CARRIED OUT. THE DETAILS HAVE NOT BEEN SUBMITTED IN A READABLE OR ANALYZABLE FORM APART FROM THE FACT THAT THEY ARE I NCOMPLETE. IT IS THEREFORE HELD THAT THERE WAS INACTION AND NEGLIGE NCE ON THE PART OF THE APPELLANT IN COMPLYING WITH THE NOTICES OF THE ASS ESSING OFFICER. THEREFORE PENALTY HAS BEEN CORRECTLY IMPOSED AND I S UPHELD. BEFORE ME THE GROUNDS ARE ALSO TAKEN THAT THE PENALTY IS EXCESSIV E CONSIDERING THE DEFAULT. 8 HOWEVER IN THAT REGARD THE STATUTE DOES NOT ALLOW ANY DISCRETION TO THE ASSESSING OFFICER REGARDING THE PERCENTAGE. IT IS C LEARLY MENTIONED THAT 2% OF THE TRANSACTION IS THE AMOUNT OF PENALTY TO BE L EVIED. 3 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE DURING THE COURSE OF HEARING HAS FILED THE FOLLOWIN G SUBMISSIONS: NO JURISDICTION TO AO AFTER REFERENCE TO TPO : - REFERENCE TO TPO MADE ON 20-10-05 - NOTICE REQUIRING INFORMATION ISSUED ON 24-10-05 - AO HAS NO JURISDICTION TO CALL FOR INFORMATION I N RELATION TO INTERNATIONAL TRANSACTIONS WHEN MATTER IS ALREADY R EFERRED TO TPO SECTION 92CA. NO NOTICE U/S 92D(3) : - 271G PROVIDES FAILS TO FURNISH ANY SUCH INFORM ATION OR DOCUMENT AS REQUIRED BY SUB-SECTION (3) OF SECTION 92D THE AO - NO NOTICE HAS BEEN ISSUED U/S 92D(3) - INFORMATION WAS CALLED FOR IN NOTICE U/S 142(1) - PENALTY U/S 271G LEVIED FOR SO CALLED NON COMPLI ANCE OF NOTICE U/S 142(1) [REFER LAST PARA LEVYING PENALTY IN PENALTY ORDER] - PENALTY IF ANY FOR NON-COMPLIANCE WITH NOTICE U /S 142(1) CAN AT MOST BE U/S 271(1)(B) INVALID NOTICE (FOR WANT OF GIVING 30 DAYS TIME) : - 92D(3) REQUIRES SUBMISSION OF DETAILS WITHIN A PE RIOD OF THIRTY DAYS - NOTICE REQUIRED DETAILS WITHIN 13 DAYS (I.E. 26-1 0-05 TO 08-11- 05) CIT VS. EKBAL & CO. 13 ITR 154 (BOM) CIT VS. NANALAL TRIBHOVANDAS 100 ITR 734 (GUJ) - THE PENALTY NOTICE DID NOT MENTION SPECIFIC DETAI LS REQUIRED 9 CARGIL INDIA (P) LTD. VS. DCIT 110 ITD 616 (DEL) COMPLETE DETAILS WERE SUBMITTED WITHIN 30 DAYS : - COMPLETE DETAILS WERE SUBMITTED ON 22-11-05 I.E. WITHIN 30 DAYS - PENALTY ORDER WAS ISSUED ON 15-12-06 HOWEVER TH E AO DID NOT EVEN MENTION THAT THE DETAILS HAVE BEEN FURNISH ED ON 22- 11-05 - IT WAS ONLY BEFORE CIT(A) AO BROADLY STATED THAT INFORMATION WAS NOT RELEVANT - NOTHING ON RECORD TO SHOW THAT THE INFORMATION WA S IRRELEVANT - NO FINDING IN THE ASSESSMENT ORDER THAT IN VIEW O F NON- AVAILABILITY OF CERTAIN INFORMATION HE HAD DIFFICU LTY IN CARRYING OUT ASSESSMENT - NOT RESORTING TO SECTION 144 MEANS HE IS SATISFIE D WITH WHATEVER HAS BEEN FURNISHED TO THE AO - ESPECIALLY WHEN TOTAL INTERNATIONAL TRANSACTIONS WERE ALMOST 70% OF TOTAL TURNOVER OF THE APPELLANT - TPO HAS SPECIFICALLY MADE COMMENT THAT HE IS SATI SFIED WITH THE DOCUMENTS - IF IT DOES NOT HAVE ANY BEARING ON THE ASSESSMENT ESPECIALLY DEALING WITH NEW LAW NO PENALTY CAN BE LEVIED. REASONABLE CAUSE- SECTION 273B : - BONAFIDE REASONS FOR DELAY IN SUBMITTING THE DETA ILS NO HARSH PENALTY BE LEVIED FOR TECHNICAL DEFAULT PARTICULARL Y WHEN TPO IS SATISFIED WITH THE DETAILS AND PASSED THE ORDER. CIT VS. HARSIDDH CONSTRUCTION (P) LTD. 244 ITR 417 (GUJ) WOODWARD GOVERNORS (I) P. LTD. VS. CIT 253 ITR 745 (DEL) 4 THE LEARNED DEPARTMENTAL REPRESENTATIVE SHRI B S GAHLOT CIT DR SUBMITTED THAT VIDE LETTER DATED 2 4-10-2005 BEARING NO. BRD/CIR..1(2)/142(1)/IMPL/2005-06 VIDE ITEM NO.18 10 THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF INTERNATIONAL TRANSACTIONS (AS PER PROVISIONS OF THE INCOME-TAX A CT) ENTERED INTO VIZ. NAME AND ADDRESS OF THE PARTIES NATURE OF TRA NSACTIONS VALUE OF TRANSACTIONS ARMS LENGTH PRICE AND METHOD ADOPTED TO COMPUTE THE ARMS LENGTH PRICE GIVING THE BASIS FOR ADOPTING TH E METHOD AND PARAMETERS TAKEN IN THIS RESPECT. HE SUBMITTED THAT THE COMPLIANCE TO THE NOTICE WAS MADE ON 22 ND NOVEMBER 2005 WHEN ALSO THE INFORMATION SUPPLIED WAS NEITHER COMPLETE AS PER TH E REQUIREMENTS SPECIFIED BY THE LEARNED ASSESSING OFFICER NOR IT W AS IN A READABLE FORM. HE FURTHER SUBMITTED THAT SUBSEQUENTLY ON 14 TH DECEMBER 2005 NAME AND ADDRESSES OF THE PARTIES AND AMOUNT OF TRA NSACTION HAS BEEN GIVEN BUT THE INFORMATION WAS INCOMPLETE IN SO FAR AS IT WAS TOTALLY SILENT ON THE POINT OF ARMS LENGTH PRICE A ND BASIS OF ADOPTING THE SAME. WHILE REFERRING TO THE ORDER OF PENALTY U /S 271G DATED 15- 12-2005 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THE ASSESSEE HAD REQUESTED FOR ADJOURNMENT ON 07-11-200 5 AND THE HEARING WAS ADJOURNED TO 11-11-2005. EVEN ON THAT D ATE THE ASSESSEE FAILED TO COMPLY WITH THE REQUIREMENTS OF INFORMATI ON VIDE ITEM NO.18 OF NOTICE U/S 142(1) DATED 24-10-2005 IN RESP ECT OF INTERNATIONAL TRANSACTIONS AND ALSO FAILED TO SUBMI T THE REPORT IN FORM NO.3CEB U/S 92D OF THE ACT. 5 THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER REFERRED TO PAGES 8 AND 9 OF THE PAPER BOOK WHERE L ETTER OF THE ASSESSEE DATED 22-11-2005 IS FILED. HE POINTED OUT THAT AT POINT 13 OF THE LETTER THE ASSESSEE HAS STATED THAT THE DETAILS OF INTERNATIONAL TRANSACTIONS (AS PER PROVISIONS OF THE INCOME-TAX A CT) ARE ENCLOSED HEREWITH MARKED AS ANNEXURE-H. HE SUBMITTED THAT EV EN THIS INFORMATION WHICH WAS SUPPLIED WAS NOT COMPLETE AS PER THE REQUIREMENTS OF LETTER DATED 24-10-2005 ISSUED U/S 142(1) OF THE ACT BY THE LEARNED ASSESSING OFFICER. 11 6 THE LEARNED DEPARTMENTAL REPRESENTATIVE THEN REF ERRED TO SECTION 92C(3) OF THE ACT AND POINTED OUT THAT T HE SAME PROVIDED THAT WHERE DURING THE COURSE OF ANY PROCEEDING OF A SSESSMENT OF INCOME-TAX ASSESSING OFFICER IS ON THE BASIS OF M ATERIAL OR INFORMATION OR DOCUMENT IN HIS POSSESSION OF THE O PINION THAT - (A). THE PRICE CHARGED OR PAID IN AN INTERNATIONAL TRANSACTION HAS NOT BEEN DETERMINED IN ACCORDANCE WITH SUB-SECTIONS (1) AND OR (B). ANY INFORMATION AND DOCUMENT RELATING TO AN IN TERNATIONAL TRANSACTION HAVE NOT BEEN KEPT AND MAINTAINED BY TH E APPELLANT IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SUB- SECTION (1) OF SECTION 92D AND THE RULES MADE IN THIS BEHALF; O R (C). THE INFORMATION OR DATA USED IN COMPUTATION OF THE ARMS LENGTH PRICE IS NOT RELIABLE OR CORRECT; OR (D). THE APPELLANT HAS FAILED TO FURNISH WITHIN T HE SPECIFIED TIME ANY INFORMATION OR DOCUMENT WHICH HE WAS REQUIRED T O FURNISH BY A NOTICE ISSUED UNDER SUB-SECTION (3) OF SECTION 92D THE AO CAN PROCEED TO DETERMINE THE ARMS LENGTH PR ICE IN RELATION TO THE SAID INTERNATIONAL TRANSACTION IN ACCORDANCE WI TH SUB-SECTION (1) AND (2) ON THE BASIS OF SUCH MATERIAL OR INFORMATIO N OR DOCUMENT AVAILABLE WITH HIM. PROVIDED THAT AN OPPORTUNITY SHALL BE GIVEN BY THE AO BY SERVING A NOTICE CALLING UPON THE APPELLANT TO SHOW CAUSE O N THE DATE AND TIME TO BE SPECIFIED IN THE NOTICE WHY THE ARMS L ENGTH PRICE SHOULD NOT BE SO DETERMINED ON THE BASIS OF MATERIAL OR IN FORMATION OR DOCUMENT IN THE POSSESSION OF THE AO. FURTHER SUB-SECTION (4) OF SECTION 92C PROVIDES THA T WHERE AN ARMS LENGTH PRICE IS DETERMINED BY THE AO UNDER SUB-SECT ION (3) THE AO MAY COMPUTE THE TOTAL INCOME OF THE APPELLANT HAVI NG REGARD TO THE ARMS LENGTH PRICE SO DETERMINED. 12 7 FURTHER HE REFERRED TO SECTION 92CA AND SUBMITT ED THAT THE SAID SECTION PROVIDES FOR REFERENCE TO THE TRAN SFER PRICING OFFICER FOR THE PURPOSE OF DETERMINATION OF ARMS L ENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE APPELL ANT . 8 FURTHER HE REFERRED TO SECTION 92D SUB-SECTION (1) AND SUBMITTED THAT THE SAID SUB-SECTION PROVIDES FOR MA INTENANCE OF INFORMATION AND DOCUMENTS AS MAY BE PRESCRIBED. HE SUBMITTED THAT RULE 10D OF THE INCOME-TAX RULES 1962 PROVIDES FOR THE INFORMATION AND DOCUMENTS TO BE KEPT AND MAINTAINED U/S 92D OF THE ACT. 9 FURTHER THE LEARNED DEPARTMENTAL REPRESENTATIVE REFERRED TO SECTION 92E OF THE ACT AND SUBMITTED TH AT THE SAID SECTION PROVIDES FOR SUBMITTING REPORT OF AN ACCOUNTANT BY THE ASSESSEE ENTERING INTO INTERNATIONAL TRANSACTIONS. 10 FURTHER THE LEARNED DEPARTMENTAL REPRESENTATIV E REFERRED TO SECTION 92F AND SUBMITTED THAT THE SAID SECTION PROVIDES FOR THE DEFINITIONS OF CERTAIN TERMS RELEVANT TO TH E COMPUTATION OF ARMS LENGTH PRICE ETC. 11 IT WAS FURTHER SUBMITTED BY THE LEARNED DEPARTM ENTAL REPRESENTATIVE THAT THE CORRESPONDING SECTION TO SE CTION 92D FOR LEVY OF PENALTY IS SECTION 271G. 12 HE ALSO SUBMITTED THAT THE WORD DOCUMENT IN S ECTION 92D(3) ALSO INCLUDES THE REPORT OF THE ACCOUNTANT U /S 92E OF THE ACT. 13 FURTHER RELYING ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AT PAGE-7 PARA -7 HE ARGUED AND SUBMITTED THAT THE PHRASE WITHIN A PERIOD OF 3 0 DAYS MENTIONED IN SECTION 92D(3) INDICATES A POINT OF TI ME WITHIN THE TWO POINTS OF TIME WHEREAS THE PHRASE NOT BEING LESS T HAN 30 DAYS INDICATES OF POINT OF TIME OUTSIDE THE TWO POINTS O F TIME. THE 13 INTENTION OF THE LEGISLATURE IS CLEAR THAT THE INFO RMATION CALLED FOR IS TO BE FURNISHED WITHIN A SHORT PERIOD OF TIME. FURT HER PROVISO TO SECTION 92D(3) STRENGTHENED THIS VIEW THAT THE LEGI SLATIVE INTENTION WAS THAT THE AO SHOULD OBTAIN THE INFORMATION IN TH E SHORTEST POSSIBLE TIME. THE PROVISO SAYS THAT THE AO MAY ON AN APPLICATION MADE BY THE ASSESSEE EXTEND THE PERIOD OF 30 DAYS BY A FURTHER PERIOD NOT EXCEEDING 30 DAYS. THE WHOLE TONE AND TE NURE OF THE SECTION IS TO OBTAIN INFORMATION WITHIN THE SHORTES T POSSIBLE TIME. THEREBY EVEN THE AO IS NOT EMPOWERED TO GIVE THE AS SESSEE UNLIMITED OR LONG PERIOD OF ADJOURNMENTS FOR FURNIS HING THE DETAILS OF THE INTERNATIONAL TRANSACTIONS. IT WAS THEREFORE HIS SUBMISSION THAT THE NOTICE ISSUED BY THE AO ON 24-10-2005 WHICH WAS SERVED ON THE APPELLANT ON 26-10-2005 REQUIRING TO FILE THE INFO RMATION ON 08-11- 2005 I.E. WITHIN 15 DAYS OF THE RECEIPT OF NOTICE W AS A VALID NOTICE AND THE CONTENTION OF THE APPELLANT THAT THE NOTIC E WAS INVALID AS SECTION 92D(3) REQUIRES GRANTING OF 30 DAYS TIME T O THE APPELLANT FOR FURNISHING THE REQUIRED INFORMATION IS NOT CORR ECT. 14 FURTHER IT WAS THE ARGUMENT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE AO WAS NOT BOU ND TO ACCEPT THE ARMS LENGTH PRICE AS DETERMINED BY THE TRANSFE R PRICING OFFICER AND COULD MAKE VARIATION IN THE PRICE AS DETERMINED BY THE TPO. THEREFORE THE ARGUMENT OF THE ASSESSEE THAT SINCE THE MATTER WAS REFERRED TO THE TPO FOR HIS DETERMINATION OF ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE ASSES SEE ON 20-10-2005 THEREFORE THE ISSUE OF NOTICE U/S 142(1) ON 24-10- 2005 BY THE AO REQUIRING THE ASSESSEE TO FURNISH THE DETAILS WITH REGARD TO THE INTERNATIONAL TRANSACTION OF THE ASSESSEE WAS WITHO UT JURISDICTION IS NOT CORRECT. 15 HENCE IT WAS HIS PRAYER THAT THE ORDER OF THE L EARNED COMMISSIONER OF INCOME-TAX (APPEALS) SHOULD BE CONF IRMED AND THE APPEAL OF THE ASSESSEE SHOULD BE DISMISSED. 14 16 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS A VAILABLE ON RECORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER L EVIED THE PENALTY OF RS.186 34 316/- U/S 271G OF THE ACT FOR DEFAULT IN COMPLIANCE WITH THE PROVISIONS OF SECTION 92D(3) OF THE ACT. T HE OPERATIVE PORTION OF THE ORDER OF THE LEARNED ASSESSING OFFIC ER READS AS UNDER:- IN VIEW OF ABOVE FACTS IT IS CLEAR THAT THE ASSESS EE FAILED TO FURNISH THE INFORMATION REQUIRED BY ITEM NO.18 OF T HE NOTICE U/S 142(1) DATED 24-10-2005 IN RESPECT OF INTERNATI ONAL TRANSACTION WITHIN THE SPECIFIED DATE AS REQUIRED BY SUB- SECTION (3) OF SECTION 92D OF THE ACT WITHOUT ANY REASONABLE CAUSE. I THEREFORE CONSIDER IT A FIT CASE FOR LEVY OF PENALTY U/S 271G OF THE I.T. ACT. A PENALTY OF RS.1 86 34 316/- IS THEREFORE LEVIED U/S 271G OF THE ACT (I.E. 2% OF TH E VALUE OF THE INTERNATIONAL TRANSACTION AMOUNTING TO RS.93 17 15 842/- AS PER SUBMISSION DATED 14-12-2005). 17 ON APPEAL THE LEARNED COMMISSIONER OF INCOME-T AX (APPEALS) CONFIRMED THE ABOVE LEVY OF PENALTY. 18 THE MAIN ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE WERE AS UNDER:- NO JURISDICTION TO AO AFTER REFERENCE TO TPO : - REFERENCE TO TPO MADE ON 20-10-05 - NOTICE REQUIRING INFORMATION ISSUED ON 24-10-05 - AO HAS NO JURISDICTION TO CALL FOR INFORMATION I N RELATION TO INTERNATIONAL TRANSACTIONS WHEN MATTER IS ALREADY R EFERRED TO TPO SECTION 92CA. NO NOTICE U/S 92D(3) : - 271G PROVIDES FAILS TO FURNISH ANY SUCH INFORM ATION OR DOCUMENT AS REQUIRED BY SUB-SECTION (3) OF SECTION 92D THE AO - NO NOTICE HAS BEEN ISSUED U/S 92D(3) 15 - INFORMATION WAS CALLED FOR IN NOTICE U/S 142(1) - PENALTY U/S 271G LEVIED FOR SO CALLED NON COMPLI ANCE OF NOTICE U/S 142(1) [REFER LAST PARA LEVYING PENALTY IN PENALTY ORDER] - PENALTY IF ANY FOR NON-COMPLIANCE WITH NOTICE U /S 142(1) CAN AT MOST BE U/S 271(1)(B) INVALID NOTICE (FOR WANT OF GIVING 30 DAYS TIME) : - 92D(3) REQUIRES SUBMISSION OF DETAILS WITHIN A PE RIOD OF THIRTY DAYS - NOTICE REQUIRED DETAILS WITHIN 13 DAYS (I.E. 26-1 0-05 TO 08-11- 05) CIT VS. EKBAL & CO. 13 ITR 154 (BOM) CIT VS. NANALAL TRIBHOVANDAS 100 ITR 734 (GUJ) - THE PENALTY NOTICE DID NOT MENTION SPECIFIC DETAI LS REQUIRED CARGIL INDIA (P) LTD. VS. DCIT 110 ITD 616 (DEL) COMPLETE DETAILS WERE SUBMITTED WITHIN 30 DAYS : - COMPLETE DETAILS WERE SUBMITTED ON 22-11-05 I.E. WITHIN 30 DAYS - PENALTY ORDER WAS ISSUED ON 15-12-06 HOWEVER TH E AO DID NOT EVEN MENTION THAT THE DETAILS HAVE BEEN FURNISH ED ON 22- 11-05 - IT WAS ONLY BEFORE CIT(A) AO BROADLY STATED THAT INFORMATION WAS NOT RELEVANT - NOTHING ON RECORD TO SHOW THAT THE INFORMATION WA S IRRELEVANT - NO FINDING IN THE ASSESSMENT ORDER THAT IN VIEW O F NON- AVAILABILITY OF CERTAIN INFORMATION HE HAD DIFFICU LTY IN CARRYING OUT ASSESSMENT - NOT RESORTING TO SECTION 144 MEANS HE IS SATISFIE D WITH WHATEVER HAS BEEN FURNISHED TO THE AO 16 - ESPECIALLY WHEN TOTAL INTERNATIONAL TRANSACTIONS WERE ALMOST 70% OF TOTAL TURNOVER OF THE APPELLANT - TPO HAS SPECIFICALLY MADE COMMENT THAT HE IS SATI SFIED WITH THE DOCUMENTS - IF IT DOES NOT HAVE ANY BEARING ON THE ASSESSMENT ESPECIALLY DEALING WITH NEW LAW NO PENALTY CAN BE LEVIED. REASONABLE CAUSE- SECTION 273B : - BONAFIDE REASONS FOR DELAY IN SUBMITTING THE DETA ILS NO HARSH PENALTY BE LEVIED FOR TECHNICAL DEFAULT PARTICULARL Y WHEN TPO IS SATISFIED WITH THE DETAILS AND PASSED THE ORDER. CIT VS. HARSIDDH CONSTRUCTION (P) LTD. 244 ITR 417 (GUJ) WOODWARD GOVERNORS (I) P. LTD. VS. CIT 253 ITR 745 (DEL) 19 THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 20 WE FIND THAT IN THE INSTANT CASE THE TPO HAS DE TERMINED ARMS LENGTH PRICE U/S 92CA(3) OF THE ACT VIDE ORDE R DATED 28-02- 2006. A PERUSAL OF THE SAID ORDER SHOWS THAT THE RE FERENCE U/S 92CA(1) WAS MADE TO HIM BY THE LEARNED ASSESSING OF FICER ON 20- 10-2005. THE ASSESSEES CONTENTION THAT AFTER SUCH REFERENCE ON 20- 10-2005 IN THE ASSESSEES CASE ARMS LENGTH PRICE W AS TO BE DETERMINED BY THE TPO AND NOT BY THE LEARNED ASSES SING OFFICER. THUS POWERS UNDER THE PROVISIONS OF SECTION 92D(3) AFTER 20-10- 2005 WAS EXERCISEABLE BY THE TPO AND NOT BY THE LEA RNED ASSESSING OFFICER. THUS THE NOTICE ISSUED U/S 142(1) ON 24-1 0-2005 CANNOT BE CONSIDERED AS A NOTICE ISSUED UNDER SECTION 92D(3) OF THE ACT AND FOR ANY DEFAULT IN COMPLIANCE WITH SUCH NOTICE ISSUED U /S 142(1) PENALTY U/S 271G IS NOT LEGALLY EXIGIBLE. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT TH E ABOVE SUBMISSIONS OF THE ASSESSEE. IN OUR CONSIDERED OPIN ION LAW ALWAYS DENOUNCES MULTIPLICITY OF PROCEEDINGS. IT CANNOT BE ASSUMED THAT LAW PERMITS TO PARALLEL PROCEEDINGS SIMULTANEOUSLY IN R ESPECT OF SAME CAUSE OF ACTION I.E. THE DETERMINATION OF ARMS LEN GTH PRICE FOR THE 17 PURPOSE OF MAKING OF ASSESSMENT UNDER THE ACT. FURT HER IT IS OBSERVED THAT SECTION 92D(3) READS AS FOLLOWS: (3) THE AO OR THE COMMISSIONER (APPEALS) MAY IN T HE COURSE OF ANY PROCEEDING UNDER THIS ACT REQUIRE AN Y PERSON WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION T O FURNISH ANY INFORMATION OR DOCUMENT IN RESPECT THEREOF AS MAY BE PRESCRIBED UNDER SUB-SECTION (1) WITHIN A PERIOD O F THIRTY DAYS FROM THE DATE OF RECEIPT OF A NOTICE ISSUED IN THIS REGARD. PROVIDED THAT THE AO OR THE COMMISSIONER (APPEALS) MAY ON AN APPLICATION MADE BY SUCH PERSON EXTEND THE PERI OD OF THIRTY DAYS BY A FURTHER PERIOD NOT EXCEEDING THIRTY DAYS. 21 THUS A PERUSAL OF THE ABOVE PROVISIONS SHOWS T HAT THE NOTICE WHICH IS ISSUED U/S 92D(3) SHOULD REQUIRE TO FURNISH THE INFORMATION OR DOCUMENT WITHIN A PERIOD OF THIRTY D AYS FROM THE DATE OF RECEIPT OF SUCH NOTICE. THUS IT IS CRYSTAL CLEA R FROM THE READING OF PROVISO TO THAT SUB-SECTION WHICH PROVIDES THAT ON AN APPLICATION MADE BY THE APPELLANT PERIOD OF THIRTY DAYS CAN BE EXTENDED BY A FURTHER PERIOD NOT EXCEEDING THIRTY DAYS. IN VIEW O F THE ABOVE ALSO WE FIND FORCE IN THE CONTENTION OF THE LEARNED AUTH ORISED REPRESENTATIVE OF THE ASSESSEE THAT THE NOTICE DATE D 24-10-2005 ISSUED BY THE LEARNED ASSESSING OFFICER U/S 142(1) REQUIRING COMPLIANCE ON 08-11-2005 CANNOT BE TREATED AS A NOT ICE REFERRED UNDER SECTION 92D(3) OF THE ACT. IT IS FURTHER OBSE RVED IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE APPELLANT HAS F URNISHED ALL THE INFORMATION OR DOCUMENT AS DESIRED BY THE TPO AND T HE TPO HAS IN FACT CALCULATED THE ARMS LENGTH PRICE OF THE INTER NATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE. THEREFOR E DEFAULT IF ANY WAS ON THE PART OF THE ASSESSEE IN RESPECT OF FURNI SHING OF INFORMATION IN RESPECT OF INTERNATIONAL TRANSACTION THE SAME WAS ONLY A TECHNICAL DEFAULT. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED BEFORE US THAT THE ASSESSEE HAS MADE DEFA ULT IN COMPLIANCE WITH THE NOTICES WHICH WERE ALSO ISSUED BY THE LEAR NED ASSESSING OFFICER PRIOR TO NOTICE ISSUED ON 24-10-2005 AND TH EREFORE THE LEVY 18 OF PENALTY U/S 271G WAS JUSTIFIED. WE FIND THAT THE PENALTY U/S 271G OF THE ACT WAS LEVIED BY THE LEARNED ASSESSING OFFI CER FOR DEFAULT IN COMPLIANCE WITH THE NOTICE DATED 24-10-2005 AND NOT IN RESPECT OF DEFAULT IF ANY IN COMPLIANCE WITH NOTICES ISSUED PRIOR TO THAT DATE. THUS WE FIND THAT THE LEARNED DEPARTMENTAL REPRESE NTATIVE IS TRYING TO EXPEND THE SCOPE OF THE SUBJECT MATTER OF APPEAL WHICH IS LEGALLY NOT PERMISSIBLE AND THE LEARNED DEPARTMENTAL REPRES ENTATIVE IS NOT ALLOWED TO IMPROVE UPON THE ORDER OF THE LEARNED AS SESSING OFFICER. IN VIEW OF THE FACTS OF THE CASE IN OUR CONSIDERED OPINION LEVY OF PENALTY U/S 271G OF THE ACT FOR DEFAULT IN COMPLIAN CE WITH NOTICE DATED 24-10-2005 ISSUED U/S 142(1) IS NOT EXIGIBLE. WE THEREFORE DELETE THE LEVY OF PENALTY U/S 271G OF THE ACT OF R S.1 86 34 316/-. THUS THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALL OWED. 22 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 13-01- 2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 13-01-2010 COPY OF THE ORDER FORWARDED TO : 1. M/S INDIA MEDTRONIC PVT. LTD. 919/2 GIDC MAKA RPURA BARODA 2. THE ACIT CIRCLE-1(2) BARODA 3. CIT CONCERNED 4. CIT(A)-I BARODA 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABA