Case Law Details

Case Name : ITO v. Nihon Parkerizing (India) (P.) Ltd. (ITAT Delhi)
Appeal Number : ITA No. 6409/Del/2015
Date of Judgement/Order : 10/04/2018
Related Assessment Year : 2011-12
Courts : All ITAT (5167) ITAT Delhi (1162)

ITO v. Nihon Parkerizing (India) (P.) Ltd. (ITAT Delhi)

Hon’ble ITAT upheld the position of law as iterated by CIT (A) that it is an established law applicable for imposition of penalty that law, as in force, at the time of filing of Return would be applicable.

Outcome: In favor of Assessee

Issue:

Whether on the facts and in circumstances of the case and in law, CIT (A) was right in deleting the penalty imposed by Ld. AO/TPO u/s 271AA of the Act by holding that there was no requirement for reporting International Transactions in respect of “share subscription money” before the insertion of Explanation to Section 92B of the Act by the Finance Act, 2012?

Facts:

1. During the relevant year, the assessee had entered into an ‘international transaction’ with its associated enterprise of “receipt of share capital” of Rs. 12.5 crores.

2. It has furnished the report in Form No. 3CEB from under section 92E of the Act on 28-9-2011, however, the transaction of receipt of share capital Rs. 12.50 crores was not included in the above report.

TPO’s Contention:

1. International Transaction of “issue of share capital” should have been reported in Form 3CEB as it was an international transaction after the amendment to the provisions of section 92B by the Finance Act, 2012 with retrospective effect from 1-4-2002 where such transactions were included as international transactions.

2. Therefore, the penalty order under section 271AA of the Act was passed levying penalty of Rs. 25 Lakhs @ 2% of International Transactions.

CIT (A)’s Contention:

1. CIT (A) holds that as the assessee has filed Form 3CEB on 28-9-2011, it was evident that there was no requirement of reporting the amount of share application in the report.

2. Further held that the assessee could not have anticipated possibility of a retrospective amendment by the Finance Act 2012 with effect from 1-4-2002 and enlarging the scope of International Transaction.

3. Also, CIT (A) was of the view that the law applicable for imposition of penalty would be the law in force at the time when return of income was filed.

4. Thus, deleted the addition of Rs. 25 lakhs imposed by Ld. AO/TPO.

ITAT’s Decision:

1. Hon’ble ITAT upheld the position of law as iterated by CIT (A) that it is an established law applicable for imposition of penalty that law, as in force, at the time of filing of Return would be applicable.

2. And held that penalty is not justified in view of fact that when assessee filed Form No. 3CEB on 28-9-2011, it was not aware that there would be retrospective amendment by Finance Act, 2012 wherein transaction of issue of shares would be included and, thus, there was a reasonable cause for not disclosing said transaction as an international transaction.

3. Thus, upheld the findings of CIT (A) and dismisses the Revenue’s Appeal.

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