Man Truck & Bus India Pvt Ltd Vs Assessment Unit (Bombay High Court)
The Bombay High Court has quashed a penalty order issued against Man Truck & Bus India Pvt. Ltd., remanding the case back to the Assessing Officer (AO) for a fresh hearing. The penalty was levied under Section 270A of the Income Tax Act, 1961, for the assessment year 2017-18. The core of the dispute revolved around a Transfer Pricing Adjustment and the subsequent filing of a modified return of income under an Advanced Pricing Agreement (APA).
Key Events and Factual Background
1. Initial Assessment: The assessee, Man Truck & Bus India, filed its original return declaring a “NIL” income. A subsequent assessment order added ₹31.15 crores to the income as a Transfer Pricing Adjustment.
2. Advanced Pricing Agreement: To resolve the issue, the company entered into an APA with the Central Board of Direct Taxes (CBDT). The APA covered multiple years, including the one in question, and specified a mutual understanding on how to handle the transfer pricing issue.
3. Modified Return: In accordance with the APA and the provisions of Section 92CD(1) of the IT Act, the assessee filed a modified return of income. In this modified return, the company offered to tax a sum of approximately ₹14.16 crores, in line with the terms of the APA, and paid the corresponding tax.
4. No New Assessment Order: The IT Act mandates that an AO must pass a new assessment order on the modified return within a specific time frame. In this case, no such order was passed by the department, which, according to the assessee, meant the modified return was final and deemed to be accepted.
5. Penalty Order: Despite the modified return and the absence of a new assessment order, the department proceeded to issue a penalty order. The department admitted in court that the penalty was levied by mistake, as the secondary adjustment was “not visible” in the modified return, and no assessment order had been passed.
High Court’s Rationale and Holding
