DCIT Vs Convergys Customer Management Group Inc. (ITAT Delhi)
It is mandatory for all taxpayers, without exception, to obtain an independent accountant’s report in respect of all international transactions between associated enterprises or specified domestic transactions. The report has to be furnished by the due date of the tax return filing. Even if it is submitted that there is no international transaction, it cannot escape the assessee at least to obtain independent accountant’s report for specified domestic transactions. Thus, the assessee mandatorily has to maintain documents of its own. Non-maintaining documents on account that there is no international transaction and merely relying on the supporting documents of Associated enterprise, cannot be termed as reasonable cause for not maintaining the documents on its own under Section 273B of the Income Tax Act in respect to the international transactions as well as the specified domestic transactions as well. In fact, it is mandatory requirement to obtain an independent accountant’s report/documents in respect of specified domestic transactions with Associated Enterprises as per Section 92D of the Act and this mandate cannot be diluted by the so called reasonable cause given under Section 273B of the Act. Hence, the Assessing Officer was right in imposing the penalty under Section 271AA of the Income Tax Act and the CIT(A) was not right in deleting the penalty.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals are filed by the Revenue against the order dated 02/03/2015 passed by CIT (A)-42, New Delhi for Assessment Years 2006-07 & 2008-09 respectively.
2. The grounds of appeal are as under:-
ITA No. 3529/DEL/2015
1. On the facts and circumstances of the case, the Ld.CIT(A) has erred in quashing/deleting the penalty u/s 271(1)(c) & 271AA of the IT Act.
ITA No. 3530/DEL/2015
1. On the facts and circumstances of the case, the Ld.CIT(A) has erred in quashing/deleting the penalty u/s 271(1)(c) & 271AA of the IT Act.
3. Firstly we are taking up the Assessment Year 2006-07 as the facts are identical in both the assessment year. The assessee i.e. Convergys Customer Management Group Inc. is a non-resident company incorporated under laws of United States of America (‘USA’). It provides outsourced customer, employee and marketing support services as well as comprehensive Customer Management Services by utilizing its advanced information system capabilities, Human Resource Management Skills and Industry experience. The assessee has a subsidiary in India by the name of Convergys India Services Pvt. Ltd. To service its customers, the assessee procures services from India from the subsidiary of the assessee. The subsidiary of the assessee provides IT enabled call centre/back office support services to the assessee. For the Assessment Year 2006-07, the assessee filed its return of income as follows:-
