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January, 10th 2015
+                  INCOME TAX APPEAL NO. 757/2014
                                     Date of decision: 23rd December, 2014
                           Through Mr. Rohit Madan & Mr. Ruchir Bhatia,


        M/S JOHNSON MATTHEY INDIA P. LTD. ..... Respondent
                     Through Mr. Vikas Srivastava & Ms. Varsha
                     Bhattacharya, Advocates.



        CM No. 20423/2014

        Learned counsel appearing for the respondent-assessee on advance

notice states that he has no objection in case delay in re-filing of 395 days

is condoned. The application is allowed in view of the said statement.

        INCOME TAX APPEAL NO. 757/2014

        This appeal under Section 260A of the Income Tax Act, 1961 (Act,

for short) impugns order dated 31st August, 2012 passed by the Income Tax

Appellate Tribunal (Tribunal, for short) affirming the finding of the

Commissioner of Income Tax (Appeals) that the Assessing Officer was not

justified in imposing penalty of Rs.1,31,82,960/- under Section 271G of the

ITA No. 757/2014                                                    Page 1 of 5

2.      The finding of the two appellate forums is that the assessee had filed

the relevant documents within two months from the date of issue of notice

by the Transfer Pricing Officer. The said notice issued by the Transfer

Pricing Officer is dated 19th March, 2007.          The respondent-assessee

thereafter had filed an application seeking adjournment on 11th April, 2007

and the proceedings were adjourned for 8th May, 2007 and then to 18th

May, 2007. The Tribunal has accepted the finding of the Commissioner of

Income Tax (Appeals) that the assessee had filed transfer pricing report

along with Form No.3CEB on 16th May, 2007.                Thus, the relevant

documents and papers as per the mandate of Section 92D(3) of the Act

were complied and filed within two months from the date of issue of

notice. The Tribunal has also referred to Section 92D of the Act, which

requires the assessee to furnish documents maintained under Section

92D(1) of the Act within a period of 30 days of service of notice, but the

Assessing Officer had power to extend the said period by another 30 days.

In this connection, request for adjournment made and allowed have been

referred to. The documents have to be filed within a period of 60 days

from the service of notice. Thus, the appellate forums have held that the

statutory compliance was duly made.

3.      The Assessing Officer in his order under Section 271G of the Act

was unsure and uncertain about the relevant facts. The Assessing Officer

ITA No. 757/2014                                                      Page 2 of 5
in the penalty order had accepted the factual position that the assessee had

sought adjournment and the case was adjourned first to 8 th May, 2007 and

then to 18th May, 2007. The assessee in response to the show cause notice

had asserted due compliance with the requirements by filing requisite Rule

10D documentations within a period of 60 days, as per extension of time

allowed by the Transfer Pricing Officer. The Assessing Officer in view of

the said reply had raised a query to the office of the Transfer Pricing

Officer and the penalty order records and accepts that adjournment was

allowed and granted upto 18th May, 2007. The Assessing Officer referring

to the Transfer Pricing Officer's response, observed that the Transfer

Pricing Officer had not mentioned whether the assessee had filed Rule 10D

documentation within the stipulated time.           The Assessing Officer

nevertheless and still observed that the assessee's letter dated 16th May,

2007 addressed to the Transfer Pricing Officer, which was filed before

him, had not been corroborated by the Transfer Pricing Officer. Silence on

the part of the Transfer Pricing Officer was read in negative and against the

assessee. The assumption drawn is not justified and a mere surmise. The

exact reasoning given by the Assessing Officer to impose penalty is

reproduced below:-

             "Assessee's reply has been considered but found not
             convincing. On enquiry from the office of TPO, it is
             gathered that the assessee was allowed adjournment
             upto 18.5.2007 and on 18.5.200 a letter has been filed
             enclosing therewith return of income with audited

ITA No. 757/2014                                                      Page 3 of 5
             balance sheet & P&L account. Further perusal of
             TPO's reply revealed that there was no mention of
             assessee's filing of Rule 10D documentation within the
             stipulated time rather whether the assessee in fact filed
             the 10D documentation or not has not been mentioned
             in his letter. Assessee's letter dated 16.5.07 addressed
             to Addl.CIT, TPO, copy of which has been filed along
             with its reply has not been corrobated [sic,
             corroborated] by the TPO in his reply dated 26.6.2009.
             Under these circumstances, it is not clearly established
             that the assessee has filed 10D documentation within
             the prescribed time limit, therefore, it is liable for
             imposition of penalty u/s 271G of 1T Act, as
             recommended by the TPO. In view of the
             circumstances, the reply of the assessee is not found
             acceptable and as such the default u/s 271G established
             beyond doubt. It is also pertinent to mention here that it
             was on the TPO's recommendation only that penalty
             proceedings u/s 271G were initiated as it was noticed
             by him that the Rule 10D documentation were not filed
             within the stipulated time."
                                                  (emphasis supplied)

4.      It is interesting to note that the Transfer Pricing Officer did not

interfere and make adjustment to the international transactions. The total

value of the international transactions was Rs.65,91,48,060/-. This figure

was not disturbed. It can be inferred that as per documentation filed, no

addition was required. In spite of the Assessing Officer not being factually

sure and certain, whether or not there was violation of Section 92D of the

Act read with Rule 10D of the Rules, penalty @ 2% of the value of

international transactions of Rs.1,31,82,960/- was imposed. Penalty cannot

be imposed unless and until the Assessing Officer is sure and certain that

there was a violation.   Ambiguity or doubt in the mind of the Assessing Officer

ITA No. 757/2014                                                          Page 4 of 5
does not justify imposition of penalty, when the actus reas itself is not

proved and established. The penalty order is self contradictory.

5.      It was in these circumstances that the Commissioner of Income Tax

(Appeals) deleted the penalty, which order has been affirmed by the

Tribunal. The Commissioner of Income Tax (Appeals) specifically

recorded a finding that the documentation was filed by the assessee within

the extended period of 30 days, i.e., within 60 days, and hence, no penalty

was leviable.

6.      In the grounds of appeal, Revenue has taken a different stand, which

was possibly not taken before the Tribunal. It is stated that the

documentation filed with the letter dated 16th May, 2007 did not enclose

documentations to be maintained under Rule 10D of the Rules. It is clear

that this was not the stand taken by the Revenue before the Tribunal and it

was not the stand or ground taken by the Assessing Officer while imposing


7.      In view of the aforesaid position and the findings of the

Commissioner of Income Tax (Appeals) and the Tribunal, we do not find

any merit in the present appeal and the same is dismissed.

                                             SANJIV KHANNA, J.

                                             V. KAMESWAR RAO, J.
        DECEMBER 23, 2014

ITA No. 757/2014                                                    Page 5 of 5
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