ITAT gives relief to assessee and set-aside penalty for non-furnishing of Form 3CEB

Case Details: Faith Intertrade v. ITO - [2022] 137 taxmann.com 259 (Ahmedabad - Trib.)

Judiciary and Counsel Details

• • Pramod M. Jagtap, Vice-President and T.R. Senthil Kumar, Judicial Member
  • Mehul Talera, Adv. for the Appellant. 
  • V.K. Singh, Sr. DR for the Respondent.

Facts of the Case

Assessee was a partnership firm engaged in the business of industrial waxes and poultry feeds. During the relevant year, it had entered into an international transaction. However, the assessee had not furnished a report in Form no. 3CEB as required under section 92E.
The Assessing Officer (AO) invoked the provisions of section 271BA and levied a penalty. In appellate proceedings, the assessee pleaded that it was not aware of the change in law. However, the CIT(A) rejected the contention and upheld the penalty order. Aggrieved-assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that a perusal of the section 271BA provisions shows that the Parliament had used the words “may” and not “shall”, thereby making their intentions clear as that levy of penalty is discretionary and not automatic.
The said conclusion is further justified by section 273B. A careful reading of section 273B encompasses that certain penalties “shall” not be imposed in cases where “reasonable cause” is successfully pleaded.

In the instant case, it was seen that the consistent explanation of the assessee had been ignored. The assessee had pleaded ignorance about the legal requirement and had demonstrated that the word “Specified Domestic Transaction” was inserted in section 92E by Finance Act, 2012 w.e.f. 1-4-2013 which was applicable for the first time from the assessment year 2013-14. Though the assessee obtained the Form 3CEB from the Chartered Accountant but had failed to upload it electronically, as it has not aware of the recent changes and amendments in the provision.

Thus, non-uploading of Form 3CEB for the first time was an unintentional bona fide mistake. Accordingly, order imposing and confirming the penalty were to be set aside.

List of Cases Referred to

• • • J.J. Exporters Ltd. v. Dy. CIT [2011] 15 taxmann.com 348/[2012] 51 SOT 69 (URO) (Kol.) (para 3.1)
    • BNT Global (P.) Ltd. v. ITO [2017] 82 taxmann.com 459/165 ITD 472 (Mum.) (para 3.1).