2022 (10) TMI 171 - AT - Income Tax

Penalty levied u/s 271AA - assessee company had not kept and maintained the information and documents as required by Sub-section (1) or subsection (2) of section 92D - AO is also influenced by the fact that the assessee has entered into international transactions during the year under consideration - HELD THAT - There is no dispute that the assessee has maintained requisite documentation in respect of its reported international transaction of FTS and FIS and has also furnished details of various documentations maintained by it. We further find that the Assessing Officer has not specified the documents/information which, in his view, were required to be kept and maintained u/s 92D(1) and 92D(2)of the Act r.w.r 10D of the Rules but were not kept and maintained by the assessee. Coming to the decision of this Tribunal in Assessment Year 2006- 07 and 2008-09 2020 (10) TMI 615 - ITAT DELHI we find that the entire basis for deciding the issue in favour of the Revenue relates to the observations given in respect of independent accountant s report/documents for specified domestic transactions whereas in the present assessment, there is not even a whisper of any specified domestic transactions. Therefore, the reference to the order of this Tribunal in earlier Assessment Years by the ld. DR would do no good to the Revenue, as the facts are totally different. - Decided against revenue.

Summary

Issues Involved:
Penalty under section 271AA of the Income-tax Act, 1961.

Analysis:
The Revenue appealed against the deletion of penalty under section 271AA of the Income-tax Act, 1961 by the ld. CIT(A). The Revenue contended that the assessee had not maintained required information and documents as per section 92D of the Act due to international transactions. The Assessing Officer imposed a penalty of 2% of the value of each international transaction. The ld. CIT(A) based the penalty cancellation on the fact that the assessee believed certain transactions did not result in income and thus were not reported. The Tribunal considered the documentation submitted by the assessee and found no adverse inference regarding the international transactions. The Tribunal distinguished previous judgments related to specified domestic transactions, emphasizing the lack of such transactions in the present case. Ultimately, the Tribunal upheld the findings of the ld. CIT(A) and dismissed the Revenue's appeal.

The key contention was whether the assessee complied with the documentation requirements under section 92D of the Act for international transactions. The Assessing Officer imposed a penalty under section 271AA based on the failure to maintain necessary information and documents. However, the ld. CIT(A) and the Tribunal found that the assessee had maintained documentation and had a bonafide belief regarding certain transactions not resulting in income. The Tribunal emphasized the absence of specified domestic transactions in the present case, distinguishing it from previous judgments. The Tribunal concluded that there was no reason to interfere with the ld. CIT(A)'s decision to cancel the penalty.

In conclusion, the Tribunal dismissed the Revenue's appeal against the deletion of the penalty under section 271AA of the Income-tax Act, 1961. The Tribunal found that the assessee had maintained the required documentation for international transactions and had a bonafide belief regarding certain transactions. The Tribunal differentiated the present case from previous judgments involving specified domestic transactions. Ultimately, the Tribunal upheld the ld. CIT(A)'s decision, emphasizing the lack of grounds to interfere with the findings in the case at hand.