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2024 (12) TMI 456 - AT - Income TaxPenalty levied u/s. 271G - breach of section 92D - asseesee has only furnished the entity level margins in spite of having been given the opportunity to furnish segment account HELD THAT - There is no breach of section 92D in conjunction with Rule 10(B)(1) of the Rules. The ld. TPO did not make any adjustments during the Transfer Pricing Study. We have relied respectfully on the case of the assessee in 2018 (12) TMI 1589 - ITAT MUMBAI . Hence, there is no violation of Section 92D of the Act, and consequently, the penalty has been waived. We do not find it necessary to intervene in the decision of the appeal. Decided against revenue.
Issues:
Appeal against deletion of penalty under section 271G for failure to furnish required documents for international transactions. Analysis: The appeal was filed by the revenue against the order of the Learned Commissioner of Income-tax(A)-57, Mumbai, challenging the deletion of penalty under section 271G for Assessment Year 2012-13. The penalty was imposed by the ld. Deputy Commissioner of Income-tax (Transfer Pricing)-3(1)(1) for failure to furnish necessary documents under section 92D(3) of the Income-tax Act. The revenue raised multiple grounds questioning the deletion of penalty by the ld. CIT(A). The primary contention of the revenue was that the assessee failed to comply with the requirement of furnishing segmental account details as per the TNMM method adopted by the assessee. The revenue argued that the ld. CIT(A) erred in deleting the penalty without adequately addressing how the assessee complied with the specific clauses of Rule 10D(1) as invoiced by the TPO. The revenue also highlighted the failure of the assessee to provide the necessary details and documents as required under section 92D(3) of the Act. Furthermore, the revenue contended that the ld. CIT(A) incorrectly based the deletion of penalty on the absence of adjustments in the Arm's Length Price, without considering that penalty under section 271G is imposable for failure to furnish any information or documents related to international transactions, irrespective of adjustments in ALP. The revenue argued that by not producing essential documents for determining ALP, the assessee obstructed the TPO from making a proper arm's length determination. In response, the assessee, engaged in the diamond business, argued that no adjustments were made in the Transfer Pricing study by the TPO, and the penalty was imposed solely under domestic tax provisions. The assessee relied on the decision of the ld. CIT(A) in a previous assessment year where penalty under section 271G was deleted. The assessee emphasized compliance with segmental amount filing requirements and cited judicial precedents supporting the deletion of penalty when no adjustments were made in the arm's length price. After considering the arguments and reviewing relevant provisions of the Act and Rules, the Tribunal found that there was no violation of section 92D in conjunction with Rule 10(B)(1) as no adjustments were made during the Transfer Pricing Study. The Tribunal relied on the previous decision in the assessee's case and concluded that the penalty was unjustified. Therefore, the Tribunal dismissed the revenue's appeal, upholding the deletion of the penalty under section 271G. In conclusion, the Tribunal's decision was based on the lack of adjustments in the Transfer Pricing study, compliance with segmental amount filing requirements, and the absence of a breach of section 92D, leading to the waiver of the penalty imposed on the assessee.
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