9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (12) TMI 707 - AT - Income TaxPenalty u/s. 271AAA - non-maintaining documents as specified in section 92D r.w.r. 10D - HELD THAT - We observe that no transfer pricing adjustment were made by the TPO. Primary contention of assessee that during the impugned year under consideration, the penalty was initiated for non-maintenance of documents on an incorrect assumption of fact that the assessee had international transaction with an Associated Enterprise. However, while passing the order, CIT(A) has correctly taken note of the fact that the assessee did not have any international transactions, but had only transactions with a domestic associated enterprise. On perusal of the Tax Audit Report and also the relevant extract of purchase ledger, submitted by the assessee before the TPO, it is observed that the assessee had made purchases from Priya Blue Industries Pvt. Ltd., a domestic company and not from Best Oasis Ltd. a foreign enterprise, as alleged. So far as applicability of specified domestic transaction, within the meaning of Section 92BA of the Act is concerned, we observe that the provisions of Section 40(A)(2)(b) of the Act have been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 and the same would not apply to the impugned assessment year. We also observe that the AO has also not made out a case for applicability of specified domestic transaction to assessee s set of facts, while imposing penalty u/s 271AA of the Act. Appeal of the Department is dismissed.
Issues:
Penalty under section 271AAA for non-maintenance of documents specified in section 92D r.w.r. 10D. Detailed Analysis: The appeal was filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad, regarding the penalty imposed under section 271AAA for non-maintenance of documents specified in section 92D r.w.r. 10D for A.Y. 2018-19. The Revenue contended that the penalty was erroneously deleted by the Ld. CIT(A) without discussing the case on merits. The brief facts revealed that the assessee, engaged in the ship-breaking business, underwent a search operation under section 132 of the Act, which led to assessment proceedings. The Transfer Pricing Officer (TPO) determined the arm's length price for international transactions, but no adjustments were made. The Assessing Officer (AO) imposed a penalty under section 271AA for non-compliance with section 92D requirements, specifically related to purchases from Best Oasis Ltd. However, the purchases were from a domestic company, Priya Blue Industries Pvt. Ltd., as evidenced in the Tax Audit Report. The Ld. CIT(A) noted that the penalty order lacked clarity as it did not specify the missing documents or provide reasons for the penalty. It was highlighted that domestic transactions do not fall under international transactions, and thus, penalty under section 271AA was not justified. The TPO had confirmed the submission of all relevant details by the assessee, and no penalty was initiated by the TPO. During the appeal, the Departmental Representative relied on the AO's observations, while the counsel for the assessee emphasized the TPO's acceptance of arm's length prices and the lack of transfer pricing adjustments. The counsel argued that the penalty initiation was vague and non-specific, with no specified documents mentioned. Furthermore, since the transactions were not international, penalty under section 271AA was unwarranted. The Tribunal observed that no transfer pricing adjustments were made by the TPO, and the transactions were with a domestic company, not an associated foreign enterprise. The provisions of Section 40(A)(2)(b) did not apply, and the AO failed to establish the applicability of specified domestic transactions for penalty under section 271AA. Consequently, the Tribunal upheld the Ld. CIT(A)'s order, dismissing the Department's appeal. In conclusion, the Tribunal found no grounds to interfere with the Ld. CIT(A)'s decision, as the penalty under section 271AA was deemed unjustified due to the absence of international transactions and the lack of clarity in the penalty order.
|
