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2024 (6) TMI 795 - AT - Income TaxIssues involved: The appeal filed by the revenue against the order of the Learned Commissioner of Income-Tax (Appeals)-56, Mumbai for the Assessment Year 2011-12. Transfer Pricing Officer's Request for Information: During the assessment proceedings, the Transfer Pricing Officer requested the assessee to provide separate profit level indicators in related party and non-related party segments to demonstrate that international transactions were at Arm's Length Price. The assessee submitted segment-wise data on related and non-related party sales, worked out the OP/Sales Margins, and provided the data to the Transfer Pricing Officer. Despite the Transfer Pricing Officer accepting the Arm's Length Price and not proposing any adjustment, a penalty under section 271G of the Act was levied for the alleged failure to furnish required information. Assessee's Non-Appearance and Revenue's Appeal: No one appeared on behalf of the assessee during the appeal proceedings initiated by the revenue in 2016. In the absence of the assessee, the case was heard with the assistance of the Learned DR who supported the Transfer Pricing Officer's decision to impose the penalty. Tribunal's Observations and Decision: The Tribunal noted that the assessee did not provide segment-wise results of purchases and sales of polished and unpolished diamonds related to international transactions. However, the assessee attempted to segregate the sales and purchases segment-wise and submitted the data to the Transfer Pricing Officer. Despite the penalty under section 271G being levied, no Arm's Length Price adjustment was proposed. Citing precedents where penalties were deleted in similar cases, the Tribunal upheld the decision of the Learned Commissioner of Income-Tax (Appeals) to delete the penalty under section 271G. The Tribunal agreed that the penalty was not justified given the nature of the diamond trade, the substantial compliance by the assessee, and the absence of any Arm's Length Price adjustment. Conclusion: The appeal filed by the revenue was dismissed, and the penalty under section 271G of the Act was deleted based on the findings and reasoning provided by the Learned Commissioner of Income-Tax (Appeals).
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