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TMI Blog2011 (9) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of sec. 271G of the Act. - Held that:- in the light of view taken in Cargil India Private Ltd (2008 -TMI - 64345 - ITAT DELHI-C ), especially when the Revenue have not placed before us any material controverting the aforesaid findings of learned CIT(A) so as to enable us to take a different view in the matter, we are not inclined to interfere. X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer cannot levy penalty a bland statement without explaining the default in detail. Finding After considering the above facts the action ofthe Assessing Officer in levying the penalty of Rs.22,20,100/- is uncalled for and is not in accordance with the facts and law and above all it is contrary to what the TPO has stated in his order. Hence, the penalty imposed u/s 271G is deleted." 4. The Revenue is now in appeal before us against the aforesaid findings of learned CIT (A). The learned DR while referring to notice dated 13.12.2007[incorrectly mentioned as 13.12.2008] supported the order of the AO, levying penalty and further contended that the assessee delayed filing of necessary documentation as observed by the TPO. On the other hand, the learned AR on behalf of the assessee supported the findings of learned CIT(A) and contended that penalty has been imposed merely on technical grounds. 5. We have heard both the parties and gone through the facts of the case.. The issue before us relates to validity of levy of penalty of ~22,20,100/- imposed u/s 271G of the Act for not furnishing information and documents within the time specified in notice u/s 92D(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions entered into, including a record of the nature, terms and conditions relating to any uncontrolled transaction with third parties which may be of relevance to the pricing ofthe international transactions; (g) - same - (f) a record of the analysis performed to evaluate comparability of uncontrolled transactions with the relevant international transaction; (h) - same - (g) a description ofthe methods considered for determining the arm's length price in relation to each international transaction or class of transaction, the method selected as the most appropriate method along with explanations as to why such method was so selected, and how such method was applied in each case; - same - (h)a record of the actual working carried out for determining the arm's length price, including details of the comparable data and financial information used in applying the most appropriate method, and adjustments, if any, which were made to account for differences between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions; - same - (i) the assumptions, policies and price negotiations, if any, which hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant change in the nature or terms of the international transaction, in the assumptions made, or in any other factor which could influence the transfer price, and in the case of such significant change, fresh documentation as may be necessary under sub-rules (1) and (2) shall be maintained bringing out the impact of the change on the pricing ofthe international transaction. (5) The information and documents specified in sub-rules (1) and (2) shall be kept and maintained for a period of eight years from the end of the relevant assessment year." 5.1 As is evident from the aforesaid Rule 1OD, documents and information prescribed thereunder are voluminous and it would only be in rare cases that all the clauses of aforesaid sub-rules would be attracted. It would all depend upon the facts and circumstances of the case, more particularly the nature of international transactions carried or services involved. Likewise supporting documents, official publications, reports, market research studies, technical publications of Government or other institute of national or international repute, and all the documents mentioned in Rule 1OD(3) may not be necessary in case of every assessee. Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (1) may be required. (iii) required to be furnished under sub-section (3) within 30 days (as extended by another 30 days) from the receipt of notice issued in this regard. 5.2.1 In terms of provisions of sec. 92D (3) of the Act, the AO may require (from any person) any information or document as may be prescribed. The word 'any' information or document does not mean 'all' the documents prescribed under rule 1OD of the IT Rules, 1962. The word 'required" is important as it rules out option with the assessee and makes it obligatory to furnish the requisite information. After having a report in form no. 3CEB in the first instance, next step is to issue notice u/s 92CA (2) of the Act to the assessee to produce evidence in support of ALP. Under sub-section (2) of Section 92CA of the Act, evidence in support of ALP may include information and documents referred to in sub-section (3) of section 92D, which are prescribed in various clauses of rule 1OD(1) as aforesaid. If on consideration of evidence produced by the assessee, the TPO is satisfied that ALP has been properly and correctly determined by the assessee, it is the end of the matter. However, if complete information is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in an office note that transfer pricing report was filed on 26.2.2008.There is no finding in the order of the TPO or the AO as to whether or not the said report was filed with the extended time stipulated, if any ,in the notice .In any case, in first para of the notice, the TPO asked the assessee to support and substantiate the computation of ALP in international transactions as required by section 92CA(2) of the Act. In next para, the T.P.O. further required to furnish information including the balance sheet, profit and loss account, statement of computation of income, audit report, tax report and also, "information and documents maintained as prescribed u/s 92D of Income-tax Act, 1961 read with Rule 1OD of Income-tax Rules" without specifying any particular information under any of the clause of Rule 1OD of the IT Rules, 1962. The aforesaid notice was a notice u/s 92CA (2) of the Act but the TPO by asking further information made it a notice u/s 92CA (3). Only under above sub-section, TPO can call for information like balance sheet, P&L account, and audit report, which already stood filed and which are un-prescribed. Such unspecific information could not be required u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d information but here both prescribed and un-prescribed information like balance sheet, profit and loss account, computation of income etc was also required to be furnished from the assessee before the assessee could file evidence under section 92CA(2) of the Act. Not only primary documents necessary to support the computation of ALP of the assessee but also supporting documents detailed in sub-rule (3) of Rule 1OD were required to be furnished without considering which supporting documents out of several mentioned in various clauses of the said sub-rule were available with the assessee. The above notice issued without application of mind and without considering relevancy and requirement of all the prescribed information and documents under Rule 1OD vitiated the legality of the notice. Without any basis of any default, no adequate reply could be furnished by the assessee. The failure, therefore, of the assessee to comply such notices in time cannot justify levy of penalty. In the absence of any basis leading to default in submitting documents and information within the prescribed time to attract provisions of section 271G of the Income-tax Act, on facts , we find no justification ..... X X X X Extracts X X X X X X X X Extracts X X X X
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