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TMI Blog2016 (10) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) further provides that the penalty thereunder is to be levied, unless the assessee proves to the satisfaction of the authorities below that the price charged in such transactions was computed in the manner prescribed, in good faith and with due diligence. In the case on hand, we concur with the finding rendered by the learned CIT(A) in the impugned order, that the price charged by the assessee in international transactions referred to in this order have not been computed in accordance with the provisions contained in section 92C of the Act, nor in the manner provided thereunder or in good faith and with due diligence. Thus we uphold the levy of penalty under section 271(1)(c) of the Act by the learned CIT(A). - Decided against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... y the order dated 15.03.2007 levying penalty of ₹ 2,30,146/- under section 271(1)(c) of the Act, for A.Y. 2002-03, the assessee preferred an appeal before the CIT(A)-15, Mumbai. The learned CIT(A) disposed off the appeal vide order dated 22.08.2014 allowing the assessee partial relief. In this impugned order, the learned CIT(A) deleted the penalty levied under section 271(1)(c) of the Act with reference to the disallowance of proportionate interest of ₹ 2,57,859/-; the learned CIT(A), however, proceeded to uphold the levy of penalty under section 271(1)(c) of the Act in respect of the adjustment of ₹ 3,86,810/- made on the basis of TP provisions holding as under at para 4.4(ii) of the impugned order: - "4.4 I have considered the facts of the case, submission of the appellant as against the findings/observations of the AO in his order u/s 271(1)(c) of the I.T. Act. The contentions and submissions of the appellant are being discussed and decided here in under: i. ............................. ii. With reference to penalty imposed on account of adjustment of ₹ 3,86,810/- made on the basis of transfer pricing provisions it was stated that entire internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to the total income on account of adjustment of Ra3,86,810 made on the basis of transfer pricing provisions. Your appellant submits that the penalty of ₹ 1,38,091 is wrongly levied and the same ought to be cancelled. 3. Your appellant craves leave to addto, alter, amend or vary all or any of the aforesaid ground(s) of appeal as they/their representative may deem fit." 3.2 The learned A.R. for the assessee was heard in support of the grounds raised and reiterated the submissions put forth before the authorities below. In support of the assessee's plea for cancellation of the penalty levied under section 271(1)(c) of the Act, on the adjustment made in transfer pricing audit, the assessee placed reliance on the decision of the Coordinate Bench of the ITAT - Delhi in the case of Mitsui Prime Advanced Composite India (P.) Ltd. vs. DCIT (2016) 178 TTJ 490 (Delhi- Trib). 3.3.1 Per contra, the learned D.R. for Revenue placed strong reliance on the decision of the learned CIT(A) in the impugned order in sustaining the levy of penalty under section 271(1)(c) of the Act on the transfer pricing adjustment of ALP at ₹ 3,86,810/-. According to the learned D.R., as per the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act on the transfer pricing adjustment of ₹ 3,86,810/- be upheld. 3.4.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. On an appreciation of the facts on record, it is seen that the assessee adopted the CUP method for demonstrating that its international transactions were at ALP. The TPO on examination thereof accepted CUP method adopted by the assessee as the most appropriate method (MAM), but observed that the assessee had sold cold flu tablets to its AEs at $1.807 per unit, whereas the same were sold to non-AEs @$1.95 per unit. This led to a difference of ₹ 3,86,810/- (i.e. ₹ 6,78,71,791/p less ₹ 6,74,84,891/-) under the CUP method and the transfer pricing adjustment to that extent was made. Though this factual discrepancy was detected, the assessee did not voluntarily revise its income and challenged the same in assessment proceedings, but, however, did not prefer any quantum appeal, due to the smallness of the amount involved. 3.4.2 Explanation 7 to section 271(1)(c) of the Act reads as under: - "Explanation 7.-Where in the case of an assessee who has entered into an internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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