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TMI Blog2020 (9) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Department : Shri V. Sreekar ORDER 1. These appeals by assessee are arising out of the common order of Commissioner of Income Tax (Appeals)-17, Mumbai in Appeal No. CIT(A)-17 wherein penalties u/s. 271G were confirmed for A.Ys. 2012-13, 2013-13 2014-15. 2. In these cases by common order learned CIT(A) confirmed the levy of penalty by the AO under section 271G of the Act for the reason that the assessee has entered into an international transactions with its AE and has failed to furnish documents or information as required under section 92D(3) of the Act. For this assessee has raised the identically worded grounds in all three years and facts and circumstances are also identical. Hence, we will take the facts from AY 2012-13 and will decide the issue. The common ground raised reads as under :- 1. General On the facts and circumstances of the case, and in law, the order passed by Hon ble Commissioner of Income-tax (appeals) ( CIT(A) ] is a vitiated order, as the Hon ble CIT(A) erred both on facts and in law in confirming the penalty under section 271G levied by the Ld. Transfer Pricing Officer ( TPO ) to the appellant s income. 2. On the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Associated Enterprises (AEs') in India. In the Transfer Pricing study report, for computing the arms' length price for the international transaction of import of raw material and finished goods, the AEs have been considered as the tested party, since they are the least complex/low risk manufacturing entities as compared to the Appellant who is performing the role of an entrepreneur for the Indian market. During the TP assessment proceedings, the Appellant submitted various documents/information to justify and support the benchmarking approach adopted in the TP study analysis. 4. However, the TPO rejected the benchmarking approach of the Appellant and determined the arms' length price by selecting the Appellant as the tested party and consequently made that T.P adjustment. 5. Separately, the TPO also initiated penalty proceedings under section 271G of the Act for non-furnishing of certain TP documentation with respect to the aforesaid international transactions of import of raw material and finished goods and export of finished goods. The Ld.CIT(A) upheld the order of the TPO on the following grounds:- (a) Non-furnishing of AE and non-AE audited segmental accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t margin method (TNMM) considering the overseas AEs as tested parties. 3. Submission dated 2 November 2015 Responses to Annexures issued by the Ld. Transfer Pricing Officer seeking details on Import of raw material, Export of finished goods and Importer of finished goods. 4. Submission dated 16 December 2015 Response to Annexure dated 18 November 2015 regarding the following details -Product wise segmental profitability given under Note 38 to the financial statements of the Petitioner 5. Submission dated 22 December 2012 Response to Annexure dated 10 November, 18 November and 10 December 2015 providing Policy of the petitioner group 6. Submission dated 7 January 2016 Submission on benchmarking of royalty paid to the AE. 7. Submission dated 7 January 2016 Submission on selection of overseas AEs as tested party and benchmarking the international transactions accordingly. 8. Submission d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices towards reimbursement of expenses and sample invoices of import of raw materials and finished goods. 9. Submission dated 12 January 2016 Submission on benchmarking of business support services rendered by the Assessee 10. Submission dated 22 January 2016 Invoices pertaining to purchase of fixed assets from AEs. 11. Submission dated 25 January 2016 Response to notice issued on 24 January 2016 furnishing all the details requested for. 12. Submission dated 28 January 2016 Reconciliation of royalty paid on net sales. 10. We find that the upon the facts circumstances it is abundantly clear that on similar notice and on similar documents maintained, the ITAT has deleted the penalty levied under section271G in a group concerns are referred above, by following conclusion. 11. We have heard rival contentions and gone through the facts and circumstances of the case. From the above, we noted that the main allegation of the revenue is that of non-furnishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, data or document, including information or data relating to the associated enterprises, which may be relevant for determination of arm's length price. A bare perusal of sub-clauses (a) to (m) would indicate that some of the information and details pertain to the assessee and the associated enterprise, their ownership, structure, address, name, broad description of business etc. The assessees are also required to maintain details like, nature and terms of international transaction, property or services provided and quantum and value of each transaction etc. However, some of the clauses are very broad and wide like clause (m) mentioned above. These clauses relate to record of economic and market analysis, forecasts, budget and other financial estimates prepared by an assessee, record of uncontrolled transactions for realising their comparability with international transactions including record of nature, terms and conditions relating to uncontrolled transactions with third parties, record of analysis performed to evaluate comparability of uncontrolled transactions. These are general clauses relating to data, details etc. of third parties etc. These details, data, informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umentation within the specified time, penalty under Section 271G can be imposed. Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in Rule 10D, which has been formulated in terms of Section 92D(1) of the Act. Looking from any quarter and angle, the appeal of the Revenue is misconceived, totally lacking in merits and is, therefore, dismissed. 12. Similarly, Jaipur Tribunal in assessee s sister concern case in the case of Gillette India Ltd (supra) has considered this issue and Hon ble High court of Rajasthan High Court in the case of CIT v. Gillette India Ltd. has finally held as under: - 8. Copy of the notice dated 23.03.2011 issued by the Assessing Officer has not been filed on record by the Revenue along with the present grounds of appeal. We do not know what was requisitioned and asked for by the said notice and which/what documents and details were supplied. We also do not know whether any extension of time was prayed for or granted by the Transfer Pricing Officer and whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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