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TMI Blog2020 (10) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational transaction and merely relying on the supporting documents of Associated enterprise, cannot be termed as reasonable cause for not maintaining the documents on its own under Section 273B in respect to the international transactions as well as the specified domestic transactions as well. It is mandatory requirement to obtain an independent accountant s report/documents in respect of specified domestic transactions with Associated Enterprises as per Section 92D of the Act and this mandate cannot be diluted by the so called reasonable cause given under Section 273B - AO was right in imposing the penalty under Section 271AA of the Income Tax Act and the CIT(A) was not right in deleting the penalty. - Decided in favour of revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee provides IT enabled call centre/back office support services to the assessee. For the Assessment Year 2006-07, the assessee filed its return of income as follows:- Details of Income Amount (RS) Rate at which offered to tax Interest on External Commercial Borrowings 1,92,29,077 15% Fees for Technical Services 20,777,272 15% Total 4,00,06,350 The interest and FTS income was earned by the assessee from CIS and associated enterprises of the assessee in India. The Assessing Officer vide Assessment order dated 29/12/2008 held that the assessee has fixed place PE, Service PE and dependent PE as per Article 5 of Indo-USA DTAA and profits of ₹ 2,84,45,67,544/- were attributable to the PE of assessee in India. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributable to PE (Taxable as business profits @ 40% plus applicable surcharge and cess) 5,715,189 Taxable Income 45,721,539 4. The assessee preferred appeal before the Hon'ble Delhi High Court which is admitted. In the meantime, the Assessing Officer issued show cause notice u/s 271(1) (c) and 271AA. The Assessing Officer levied penalty u/s 271AA vide order dated 3/1/2014 to the tune of ₹ 10,37,46,481/- which is 2% of the value of international transactions of ₹ 518,73,24,61/-. 5. Being aggrieved by the penalty u/s 271AA, the assessee preferred appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 6. The Ld. DR submitted that the assessee has not maintained documents as per the requirement of the Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... datory for all taxpayers, without exception, to obtain an independent accountant's report in respect of all international transactions between associated enterprises or specified domestic transactions. The report has to be furnished by the due date of the tax return filing. Even if it is submitted that there is no international transaction, it cannot escape the assessee at least to obtain independent accountant's report for specified domestic transactions. Thus, the assessee mandatorily has to maintain documents of its own. Non-maintaining documents on account that there is no international transaction and merely relying on the supporting documents of Associated enterprise, cannot be termed as reasonable cause for not maintaining the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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