9911796707
TMI Blog2024 (12) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have any international transactions, but had only transactions with a domestic associated enterprise. On perusal of the Tax Audit Report and also the relevant extract of purchase ledger, submitted by the assessee before the TPO, it is observed that the assessee had made purchases from Priya Blue Industries Pvt. Ltd., a domestic company and not from Best Oasis Ltd. a foreign enterprise, as alleged. So far as applicability of specified domestic transaction, within the meaning of Section 92BA of the Act is concerned, we observe that the provisions of Section 40(A)(2)(b) of the Act have been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 and the same would not apply to the impugned assessment year. We also observe that the AO has also no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h price for the assessee's international transactions. The TPO passed an order under section 92CA(3) of the Act on January 27, 2022, wherein he made no adjustments to the arm's length prices of the transactions. Additionally, the TPO did not initiate any penalty proceedings under sections 271AA or 271G for the non-submission of required documents during the transfer pricing proceedings. After the TPO's order, the AO passed the assessment order on February 24, 2022, accepting the return of income filed by the appellant. The AO, however, noted that the appellant had failed to maintain the requisite documents specified in section 92D and Rule 10D of the Income Tax Rules, and thus issued a penalty notice under section 271AA for non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271AA cannot be justified. Upon reviewing the assessment order, Ld. CIT(A) observed that while the AO initiated the penalty under section 271AA, there was no explanation given as to why this penalty was being levied or which specific documents or information required under section 92D were not furnished by the assessee. In contrast, the TPO had not initiated any penalty proceedings. As per Ld. CIT(A), the AO's penalty order lacked clarity, since the AO merely mentioned that the assessee had failed to maintain the required documents, without specifying which documents were missing. Moreover, the penalty was imposed based on the assumption that the purchases were made from Best Oasis Ltd., whereas the purchases were actually made fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Ld. Departmental Representative placed reliance on the observations made by the Assessing Officer in the penalty order. In response, the counsel for the assessee placed reliance on the observations made by Ld. CIT(A) in the appellate order. The counsel for the assessee submitted that no transfer pricing adjustments were made by the Transfer Pricing Officer concerning the underlying transactions, specifically the purchase of vessels. This implies that the TPO accepted that these transactions were conducted at arm s length price (ALP). The TPO s order indicates that the relevant details were provided by the assessee and kept on record, as mentioned in Paragraph 3 of the TPO's order. There is no indication in the TPO's or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 24, 2022, and August 17, 2022, were also vague and did not specify which documents were not maintained by the assessee. Even in the penalty order itself, the AO simply mentioned that, under the provisions of section 271AA, the assessee had committed a default, but failed to specify the exact documents that were not provided. The counsel for the assessee placed reliance on several cases to support the argument that a penalty under section 271AA cannot be levied when the AO's order is vague and non-specific. Lastly, the counsel for the assessee submitted that no international transaction was involved in the purchase of the ship M.V. Jin V from Priya Blue Industries Pvt. Ltd. (PBIPL), which is a domestic company. PBIPL had purchased t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the assessee before the TPO, it is observed that the assessee had made purchases from Priya Blue Industries Pvt. Ltd., a domestic company and not from Best Oasis Ltd. a foreign enterprise, as alleged. Further, so far as applicability of specified domestic transaction, within the meaning of Section 92BA of the Act is concerned, we observe that the provisions of Section 40(A)(2)(b) of the Act have been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 and the same would not apply to the impugned assessment year. Further, we also observe that the AO has also not made out a case for applicability of specified domestic transaction to assessee s set of facts, while imposing penalty under section 271AA of the Act. Accordingly, in lig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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