2020 (12) TMI 732 - AT - Income Tax

Tribunal upholds penalty under Income-tax Act, 1961

Convergys Customer Management Group Inc. C/o. Price Waterhouse Coopers Pvt. Ltd. Versus DCIT Circle-1 (2) (1), International Taxation, New Delhi

Convergys Customer Management Group Inc. C/o. Price Waterhouse Coopers Pvt. Ltd. Versus DCIT Circle-1 (2) (1), International Taxation, New Delhi - TMI Issues:1. Penalty under section 271AA of the Income-tax Act, 1961.2. Mistakes apparent in the Tribunal's order.3. Requirement of specific documents for international transactions.4. Review of Tribunal's order.Analysis:1. Penalty under section 271AA:The issue revolved around the imposition of penalty under section 271AA of the Income-tax Act, 1961 by the Assessing Officer (AO). The Commissioner of Income Tax (Appeals) had deleted the penalty after considering the international transactions between the non-resident company and its Associated Enterprise in India. The Tribunal, however, sustained the penalty, leading to the filing of Miscellaneous Applications by the assessee.2. Mistakes apparent in the Tribunal's order:The applicant raised concerns regarding mistakes in the Tribunal's order. The applicant's counsel argued that certain facts stated in the order were not relevant to the case and requested a recall of the order for rehearing. The mistakes included the Tribunal drawing an adverse inference against the applicant based on the requirement to maintain separate TP documents and the failure to consider specific contentions regarding the maintenance of documents.3. Requirement of specific documents for international transactions:The Tribunal's order highlighted the necessity of maintaining separate TP documents as per Section 92D of the Act. The applicant had obtained an independent accountant's report in the prescribed format (Form 3CEB) for international transactions. However, the Tribunal raised concerns about the failure to submit specific documents required under Section 92D, leading to an adverse inference against the applicant.4. Review of Tribunal's order:During the hearing, the Tribunal dismissed the applicant's request for a review of its own order dated October 13, 2020. The Tribunal emphasized that seeking a review without pointing out a mistake apparent on record was impermissible under the provisions of the Income Tax Act, 1961. The Tribunal concluded that the applicant was attempting to review its own order without valid grounds, leading to the dismissal of the Miscellaneous Applications.In conclusion, the Tribunal dismissed the Miscellaneous Applications filed by the assessee, upholding the imposition of the penalty under section 271AA and rejecting the plea for a review of the Tribunal's order. The judgment emphasized the importance of maintaining specific documents for international transactions and highlighted the limitations on seeking a review without valid grounds under the Income Tax Act, 1961.