Tribunal Orders Deletion of Penalty for Single Non-SDT The Tribunal allowed the appeal, ordering the deletion of the penalty imposed under section 271AA. It was determined that only one transaction qualified ...
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Tribunal Orders Deletion of Penalty for Single Non-SDT
The Tribunal allowed the appeal, ordering the deletion of the penalty imposed under section 271AA. It was determined that only one transaction qualified as a specified domestic transaction under section 40A(2)(b), which did not exceed the specified limit. As a result, the transactions in question did not meet the criteria for SDTs, leading to the removal of penalties under sections 92D, 92E, and 271AA.
Issues: Penalty imposed under section 271AA for failure to maintain information u/s 92D and not furnishing report u/s 92E for assessment year 2013-14.
Analysis: The appellant filed a return declaring total income and reported payments in the tax audit report. The AO observed transactions exceeding the limit, requiring compliance with sections 92D and 92E. The AO imposed a penalty under section 271AA, upheld by the CIT(A), leading to the appeal.
The penalty provision under section 271AA applies to failure in maintaining information for specified domestic transactions (SDTs). The term 'specified domestic transaction' is defined in section 92BA, encompassing certain transactions exceeding a specified limit.
The dispute revolves around whether the transactions reported were covered under section 40A(2)(b), involving payments to relatives. The definition of 'relative' in section 2(41) is crucial, and the CIT(A) relied on the Explanation to section 56(2)(v) for interpretation.
The analysis further delves into the definition of 'relative' and its applicability to section 40A(2)(b). It clarifies that only transactions with specific relatives fall under the purview of this section.
Examining the nature of payments in the tax audit report, it is determined that only one transaction qualifies as an SDT under section 40A(2)(b). As this transaction does not exceed the specified limit, it does not attract penalties under sections 92D, 92E, or 271AA.
Ultimately, the Tribunal orders the deletion of the penalty, as the transactions did not meet the criteria for SDTs. The appeal is allowed, and the decision is pronounced in the Open Court on 12th July 2021.
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