2024 (5) TMI 1496 - AT - Income Tax

Tribunal Overturns Rs. 40L Penalty for Late Submission; Transfer Pricing Officer Accepted Details as Adequate.

The Tribunal allowed the appeal, deleting the penalty under section 271G for the A.Y. 2015-16. Despite the initial imposition of a Rs. 40,47,075 penalty ... Penalty under section 271G - acceptance by Transfer Pricing Officer - arm's length price - specified domestic transaction - reasonable cause for delay in furnishing informationPenalty under section 271G - acceptance by Transfer Pricing Officer - arm's length price - reasonable cause for delay in furnishing information - specified domestic transaction - Validity of levy of penalty under section 271G for delay in furnishing details for computation of ALP of specified domestic transactions where the Transfer Pricing Officer accepted the assessee's submissions and did not disturb the ALP. - HELD THAT: - The Assessing Officer imposed penalty under section 271G on the ground that the required details were not filed within 30 days. The Transfer Pricing Officer's order under section 92CA(3), however, records that notices were issued, the assessee furnished submissions and documents in response, and consequently the value of the specified domestic transaction with the associated enterprise in regard to ALP was not disturbed. Where the TPO has considered and accepted the assessee's submissions and the ALP computed by the assessee is accepted, there is no basis for levying penalty under section 271G solely on the ground of delay in filing. The Commissioner (Appeals) erred in confirming the penalty by merely holding that no explanation was filed and there was no reasonable cause, contrary to the TPO's finding that the required details were furnished and accepted. In view of the TPO's acceptance of the submissions and non-disturbance of ALP, levy of penalty under section 271G is not justified and is to be deleted. [Paras 4, 5]Penalty under section 271G deleted and the assessee's appeal allowed.Final Conclusion: The appeal is allowed; the penalty levied under section 271G for delay in furnishing details relating to specified domestic transactions is deleted because the Transfer Pricing Officer accepted the assessee's submissions and did not disturb the arm's length price. Issues:Levy of penalty under section 271G for specified domestic transaction for A.Y. 2015-16.Analysis:The appeal was filed against the penalty order u/s. 271G for the A.Y. 2015-16. The penalty of Rs. 40,47,075 was imposed on the assessee, being 2% earned on the total value of the specified domestic transaction of Rs. 20,23,52,771. The grounds of appeal argued that all details were submitted, arm's length price (ALP) was accepted, and the delay in submission was due to a reasonable cause. The Assessing Officer (AO) had issued notices to submit details/explanations related to arm's length price, but it was not mentioned that the assessee had failed to furnish the required details during the transfer pricing proceedings. The Transfer Pricing Officer (TPO) noted in an order that all required details were submitted by the assessee and the value of the specified domestic transaction with the associated enterprise in regard to ALP was not disturbed.The penalty was imposed solely on the grounds that the details were not filed within 30 days. However, since the TPO had accepted the explanation and details submitted by the assessee, and the ALP computed by the assessee was accepted, there was no valid reason for the penalty under section 271G. The Commissioner of Income Tax (Appeals) confirmed the penalty based on the absence of an explanation filed by the assessee without considering the details submitted and accepted by the TPO. Therefore, the penalty was unjustified, and the Tribunal allowed the appeal of the assessee, leading to the deletion of the penalty.In conclusion, the Tribunal found that if the TPO had duly considered the explanation and details submitted by the assessee, as noted in the TPO's order, then the penalty under section 271G could not be levied. As a result, the penalty was deleted, and the appeal of the assessee was allowed.