TaxTMI 
TaxTMI 
2015 (1) TMI 918
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....al transactions and submitting of relevant documents, the case was referred to TPO where the assessee filed the relevant documents to ADIT (TPO) who made an observation that the assessee was served notice 92CA(2) and 92CA(3) under I.T. Act dated 22-12-2008, calling on the assessee to furnish ''copies of information and documents maintained u/s 92D(1) of I.T. Act read with rules 10D(1) & (3) alongwith copy of TP study report.'' Though other details were filed but the copy of T.P. documents were not filed and the same was filed as late as 20-07-2009. For this default, the AO may consider initiation of penalty proceedings u/s 271G of the Act. 5.0 While completing assessment u/s 145(3), the AO on the basis of the above direction issued a show cause notice dated 29-10-2010 asking the assessee to show cause as to why penalty proceedings should not be imposed. According to the AO, the assessee did not file any reply. Thereafter, as penalty was getting time barred on 30-04-2011, again a letter fixing the date of hearing on 25-04-2011 was sent to the assessee at its Bhiwadi address through Speed Post. In response thereto on 21-04-2011 assessee replied that in its first submission filed for....
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....ded by the TPO. The reluctance of the assessee in submission of the required informations and documents before the TPO can be gauged from the fact that even the T.P. study report was filed by the assessee as late as on 20-07- 2009. These informations and documents were important for computation of arm's length price of the international transaction entered into. What information and documents are needed to correctly compute the arm's length price of the international transactions, it is upto the TPO to decide on case to case basis. In the instant case, after analyzing the facts, circumstances and peculiarity of the case and applying mind, the TPO has called for the informations and documents including T.P. documentations and afforded several opportunities to the a to furnish the same. Thus the onus was on the assessee who failed to discharge the same. In this case as the assessee could not furnish the reasons for such failure in submission, the provisions of Section 273B also become irrelevant. The assessee could not adduce/ furnish any reasonable cause for such failure alongwith documentary evidences as to what effectively prevented the assessee from making the statutory complianc....
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....n (1), the Board may prescribe the period for which the information and document shall be kept and maintained under that sub-section. (3) The Assessing Officer or the Commissioner (Appeals) may, in the course of any proceeding under this Act, require any person who has entered into an international transaction 1259dh[or specified domestic transaction] to furnish any information or document in respect thereof, as may be prescribed under sub-section (1), within a period of thirty days from the date of receipt of a notice issued in this regard: Provided that the Assessing Officer or the Commissioner (Appeals) may, on an application made by such person, extend the period of thirty days by a further period not exceeding thirty days. No delay was pointed out by TPO at the time of hearing which is evident from the fact that there is no mention in this regard in TPO's order. Otherwise assessee would have applied for the extension. Section 271G. Penalty for failure to furnish information or document under section 92D. If any person who has entered into an international transaction fails to furnish any such information or document as required by sub-section (3) of section 92D, the Asses....
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.... ask for information under all the clauses. One or more clauses of sub-r. (1) are applicable and not all clauses of the rule in a given case. It would all depend upon the facts and circumstances of the case more particularly the nature of international transactions carried or services involved. Likewise supporting documents, official publications, reports, market research studies, technical publications of Government or other institute of national or international repute, and all the documents mentioned in r. 10D(3) may not be needed in case of every taxpayer. It is evident from the information/documents prescribed in subrules of r. 10D that the taxpayer and the tax authorities are to see what information and documents and which particular clause is relevant are therefore, needed for determining ALP. The consideration of above aspect is material before issuing notice under s. 92D(3), if it is to serve its purpose. The prescribed information is gathered from the taxpayer through various means and at different stages of assessment proceedings. The initial or first information relating to international transactions is gathered from the taxpayer in the prescribed audit report in Form 3....
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....to be filed to support ALP by the taxpayer in response to notice under s. 92CA(2). If on consideration of evidence produced by the taxpayer the TPO is satisfied that ALP has been properly and correctly determined by the taxpayer, it is the end of the matter. There is no question of issuing further notice under any provision to the taxpayer. However, if complete information is not furnished, or otherwise, TPO is of the view that more information on specified points is required from the taxpayer, the TPO can issue notice under sub-s. (3) of s. 92D. TPO can also issue notice under s. 92CA(3), depending upon the facts of the case and the information needed. Only in case of failure of the taxpayer to support its ALP by filing necessary evidence, question of requiring taxpayer to furnish prescribed information would arise. There is no rationality in requiring information, documents from the taxpayer first under s. 92D(3) and thereafter provide opportunity to the taxpayer to support its ALP. Further, having regard to purpose of the regulations, the notice under s. 92D(3) must require specific information (or document) which the taxpayer failed to furnish under s. 92CA(2) but which accordi....
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....uld be of no use and there is no point in requiring the same information again or require unprescribed information under s. 92D(3) and cast additional burden on the taxpayer. In all such cases, it would no more remain valid notice under s. 92D(3)/271G. Application of mind to find and consideration of material on record and to see what further information on specific point is required, is essential before issuing notice under s. 92D(3) to the taxpayer.-Barium Chemicals Ltd. vs. A.J. Rana AIR 1972 SC 591 applied. The TPO in this case issued first notice on 22nd Sept., 2005. In para 1 of the notice, he asked the assessee to support and substantiate the computation of ALP in international transactions. This is required by s. 92CA(2). As per para No. 2, the TPO further required to furnish information including the balance sheet, P&L a/c, statement of computation of income, audit report, tax report and also "information and documents maintained as prescribed under s. 92D of IT Act, 1961 r/w r. 10D of IT Rules" without specifying any particular information clause of r. 10D. The aforesaid notice was a notice under s. 92CA(2) but the TPO by asking further information made it a notice under....
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....ts out of several mentioned in various clauses of the said sub-rule were available with the taxpayer. The burden of selection/relevancy of clauses applicable was shifted to the taxpayer. The notice only increased burden of the taxpayer and confused the noticee. Above notices issued without application of mind and without considering relevancy and requirement of all the prescribed information and documents under r. 10D vitiated the legality of the notices. Above notices could not be treated as proper and legal notices in terms of s. 92D(3). The failure, therefore, of the taxpayer to comply such notices in time cannot justify levy of penalty. The notices being illegal, question of levy of penalty did not arise.-New Central Jute Mills Co. Ltd. vs. Dwijendralal Brahmachari & Ors. (1973) 90 ITR 467 (Cal) applied. The notice relating to specific defects and calling for their rectification could be treated as a notice under s. 92D(3) although not so labelled by the AO. Admittedly before the end of December, 2005, all documents and information were furnished by the taxpayer. So there was no default in not submitting documents and information within the prescribed time to attract provision....
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....ithin the prescribed time is held to be due to a reasonable cause. Therefore, the penalty is not sustainable on account of this ground also. Besides, penalty of Rs. 40,46,41,376 for mere delay of about a month or so in the submission of information and documents assuming entire case of Revenue is established, is to be held to be imposed on mere technical grounds. Having regard to the settled law, no penalty for technical or venial default is imposable. 13.0 Further reliance is placed on latest Delhi High Court judgment in the case of CIT v Bumi High Way (I)(P) Ltd. (2014) DTR 110 321 (Del) holding as under: ''Held : what is clearly discernible from the penalty order is that reference was not made to any particular or specific date by which assessee was required to submit the documents; or whether the same were furnished within 30 days or within the extended period of 30 days thereafter. Penalty under s. 27lG cannot be imposed in this manner. A specific finding should be recorded on the date by which the Assessee was required to furnish documents and whether documents were furnished, if not which documents were not furnish and whether any extension of time was granted by the TPO a....