TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 659
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....ansfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) of these transactions. Accordingly, a notice under Section 92CA(2) & 92D(3) of the Act along with questionnaire was issued by the TPO requiring the assessee to produce all the evidences in support of computation of ALP of international transactions as well as the specified domestic transactions, along with transfer pricing study report. The assessee had made only part compliance to the requirements of the TPO and all the details as requisitioned were not furnished. Therefore, a notice under Section 271G of the Act was issued to the assessee by the TPO requiring an explanation as to why penalty at the rate of 2% of international transactions and specified domestic transactions should not be imposed. The TPO was not satisfied with the explanation of the assessee given in response to the show cause notice. After considering the reply of the assessee, the TPO had passed the penalty order under Section 271G of the Act on 23.03.2022 levying penalty of Rs. 8,80,51,068/- being 2% of the value of international transactions and specified domestic transactions of the assessee. 3. The assessee has preferred an appeal....
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.... furnished all the documents and details as requisitioned by the TPO. He submitted that the penalty under Section 271G of the Act can be initiated only when the assessee fails to furnish any information or documents and not in the case where the information submitted by the assessee is not acceptable to the TPO. The Ld. AR submitted that the assessee had submitted all the details and documents in respect of all the issues raised by the TPO which was also acknowledged in the penalty order. The Ld. AR assailed the penalty order on the ground that the TPO had not specified as to which information or document was not provided by the assessee, for which the penalty was leviable. He submitted that the Ld. CIT(A) had correctly appreciated the facts of the case and rightly deleted the penalty imposed by the TPO. He, therefore, strongly supported the order of the Ld. CIT(A). 7. We have carefully considered the rival submissions. The penalty under Section 271G of the Act can be levied if the person, who has entered into an international transaction or specified domestic transaction, fails to furnish any such information or documents as required under Section 92D(3) of the Act to the Asses....
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....n 271G of the I.T. Act. The penalty u/s. 271G is levied if any person who entered into international transaction or specified domestic transaction failed to furnish any such information or document as required by sub-section 3 of section 92D of the I.T. Act. The Ld. TPO has not specified in her show cause notice es to which information and documents required were not furnished by the appellant during the TP audit. The allegation of the Ld. TPO that the appellant did not comply with the notice u/s. 92D(3) dated 06.09.2018 within the prescribed time is not factually correct and part submission was made on due date of compliance. 4.3 The appellant also pointed out that the notice u/s. 92D(3) dated 06.09.2018 is not legal as the time limit fixed for compliance was 24.09.2018 which is less than 30 days as stipulated in Section 92D(3) of the IT Act and there are ruling in favour of the appellant where penalty levied u/s. 271G was deleted solely on this ground. The appellant relied on the decision of JSW Energy Ltd. vs. DCIT (ITA 1223/Mum/2019 order dated 12.08.2022). I have examined the Ld. TPO order u/s 92CA(3) of the Act and find that the Ld. TPO has stated in para 2 that the ....
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....ed only when the assessee failed to furnish any information or document and not when the information/documents submitted is found un-acceptable by the Ld. TPO. The Ld. TPO has not pointed out in her penalty order which information and documents could not be furnished by the appellant which warrants levy of penalty u/s. 271G of the Act. Therefore, I find merit in the submission of the appellant that it has provided all the information/details and documents relevant to the transactions and benchmarking of the same. Therefore, penalty levied u/s. 271G in this transaction is not sustainable. 4.5 The second transaction on which penalty u/s. 271G was initiated pertains to Purchase of raw-material from Atul USA Inc. The appellant during the course of TP audit submitted transaction wise listing of purchase from Atul USA Inc. and third party along with copy of invoices. In this case a third party is its AE Atul China, however, the appellant has stated that Atul China Ltd. is not manufacturing the material and the material was actually purchased from a non- AE and the details of purchase by Atul China was provided during the course of TP audit. Thus, the appellant argued that the CU....
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...., data information can also vary. The tribunal has rightly concluded that with such a broad rule, which requires documentation and information voluminous and virtually unlimited, Section 271G has to be interpreted reasonably and in a rational manner. Information or documentation, which is assessee specific or specific to the associated enterprises, should be readily available, whereas other documentation or information relates to data bases or transactions entered into by third parties may require collation/collection from time to time. There cannot be any end or limit to the documentation or information relating to data bases or third parties. When there is general and substantive compliance of the provisions of Rule 10D, it is sufficient. The Legislature was conscious of this fact and, therefore, had specifically stipulated in Section 92D(3) that the Assessing Officer or Commissioner (Appeals) may require a person to furnish any information or document in respect thereof and on failure of the said person to furnish the documentation within the specified time, penalty under Section 271G can be imposed. Thus, for imposing penalty the Revenue must first mention the document and info....
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....nancial estimates prepared by the assessee for the business as a whole and for each division or product separately, which may have a bearing on the international transactions or the specified domestic transactions entered into by the assessee; (g) a record of uncontrolled transactions taken into account for analysing their comparability with the international transactions or the specified domestic transactions entered into, including a record of the nature, terms and conditions relating to any uncontrolled transaction with third parties which may be of relevance to the pricing of the international transactions or specified domestic transactions, as the case may be; (h) a record of the analysis performed to evaluate comparability of uncontrolled transactions with the relevant international transaction or specified domestic transaction; (i) a description of the methods considered for determining the arm's length price in relation to each international transaction or specified domestic transaction or class of transaction, the method selected as the most appropriate method along with explanations as to why such method was so selected, and how such method ....