TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1622
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there no transfer pricing adjustment when it is mentioned in the Act that penalty @ 2% of international transaction entered into by the assessee is to be levied in case the assessee fails to furnish the details within sixty days." (iii) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty by holding that the change of consultant as a reasonable cause u/s. 273B of the Act for delay of the submission of details when the letter of authority was given to the consultant on 24.09.2015." 2. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the A.O. be restored, 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 3. The common issue challenged in all the three grounds is against the deletion of penalty of Rs. 7.00 crore by Ld. CIT(A) as levied by the AO under section 271G of the Act. 4. The facts in brief are that a reference under section 92CA(1) of the Act, 1961 dated 10.11.2004 was received on 10.11.2014 from the AO. The AO made a reference to TPO for determination of arm length price (hereinafter referred to as ALP) wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of not submitting the information/documentation already maintained by the assessee under rule 10D of the IT. Rules 1962. The assessee therefore requests that as there was reasonable cause for filing the details immediately on receipt of notice, the penalty proceedings should be dropped. d) The assessee has relied on the following decisions i) ITAT decision in the case of Dy. CIT company circle IV(1) Chennai v/s Magick Woods Exports (P) Ltd (2012)25 taxmann.com -20(Chennai) wherein it was held that since default as to late filing of details was explain delay caused in filing details, and moreover TPO had not suggested any adjustment in ALP reported by assessee, the penalty imposed u/s 271G r.w.s. 92D is to be deleted. ii) The assessee has also relied on the Delhi HC decision in the case of CIT II v/s Jhonson of the Act was that based on the documentation filed by the assessee no addition was made to the value of international transaction entered by the assessee." 5. Thereafter the TPO, after rejecting the contentions of the assessee and after analyzing the provisions of section 92D, rule10D, rule 10C, finally imposed a penalty @ 2% of value of international transaction at Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to Rs:388,34,38,641/- The Value of 2% International Transaction comes out to be,Rs.7,76,68,7737- Hence being satisfied, I hereby levy penalty of a sum Rs.7,76,68.773/- u/s 271 G of the Income Tax Act, 1961." 6. In the appellate proceedings, the Ld. CIT(A), after taking into account the submissions and contentions of the Ld. A.R. of the assessee, deleted the penalty as imposed by DCIT(TP) u/s 271G of the Act by observing and holding as under "I have perused the penalty order u/s 92CA(3) and u/s 271G of the Act passed by the TPO, written submission and paper book filed by the Appellant. There is no dispute with the fact as emerging from TPO's order and details and submission filed by the Appellant. The first contention of the Appellant is that period of sixty days have to be counted from the receipt of notice issued u/s 92D(3) of the Act. The AO has considered this issue in paragraph 6 and 17 of the penalty order passed u/s 271G of the Act wherein the AO has stated that the Appellant has not submitted the details for the period of notice dated 11.11.2014 u/s 92CA(3) of the Act. Thus, the question for consideration before me is as to sixty days is to be computed from which not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act cannot be levied as there is no TP adjustment and the Appellant's transaction have been accepted at the arms length price determined by the Appellant. This aspect has been considered by the TPO in paragraph 15.2 of the penalty order passed u/s 271G of the Act. The Appellants contentions have been considered in the light of observation made by the TPO in the penalty order passed u/s 271G of the Act. The Appellant has correctly explained that section 271G of the Act has been inserted to curb the practice of tax avoidance which is evident from the Finance Act, 2001. I found force in the submission of the Appellant that there is no TP adjustment in the case of the Appellant and the transaction of the Appellant with AEs have been accepted at the arms length price determined by the Appellant; thus, there is no tax evasion in the case of the Appellant. On perusal of the documents on record and Finance Act, 2001 I am of the considered view that section 271G of the Act have been inserted as a measure to curb tax avoidance. In the case of Appellant, since the transaction have been accepted at ALP decided by the Appellant, there is no tax evasion on the Part of the Appellant; hen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e TPO. I am of the considered view that in absence of executive familiar with the transaction who were involved at the time to transfer pricing audit, it is difficult to file information and documents before the TPO. I'm also of the view that in absence of a well versed consultant, it is very difficult to represent the case before the departmental authorities. I am also ^convinced with the reasonable cause that the Appellant was busy with Income Tax Returns and Transfer Pricing Report in the month of November, 2015. The non-filing of returns, Tax Audit Report and Transfer Pricing Report has severe consequences in the Income Tax Law; therefore, the Appellant has rightly given the first priority to that the transfer pricing assessment were getting time barred. On study of TPO's order in juxtaposition with the submission of the Appellant, I am of the considered view that the Appellants case is covered u/s 273B of the Act (i.e. the Appellant could not file the details due to reasonable cause); therefore, the penalty levied by the TPO is deleted. My above view is fully supported by the following decisions: - PCIT v. Magick Woods Exports (P.) Ltd. [20121 25 taxmann.com 20 (Chen....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under section 92D3 instead of 92CA(ii) of the Act and therefore the Ld. D.R. prayed that the order of the Ld. CIT(A) may be set aside and that of the AO may be restored. 7. We have heard the rival submissions of both the parties and perused the material on record including the impugned order of the Ld. CIT(A). In this case the assessee has entered into international transactions with its foreign AE and has reported all the transactions in form No.3CEB. The AO referred the matter under section 92CA(i) of the Act to the TPO for determining the Arm Length Price of all the transactions reported in form 3CEB and thereafter the TPO issued three notices to the assessee on various dates as under: (1) 11.11.2014 under section 92CA(ii) of the Act (2) 06.05.2015 under section 92CA(ii) of the Act (3) 06.11.2015 under section 92D3 of the Act The ld TPO imposed the penalty u/s 271G of the Act by taking 60 days from the date of the first notices issued under section 92CA(ii) . The Ld. CIT(A) has calculated the 60 days from the date of notice issued under section 92D of the Act. The Ld. CIT(A) also noted that if the 60 days are reckoned from the date of issue of notice under section 92CA ....