TaxTMI 
TaxTMI 
2026 (2) TMI 879
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....d 02.11.2023. 4. The aforesaid notice was issued pursuant to an Assessment Officer dated 02.11.2023, wherein the Assessing Officer arrived at the following conclusion:- The TPO after making a threadbare analysis of the issue involved and considering the various submissions made during the course of Transfer Pricing proceedings, passed order u/s 92CA(3) of the Act, on 30.03.2023 in order ITBA/TPO/F/92CA3/2022- 23/10516605833(1), dated 30.03.2023, made the following upward adjustments:- Sl.No. Description Adjustment u/s 92CA(In Rs. ) 1. Total Adjustment u/s 92CA 4,49,59,601/- 5. The facts on record reveals that the Petitioner had filed a return of Income on 24.12.2020 declaring a gross total income for a sum of Rs. 283,97,38,290/- for Assessment Year 2020-2021. 6. During the course of the proceedings, a reference was made to the Transfer Pricing Officer under Section 92CA(1), which ultimately culminated in an Order dated 30.03.2023 of the Transfer Pricing Officer under Section 92CA(3) wherein the Transfer Pricing Officer proposed to add to sum of Rs. 4,49,59,601/- to the income of the petitioner. 7. In the Assessment Order dated 02.11.2023 itsel....
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....28.12.2023 the application filed for Waiver of penalty was however rejected. 13. Learned counsel for the Petitioner would submit that imposition of penalty under Section 270A of the Income Tax Act, 1961 vide impugned Order dated 30.05.2024 was unjustified particularly in the light of the fact that the Petitioner had opted for immunity under Section 270AA by filing an application in Form 68 on 03.11.2023. 14. It is further submitted that imposition of penalty and rejection of the application filed by the immunity without authority of law. It is therefore submitted that the Assessment Order itself confirms that there was misreporting and therefore, denial of the immunity of Section 270 AA of the Income Tax Act, 1961 was unjustified. 15. Therefore, it is further submitted even otherwise there is no case for misreporting even as per the Assessment Order dated 02.11.2023. Specifically a reference was made to the Para No.4.4 of the Assessment Order dated 02.11.2023 content of which has already been extracted supra. 16. It is submitted that there was only a upward revision to the Return of Income filed by the Petitioner and that if at all there was only under reporting and not....
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.... Specifically, the learned Senior Standing Counsel for the Respondent submitted that under Section 270A(8) of the Act, as a consequence of 'Underreporting" of income penalty equivalent to 200% can be imposed. It is further submitted that in the impugned Order, it has been clarified that as consequence of misreporting, T.P.O. concluded that there was Underreporting of income due to misreporting. 24. By way of a rejoinder, Mr.Ajay Vohra, the learned Senior Counsel for the Petitioner has submitted that in the case of the Petitioner, neither any scope to infer "under -reporting nor under "mis-reporting" and at best, it can be construed that there was only "under-reporting" within the meaning of Section 27A(d) of the Act. 25. It is further submitted that to conclude that there was "mis-reporting", the Respondent-Income Tax Department has to establish one of the following provisions of Section 270A(9) of the Act, viz., :- a. Misrepresentation or suppression of facts: Hiding crucial details to evade tax. b. Non-recording of investments: Failure to record investments in the books of account. c. Substantiation failure: Claiming expenditure not supported by e....
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....e return processed under clause (a) of sub-section (1) of section 143; (b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished; (c) the income reassessed is greater than the income assessed or reassessed immediately before such reassessment; (d) the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143; (e) the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been filed; (f) the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such, reassessment; (g) the income assessed or reassessed has the effect of reducing the loss or converting such loss into income. (3) The amount of....
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....converting that loss into income, the amount of under-reported income shall be the difference between the loss claimed and the income or loss, as the case may be, assessed or reassessed. (4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as "preceding year") and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or investment. (5) The amount referred to in sub-section (4) shall be deemed to be amount of income under-reported for the preceding year in the following order- (a) the preceding year immediately before the year in which the receipt, deposit or investment appears, being the first preceding year; and (b) where the amount added or deducted in the first preceding year is not sufficient to cover the receipt, deposit or in....
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....count; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply. (10) The tax payable in respect of the under-reported income shall be- (a) where no return of income has been furnished and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income; (b) where the total income determined under clause (a) of subsection (1) of section 143 or assessed, reassessed or recomputed in a preceding order is a loss, the amount of tax calculated on the under-reported income as if it were the total income; (c) in any other case determined in accordance with the formula - (X-Y) where, X = the amount of tax calculated on the u....
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....ontrolled Price Method (CUP) :- 1.Allsec Technologies Ltd. 2.Anderson Business Solutions Pvt. Ltd. 3.Cosmic Global Pvt. Ltd. 4.Datamatics Business Solutions Ltd. 5.Digicall Global Pvt. Ltd. 6.Global Healthcare Billing Partners Pvt. Ltd. 7.Silgate Solutions Ltd. 8.WE Win Ltd. (Surevin BPO services Ltd.) 35. On examination of the above comparables offered by Petitioner for determination of Arm's Length Price, the Transfer Pricing Officer held that the data of the following two comparables were to be rejected. The reasons given for rejection were as under:- S.No. Name of the Comparable Reason for rejection 1. Anderson Business Solutions Pvt. Ltd. Failed in Employee Cost Filter (<60%) 2. Digicall Global Pvt. Ltd. Failed in Employee Cost Filter (<60%) & Negative NCP margin 36. Therefore, the Transfer Pricing Officer proceeded to determine the Arm's Length Price (ALP) in accordance with sub-Sections (1) and (2) of Section 92C of the Income Tax Act, 1961 by conducting an independent search through Prowess IQ database applying the following filters:- 1. Companies in predefined set....
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....o base on the assessee's request to include two more comparable companies at this stage. The assessee company is a well established reputed company with significant turnover. The assessee submitted that it "being a captive service provider, assumes less than normal risks relating to business and operations and all significant business and entrepreneurial risks are borne by its AEs, outside India. In other words, VDSI is insulated from most of the business and operational risks which the comparable companies are exposed to, e.g., market risk, services liability risk, technology risk, credit risk, etc." This clearly shows that the assessee's margin is not within the arm's length price of the industry wide margins which is clearly visible from the margins computed by this office. In view of the above discussion, the assessee's request for inclusion of two new comparables are not accepted as the assessee has cherry picked these two comparables as these companies have tendency to skew the results and cannot be considered representative of the industry. Hence, the claim of the assessee is denied. Final List of Comparables: ITES and supervisory support....
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....Partners Pvt. Ltd. -2.66 2. Designed Products Ltd. 3.97 3. Silgate Solutions Ltd. 7.54 4. Cosmic Global Ltd. 9.55 5. Datamatics Business Solutions Limited 14.49 6. Sundaram Business Services Limited 14.99 7. WE Win Ltd. (Surevin BPO services Ltd.) 16.32 8. Tech Mahindra Business Services Ltd. 17.45 9. M O L Information Processing Services (India) Pvt. Ltd. 17.66 10. Bahar Infocons Pvt. Ltd. 17.76 11. Allsec Technologies Ltd. 18.76 12. Inteq BPO Services Private Limited 40.85 35th PERCENTILE 14.49 65th PERCENTILE 17.45 MEDIAN 15.65 From the weighted average margin of the comparable companies, it is observed that, the 35th percentile margin is 14.49% and the 65th percentile margin is 17.45%. Since the margin of assessee i.e., 14.00% is not within the range, the ALP of the assessee is computed as follows. Value of International Transactions = Rs. 139,65,65,258 Margin of Assessee Company = 14.00% Median of Comparable Companies = 15.65% Cost Margin Sale Assessee Company 100 14....
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....cord any receipt in books of account having a bearing on total income; and f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply. 49. "Misreporting of income" represents an aggravated form of underreporting, characterized by a deliberate and willful attempt to evade tax. In the facts of the case, there is no scope to infer aggravated form of under-reporting, characterized by a deliberate and willful attempt to evade tax. 50. The entire basis for initiation of penalty proceedings is the transfer pricing adjustment proposed in the draft assessment order. Such adjustment, by its very nature, involves estimation and determination of arm's length price and cannot, in law, be equated with either concealment or misrepresentation so as to attract the Clause (a) to Sub Section (9) to Section 270A. 51. Since the Petitioner had maintained information and documents as prescribed under Section 92D, and complied with all statutory requirements under Chapter X of the Income Tax Act, 1961. 52. Therefore, the case squarely falls within the ....