TaxTMI 
TaxTMI 
2026 (8) TMI 1354
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.... required to produce certain documents which was relied upon by assessee in support of computation of arm's length price of international transactions. Subsequently, in response to the notice issued vide reply dated 25.02.2023 assessee had submitted financial statement etc. desired by ld. TPO except transfer pricing study/documentation. Thereafter notice dated 06.06.2023 was issued u/s. 92CA(2) of the Act by which assessee was directed to file transfer pricing study report and assessee was given a show cause, too, as to why proceedings u/s. 271G of the Act should not be taken up. Subsequently, ld. TPO has passed the order making adjustments on account of international transactions by ignoring the transfer pricing study report and against which assessee had preferred objection before ld. DRP and where the objections of assessee were rejected and final assessment order u/s. 144C(13) dated 24.07.2024 was passed. Assessee filed appeal before this Tribunal and vide order dated 15.01.2025 vide ITA No. 4404/Del/2024 the Coordinate Bench had allowed the appeal of assessee for statistical purposes with following observations and directions: "13. We have heard the rival submissions ....
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....On perusal of para 4 of the TP order dated 27.07.2023, it is seen that the TO has mentioned vide para 4 of the show cause notice dated 17.07.2023 (page 2 of the TP order) that assessee did not furnish TP report in the course of the Transfer Pricing Audit that was been conducted by the TPO. In para 10 of the said show cause (page 4 of the TP Order), the TPO has also mentioned that with respect to the interest paid during the year, the assessee has not provided loan agreement, partners of the loan, proof of payments etc. The TPO vide para 11 of the same show cause notice, the TPO has sought to initiate penalty proceedings u/s. 271G of the I.T. Act. 5.3. It is also emanated from the order of TRO that the appellant has filed the TP study report only on 21.07.2023. Now it is to be noted that the TP study report is a primary document which/are required to benchmark the transaction to determine Arms Length Pricing. The fact that the basic documents has not been provided in response to seven notices issued by the TPO requisitioning the same and documentary evidence other than TP report in support of the international transactions undertaken by the assessee clearly implies that the....
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.... Income tax Act, the TPO has levied a penalty u/s. 271G on the appellant. Now evidently imposition of penalty u/s. 271G is clearly connected with non-compliance of provisions of Section 92D(3) of the Income tax Act and accordingly, it has nothing to do with the final outcome of the assessment proceedings before any appellate authority including DRP and ITAT. Hence, the appellant's contention in para (vii) of its submission dated 20.01.2025 that the penalty order u/s. 271G stemmed out of TPO's order is entirely misplaced and accordingly, rejected as a valid ground for deletion of penalty. In this connection, it is also to be mentioned that the AO, as per 271G the TO may direct the defaulter to pay a sum equal to 2% of the value of international transactions for each such failure. In this instant case, the number of failures of the appellant was more than one, however, the TPO has taken a liberal approach by restricting the penalty amount to only 2% of the turnover. Since it appears that the quantum of penalty imposed by the TO has been taken under due consideration of the fact, the judgement of the TPO is respected and no interference is being made as per as quantum....
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..../w Rule 10D(1) of the Rules and furnished the same to the TPO in the course of the proceedings and sufficient / substantial compliance was made and further that the Assessee has acted in a bona fide manner without any mala fide intent and the alleged failure to provide Transfer Pricing Report was due to an inadvertent mistake to attach the Report despite marking the same in the affirmative in the reply to Notice u/s. 92CA of the Act. 4. Because the Impugned Order dated 19.09.2025 passed by the Ld. CIT(A) u/s. 250 of the Act is arbitrary and non-speaking as the same has completely failed to consider the Ground Wise Submissions of the Appellant and recorded no finding on the merits of the case vis-à-vis the submissions made by the Appellant. 5. Because the Impugned Order dated 19.09.2025 has been passed by the Ld. CIT(A) u/s. 250 of the Act without appreciating that this Hon'ble Tribunal has set aside the Order of the Ld. AO/TO and further Order of the Ld.DRP and remanded the matter for fresh adjudication and consideration of the TP Study Report for making de novo order u/s. 92CA of the Act. 6. Because the Impugned Order dated 19.09.2025 has been....
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....d 21.07.2023 and forms part of the record, the Notice issued u/s. 271G is bereft of any specific determination of information or document which the Appellant has failed to submit. 7. It is further submitted that the relevant year in question was the first year of operation of the Appellant and the management of the Appellant were South Korean nationals who were completely dependent on the Consultant to satisfy all statutory compliances and the Transfer Pricing Report was inadvertently not submitted despite marking the same in the affirmative in Point No.2 of reply to Notice u/s. 92CA(2) of the Act dated 25.02.2023. It is further submitted that after the change in consultants, the Appellant has duly responded to all Notices and fully participated in the proceedings in a timely manner without any allegation of delay by the Department. An Affidavit of Mr. Changyoun Woo, Managing Director of the Appellant was made part of record. 8. On the other hand, ld. DR has merely relied the impugned order and submitted that proceedings u/s. 271G are independent and only on the basis of that the Coordinate Bench has restored the issue to TPO/AO to take into consideration the Transfer Pricing....
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....) Pvt. Decided on 30 August, 2013, vide ITA no. 410/2012, and concluding the findings, Hon'ble High Court has laid down as follows; "Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in Rule 10D, which has been formulated in terms of Section 92D(1) of the Act." 13. Further we find that in the impugned order of levy of penalty dated 29.03.2024 while rejecting the submissions of assessee ld. TPO has observed that notice u/s. 92D, were served, by making following observations; "6.2.1 The submission has not been found to be satisfactory. The scrutiny proceedings were barred by limitation On 31.07.2023. The assessee was provided multiple opportunities vide notices u/s. 92D of the Act dated 6/09/2022, 08/12/2022, 09/12/2022, 22/03/2023, 04/05/2023, 08/05/2023 and 06/06/2023 to provide the transfer pricing report, to enable this office to scrutinize the international transactions of the assessee. However, the transfer pricing report, which is the basic document required for be....
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....y no, non-compliance, justifying initiation of proceedings and levy of penalty. 17. In the light of these facts and circumstances as discussed above we are of the considered view that procedure and provisions of Section 271G being penal in nature providing for levying of penalty @ 2% on the total international transaction, which in the case of assessee was calculated to Rs. 2,20,14,302/, same need to be strictly adhered to and in the absence of due process being followed, the penalty deserves to be deleted. We thus, sustain the ground. The appeal is allowed and the impugned penalty order is quashed. Order pronounced in the open court on 19.08.2026 ============= Document 1 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, TRANSFER PRICING DC/ACIT TP 3(2)(2) DELHI To. SENATECH INDIA PRIVATE LIMITED INDUSTRIAL PLOT NO .- 90, 91,BLOCK-, ECOTECH EXTENSION SECTOR-ECOTECH- 1 NOIDA 201308,Uttar Pradesh India PAN: AAYCS8501K AY: 2020-21 DIN & Notice No: ITBA/TPO/S/92CA/2025-26/1086387962(1) Dated: 23/02/2026 Sir/Madam, Sub: Notice u/s. 92CA(2) of the Income Tax Act, 196....