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2016 (4) TMI 214 - AT - Income TaxPenalty under section 271(1)(c) - adjustment to the arm's length price - Held that:- Assessee has furnished all relevant information in respect of international transaction with A.E. in the audit report as well as transfer pricing study. In fact, the Transfer Pricing Officer himself admits that the assessee furnished the updated margins of the comparables. The Transfer Pricing Officer has not found any of the information submitted by the assessee misleading or unreliable. Therefore, in our view, a case of furnishing of inaccurate particulars of income has not been made out to justify imposition of penalty under section 271(1)(c). Addition made under section 40(a)(ia) - Held that:- On a perusal of the provisions contained under section 144C, it is to be noted that the as per sub–section 3, if the assessee intimates the Assessing Officer the acceptance of variation made in the draft assessment order or no objections are received within the period prescribed under sub–section (2), Assessing Officer shall complete the assessment on the basis of draft order. However, in case, the assessee raises objection against the draft assessment order, as per sub–section (13) of section 144C, the Assessing Officer shall pass the final assessment order in conformity with the direction of the DRP without providing any further opportunity of being heard to the assessee. Thus, the final assessment order as contemplated under section 144C(13) is only to implement the directions of the DRP. Therefore, in our view, if the Assessing Officer has not initiated penalty proceedings under section 271(1)(c) in respect of a particular item of addition in the draft assessment order, he cannot do so in the final assessment order. Thus, in such a situation, if at the stage of final assessment, the Assessing Officer initiates penalty proceedings under section 271(1)(c) against additions not objected / contested before DRP, assessee would be put to a very precarious position, because in terms of section 144C(13), final assessment order has to be passed without affording any further opportunity of being heard to assessee. Therefore, on a harmonious construction of relevant statutory provisions, we are of the view, if the Assessing Officer did not initiate proceeding for imposition of penalty under section 271(1)(c) in respect of a particular addition in the draft assessment order, he cannot do so in the final assessment order.
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