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2019 (1) TMI 1524 - AT - Income TaxPenalty u/s 271(1)(c) - TPA adjustment - assessee has used multiple year data in computing the ALP - Held that:- TPO/Assessing Officer has held that such action by the assessee is contrary to the provisions of the Act and would tantamount to furnishing of inaccurate particulars of income. In our understanding of the law, prior to 2007, there was a legal debate as to whether multiple year data can be used or current year data has to be used. In our considered opinion, this being a debatable issue at that point when the assessee filed its return of income, adoption of multiple year data for arriving at ALP is a bonafide exercise. Therefore, it cannot be said that the assessee has not done TP exercise in good faith and with due diligence. Another reason for making the adjustments was that the assessee had claimed capacity utilisation which was denied by the TPO/CIT(A)/ITAT. The difference in level of capacity utilisation is an accepted principle though denied in the case of the assessee but then the same cannot tantamount to filing TP report without good faith and due diligence. Considering the TP documentation of the assessee in totality, we are of the considered opinion that neither Explanation 1 as applied by the Assessing Officer nor Explanation 7 as applied by the CIT(A) to section 271(1)(c) of the Act apply. No merit in the penalty so levied and we, accordingly, direct the Assessing Officer to delete the same. - decided in favour of assessee
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