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2020 (3) TMI 603 - AT - Income TaxPenalty u/s 271G - non–maintenance of documents which the assessee is required to maintain under the statutory provisions, the Transfer Pricing Officer found it difficult to determine, the arm’s length price of the transactions with the AE - HELD THAT:- Assessee has maintained primary books of account / documents in respect of its business activity. The fact that the documents relating to transaction with the AE have also been maintained by the assessee is evident from the transfer pricing study report, wherein, the transaction with the AE has been benchmarked under TNMM. This shows that the assessee has maintained documents / books of account as required under the statute. It is also evident, in the course of proceedings before the Transfer Pricing Officer, the assessee has made substantial compliance by furnishing transfer pricing study report as well as many other documents. What the assessee has failed to furnish is, the segmental profitability of the AE and non–AE transactions. The inability to furnish the aforesaid details was also well explained by the assessee before the Transfer Pricing Officer and learned Commissioner (Appeals) by demonstrating the practical difficulty in maintaining those details considering the nature of business carried on. Though, the Transfer Pricing Officer has alleged that non–furnishing of segmental profitability makes it difficult for him to correctly ascertain the arm’s length price, however, ultimately the Transfer Pricing Officer has accepted the transaction with the AE to be at arm's length. If the Transfer Pricing Officer was not satisfied with the benchmarking of the assessee under TNMM, nothing prevented him from rejecting assessee’ benchmarking and determining the arm’s length price of the transaction with the AE independently by applying any one of the prescribed methods. The blame for failure on the part of the Transfer Pricing Officer to determine the arm’s length price cannot be fastened with the assessee. Hon’ble Gujarat High Court in case of D. Navinchandra Exports Pvt. Ltd. [2018 (7) TMI 2099 - GUJARAT HIGH COURT] has also uphold the deletion of penalty imposed under section 271G - Decided in favour of assessee.
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