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2016 (4) TMI 947 - ITAT JAIPUR

2016 (4) TMI 947 - ITAT JAIPUR - TMI - Penalty U/s 271AA - assessee failed to maintain the record as required U/s 92D of the I.T. Act read with rule 10D of the I.T. Rules - CIT(A) deleted the penalty - Held that:- The assessee disclosed international transaction made with AE. The Tribunal had decided that no upward adjustment is required in the ALP disclosed by the assessee. Whatever information asked to supply by the TPO had been furnished before him i.e. nine comparable companies data were fur .....

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T.R.MEENA, AM & SHRI LALIET KUMAR, JM For The Revenue : Shri B.K. Gupta (CIT) For The Assessee : Shri Rajendra Agarwal (C.A.) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the revenue against the order dated 07/11/2012 of the learned C.I.T.(A)-II Jaipur, for A.Y. 2006-07. The sole effective ground of appeal is as under:- On the facts and in the circumstances of the case, the ld CIT(A) has erred in deleting the penalty of ₹ 15,51,675/- imposed by U/s 271AA of the I.T. Act, 1961 .....

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e case was scrutinized U/s 143(3) of the Act. During the course of assessment proceedings, the ld Assessing Officer has held that the assessee had not used recent contemporary data for the purpose of benchmarking international transaction of the year in which the transaction took place, the comparables identified by the assessee were not considered valid. Accordingly, penalty U/s 271AA was initiated for default of the provisions/requirements prescribed by Rule 10D(1) of the Income Tax Rules, 196 .....

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itted by the assessee that it had filed appeal before the Hon ble ITAT and requested to keep the penalty proceeding in abeyance. After considering the assessee s reply, the ld Assessing Officer held that the facts of maintenance of records as per provisions of Rule 10D of the Rules will remain unchanged from the status as observed during assessment proceedings. The appellate authority may decide the relevancy of kind of information but observation that the records relating to international trans .....

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tudy report, relating to the record of the analysis performed to evaluate comparability, the search process had been undertaking for the preceding year i.e. F.Y. 2004-05. Eighty companies had been selected as comparables by the assessee for F.Y. 2002-03, 2003-04 and 2004-05, which had been analysed. No fresh search for comparables or analysis using contemporaneous data had been made by the assessee. Thus the assessee had not complied with the provisions of (f),(g) and (h) of Rule 10D of the Rule .....

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ternational transaction was actually entered into is a mandatory requirement of the law in the comparability analysis under the transfer pricing regulations. The assessee failed to maintain records relating to international transactions as required under Rule 10D of the Rules is liable to impose penalty U/s 271AA of the Act. Thus, he imposed 2% penalty under this Section on value of each international transaction determined by the TPO at ₹ 15,51,675/-. 3. Being aggrieved by the order of th .....

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ompanies has been narrated by the ld CIT(A) at page 10 of his order. The ld TPO did not find the necessary documents in support of the Arms Length Price (ALP) shown by the appellant. He directed the appellant to conduct search for comparables relevant to F.Y. 2005-06. The appellant did during TPO proceedings and provided nine company cases as comparables. However, these nine companies were the same companies which the appellant had used for FY 2004-05. For providing the information required by t .....

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posed penalty U/s 271AA on the ALP determined by the TPO and taken in the assessment order i.e. on ₹ 7,75,83,771/- but this ALP has not been upheld by the Hon ble ITAT vide order dated 31/10/2011 in the case of appellant on the ground that the difference in the ALP declared by the appellant and that determined by the department was less than 5% so no upward adjustmeant was warranted. The appellant had furnished required documents/information as per Rule 10D(4), as far as possible, be conte .....

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od of 30 days from the date of receipt of a notice issued in this regard. The ld TPO asked the appellant to undertake search for comparables relevant for F.Y. 2005-06, which the appellant did. The TPO used the comparables provided by the appellant. The argument of the appellant is also not disputed by the Assessing Officer that similar service rendered to the AE during the year under consideration, which has been rendered in F.Y. 2004-05. Accordingly she deleted the penalty. 4. Now the revenue i .....

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ransactions. He further relied on the decision in the case of DCIT Vs M/s Bebo Technologies Pvt. Ltd. ITA No. 532/Chd/2010 dated 26/08/2013 wherein it has been held by the Hon ble Tribunal that the international transaction disclosed by the assessee has not found to be ALP and no adjustment is required to be made as held by the Tribunal. Thus, there is no merit in the levy of penalty U/s 271AA of the Act. He further relied on the following case laws:- (i) ACIT Vs. M/s Smith and Nephew Healthcare .....

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