9911796707
TMI Blog2022 (2) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... r under section 271G of The Income-Tax Act, 1961 (hereinafter referred to as 'Act') amounting to Rs.2,71,91,127/-. 02. The learned Assessing Officer has raised the following ground of appeal: - "1. Whether CIT(A) was correct in deleting the penalty levied u/s 271G by holding that the assessee had made substantial compliance, failing to note that under TNMM adopted by the assessee, the profit of the international transaction has to be furnished, whereas the assessee has only furnished the entity level margins which consists of overall profits on AE and significant non-AE transactions. 2. Whether the decision of the CIT(A) is not vitiated for the reason that the CIT(A) has not given any finding on how the assessee has complied with c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h challenges applicability of transfer pricing provisions and supports the order of the ld CIT (A). 04. The Brief facts of the case shows that the assessee is a partnership firm engaged in the business of cutting and polishing of diamonds. It has entered into international transaction of purchases of rough diamonds and export of rough and polished diamonds. The assessee filed return of income and filed form No. 3CEB. The reference was made to the Transfer Pricing Officer to determine the arms length price of those international transactions. The learned Transfer Pricing Officer asked assessee to furnish the details and documents in respect of Transactional Net Margin Method (TNMM) to workout profitability of associate enterprises and non-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted case law paper book stating that on identical facts and circumstances as of the case of the assessee, in so many cases, penalty is deleted. He otherwise stated that the penalty could not be levied for technical or venial default. He submitted that no adjustment has been made by the learned Transfer Pricing Officer to the international transaction entered into by the assessee, in view of this he submitted that penalty has been correctly deleted by the learned Commissioner of income-tax (Appeals). 08. The learned Authorised Representative further stated that if the order of the learned CIT (A) is upheld, the cross objection of the assessee become infructuous. 09. We have carefully considered the rival contentions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions are at arm' length or not. For this proposition, the assessee must have cost incurred and sales affected with Associated Enterprises separately along with other cost to determine the profit margin. The Transfer Pricing Officer stated that entity level margins is also included the losses in Associated Enterprises transaction which can be set off with profit of non Associated Enterprises transactions. This detail was not filed and therefore, penalty notice under section 271G was issued. The Transfer Pricing Officer was of the view that assessee has failed to maintain the information as per Rule 10D (1) (d), (g), (h) and (m) of Income Tax Rules. In reply to the show cause notice, assessee submitted that transfer pricing provisions do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of the details submitted by the assessee, which were lot wise details of exported cut and polished diamonds. The CIT (A) further held that the type of details asked by the Transfer Pricing Officer from assessee is also not available in case of comparables in public domain and therefore, he should have utilised the details and documents made available to arrive at a fair and reasonable opinion regarding ALP of the international transactions. It was further held that the profit and loss account and the annual accounts of the Associated Enterprises would have revealed the gross profit margin earned by them for comparisons. The learned CIT (A) further held that on the identical facts and circumstances for Assessment Year 2011-12, the bench ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
