Case Law Details
DCIT Vs Interjwel private limited (ITAT Mumbai)
The assessee submitted that in a diamond business world over there are estimated 8000 – 10,000 different qualities of diamonds price of which depends on various factors and note to diamonds can have the same price as valuation also depends upon the perception of individual businessman. Assessee therefore stated that normally there are no comparable pieces and prices of diamonds available.
Based on the above submission the learned assessing officer held that it is a gross violation of provisions of Section 271G of the act and accordingly a penalty of ₹ 69,584,950/– being 2% of the international transaction was levied. The main reason for the levy of penalty was that the transfer-pricing officer has called for specific details pertaining to segmental profitability between associated enterprise and no associated enterprises within the provisions of Section 92D (3) of the act. The details were called for during the transfer, pricing proceedings and assessee was given opportunity to submit the same but it were not furnished. These details are essential for benchmarking the transaction of assessee with its associated enterprises. As assessee could also not provide any alternative method of benchmarking the transaction based on material available on record were accepted. In the absence of material, the TPO was forced to accept the transaction of the assessee to be at arm’s-length. Thus penalty was levied by order dated 20/4/2017 passed u/s 271G of the act.
Assessee, aggrieved with that order preferred an appeal before the learned CIT – A. The learned CIT – A as per order dated 22/3/2019 deleted the penalty holding that in the similar circumstances and facts in the case of the appellant itself the coordinate bench in ITA number 5628/M/2016 for assessment year 2011 – 12 per order dated 1/11/2018 deleted the penalty. Therefore, the learned CIT – A merely followed the order of the coordinate bench in assessee’s own case for earlier year where on identical facts and circumstances the penalty was deleted.
ITAT find that the learned CIT – A has deleted the penalty by following the order of the coordinate bench in assessee’s own case for assessment year 2011 – 12 in ITA number 5628/M/2016 wherein on identical facts and circumstances are identical penalty levied u/s 271G was deleted. When the learned CIT – A as followed the order of the coordinate bench in assessee’s own case for earlier years on identical facts and circumstances, no fault can be found with such an order. Assessee has also stated that there are plethora of judicial precedents available (16 subject precedents are cited) on identical facts and circumstances where such penalty is been cancelled looking to the peculiar scenario in the diamond trade. Therefore respectfully following the decision of the coordinate bench in assessee’s own case as well as other decisions of the coordinate benches involving the similar set of facts and circumstances, we confirm the order of the learned CIT – A in deleting the penalty u/s 271G of the act of ₹ 69,584,950/–.
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