ITO Vs Aura Spinwell Limited (ITAT Mumbai)
Penalty u/s 271G untenable as no transfer pricing adjustment possible due to omission of section 92BA(i): ITAT Mumbai
ITAT Mumbai held that no transfer pricing adjustment could have been made in the hands of assessee on account of ALP of specified domestic transactions as section 92BA(i) of Income Tax Act was omitted. Thus, since provisions of section 92D are not applicable, penalty u/s. 271G of the Income Tax Act untenable.
Facts-
Assessee is a company engaged in the business of trading in grey fabric, recycled polyester yarn and other allied products. The case was selected for limited scrutiny, where one of the ground was whether the value of specific domestic transactions are at arms’ length or not. The reference was made to TPO, to examine the Arm’s Length Price of domestic transactions amounting to ₹216 crores. TPO passed an order u/s. 92CA(3) of the Act making an adjustment of ₹4,26,12,834/-. Accordingly, the assessment order was passed determining the total income of the assessee at ₹4,26,97,870/-.
During the course of TP assessment, TPO asked the assessee to furnish the transfer study report and annual accounts of the assessee. Further notice u/s. 92D(3) were issued. The assessee did not comply with the same. Accordingly, notice u/s. 271G of the Act was issued which was replied by the assessee. After considering the reply of the assessee, TPO passed the penalty order u/s. 271G of the Act levying penalty of ₹4,32,65,819/- being 2% of the value of transaction of SDT.
