DCIT Vs Atul Limited (ITAT Ahmedabad)
Assessee company entered into international & specified domestic transactions. TPO issued notices u/s 92CA(2)/92D(3) asking for TP documents. Assessee submitted TP study & supporting documents. TPO accepted most transactions but objected to benchmarking method (CUP) in two transactions held benchmarking was improper. Penalty u/s 271G @2% of total transaction value = ₹8.80 Cr was levied. CIT(A) deleted penalty. Revenue appealed.
ITAT’s Key Findings:
Penalty u/s 271G applies ONLY when information/document required u/s 92D(3) is NOT furnished.
- Here, TPO never specified which document was not furnished.
- In fact, TPO acknowledged assessee submitted TP study & details.
Penalty cannot be levied for “incorrect / unacceptable benchmarking”.
- 271G is NOT meant for rejecting method or benchmarking approach.
- It punishes non-furnishing of documents, not disagreement on method.
TPO accepted TP study for all other transactions.
- If at all, penalty could only be examined for the two specific transactions.
- But even for those two, assessee furnished invoices, comparables, workings.
Notice u/s 92D(3) itself was defective.
- Gave <30 days time (statute requires minimum 30 days).
Relied on judicial precedents:
- Leroy Somer Controls (Delhi HC) – Revenue must first identify specific documents not furnished before levying penalty.
- Edelweiss Financial Services Ltd. (ITAT Mumbai)
- JSW Energy Ltd. (ITAT Mumbai) – similar view.
Conclusion
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