Case Number: ITA 1570/DEL/2020
Appellant: ATEPL RAHEE JOINT VENTURE, New Delhi
Respondent: ACIT Circle-62(1), New Delhi
Assessment Year: 2015-16
Case Filed On: 2020-09-09
Order Type: Final Tribunal Order
Date of Order: 2022-12-06
Date of Pronouncement: 2022-12-06
The case revolves around the penalty imposed under Section 271AA of the Income Tax Act for the assessment year 2015-16. The appellant, M/S ATEPL RAHEE JOINT VENTURE, New Delhi, appealed against the order passed by the Ld. CIT (Appeals)-20, New Delhi, dated 13.02.2020.
Brief facts of the case are that the assessee filed a return declaring an income of Rs. 1,15,62,960/- electronically on 27.11.2015. The case was selected for Limited scrutiny through CASS. During the assessment proceedings, it was found that the assessee had entered into Specified Domestic Transactions to the tune of Rs.72,07,69,703/- with its associate enterprises M/s Arvind Techno Engineers Pvt. Ltd and M/s Rahee Infrastructure Limited. Therefore, the case was referred by the AO to Additional Commissioner of Income Tax (TPO) for the computation of Arms Length Price (ALP).
In his order dated 26.03.2018, the TPO noted discrepancies in the benchmarking method reported in Form no. 3CEB and the TP report. The method used for benchmarking transactions in Form no. 3CEB was stated as ‘Any other method as per rule 10AB,’ whereas the method used in the TP report was TNMM (Transactional Net Margin Method). The AO initiated penalty proceedings u/s 271AA of the Act and levied a penalty of Rs.1,44,15,934/-.
The assessee appealed against the penalty order before the Ld. CIT(A). The Ld. CIT(A) upheld the penalty, stating that the assessee could not provide a cogent reason for the discrepancy. The argument that it was a clerical mistake was not accepted, given that the accounts and TP report were prepared by qualified Chartered Accountants.
The ITAT, comprising Shri Shamim Yahya, Accountant Member, and Shri Anubhav Sharma, Judicial Member, heard the case on 22.11.2022 and pronounced the order on 06.12.2022.
The Tribunal observed that the TPO had not proposed any transfer pricing adjustment. The erroneous mention of the method in the TP report did not result in any transfer pricing adjustment and was revenue-neutral. The plea of inadvertent mistake was considered valid, referencing the Hon’ble Supreme Court decision in Price Waterhouse Coopers Pvt. Ltd vs C.I.T 348 ITR 346, which explained that no penalty should be imposed for human errors.
Furthermore, the Tribunal noted the non-specification of the charge in the penalty notice, which is essential for any adverse inference against the assessee. Given these factors, the penalty levied under Section 271AA was not sustained.
In conclusion, the Tribunal deleted the penalty of Rs.1,44,15,934/- imposed under Section 271AA, accepting the grounds of inadvertent mistake and no revenue loss. The appeal by ATEPL RAHEE JOINT VENTURE was allowed.
The order was pronounced in the open court on 06.12.2022.
Order signed by:
[ANUBHAV SHARMA] – JUDICIAL MEMBER
[SHAMIM YAHYA] – ACCOUNTANT MEMBER
Date: 06.12.2022
Location: Delhi
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