INCOME TAX ACT, 1961

Section 2271AA

Penalty under section 271AA - Leviability - Non-maintenance of documents as per section 92D - No reasonable cause

AO levied penalty under section 271AA to the tune 2% of the value of international transactions on the ground that assessee had not maintained documents as per the requirement of the section 92D where in every person has to maintain its own documents. The contention of the assessee was that there was no international transaction, therefore, there was no need to maintain the TP documents. Held: Non-maintaining of documents on account that there is no international transaction and merely relying on the supporting documents of Associated enterprise, cannot be termed as reasonable cause for not maintaining the documents on its own under section 273B in respect to the international transactions as well as the specified domestic transactions as well. In fact, it is mandatory requirement to obtain an independent accountant's report/documents in respect of specified domestic transactions with Associated Enterprises as per section 92D and this mandate cannot be diluted by the so-called reasonable cause given under section 273B. Hence, AO was right in imposing the penalty under section 271AA.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2008-09 & 2006-07

SUBSCRIBE FOR FULL CONTENT