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| The Tax Publishers2020 TaxPub(DT) 2276 (Mum-Trib) INCOME TAX ACT, 1961
Section 271AA Section 271BA
Once assessee and the alleged AE could not be treated as associated enterprises it could not be said that assessee had entered into any international transactions and therefore, no penalty could be levied under section 271AA for non-maintenance of requisite records under section 92D in respect of international transactions and penalty under section 271BA for non-filing of report as required under section 92D.
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Penalty under section 271AA/271BA - Non-filing of records under section 92D and on-filing or report under section 92E - Assessee and alleged AE not found to be associated enterprises -
AO levied penalty under section 271AA for non-maintenance of requisite records under section 92D in respect of international transactions and penalty under section 271BA for non-filing of report as required under section 92D in respect of international transactions with KE-S alleged to be an associated enterprises of assessee.Held: Section 92A(1) cannot be applied on standalone basis, and has to be essentially considered in conjunction of section 92A(2). AO's case hinged only on application of section 92A(1) and it did not meet any of the specific conditions set out in section 92A(2) and, therefore, relationship between assessee company and its KE-S could not be said to be that of the associated enterprises. Once assessee and the alleged AE could not be treated as associated enterprises it could not be said that assessee had entered into any international transactions. As a corollary to this very foundation of impugned penalties ceased to hold good in law and impugned penalties were, therefore, deleted.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2006-07
IN THE ITAT, MUMBAI BENCH
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