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| The Tax Publishers2020 TaxPub(DT) 3793 (Del-Trib) : (2020) 205 TTJ 0107 INCOME TAX ACT, 1961
Section 271(1)(c)
There was nothing on record to disprove the good faith and the due diligence discharged by the assessee in determining the ALP of transactions in the TP report submitted. Hence, Expln. 7 to section 271(1)(c) was not attracted and it was not a fit case for levying penalty.
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Penalty under section 271(1)(c) - Explanation 7 - Leviability - Due diligence discharged while determination of ALP
Assessee entered into international transaction with its associate enterprise. AO levied penalty by invoking Explanation 7 to section 271(1)(c) on the ground that assessee failed to carry out international transaction with proper due diligence. Held: As regards TP adjustment made in the present case a dispute arose due to exclusion of some comparables and use of current year data by the Revenue, instead of multiple year data by the assessee and also taking OP/Sales, instead of NP/TC as PLI. This amounts to determination of ALP from a different angle. It cannot be said that there was any surreptitious mechanism embarked upon by the assessee nor it can be said that the assessee failed to carry out the transactions with due diligence. Thus, penalty imposed by invoking Explanation 7 to section 271(1)(c) requires to be deleted.
Followed:Verizon Communication India (P) Ltd. v. Dy. CIT (2013) 157 TTJ (Del-Trib) 882 : 2013 TaxPub(DT) 769 (Del-Trib).
REFERRED :
FAVOUR : In favour of assessee.
A.Y. : 2006-07
IN THE ITAT, DELHI 'G' BENCH
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