DCIT., CENTRAL CIRCLE-3(2), HYDERABAD V. JODAS EXPOIM PRIVATE LIMITED, HYDERABAD

ITA 702/HYD/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax, Central Circle 3(2), Hyderabad as the appellant and M/s. Jodas Expoim (P) Ltd as the respondent. The appeal by the Revenue was against the order of the CIT(A) which deleted the penalty imposed on the assessee under section 271AA for failure to file Form 3CEB and report international transactions for the assessment year 2016-17. The Tribunal examined whether the CIT(A) erred in deleting the penalty despite the assessee's failure to comply with the statutory requirements under sections 92E and 139(1) of the I.T. Act. The Tribunal concluded that the assessee had indeed complied with the documentation requirements as the TPO had verified the transfer pricing study documents submitted by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315610 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI BHARADWAJ
• Keywords: Transfer pricing; International transaction
• Section: 133A; 115JB; 92E; 92D; 92A

Judgement Text

" ITA No 702 of 2024 JODAS EXPOIM P LTD Page 1 of 6 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.702/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2016-17) Dy. C.I.T Central Circle 3(2) Hyderabad Vs. M/s. Jodas Expoim (P) Ltd Siddipet, Telangana PAN:AABCJ8653L (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri Ravi Bharadwaj, CA राज̾ व Ȫारा/Revenue by:: Shri Srinath Sadanala, DR सुनवाई की तारीख/Date of hearing: 05/03/2025 घोषणा की तारीख/Pronouncement: 16/05/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President This appeal filed by the Revenue is directed against the order dated 7/5/2024 arising from the penalty order passed u/s 271AA of the I.T. Act, 1961 for the A.Y 2016-17. 2. The Revenue has raised the following grounds of appeal: “1) Whether on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty levied u/s 271AA of the Act even though the assessee failed to file Form 3CEB as mandated u/s 92E of the Act within the time prescribed u/s 139(1) of the Act? 2) Whether on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty levied u/s 271AA of the Act even though the assessee failed to report ITA No 702 of 2024 JODAS EXPOIM P LTD Page 2 of 6 internation transactions for the A.Y; 2016-17 which assessee failed to report international transactions for the A.Y. 2016- 17 which came to light during the course of survey operations conducted u/s 233A of the Act? 3) Whether on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the penalty levied u/s 271AA of the Act for the reason that the assessee maintained proper TP documentation whereas the penalty is levied on account of the assessee’s failure to report international transactions by filing Form 3CEB within the prescribed time? 4) Any other ground that may be urged at the time of hearing.” 3. The assessee company filed its return of income for the year under consideration on 16/10/2017 declaring total income of Rs.1,01,04,565/- and income u/s 115JB of the Act at Rs.1,31,81,066/-. There was a survey u/s 133A of the Act in the case of the assessee carried out on 28/02/2016. During the course of survey proceedings, it was found that major part of the sales of assessee company are made to AEs. The case was selected for scrutiny and also referred the matter to the TPO to determine the ALP on the international transactions. The TPO while passing the order u/s 92CA(3) of the Act proposed an adjustment of Rs.4,60,19,498/-. Thereafter, the Assessing Officer initiated the penalty proceedings u/s 271AA of the Act for the failure of the assessee to maintain, keep and furnishing of the information and documents as required u/s 92D of the Act. The Assessing Officer finally levied the penalty u/s 271AA vide order dated 22/06/2021 @ 2% of the value of the international transaction. The assessee challenged the action of the Assessing Officer before the learned CIT (A) and contended that there was no failure on the part of the assessee to maintain, keep and furnishing the information as required u/s 92A of the Act r.w. Rule 10D of the I.T. Rules, 1962. The learned CIT (A) deleted the ITA No 702 of 2024 JODAS EXPOIM P LTD Page 3 of 6 penalty levied u/s 271AA of the Act while passing the impugned order. 4. Before the Tribunal, the learned DR has submitted that the survey was conducted in the case of the assessee on 28/02/2016 whereas the assessee has filed the return of income on 16/10/2017 but neither the assessee has filed the report in Form No.10CEB nor the assessee was maintaining the requisite documents record and information. He has referred to the order of the TPO and submitted that in response to the notice issued u/s 92CA(2), the assessee furnished only a copy of the audit financial computation of the total income, tax audit report and return of income, but has not furnished the transfer pricing study as well as the report in Form No.3CEB. Thus, the learned DR has submitted that despite this fact detected during the survey that the assessee has entered into various international transactions which were not reported in the books of account of the assessee, then there is a clear failure on the part of the assessee to maintain the record, documents and information as required u/s 92D of the I.T. Act, 1961. He has supported the order of the Assessing Officer passed u/s 271AA of the Act. The learned DR has further submitted that the learned CIT (A) has deleted the penalty on the ground that the assessee has not failed in maintaining information as required in section 92D of the Act and the same was also produced before the TPO. This finding of the learned CIT (A) is contrary to the facts recorded by the TPO as well as the facts emerging from the record that the international transactions were detected only during the survey carried out on 28/02/2016. ITA No 702 of 2024 JODAS EXPOIM P LTD Page 4 of 6 5. On the other hand, the learned AR of the assessee has submitted that this is not a case of non-compliance on the part of the assessee to maintain the record and information as required u/s 92D of the Act but the assessee has furnished the TP study document before the TPO as reflected from the impugned order of the TPO. He has then referred to various orders of the dropping similar penalty proceedings u/s 271AA of the Act for the A.Ys 2013-14 to 2017-18 and submitted that the Assessing Officer has accepted that there was no failure on the part of the assessee. He has also referred to the penalty order passed by the Assessing Officer u/s 271BA of the Act for failure on the part of the assessee to file the report in form 3CEB. Thus, the learned AR has submitted that the learned CIT (A) has given the findings based on the fact as recorded by the TPO. 6. We have considered the rival contentions as well as the relevant material available on record. The penalty u/s 271AA of the Act is leviable in case of failure on the part of the assessee to maintain, keep and furnishing of the information and documents as required u/s 92D of the Act r.w.s. Rule 10D of the I.T. Rules, 1962. All these records, information and documents are required to be maintained by the assessee in respect of the international transaction entered into during the previous year relevant to the A.Y under consideration. Though the assessee has not filed the report in Form 10CEB, however, the TPO has recorded this fact that the assessee submitted the transfer pricing study documents on 04/09/2019 which was verified and analyzed by the TPO. The ITA No 702 of 2024 JODAS EXPOIM P LTD Page 5 of 6 relevant facts are recorded by the TPO in para 4.1 and 6.1 as under: “4.1 In response to the notices issued u/s 92CA(2) calling for documentation maintained as prescribed u/s 92D(3), the tax payer filed a copy of the audited financials, computation of total income, tax audit report and income tax return for A.Y 2016-17. However, the assessee did not submit any Form No.3CEB to the Department and TP study reported conducted by it. As this office is not in receipt of the TP study document made by the taxpayer, the same was specifically sought for and Sri Sabyasachi Mohapatra, CFO appeared and submitted the same on 04/09/2019”. 5.1………….. to 6…………… 6.1 Understanding the TP Documentation: 1. On verification of the TP study document submitted by the assessee it is understood that the assessee adopted CPM and MAM for benchmarking its Arms’ Length. Further, the assessee taxpayer made comparisons of its Gross Profit with that of the industry and held that its GP at 75.81% which is higher than the comparables. 1. Also, it is seen that the outstanding receivables from its AE M/s. Temront Enterprise Ltd stood at Rs.33.22 crores. For this, the taxpayer stated that no separate benchmarking is required for this as the principal transaction itself was benchmarked. “ 7. Thus, it is evident from the order of the TPO that the assessee submitted the transfer pricing document which were required to be maintained and furnished as and when called for by the tax authorities. The failure of the filing of the report in Form 3CEB attracts separate penalty u/s 271AB of the Act. Therefore, the non-filing of the report in Form 3CEB cannot lead to the conclusion that the assessee has not maintained the requisite documents prescribed u/s 92D r..w rule 10D of the IT Rules, 1962. By considering these facts, the learned CIT (A) has deleted the penalty as under: ITA No 702 of 2024 JODAS EXPOIM P LTD Page 6 of 6 8. Accordingly, in the facts and circumstances as discussed above, we do not find any error or illegality in the impugned order of the learned CIT (A) in deleting the penalty levied u/s 271AA of the I.T. Act, 1961. 9. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the Open Court on 16th May, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER (VIJAY PAL RAO) VICE-PRESIDENT Hyderabad, dated 16th May, 2025 Vinodan/sps Copy to: S.No Addresses 1 Dy.CIT, Central Circle 3(2) 7th Floor, Aayakar Bhavan, Basheerbagh Hyderabad 500004 Telangana 2 JODAS EXPOIM (P)LTD, 3rd Floor, NSL Centrum, KPHB Colony, Phase-3, Tirumalgiri, Kukatapally SO Hyderabad 500072 3 Pr. CIT -Central, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "