INCOME TAX OFFICER , JALNA V. VIKRAM TEA PROCESSOR PRIVATE LIMITED , JALNA

ITA 685/PUN/2025

AI Insights

The case involves two appeals by the Income Tax Officer, Ward-1, Jalna against Vikram Tea Processing Pvt. Ltd. concerning the assessment year 2013-14. The primary issue was the addition of Rs.4,73,46,877 to the assessee's income based on a Transfer Pricing Officer's (TPO) report, which applied the internal Comparable Uncontrolled Price (CUP) method instead of the Cost Plus Method (CPM) adopted by the assessee. The TPO's adjustment was contested on the grounds that the relevant legal provision (section 92BA(i)) had been omitted and was not applicable retrospectively. The Ld. CIT(A) agreed with the assessee, leading to the Revenue's appeal to the Tribunal, which upheld the CIT(A)'s decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773223 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 12-03-2025
• Other Referred Cases: PCIT vs. Texport Overseas (P.) Ltd., Imperial Mark Trade (I) Pvt. Ltd. vs. DCIT, Mahindra Two Wheelers Ltd. vs. DCIT, Ammann India (P.) Ltd. vs. ACIT, Raipur Steel Casting India (P) Ltd. vs. PCIT-5, Swastik Coal Corporation Pvt. Ltd. vs. PCIT-2
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BASAVARAJ HIREMETH; ADDL
• Assessee Lawyers: JP BAIRAGRA; DETERMINING ARMS LENGTH PRICE OF SPECIFIED DOMESTIC
• Keywords: Transfer pricing; Question of law; Fair market value; Revision of order
• Section: 142(1); 263; 14A; 10B; 92E

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “C”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA No.685/PUN/2025 Assessment year : 2013-14 ITO, Ward-1, Jalna Vs. Vikram Tea Processing Pvt. Ltd. Swamy, Ajintha Nagar, Jalna – 431203 PAN: AABCT2821L (Appellant) (Respondent) ITA No.2285/PUN/2024 Assessment year : 2013-14 ITO, Ward-1, Jalna Vs. Vikram Tea Processing Pvt. Ltd. Swamy, Ajintha Nagar, Jalna – 431203 PAN: AABCT2821L (Appellant) (Respondent) Assessee by : Shri J P Bairagra Department by : Shri Basavaraj Hiremeth, Addl CIT Date of hearing : 08-07-2025 Date of pronouncement : 26-09-2025 O R D E R PER R.K. PANDA, VP: The above 2 appeals filed by the Revenue are directed against the separate orders dated 31.08.2024 of the Ld. CIT(A), Pune - 13 relating to assessment year 2013-14. For the sake of convenience, both the appeals were heard together and are being disposed of by this common order. ITA No.685/PUN/2025 2. Facts of the case, in brief, are that the assessee is a private limited company engaged in the business of Tea leaf, Tea powder, Sugar and generation of power Printed from counselvise.com 2 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 through windmills. It filed its return of income on 28.09.2013 declaring total income of Rs.16,04,16,830/-. The case was selected for scrutiny and statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were issued and served on the assessee in response to which the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details. Since the assessee has entered into certain domestic transactions with its ‘Associate Enterprises’ (AEs) within the meaning of section 92A(2)(a) & (b) of the Act, the Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) to determine the Arm’s Length Price (ALP) of the transactions entered with AEs. From the various details furnished by the assessee the TPO noted that the assessee has entered into following specified domestic transactions during the year: Sr. No. Name of AEs Description of Specific domestic transactions Amount (In INR) Method 1 ASSAM TEA COMPANY PURCHASE OF TEA LEAF AND POWDER 5844626 Kgs. 920,076,186 Cost plus method 2 ASSAM TEA COMPANY RENT PAID 96,000 CUP 3 BHAVESH R PATEL PURCHASE OF TEA LEAF AND POWDER 1108536 Kgs. 171,111,019 Cost plus method 4 BHAVESH R PATEL MACHINERY HIRE 252000, RENT 345000 597,000 CUP TOTAL 1,091,880,205 3. He noted that the assessee has adopted CPM method as the most appropriate method. However, in absence of the mark-up of non-AEs, the TPO adopted internal Comparable Uncontrolled Price (CUP) method as the most appropriate Printed from counselvise.com 3 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 method and proposed an upward adjustment of Rs.4,73,46,877/-. The Assessing Officer accordingly made addition of the same to the total income of the assessee which is the subject matter of appeal. 4. Relying on various decisions it was argued before the Ld. CIT(A) that since clause (i) of section 92BA has been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 from Statute, therefore, the same could not be made applicable on pending proceedings of the assessee company. Therefore, the resultant effect is that it had never been passed and therefore, the decision taken by the Assessing Officer under effect of section 92BA and reference made to the TPO u/s 92CA of the Act on 09.02.2016 was invalid and bad in law. 5. Based on the arguments advanced by the assessee, the Ld. CIT(A) deleted the addition by observing as under: Printed from counselvise.com 4 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 Printed from counselvise.com 5 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 Printed from counselvise.com 6 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 Printed from counselvise.com 7 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 6. Aggrieved with such order of the Ld. CIT(A) the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether, on the facts and circumstances of the case, the Ld. CIT(A) is justified in holding that the omission of Section 92BA(i) is applicable retrospectively from its inception, without considering that the Finance Act 2017 specifically provides for the omission to apply prospectively from AY 2017-18 onwards. 2. Whether, on the facts and circumstances of the case, the Ld. CIT(A) is justified in overlooking the saving clause in Section 40A(2)(a), which preserves the applicability of Section 92BA(i) for specified domestic transactions up to AY2013-14. 3. Whether, on the facts and circumstances of the case, the Ld. CIT(A) is correct in relying on judicial precedents that did not take into account the existence of the saving clause or the legislative intent behind it, thereby arriving at the incorrect conclusion that Section 92BA(i) is inapplicable for AY 2013-14. 4. Whether, on the facts and circumstances of the case, the Ld. CIT(A) erred in concluding that the provisions of Section 92BA(i) were not applicable for AY 2013-14, without properly appreciating that the provision was valid and enforceable during that assessment year. 5. The order of the Assessing officer may be restored and that of the CIT(A), NFAC, Delhi be vacated. 6. The appellant craves leave to add, amend, or alter all or any of the grounds of appeal. 7. The Ld. DR heavily relied on the order of the Assessing Officer. 8. The Ld. Counsel for the assessee on the other hand while supporting the order of the Ld. CIT(A) submitted that the Ld. CIT(A) deleted the addition based on omission of clause (i) of section 92BA w.e.f. 01.04.2017 by the Finance Act, 2017. He submitted that as per clause (i) of section 92BA being meaning of Specific Domestic Transaction, \"any expenditure in respect of which payment has Printed from counselvise.com 8 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A.\" He submitted that during the course of assessment proceedings, in response to the notice issued under section 142(1) read with section 129 of the Income-tax Act, 1961, dated 01.11.2016, the assessee company vide letter dated 10.11.2016 had submitted the Tax Audit Report of the assessee company along with the Tax Audit Report, Audited Balance Sheet and Profit & Loss Account of its Associate Enterprises (AEs) namely M/s Assam Tea Company and M/s Bhavesh R Patel (Proprietor of Patel Tea Company). He submitted that the Auditors in the Tax Audit Report have certified that the payments made to the related parties for the expenditure which are debited to the Profit & Loss Account are at par or less than the fair market value of the transaction. He submitted that the assessee and both the AEs are paying taxes in the higher bracket and therefore, there is no arbitrage by entering transactions with the AEs. He accordingly submitted that since the Ld. CIT(A), while deleting the addition, has relied on various decisions, therefore, the same being in order should be upheld and the grounds raised by the Revenue should be dismissed. 9. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.4,73,46,877/- on the basis of the TPO’s report passed u/s 92CA of the Act. We Printed from counselvise.com 9 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 find the TPO in the instant case, rejecting the CPM method adopted by the assessee as the most appropriate method, applied internal CUP method as the most appropriate method and proposed an upward adjustment of Rs.4,73,46,877/-. We find the Ld. CIT(A) deleted the addition made by the Assessing Officer on the ground that clause (i) of section 92BA of the Act has been omitted by the Finance Act, 2017 w.e.f. 01.04.2017. The reasons given by the Ld. CIT(A) while deleting the addition have already been reproduced in the preceding paragraphs. We do not find any infirmity in the order of the Ld. CIT(A) on this issue. 10. We find the Hon’ble Karnataka High Court in the case of PCIT vs. Texport Overseas (P.) Ltd. (2020) 271 Taxman 170 (Karnataka) while deciding an identical issue has upheld the order of the Tribunal and dismissed the appeal filed by the Revenue by observing as under: “3. It is the contention of learned Advocates appearing for revenue that tribunal was not justified in arriving at conclusion that Clause (i) of section 92BA of the Act, which had been omitted w.e.f. 01.04.2017 would be applicable retrospectively by presuming the retrospectivity, particularly when the statute itself explicitly stated to be prospective in nature. As such they have sought for formulating substantial questions of law and has sought for answering the same in favour of revenue and against the assessee. 4. Sri. EL Sanmathi, learned counsel appearing for revenue/appellant in ITA No.170/2019 would contend that even the disallowance made by the AO under section 14A r/w section 8(2)(iii) of Income Tax Rules for a sum Rs.14,88,870/- by holding that there was no exempted income and as such disallowance could not have been made even though said provision was rightly invoked by AO, and as such setting aside the disallowance erroneous. Hence, he prays for substantial question of law as formulated in the appeal memorandum (ITA 170/2019) be formulated, adjudicated and answered in favour of assessee. 5. Having heard learned Advocates appearing for parties and on perusal of records in general and order passed by tribunal in particular it is clearly Printed from counselvise.com 10 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 noticeable that Clause (i) of section 92BA of the Act came to be omitted w.e.f. 01.04.2017 by Finance Act, 2017. As to whether omission would save the acts is an issue which is no more res intigra in the light of authoritative pronouncement of Hon'ble Apex Court in the matter of Kolhapur Canesugar Works Ltd. v. Union of India AIR 2000 SC 811 whereunder Apex Court has examined the effect of repeal of statute vis-a-vis deletion/addition of a provision in an enactment and its effect thereof. The import of section 6 of General Clauses Act has also been examined and it came to be held. 37. The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute-book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not be granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable. In a case where a particular provision in statute is omitted and in its place another provision dealing with the same contingency is introduced without a saving clause in favour of pending proceedings then it can be reasonably inferred that the intention of the legislature is that the pending proceedings shall not continue but fresh proceedings for the same purpose may be initiated under the new provision\". 6. In fact, Co-ordinate Bench under similar circumstances had examined the effect of omission of sub-section (9) to Section 10B of the Act w.e.f. 01.04.2004 by Finance Act, 2003 and held that there was no saving clause or provision introduced by way of amendment by omitting sub-section (9) of section 10B. In the matter of General Finance Co v. ACIT, which judgment has also been taken note of by the tribunal while repelling the contention raised by revenue with regard to retrospectivity of section 92BA(i) of the Act. Thus, when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of section 92BI and reference made to the order of Transfer Pricing Officer-TPO under section 92CA could be invalid and bad in law. 7. It is for this precise reason, tribunal has rightly held that order passed by the TPO and DRP is unsustainable in the eyes of law. The said finding is based on the authoritative principles enunciated by the Hon'ble Supreme Court in Kolhapur Canesugar Works Ltd. referred to herein supra which has been followed by Co- ordinate Bench of this Court in the matter of Ms. GE Thermometrias India Private Ltd., stated supra. As such we are of the considered view that first substantial question of law raised in the appeal by the revenue in respective appeal Printed from counselvise.com 11 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 memorandum could not arise for consideration particularly when the said issue being no more rex integra”. 11. We find the Mumbai Bench of the Tribunal in the case of Imperial Mark Trade (I) Pvt. Ltd. vs. DCIT vide IT(TP)A No.1453/Mum/2017, order dated 31.08.2023 following the decision of the Mumbai Bench of the Tribunal in the case of Mahindra Two Wheelers Ltd. vs. DCIT vide ITA No.519/Mum./2018 order dated 28.04.2022 for the assessment year 2013-14 has observed as under: “17. We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case there is an adjustment made to the income of the assessee by determining arm's length price of specified domestic provisions by invoking the provisions of Section 92BA (1) of the act. The impugned assessment year before us is assessment year 2013-14. The above provision i.e. 92BA (i) of the act was inserted by The Finance Act, 2012 with effect from 1/4/2013 and is omitted by The Finance Act, 2017 with effect from 1/4/2017. The issue whether the adjustment can be made to the total income of the assessee by invoking the provisions of Chapter X of The Income Tax Act to the transactions covered by provisions of Section 92BA (1) for assessment year 2013-14 till it was omitted. This issue has been dealt with by the honourable Karnataka High Court in case of Texport overseas (supra) (Page No.195-197 of the PB) in favour of the assessee holding that as the provisions of Section 92BA (1) has been omitted from the Income Tax Act without any saving clause.\"] 12. We find The Ahmedabad Bench of the Tribunal in the case of Ammann India (P.) Ltd. vs. ACIT (2022) 192 ITD 680 (Ahmedabad-Trib.) while deciding an identical issue has held as under: “8. We have heard the respective parties, we have also perused the relevant materials available on record. 9. The short point involved on the maintainability of the order impugned on the issue as to whether under the present facts and circumstances of the case Section 92BA(i) would be applicable particularly when the said section was omitted from the statute by the Finance Act, 2017 w.e.f. 01.04.2017. In fact, it is to be considered as to whether Clause (i) of Section 92BA of the Act which has been omitted w.e.f. 01.04.2017 would be applicable retrospectively. It is a settled principle of law that when a particular provision is repealed from the statue the normal effect would be to obliterate it from the statute book as completely as if it Printed from counselvise.com 12 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 had never been passed and the statute must be considered as a law that never existed. Further that in a case where a particular provision in a statute is unconditionally omitted and in its place another provision dealing with the same contingency is introduced without a saving clause in favour of pending proceedings then it can be reasonably inferred that the intention of the legislature is that the pending proceeding shall not continue but fresh proceedings for the same purpose may be initiated under the new provision. If that be so, then since the Clause (i) of Section 92BA was omitted by Finance Act, 2017 w.e.f. 01.04.2017 from the statute the same cannot be made applicable in the pending proceeding. It is, therefore, to be considered non-est in the concerned statute as if it had never been passed. In that view of the matter once the said Clause being omitted w.e.f. 01.04.2017 the decision made by AO/TPO and DRP invoking such Section 91BA is without any basis, and/or jurisdiction, invalid and bad in law and, thus, the same is liable to be quashed. On this aspect, we have further carefully considered the judgment passed by the Hon’ble Karnataka High Court. While dealing with the issue the Hon’ble Court was pleased to observe as follows: “6. In fact, Coordinate Bench under similar circumstances had examined the effect of omission of sub-section (9) to Section 10B of the Act w.e.f. 01.04.2004 by Finance Act, 2003 and held that there was no saving clause or provision introduced by way of amendment by omitting sub-section (9) of Section 10B. In the matter of GENERAL FINANCE CO. vs. ACIT, which judgment has also been taken note of by the tribunal while repelling the contention raised by revenue with regard to retrospectivity of Section 92BA(i) of the Act. Thus, when clause (i) of Section 92BA having been omitted by the Finance Act, 2017, with effect from 01.07.2017 from the Statute the resultant effect is that it had never been passed and to be considered as a law never been existed. Hence, decision taken by the Assessing Officer under the effect of Section 92BI and reference made to the order of Transfer Pricing Officer TPO under Section 92CA could be invalid and bad in law.” 10. We have further considered the following various judgments passed by the Hon’ble Benches as relied upon by the Ld. AR: (i) ITAT Cuttack Bench in the matter of M/s. SKM- UMSL JV vs. ITO in ITA No. 229/CTK/2019 for A.Y. 2014-15 observed as follows: “…In view of the above, we are of the considered opinion that the transactions related to the assessee falls under the clause (i) at Section 92BA of the Act, which has already been removed by the Finance Act, 2017 w.e.f. 01.04.2017, therefore, the imposition of penalty u/s.271BA of the Act for failure to furnish the report in prescribed Form No.3CEB in terms of provisions of section 92E of the Act, does not survive at all. Accordingly, we allow the appeal of the assessee and cancel penalty levied u/s.271BA of the Act by the AO and upheld by the CIT(A). Printed from counselvise.com 13 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 8. In the result, appeal of the assessee is allowed.” (ii) ITAT Gauhati Bench in the matter of Shree Shai Smelters (I) Ltd. vs. ACIT in ITA No.228/Gau/2019 for A.Y. 2014-15 dealt with the identical issue. The relevant portion whereof is as follows: “5. We note that in respect of specified domestic transactions which is referred to clause (i) of section 92BA of the Act, which was omitted with effect from 01.04.2017 and the effect of such “omission” of clause (i) of section 92BA means that this provision never existed in the statute book, hence reference to TPO was bad in law. As the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench in the case of M/s Raipur Steel Casting India (P) Ltd. (supra), and there is no change in facts and law and the Revenue is unable to produce any material to convert the above said findings of the Coordinate Bench. Therefore, respectfully following the decision of Co-ordinate Bench on the technical issue referred above, we allow the appeal of the assessee. 6. In the result, the appeal of the assessee is allowed.” (iii) ITAT Kolkata Bench in the matter of M/s. Raipur Steel Casting India (P.) Ltd. vs. PCIT-5 in ITA No.895/Kol/2019 for A.Y. 2014-15 on the identical issue observed the following: “…We note that ld PCIT issued the above show cause notice u/s 263 in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act which was omitted with effect from 01.04.2017, and effect of such \"omission\" of clause (i) of section 92BA means that this provision never existed in the statute book, since clause (i) of section 92BA never existed in the statute book therefore, ld PCIT cannot exercise his jurisdiction under section 263 of the Act in respect of specified domestic transactions referred to in clause (i) of section 92BA of the Act. Therefore, the action of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances as narrated above. Thus, the usurpation of jurisdiction of exercising revisional jurisdiction by the Principal CIT is \"null\" in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 of the Act by the Principal CIT. Therefore, we quash the order of the Principal CIT dated 08.03.2019 being ab initio void.” (iv) ITAT Indore Bench in the matter of Swastik Coal Corporation Pvt. Ltd. vs. PCIT-2 in ITA No.486/Ind/2018 for A.Y. 2014-15 on the identical issue observed the following: Printed from counselvise.com 14 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 “8. We find that the above view of the Ld. Pr. CIT is not correct. In view of the aforesaid discussion, moreover, the coordinate bench has also examined the issue in the case of Texport Overseas Pvt. Ltd. in IT(TP&A No.l722/Bang/2017. Admittedly, in this case, the order has been revised purely on the basis that the assessing officer has not referred to determine the arm's length price to the TPO. Since the provision itself stood omitted at the time when the order was passed by the Ld. Pr. CIT, under these undisputed facts in the light of the Judgement of the Hon'ble Supreme Court rendered in the case of General Finance Company (supra) as well as the order of the coordinate bench rendered in the case of Texport Overseas Pvt. Ltd. (supra), the impugned order cannot be sustained, hence is hereby quashed. The order impugned is thus quashed and the grounds raised in the appeal are allowed. 9. In the result, the appeal filed by the assessee in ITA No. 486/Ind/2018 for the A.Y. 2014-15 is allowed.” Thus, relying upon the ratio laid down upon the Hon’ble Karnataka High Court and different benches of the Tribunal we find no justification in passing the impugned order by the TPO/AO in making upward adjustment invoking Section 92BA(i) of the Act in the present facts and circumstances of the case particularly when the said section stood omitted w.e.f. 01.04.2017 from the statute itself. Hence, we find the same is without any basis, void ab initio and without jurisdiction. In our considered opinion the impugned order is, thus, bad in law and hence the same is hereby quashed. Since the matter is allowed on the maintainability point itself further discussion of the ground on merit has become academic.” 13. Since the provisions of section 92BA(i) of the Act have been omitted by the Finance Act, 2017 w.e.f. 01.04.2017 without any saving clause, therefore, the resultant effect is that it had never been passed and to be considered as a law never been existed. In view of the above discussion and respectfully following the decisions cited (supra) and in view of the detailed reasoning given by Ld. CIT(A), we do not find any infirmity in his order deleting the addition. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. ITA No.2285/PUN/2024 14. Grounds raised by the Revenue are as under: Printed from counselvise.com 15 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in deleting the penalty levied u/s.271AA of the Act, without appreciating the fact that the assessee has failed to maintain the information comparable as per Cost Plus Method { Rule 10D (g)}, their analysis to evaluate comparability (Rule 10D(h)) and actual working {Rule 10D(j)} as mentioned in the 3CEB report, which were required to be maintained by the assessee as per section 92D(1) and 92D(2) read with rule 10D sub clauses (g), (h) & (j). 2. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the penalty merely on deletion of quantum addition wherein it has been held that the omission of Section 92BA(i) is applicable retrospectively from its inception, without considering that the Finance Act 2017 specifically provides for the omission to apply prospectively from AY 2017-18 onwards. 3. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is justified in deleting the penalty merely on deletion of quantum addition where it has been overlooked by the CIT(A) that the saving clause in Section 40A(2)(a) which preserves the applicability of Section 92BA(i) for specified domestic transactions up to AY 2013-14. 4. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in deleting the penalty merely on deletion of quantum addition, relying on judicial precedents that did not consider that the existence of the saving clause or the legislative intent behind it, thereby arriving at the incorrect conclusion that Section 92BA(i) is inapplicable for AY 2013-14. 5. The order of the Assessing officer may be restored and that of the CIT(A), NFAC, Delhi be vacated. 6. The appellant craves leave to add, amend, or alter all or any of the grounds of appeal. 15. After hearing both sides we find the Assessing Officer initiated penalty proceedings u/s 271AA of the Act on the ground that the assessee failed to maintain the information comparables as per Cost Plus Method {Rule 10D(g)}, their analysis to evaluate comparability {Rule 10D(h)} and actual working {Rule 10D(j)} as mentioned in the 3CEB report and which are required to be maintained as per section 92D(1) and 92D(2) read with Rule 10D sub clauses (g), (h) and (j). We find the assessee in response to the notice issued by the Assessing Officer / Printed from counselvise.com 16 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 TPO submitted a copy of the report to the TPO during the course of TP proceedings which is also mentioned by the TPO in his order u/s 92CA of the Act dated 28.10.2016. The TPO has only rejected the assessee’s TP report and selected the most appropriate method. Accordingly it was requested to drop the penalty proceedings initiated u/s 271AA. 16. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that the TPO has rejected the assessee’s TP report on the ground that what is the mark up for non-AEs from whom purchases are made was not maintained and mentioned in the TP report. The company has failed to keep and maintain the records of the actual working carried out for determining the arms length price, including details of the comparable data and the financial information used in applying the most appropriate method as mentioned in 3CEB report as per rule 10D(j) which are required to keep and maintain as per section 92D(1) and 92D(2) read with rule 10D. He, therefore, levied penalty of Rs.2,18,37,604/- being the sum equal to 2% of the value of each specified domestic transaction entered by the assessee to the extent of Rs.109,18,80,205/-. 17. We find the Ld. CIT(A) deleted the penalty levied by the Assessing Officer on the ground that the quantum addition made by the Assessing Officer has already been deleted by him. The order of the Ld. CIT(A) deleting the addition reads as under: Printed from counselvise.com 17 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 “2.3 I have carefully considered the facts of the case as per documents available on records. The only addition made by the AO/TPO on account of specified domestic adjustment of Rs.2,18,37,604/- has been deleted vide order DIN No.ITBA/APL/S/250/2024-25/1068224941(1) dated 31.08.2024. Accordingly, penalty u/s 271AA does not survive and hence, the appeal is allowed.” 18. We do not find any infirmity in the order of the Ld. CIT(A) deleting the penalty. In the preceding paragraphs, while deciding the appeal filed by the Revenue, we have upheld the order of the Ld. CIT(A) deleting the addition made by the Assessing Officer on account of ALP of the specified domestic transactions entered into by the assessee with its AEs. Since the quantum addition has already been deleted by the Ld. CIT(A) which has been upheld by us, therefore, we do not find any infirmity in the order of the Ld. CIT(A) deleting the penalty levied u/s 271AA of the Act for non-maintenance of certain records for working out the ALP of the specified domestic transactions. The grounds raised by the Revenue are accordingly dismissed. 19. In the result, both the appeals filed by the Revenue are dismissed. Order pronounced in the open Court on 26th September, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 26th September, 2025 GCVSR Printed from counselvise.com 18 ITA No.685/PUN/2025 ITA No.2285/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘C’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 22.09.2025 Sr. PS/PS 2 Draft placed before author 22.09.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "