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In the instant case, all the facts have been submitted before the Revenue authorities while the assessee sued NP/TC, the Revenue used OP/Sales. This amounts to determination of ALP from a different angle, say at most from the angle of the Revenue. 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 exercise their transactions with all the due diligence. In the present case the assessee has prepared its TP report in good faith and with due care. There is 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 by the assessee. Hence, we hereby hold that Expln. 7 to s. 271(1)(c) is not attracted in the present case, and hence, it is not a fit case for levying the penalty under s. 271(1)(c). Accordingly, the penalty imposed under s. 271(1)(c) is hereby ordered to be deleted.

Shanti Prime Publication Pvt. Ltd.

Sec. 92CA(3) & 271(1)(c) of Income-tax Act, 1961—Penalty— The assessee was one of the group companies of China based TIENS group of companies. The business of the assessee, was trading/distribution of food supplements and health care equipments. The products dealt with by the company are basically products manufactured at China or other places by group concerns. Another group entity Tianjin Tianshi Biological Development Company Ltd., incorporated at China has established a foreign branch office in India. This is a foreign company with non-resident status falling under the category of an AE of the assessee, while the Indian branch office of this company specifically fall under the category of 'PE'. The AO made a reference to the TPO and the TPO has determined the TP adjustment. Accordingly, the CIT(A) has deleted the addition in the quantum appeal. The Department had filed an appeal before the Tribunal against the said assessee order passed by the CIT(A). Subsequently, the penalty under s. 271(1)(c) has been levied by the AO and the penalty order has been passed.
While deleting the penalty, the CIT(A) held that the assessee was under belief that the purchase from the PE of the foreign AE would not attract the TP provisions. It was held that the provisions of Expln. 7 to s. 271(1)(c) are not attracted in this case and deleted the penalty. Revenue filed the appeal. The assessee has prepared its TP report in good faith and with due care. There is 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 by the assessee.
 Hence, tribunal held that Expln. 7 to s. 271(1)(c) is not attracted in the present case, and hence, it is not a fit case for levying the penalty under s. 271(1)(c). Accordingly, the penalty imposed under s. 271(1)(c) was hereby ordered to be deleted.  Hence, we hereby hold that Expln. 7 to s. 271(1)(c) is not attracted in the present case, and hence, it is not a fit case for levying the penalty under s. 271(1)(c). Accordingly, the penalty imposed under s. 271(1)(c) is hereby ordered to be deleted.  the appeal of the Revenue was dismissed. --- ITO vs. TIANJIN TIANSHI INDIA (P) LTD. [2020] 23 ITCD Online 148 (DEL)