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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— Expln. 7 to s. 271(1)(c) is not attracted as 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.

Facts: Revenue went on appeal and raised the ground that CIT(A) has erred in observing that since no cross border transaction is involved, the TP provisions are not attracted.The issue is as to whether the TP provisions have been rightly held to be not applicable. Another ground raised by revenue was that while deleting the penalty, CIT(A) held that the assessee was under belief that the purchase from PE of foreign AE would not attract the TP provisions. It was held that CIT(A) has also held the same view and deleted the addition vide the appellate in the quantum appeal and it was held that provisions of Expln. 7 to s. 271(1)(c) are not attracted in this case and deleted the penalty.

Held, that the adjustment arose due to exclusion of some comparables and the 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. The issue of applicability of current year data or multiple year data has not been attained finality at that point of time. 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 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. - ITO V/s TIANJIN TIANSHI INDIA (P) LTD. - [2020] 205 TTJ 107 (ITAT-DELHI)

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