Senatech India Pvt. Ltd. vs DC/ACIT TP 3(2)(2)

“13.

We have heard the rival submissions and have perused the relevant material on record. We are of the considered view that the TPO did not have adequate time to study the TP Study Report as it was submitted only on 21.07.2023 whereas he passed the order u/s 92CA(3) on 27.07.2023. In the interest of justice and fair play, we deem it fit to remit the entire matter to the file of the AO/TPO for fresh adjudication. Accordingly, the order of the Assessing Officer/TO as well as the DRP is set aside and the matter is remitted back to the file of the Assessing Officer who would refer the matter to the TPO for fresh consideration of the TP Study Report for making de novo order u/s 92CA. With these directions, the grounds of the assessee are allowed for statistical purposes.”

“5.0. Discussion & Decision:

5.1.

The submission of the assessee is carefully considered. The principal reason of imposition of penalty u/s.271G is non-compliance to the provisions of Section 92D(3) of the Income tax Act wherein any person entering into international ltransaction of specified domestic transaction has to keep and maintain certain information and documents as specified u/r.10D and provide the same before the TPO/AO as per requisitions issued vide notice u/s.92D(3). Pursuant to such statutory requirement in the Section 92D, the assessee had to maintain all the relevant documents as required by Rule 10D r.w.s. 92D and are required to provide the same to the TPO or AO within the specified time as per his requisition.

5.2.

The main issue that whether the appellant has discharged the liability as per the aforementioned Income tax Act and Rules for the financial year under consideration. On perusal of para 4 of the TP order dated 27.07.2023, it is seen that the TO has mentioned vide para 4 of the show cause notice dated 17.07.2023 (page 2 of the TP order) that assessee did not furnish TP report in the course of the Transfer Pricing Audit that was been conducted by the TPO. In para 10 of the said show cause (page 4 of the TP Order), the TPO has also mentioned that with respect to the interest paid during the year, the assessee has not provided loan agreement, partners of the loan, proof of payments etc. The TPO vide para 11 of the same show cause notice, the TPO has sought to initiate penalty proceedings u/s.271G of the I.T. Act.

5.3.

It is also emanated from the order of TRO that the appellant has filed the TP study report only on 21.07.2023. Now it is to be noted that the TP study report is a primary document which/are required to benchmark the transaction to determine Arms Length Pricing. The fact that the basic documents has not been provided in response to seven notices issued by the TPO requisitioning the same and documentary evidence other than TP report in support of the international transactions undertaken by the assessee clearly implies that the said documentation has not been prepared and maintained at the end of the appellant. The appellant has filed his written submission alongwith form 35 and also made a supplementary submission on 20.01.2025 in the course of appellate proceeding wherein it failed to elaborate and explain satisfactorily as to why the documentation has not been provided before the Transfer Pricing Officer inspite of repeated notices requisitioning the same.

5.4.

Vide para (vii) of its submission dated 20.01.2025, the appellant claimed that the ITAT Delhi and remanded the matter to the TPO or Assessing Officer for de novo assessment. However, the final order could not be made available to this office. Now it is to be mentioned the ITAT order doesn't have any implementation on the issue of failure to maintain documents as prescribed in Rule 10D r.w.s. 92D of the Income tax Act. As per Section 92D(3) the assessing officer in the course of proceedings under this Act, may request any person who had entered into international transaction or specified domestic transaction to furnish any information or document referred therein within a period of 10 days from the date of receipt of notice received in this regard. In this instant case, in the course of TP proceedings, the appellant failed to provide such documentation including the TP study report to the TPO within the time provided alongwith the extended time given vide notice dated 06.09.2022, 08.12.2022, 09.12.2022, 22.03.2023, 04.05.2023, 08.05.2023 and 06.06.2023. The TP study report was provided only when a show cause notice was issued 17.07.2023 which implies that the assessee did not maintain such document which it required to maintain as per Section 92D(1) of the Income tax Act since the TP study report (encapsulating) and the documentation maintained therein and other relevant documents in support of the study report could not be produced before the Assessing Officer for a period of approximately ten months. Section 271G states that penalty maybe imposed on any person who enter into an international transaction or specified transaction fail to produce such information or documentation as specified under section 92D of the Income tax Act. Since the appellant has failed to provide the documentation in connection to the international transaction before the Transfer Pricing Officer as mandated in Section 92D(3) of the Income tax Act, the TPO has levied a penalty u/s.271G on the appellant. Now evidently imposition of penalty u/s.271G is clearly connected with non-compliance of provisions of Section 92D(3) of the Income tax Act and accordingly, it has nothing to do with the final outcome of the assessment proceedings before any appellate authority including DRP and ITAT. Hence, the appellant's contention in para (vii) of its submission dated 20.01.2025 that the penalty order u/s.271G stemmed out of TPO's order is entirely misplaced and accordingly, rejected as a valid ground for deletion of penalty.

In this connection, it is also to be mentioned that the AO, as per 271G the TO may direct the defaulter to pay a sum equal to 2% of the value of international transactions for each such failure. In this instant case, the number of failures of the appellant was more than one, however, the TPO has taken a liberal approach by restricting the penalty amount to only 2% of the turnover. Since it appears that the quantum of penalty imposed by the TO has been taken under due consideration of the fact, the judgement of the TPO is respected and no interference is being made as per as quantum of penalty is concerned.

5.5.

On the basis of above discussion, I am of the considered opinion that the TPO has justifiably imposed penalty u/s.271G in the instant case as the appellant squarely failed to discharge its responsibility as stated in provisions of 92D(3) of the Income tax Act without any justifiable cause. The grounds of appeal placed before the undersigned which are in connection with the aforementioned penalty order are hereby rejected. The appellant's appeal is therefore, dismissed and the order u/s.271G imposing penalty of Rs.2,20,14,302/- is confirmed.”

“1.

Because the Impugned Order dated 19.09.2025 has been passed by the Ld. CIT(A)u/s u/s of the Act without appreciating the mandate of Section 92D(3)r/ Section 271G of the Act as it is an admitted fact that substantial compliance was made to Notice u/s 92CA(2) vide reply dated 25.02.2023 and the Appellant only inadvertently failed to attach the Transfer Pricing Study Report which was duly submitted along-with other documents/record in reply to Show Cause Notice u/s 92CA(2) and 92D(3) of the Act dated 17.07.2023 on 21.07.2023 i.e., within 10 days as mandated u/s 92D(3) of the Act and therefore it is not a case of failure to submit information/document u/s 92D(3) of the Act which is necessary to attract penalty proceedings u/s 271G of the Act and further that Show Cause Notice u/s 271G was issued without application of mind and in an omnibus manner without specifying the required documents which the Appellant failed to produce u/s 92D(3) of the Act.

2.

Because the Impugned Order dated 19.09.2025 passed by the Ld. CIT(A) u/s 250 of the Act is in violation of Section 273B of the Act as the Ld.CIT(A) has failed to appreciate the reasonable cause for alleged delay in furnishing Transfer Pricing Documentation as mandated u/s 92D(3) of the Act r/w Rule 10D(1) of the Rules and the said Order of the Ld. CIT(A) is completely non speaking as it has failed to deal with or consider the submissions pertaining to the said alleged delay.

3.

Because the Impugned Order dated 19.09.2025 has been passed by the Ld.CIT(A)u/s u/s of the Act without appreciating that it is an admitted fact that the Assessee has maintained all documents/records as required under Section 92D(3) of the Act r/w Rule 10D(1) of the Rules and furnished thesame to the TPO in the course of the proceedings and sufficient / substantial compliance was made and further that the Assessee has acted in a bona fide manner without any mala fide intent and the alleged failure to provide Transfer Pricing Report was due to an inadvertent mistake to attach the Report despite marking the same in the affirmative in the reply to Notice u/s 92CA of the Act.

4.

Because the Impugned Order dated 19.09.2025 passed by the Ld. CIT(A) u/s 250 of the Act is arbitrary and non-speaking as the same has completely failed to consider the Ground Wise Submissions of the Appellant and recorded no finding on the merits of the case vis-à-vis the submissions made by the Appellant.

5.

Because the Impugned Order dated 19.09.2025 has been passed by the Ld. CIT(A) u/s 250 of the Act without appreciating that this Hon'ble Tribunal has set aside the Order of the Ld. AO/TO and further Order of the Ld.DRP and remanded the matter for fresh adjudication and consideration of the TP Study Report for making de novo order u/s 92CA of the Act.

6.

Because the Impugned Order dated 19.09.2025 has been passed by the Ld. CIT(A) u/s 250 of the Act without appreciating the factual matrix of the case in as much as the value of international transactions have been inflated without application of mind and penalty has been imposed @2% on such alleged value of international transactions mechanically without verifying the facts and circumstances of the case.

7.

Because the Impugned Order dated 19.09.2025 has been passed by the Ld. CIT(A) u/s 250 of the Act without appreciating that Order of the Ld. TPO u/s 271G dated 29.03.2024 was passed in violation of Section 275 of theAct and no reasonable opportunity of being heard was afforded to the Appellant.”

Whereas in the course of proceedings before me for the Assessment Year 2020-21, it appears to me that you have failed to furnish information or document under section 92D of the Income Tax Act,1961.

Additional Remarks: Assessee has failed to furnish documents required Us 92D.

ITBA/TPOIS/92CA/2025-20/109638796.21)

f. Copy of TPO's order for the last assessment year.

g. Copy of assessment order for the last assessment year.

h. Copy of computation of total income.

i.

Copy of grounds of appeal and statement of facts in respect of appeals, if any, filed against the last year's assessment order.

j. Copy of tax audit report.

k. Details of all international transactions and domestic transactions along with segment-wise break-up of such transactions.

l. Details of changes in shareholding structure, whether directly or indirectly.

m. Details of transactions with associated enterprises relating to transfer of tangible or intangible goods or provision of services without any consideration, along with reasons therefore.

n. Details of transactions with third parties in India or outside India along with their comparability with international transactions and domestic transactions.

o. Details of transfer pricing adjustments, if any, offered in the tax return.

p. Fact sheet showing business description, total turnover, GrossOperatingNet profit, Method applied, value of International Transaction and domestic transactions, PLI etc. of three year including the relevant year.

q. Global transfer pricing policy of associated enterprises.

r. If any of the associated enterprise is filing its tax return in India, a copy of the return along with details of its assessment.

4.

You are requested to comply with the terms of this notice by attending my office on 10/03/2026 at 11:00 AM either in person or through a representative duly authorised in writing in this behalf.

Preeti Panchal DC/ACIT TP 3(2)(2) DELHI

(In case the document is digitally signed please refer Digital Signature at the bottom of the page)

“Whereas in the course of proceedings before me for the Assessment Year 2020-21, it appears to me that you have failed to furnish information or document under section 92D of the Income Tax Act, 1961.”

“Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in Rule 10D, which has been formulated in terms of Section 92D(1) of the Act.”

“6.2.1

The submission has not been found to be satisfactory. The scrutiny proceedings were barred by limitation On 31.07.2023. The assessee was provided multiple opportunities vide notices u/s 92D of the Act dated 6/09/2022, 08/12/2022, 09/12/2022, 22/03/2023, 04/05/2023, 08/05/2023 and 06/06/2023 to provide the transfer pricing report, to enable this office to scrutinize the international transactions of the assessee. However, the transfer pricing report, which is the basic document required for benchmarking of transactions was not provided till 21.07.2023. The primary onus to establish that a transaction is at arm's length rests upon the assessee and in not furnishing the transfer pricing report, the assessee failed to discharge this statutory obligation placed upon it.”

“Proceedings u/s 92CA(2) and 92D(3) of the Income Tax Act, 1961 – Computation of Arm’s Length Price- A.Y. 2020-21 (Show Cause Notice)-reg.”.