The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), has held that a domestic transaction from a related party is not a specified domestic transaction under section 92BA.
The appellant, Giraffe Developers Pvt Ltd is engaged in the business as a builder and developer. During the scrutiny assessment, the Assessing Officer assessed the total income of Rs. NIL after setting off the brought forward losses. The PCIT observed that the AO has not made any inquiry concerning certain primary facts/claims and considered the assessment order as erroneous and prejudicial to the interest of revenue and initiated proceedings under section 263.
The aggrieved appellant filed an appeal before the ITAT against the issue of penalty notice under section 271AA of the Act for failure to report the domestic transactions under section 92D(1) of the Act and Notice under section 271BA of the Act for failure to furnish the Audit Report under section 92E of the Act.
Before the ITAT the appellant counsel by relying on the decision of the Delhi High Court in Addl. CIT vs. JK. D’Costa submitted that the CIT cannot pass an order under s. 263 of the Act about the imposition of penalty where the assessment order under Sec 143(3) is silent in that respect. The appellant’s counsel further submitted that if at all the penalty is levied it should be commensurate with the charges and the provisions of Sec.40A(2)(b) of the Act.
The Tribunal by relying on the decision of the Ahmedabad Tribunal in Ashish Subodchandra Shah Vs. Pr. CIT observed that a domestic transaction of purchase from a related party was not required to be considered as a specified domestic transaction under section 92BA of the Act as Clause (i) of section 92BA has been omitted, and therefore, no proceedings under section 263 should have been undertaken.
The Coram of Mr. Prashant Maharishi, Accountant Member, and Mr. Pavan Kumar Gadale, Judicial Member has held that “We considering the ratio of the judicial decisions discussed are of the view that the order of the Pr.CIT does not hold good on the aspects of levy of penalty.”
Mr. Madhur Agrawal and Mr. S. Anbuselvam appeared on behalf of the appellant and respondent respectively.
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