ITAT: Correlated Party Transaction Excluded from Specified I-T Section 92BA

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), ruled that a domestic transaction through an affiliated party does not a described domestic transaction under section 92BA.

The petitioner, Giraffe Developers Pvt Ltd has a construction business. While in the investigation assessment, the assessing officer assessed the total income of Rs NIL post to set off the brought carried losses. PCIT revealed that AO does not incur any investigation related to the claims and acknowledged the assessment order as wrong and prejudicial to the interest of revenue and initiated proceedings under section 263.

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The disappointed petitioner furnishes a petition to ITAT opposing the issuance of the penalty notice section 271AA of the Act regarding the failure to notify the domestic transactions under section 92D(1) of the Act and Notice under section 271BA of the Act for failure to file the Audit Report under section 92E of the Act.

Towards ITAT the petitioner’s counsel laid on the decision of the Delhi High Court in Addl. CIT vs. JK. D’Costa submitted that CIT shall not pass an order under s. 263 of the Act for the levying of the penalty in which the assessment order under sec 143(3) is quite for that. The petitioner’s counsel moreover submitted that when all the penalties would be imposed then the same must be commensurate with the charges and the provisions of Sec.40A(2)(b) of the Act.

Tribunal laid on the decision of the Ahmedabad Tribunal in Ashish Subodchandra Shah Vs. Pr. CIT revealed that a domestic transaction of buying from the concerned party was not needed to be acknowledged as a specified domestic transaction under section 92BA of the Act as Clause (i) of section 92BA would be excluded and hence no proceedings under section 263 must be considered.

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The Coram consists of Mr. Prashant Maharishi, Accountant Member, and Mr. Pavan Kumar Gadale, Judicial Member ruled that “We consider 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.” On the behalf of the appellant and respondent, Mr. Madhur Agrawal and Mr. S. Anbuselvam have appeared respectively.