DCIT, CIRCLE-14(2), NEW DELHI vs. KINDLE ENGINEERING AND CONSTRUCTION PVT. LTD., NEW DELHI

Per Dr. B. R. R. Kumar, Accountant Member:

2. In the facts and circumstances of the case, whether the ld. CIT(A) was right in ignoring the fact that there was failure on the part of the assessee in filing the documentation as prescribed in Rule 10D of the Income Tax Rules, 1962 despite several opportunities provided.”

Specified Domestic Transactions as defined 92BA of The Income Tax Act:

“Meaning of specified domestic transaction 92BA. For the purposes of this section and sections 92, 92C, 92D and 92E, "specified domestic transaction” in case of an assessee means any of the following transactions, not being an international transaction, namely:— (i) any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A: (ii) any transaction referred to in section 80A: (iii) any transfer of goods or services referred to in sub- section (8) of section 80-1 A: (iv) any business transacted between the assessee and other person as referred to in sub-section (10) of section 80-1 A: (v) any transaction, referred to in any other section under Chapter VI-A or section I0AA, to which provisions of sub-section (8) or sub-section (10) of section 80-1A are applicable; or (Vi) any other transaction as may be prescribed.” and where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of five crore rupees.

Name of Associated Description of Amount Paid or Payable Persons/ Enterprises transaction As per Arm Length books of Price Account Hindustan power Consultancy 10,531,645 10,531,645 projects Private Charges Limited Hindustan Reimbursement 15,479,042 15,479,042 Cleanenergy Limited of Expenses Hindustan EPC Co. Operation and 16,641,626 16,641,626 Limited Maintenance charges Hindustan EPC Co. Reimbursement 70,312 70,312 Limited of Expenses Mr. Salil Bhalla Director 311,400 311,400 Remuneration Total 43,034,025 43,034,025

“Penalty for failure to furnish information or document under section 92D.

271G. If any person who has entered into an international transaction or specified domestic transaction fails to furnish any such information or document as required by sub-section (3) of section 92D, the Assessing Officer or the Transfer Pricing Officer as referred to in section 92CA or the Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent of the value of the international transaction or specified domestic transaction for each such failure.”

Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration o al the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions.