“Section 271(1)(e)”
The decision most relied on for Section 271(1)(e) is Trilogy E-Business Software India (P.) Ltd. v. Dy. CIT (29 Taxmann.com 310), cited in 48 judgments on BharatTax.
Leading authorities on Section 271(1)(e)
For Transfer Pricing, this case clarifies that foreign exchange gains can be considered operating revenue for ITES providers, acknowledges the impact of offshore versus onsite development pricing on margins even when using TNMM, and affirms the use of a turnover filter for selecting comparable companies.
The cost base for applying the operating profit over total cost margin in transfer pricing cannot be broadened to include costs not incurred by the assessee. Tax authorities cannot impute costs incurred by third parties or associated enterprises for computing the assessee's net profit margin.
An appellate authority cannot enhance income on an issue that was not the subject matter of the original assessment proceedings. The appellate authority is empowered to decide any matter arising in the assessment proceedings, even if not raised in the appeal, provided it is covered by the order appealed against.
A statement made during a survey cannot be automatically retracted by the assessee; the burden is on the assessee to prove the statement was wrong. Therefore, such statements are relevant in penalty proceedings.
Furnishing the assessment of the value of a property does not, in itself, constitute the furnishing of inaccurate particulars for the purpose of penalty under section 271(1)(c).
In penalty proceedings under section 271(1)(c), the initial burden is on the Revenue to prove that the assessee concealed income or furnished inaccurate particulars. The burden shifts to the assessee only if they fail to offer a satisfactory explanation for undisclosed income.
Interest-free advances are presumed to be given out of owned funds, not borrowed funds, if the assessee has sufficient owned funds. The revenue cannot arbitrarily estimate proportionate interest expenditure when the assessee has the right to appropriate funds.
A purely legal ground can be raised at any stage of the proceedings, including before the Income Tax Appellate Tribunal, as long as it does not require fresh evidence or investigation.
