Assessee’s Contentions

Revenue’s Contentions

Tribunal’s Judgment

The assessee contended that the TP adjustment arose due to a difference in benchmarking / economic analysis, as the TPO rejected the assessee’s method and adopted a different Most Appropriate Method. Hence, the adjustment could not be treated as misreported income under Section 270A.

The Revenue contended that the assessee had misreported facts relating to the transaction, resulting in under-reporting of income, and therefore the penalty under Section 270A was justified.

The ITAT held that the adjustment arose exclusively from the TP determination of ALP, with the assessee having disclosed the international transactions in Form 3CEB and maintained the prescribed documentation. The Revenue failed to establish that the case fell under any of the specific instances of misreporting under Section 270A(9)

It submitted that the international transactions were duly reported in Form 3CEB, prescribed documentation under Section 92D was maintained and all material facts were disclosed. Therefore, the exclusion under Section 270A(6)(d) applied and no penalty could be imposed.

It further argued that the assessee was fully aware of the penalty proceedings and the allegation of misreporting. Therefore, the absence of a specific clause of Section 270A(9) in the penalty order did not cause any prejudice and should not invalidate the penalty.

Accordingly, the ITAT upheld the CIT(A)’s deletion of the ₹60.50 crore penalty and dismissed the Revenue’s appeal, holding that the case was governed by Section 270A(6)(d) read with Section 270A(9).