Bharani Exports Ltd (BEL), has a SEZ unit in 8th year of its operation. 90% of its export sales are to Lovely LLC of USA, which has guaranteed the loan of ₹ 100 crore taken by BEL. Export sales turnover for the year is ₹

The action of the assessing officer in making addition to the declared income and issuing show cause notice for levy of various penalties is correct since BEL had committed various defaults, as briefed hereunder, in respect of which penalty, is imposable. (i) Failure to report any international transaction or any transaction, deemed to be an international transaction or any specified domestic transaction, to which the provision of Chapter-X applies would attract penalty @ 200% of the amount of tax payable, since it is a case of misreporting of income referred under section 270A(9) read with section 270A(8). (ii) Failure to maintain requisite records as required under section 92D in relation to international transaction shall be subject to penalty u/s 271AA @ 2% of the value of each international transaction. (iii) Failure to furnish report from an accountant as required under section 92E makes it liable for penalty under section 271BA of ₹ 1 Lakh. The assessing officer shall give an opportunity of being heard to the assessee with a notice as to why the arm's length price should not be determined on the basis of material or information or documents in the possession of the Assessing Officer. The assessee cannot claim deduction u/s 10AA in respect of the additions of ₹ 32 lakhs made the AO on account of transfer pricing adjustments.