Section 271G — Failure to Furnish Information or Document under Section 92D (Transfer Pricing)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Penalty of 2% of the value of the international transaction or specified domestic transaction for failure to furnish, within the prescribed time, the information or document required under section 92D(3) when called for by the Assessing Officer/Transfer Pricing Officer. Subject to reasonable cause under section 273B.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: Failure to furnish, within the time allowed, the section 92D(3) information/document on a notice → penalty of 2% of the value of each international transaction/SDT → unless reasonable cause is shown under section 273B.
Litigation profile: Moderately litigated at the Tribunal. The recurring issues are (i) the distinction between non-maintenance (271AA) and non-furnishing (271G); (ii) reasonable cause where the documents called for are commercially impossible or irrelevant; and (iii) proportionality of a 2%-of-value penalty for a documentation lapse.
A. COMMENTARY
A furnishing, not a maintenance, penalty
Section 271G applies where the transfer-pricing documentation or information required under section 92D(3) is called for by the Assessing Officer or Transfer Pricing Officer and the assessee fails to furnish it within the time allowed. It is distinct from section 271AA (non-maintenance/non-reporting): 271G presupposes a valid notice calling for documents already required to be maintained.
Reasonable cause: impossibility and irrelevance
A substantial Tribunal line holds that where the specific documents demanded are commercially impossible to produce (for instance, segmental data not maintained in that form in the diamond/bullion trade), or are not relevant to the arm’s-length determination, and the assessee furnished the substantive documentation it did maintain, reasonable cause under section 273B is made out and the 2% penalty is deleted. The penalty is not a tool to punish inability to produce data never required to be kept in that form.
Proportionality
Because the penalty is 2% of the transaction value — potentially enormous for high-value transactions — Tribunals scrutinise whether a genuine, substantive default occurred or whether the lapse was technical, deleting the penalty in the latter case.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
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.
C. AUTHORITIES
The authorities are predominantly from the Tribunal and turn on the furnishing/maintenance distinction and reasonable cause. The candour rule is observed; representative propositions are stated.
1. Reasonable cause — impossibility / irrelevance of the documents demanded
Principle — documents impossible or irrelevant to ALP
Proposition Where the documents specifically called for could not be maintained/produced in the form demanded (e.g., transaction-wise segmental data in trades where it is not commercially feasible), or were not relevant to the arm’s-length determination, and the assessee furnished the documentation it did maintain, reasonable cause under section 273B is established and the section 271G penalty is deleted (a consistent Mumbai/Tribunal line in diamond-trade and similar cases).
Use The principal and frequently successful defence to a 271G penalty.
Hindustan Steel Ltd v. State of Orissa (1972) 83 ITR 26 (SC)
Holding Penalty is not to be imposed for a technical/venial breach or a bona fide default; discretion is to be exercised judicially.
Use Reinforces deletion of a 271G penalty for a technical documentation lapse.
2. The 271AA / 271G boundary
Principle — furnishing on notice versus maintenance
Proposition Section 271G is attracted only by a failure to furnish, on a valid section 92D(3) notice, documentation required to be maintained; non-maintenance or non-reporting is the field of section 271AA. The correct charge must be identified before the penalty is sustained.
Use Resists a 271G penalty mischarged on facts that are, at most, a 271AA default.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.
CHAPTER XXI — PENALTIES IMPOSABLE
Section 271G — Failure to Furnish Information or Document under Section 92D (Transfer Pricing)
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. Penalty of 2% of the value of the international transaction or specified domestic transaction for failure to furnish, within the prescribed time, the information or document required under section 92D(3) when called for by the Assessing Officer/Transfer Pricing Officer. Subject to reasonable cause under section 273B.
Finance Act, 2026: No amendment by the Finance Act, 2026.
Mechanism: Failure to furnish, within the time allowed, the section 92D(3) information/document on a notice → penalty of 2% of the value of each international transaction/SDT → unless reasonable cause is shown under section 273B.
Litigation profile: Moderately litigated at the Tribunal. The recurring issues are (i) the distinction between non-maintenance (271AA) and non-furnishing (271G); (ii) reasonable cause where the documents called for are commercially impossible or irrelevant; and (iii) proportionality of a 2%-of-value penalty for a documentation lapse.
A. COMMENTARY
A furnishing, not a maintenance, penalty
Section 271G applies where the transfer-pricing documentation or information required under section 92D(3) is called for by the Assessing Officer or Transfer Pricing Officer and the assessee fails to furnish it within the time allowed. It is distinct from section 271AA (non-maintenance/non-reporting): 271G presupposes a valid notice calling for documents already required to be maintained.
Reasonable cause: impossibility and irrelevance
A substantial Tribunal line holds that where the specific documents demanded are commercially impossible to produce (for instance, segmental data not maintained in that form in the diamond/bullion trade), or are not relevant to the arm’s-length determination, and the assessee furnished the substantive documentation it did maintain, reasonable cause under section 273B is made out and the 2% penalty is deleted. The penalty is not a tool to punish inability to produce data never required to be kept in that form.
Proportionality
Because the penalty is 2% of the transaction value — potentially enormous for high-value transactions — Tribunals scrutinise whether a genuine, substantive default occurred or whether the lapse was technical, deleting the penalty in the latter case.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; Finance Act, 2026 changes are noted above.
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.
C. AUTHORITIES
The authorities are predominantly from the Tribunal and turn on the furnishing/maintenance distinction and reasonable cause. The candour rule is observed; representative propositions are stated.
1. Reasonable cause — impossibility / irrelevance of the documents demanded
Principle — documents impossible or irrelevant to ALP
Proposition Where the documents specifically called for could not be maintained/produced in the form demanded (e.g., transaction-wise segmental data in trades where it is not commercially feasible), or were not relevant to the arm’s-length determination, and the assessee furnished the documentation it did maintain, reasonable cause under section 273B is established and the section 271G penalty is deleted (a consistent Mumbai/Tribunal line in diamond-trade and similar cases).
Use The principal and frequently successful defence to a 271G penalty.
Hindustan Steel Ltd v. State of Orissa (1972) 83 ITR 26 (SC)
Holding Penalty is not to be imposed for a technical/venial breach or a bona fide default; discretion is to be exercised judicially.
Use Reinforces deletion of a 271G penalty for a technical documentation lapse.
2. The 271AA / 271G boundary
Principle — furnishing on notice versus maintenance
Proposition Section 271G is attracted only by a failure to furnish, on a valid section 92D(3) notice, documentation required to be maintained; non-maintenance or non-reporting is the field of section 271AA. The correct charge must be identified before the penalty is sustained.
Use Resists a 271G penalty mischarged on facts that are, at most, a 271AA default.
Prepared for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the official Act; case-law holdings are the author’s summaries for professional use.