Mahanagar Telephone Nigam Ltd., New Delhi V. ACIT, New Delhi

ITA 1589/DEL/2015

AI Insights

The case involves Mahanagar Telephone Nigam Ltd. (MTNL), which appealed against the penalty levied by the Assessing Officer following a revised assessment of fringe benefits tax for the assessment year 2006-07. The original assessment accepted the fringe benefits as declared by MTNL. However, upon scrutiny, it was found that MTNL had not included a substantial contribution to a superannuation fund in their fringe benefits tax return. This led to a revised assessment and an increased tax liability, followed by a penalty. The Tribunal's decision to delete the penalty was based on the collapse of the foundation for the penalty following the re-examination of the fringe benefits by the Assessing Officer, which restored the original declared amount.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 116261 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-03-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2015
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263; 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’ NEW DLEHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA No. 1589/Del/2015 Assessment Year: 2006-07 Mahanagar Telephone Nigam Ltd., Lodhi Road, New Delhi. PAN: AAACM0828R VersuS ACIT, LTU, New Delhi (Appellant) (Respondent) Appellant by: Sh. Aman Garg, Ld. CA Revenue by: Ms. Sarita Kumar, Ld. CIT/DR Date of hearing : 16/03/2023 Date of order : 29/03/2023 ORDER PER N.K. CHOUDHRY, J.M. This appeal has been preferred by the Assessee/Appellant herein, against the order dated 04.02.2015, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)- 22, New Delhi (in short “Ld. Commissioner”), u/s. 250 of the Income-tax Act, 1961 (in short ‘the Act’) for the assessment year 2006-07. ITA No. 1589/Del/2015 2 2. In this case, the original assessment u/s. 115WE(3) was completed on 11.02.2008, whereby the value of fringe benefits at Rs.16,60,66,503/- as declared by the Appellant in its fringe benefit tax return, was accepted. 2.1 Subsequently, during the scrutiny assessment proceedings u/s. 143(3) of the Act, it was revealed on 09.11.2009 that the Appellant has contributed a sum of Rs.3,22,74,88,883/- towards pension funds (superannuation fund for the employees) which it had not shown in the FBT return. Therefore, by observing that value of Rs.3,22,74,88,883/- had escaped assessment within the meaning of section 115WG of the Act, the Assessing Officer had issued a notice u/s. 115WH of the Act on dated 12.11.2009 and ultimately assessed the value of Fringe Benefit (FB) at Rs.3,39,35,55,386/- by completing the assessment order u/s. 115WG/115WE(3) of the Act on dated 12.02.2010. 3. The Appellant being aggrieved, challenged the said order passed by the Assessing Officer before the then Ld. CIT, who vide order dated 15.12.2010 dismissed the Appellant’s appeal upholding the addition made by the AO, on account of contribution towards superannuation fund by the Assessing Officer. ITA No. 1589/Del/2015 3 3.1 Subsequently, penalty of Rs.1,24,93,28,674/- u/s. 271(1)(d) was also levied on 18.10.2011. 4. Thereafter, Assessment order dated 12/02/2010 was revised by the ld. Pr. Commissioner of Income-tax. LTU, Delhi by passing an order dated 30-03-2012 u/s. 263 of the Act, whereby the Fringe Benefit on account of contribution made by the Appellant to an approved superannuation fund liable for Fringe Benefit Tax during the year was determined to the tune of Rs.4522.91 million instead of Rs.3227.49 million as assessed by the Assessing Officer. The Assessing Officer was consequently directed to give effect to the order u/s. 263 of the Act and to take further consequential action as required under the law. 5. The Assessing Officer consequently levied the penalty of Rs.43,60,35,043/- on the amount of difference/income (4,68,89,65,503 the value of fringe Benefit, assessed vide order dated 11.04.2012 by giving effect to PCIT’s order dated 30.03.2012 u/s. 263 of the Act minus Rs.3,39,35,55,386/- the value of Fringe Benefit assessed u/s. 115WG/115WE(3) of the Act as per order dated 12.02.2010 by the Assessing Officer). It is a fact that vide order dated 26.09.2014, the Hon’ble Tribunal in appeal No. 510/Del/2011 filed against the order dated 15.12.2010 passed by the ld. CIT(Appeals) arises out of the ITA No. 1589/Del/2015 4 original assessment order dated 11.12.2008 u/s. 115WE(3) read with section 115WC of the Act, restored the issue qua the Fringe Benefits, on the basis of which the penalty was levied, to the file of the Assessing Officer for de novo consideration. 6. The Assessing Officer in compliance to the direction of the Hon’ble Tribunal, re-examined the issue qua Fringe Benefits and accepted the value of Fringe Benefits to the tune of Rs. 16,60,66,503/- as declared by the Appellant. Further, the appeal filed by the Appellant against the order u/s. 263 of the Act as well as against the order dated 23.01.2015 passed by the ld. CIT(A)-22, New Delhi whereby enhancement of value of Fringe Benefits was affirmed, were dismissed being infructuous. 7. In the totality of facts and circumstances, as the foundation for levying the penalty and affirmation thereof has already been collapsed, consequently, the penalty will not survive. Hence, the penalty under consideration stands deleted and the appeal of the Appellant stands allowed. ITA No. 1589/Del/2015 5 8. In the result, the appeal filed by the appellant stands allowed. Order pronounced in the open court on 29/03/2023. Sd/- Sd/- (ANIL CHATURVEDI) (N.K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Assistant Registrar ITAT New Delhi Draft dictated 20.03.2023 Draft placed before author 22.03.2023 Approved Draft comes to the Sr.PS/PS Order si gned and pronounced on Date of uploading on the website File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order.