M/s Laxmi Mangal Warehouse, Neemuch V. The ITO, Neemuch

ITA 159/IND/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7175 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 20-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S S DESHPANDE
• Keywords: Reasonable cause; Ignorance of law

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM 1. ITA NO158/IND/2011 : A.Y. 2006-07 2. ITA NO159/IND/2011 : A.Y. 2006-07 3. ITA NO160/IND/2011 : A.Y. 2006-07 4. ITA NO161/IND/2011 : A.Y. 2006-07 5. ITA NO163/IND/2011 : A.Y. 2006-07 1. M/S RAJWANTSINGH & PARTY TELANKHEDI, NEEMUCH PAN AAAR-4999L 2. M/S LAXMI MANGAL WAREHOUSE RAWATKHEDA, NEEMUCH PAN AACFL 2242H 3. M/S MAHESHWARI WAREHOUSE RAWATKHEDA, NEEMUCH PAN AALFM 7899 Q 4. M/S LAXMINARAYAN SONS NEEMUCH ROAD, MANASA PAN AABFL 9122B 5. M/S KACHOLIYA ROADWAYS MAIN ROAD, NAYAGAON PAN AAAK 5351M ::: APPELLANTS 2 VS INCOME TAX OFFICER NEEMUCH ::: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI ARUN DEWAN DATE OF HEARING 23. 05.2012 DATE OF PRONOUNCEMENT 04. 0 6 .2012 O R D E R PER R.C. SHARMA, AM THESE ARE THE APPEALS FILED BY DIFFERENT ASSESSEES AGAINST THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 200 6-07 IN THE MATTER OF ORDER PASSED U/S 271FB OF THE INCO ME TAX ACT. 2. ALL THE ASSESSEES IN THESE APPEALS ARE RELATED A ND PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER U /S 3 271FB OF THE ACT ON THE PLEA OF DELAY IN FILING OF FRINGE BENEFIT TAX (HEREINAFTER REFERRED TO AS FBT) RETU RNS. BY THE IMPUGNED ORDERS, THE CIT(A) HAD CONFIRMED THE PENALTIES SO IMPOSED BY THE ASSESSING OFFICER. 3. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESS EE WAS THAT IT WAS THE FIRST YEAR OF FBT AND THE ASSES SEES WERE NOT AWARE OF FILING OF SEPARATE RETURN OF FBT, THEREFORE, PENALTY SHOULD NOT BE LEVIED FOR THE DEL AY IN FILING OF FBT RETURNS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES, GONE THROUGH THE MATERIAL AVAILABLE ON REC ORD AND FIND THAT PROVISIONS OF FRINGE BENEFIT TAX WAS INTRODUCED FOR THE FIRST TIME WITH EFFECT FROM THE ASSESSMENT YEAR 2006-07 WHICH IS UNDER CONSIDERATIO N. THE ASSESSEE WAS IGNORANT IN FILING SEPARATE RETURN S OF FBT, THEREFORE, NO RETURN WAS FILED AND IMMEDIATELY AFTER THE ASSESSING OFFICER ISSUED NOTICE U/S 115WH, THE ASSESSEES FILED THE RETURNS. THE ASSESSEES HAVE DEP OSITED 4 THE DUE TAXES AS WELL AS INTEREST THEREON. HOWEVER, THE ASSESSING OFFICER ALSO IMPOSED PENALTY FOR THE DELA Y IN FILING OF THE RETURNS. THE LD. COUNSEL FOR THE ASSE SSEE ARGUED THAT THERE WAS A REASONABLE CAUSE IN NOT FIL ING A SEPARATE RETURN OF FBT WHICH WAS INTRODUCED FOR THE FIRST TIME DURING THE YEAR UNDER CONSIDERATION, BEING THE IGNORANCE OF LAW BY THE ASSESSEE. AT THIS STAGE, IT IS IMPORTANT TO NOTE THAT WHAT IS A REASONABLE CAUSE M AY DIFFER FROM PERSON TO PERSON AND SITUATION TO SITUA TION. THEIR LORDSHIPS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR INDIA (P) LTD. VS. CIT (2 002) 253 ITR 745 HAVE EXPLAINED THE EXPRESSION REASONAB LE CAUSE AS APPLIED TO HUMAN ACTION IS THAT WHICH WOU LD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDI NARY PRUDENCE. IT HAS BEEN EXPLAINED TO MEAN AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS OF THE EXIST ENCE OF A STATE OF CIRCUMSTANCES WHICH ASSUMING THEM TO BE TRUE, WOULD REASONABLY LEAD ANY ORDINARY PRUDENT AN D CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON 5 CONCERNED, TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. THE ASSESSEE IN THE PRESENT CASE HAS PLEADED THE IGNORANCE OF THE RELEVANT PROVISION S AS A REASONABLE CAUSE FOR DELAY IN FILING THE RETURN UND ER FBT ACT. HERE WE ARE REMINDED OF THE CELEBRATED DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD., VS. STATE OF U.P; 11 8 ITR 326 WHEREIN IT WAS HELD THAT IGNORANCE OF LAW CAN HAPPEN AND THERE IS NO MAXIM THAT EVERYBODY KNOWS T HE LAW. PRECISELY, IT WAS HELD THAT THERE IS NO PRESU MPTION THAT EVERY PERSON KNOWS THE LAW, BUT THAT IS NOT A CORRECT STATEMENT; THERE IS NO SUCH MAXIM KNOWN TO THE LAW . THIS VERDICT IS AN AUTHORITY FOR THE PROPOSITION TH AT THE DICTUM : IGNORANCE OF LAW IS NOT EXCUSABLE DOES N OT HOLD GOOD IN ALL CASES. THE PLEA OF IGNORANCE OF LAW HAS TO BE DECIDED IN THE FACTS OF EACH CASE. IN A PARTICULAR SITUATION, THE AFORE-REFERRED MAXIM MAY HOLD GOOD, WHILE IN ANOTHER, IT MAY NOT. THE FACTS OF EACH CASE ARE REQUIRED TO BE EXAMINED CAUTIOUSLY BEFORE REACHING ANY 6 CONCLUSION AS TO WHETHER THE GUILTY CAN BE SAID TO HAVE KNOWLEDGE OF LAW OR NOT. IF THE SURROUNDING CIRCUMSTANCES NOT ONLY INDICATE BUT LEAD TO INEVITA BLE CONCLUSION THAT THE ACCUSED WAS NOT OR COULD NOT HA VE THE KNOWLEDGE OF LAW, HE CANNOT BE PENALISED FOR HI S DEFAULT. 5. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE REASONS STATED BY THE ASSESSE E ALL ALONG FOR DELAY IN FILING THE SEPARATE RETURNS OFFB T, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE AMOUNT OF PENALTY TO THE AMOUNT OF FRINGE BENEFIT TAX IMPOSED BY THE ASSESSING OFFICER. WE DIRECT ACCORDINGLY. 5. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED IN PART IN THE TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN OPEN COURT ON 4TH JUNE, 2012 SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER 7 DATED 4 TH JUNE, 2012 DN/- 1.1.6/44