Sh. Adesh Gram Udyog Samiti (Regd), Ferozepur V. The Income-tax Officer, Ferozepur

ITA 172/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95056 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Bonafide belief; Reasonable cause; Assessment record
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A. NO. 172(ASR)/2014 ASSESSMENT YEAR: 2006-07 PAN: AAAJAI303Q M/S. ADESH GRAM UDYOG SAMITI,(REGD.), SAMITI, VILLAGE SATIYA WALA, FIROZPUR VS. THE INCOME TAX OFFICER, WARD-3(1), FIROZPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. Y.K. SUD, (C.A) RESPONDENT BY: SH. TARSEM LAL, (DR) DATE OF HEARING: 0 9.11.2015 DATE OF PRONOUNCEM ENT: 27.11.2015 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED CIT(A) DATED 20.12.2013 FOR THE ASST. YEAR. 2006-07. THE O NLY GRIEVANCE RAISED BY THE ASSESSEE IS REGARDING CONFIRMATION OF PENALTY IMPOS ED BY THE ASSESSING OFFICER UNDER SECTION 271FB OF THE INCOME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE AS RECORDED IN THE O RDER UNDER SECTION 271FB ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD NOT FILED ITS RETURN OF FRINGE BENEFITS FOR ASST. YEAR 2006-07 WHEREAS, IT HAD INCURRED EXPENSES ON I TEMS MENTIONED UNDER SECTION 115WE(2) OF THE ACT. THEREFORE, ASSESSEE WA S SHOW CAUSED TO FILE FRINGE BENEFIT TAX RETURN AND IN RESPONSE TO THE NOTICE TH E ASSESSEE FILED ITS RETURN OF 2. ITA NO. 1 72(ASR)/2014 ASST. YEAR 2006-07 FBT ON 14.08.2009 SHOWING VALUE OF FBT AT RS.2,410/ -. SINCE, THE ASSESSEE HAD NOT FILED THE RETURN OF FBT WITHIN THE PRESCRIB ED TIME, THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE PENALTY UNDER SECTION 271 FB BE NOT IMPOSED. IN RESPONSE TO SUCH SHOW CAUSE NOTICE THE ASSESSEE SUB MITTED AS UNDER: THAT THE SUBJECT RETURN COULD NOT BE FILED IN TIME DUE TO THE FACT THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE PRO VISIONS OF THE SECTION RELATING TO FBT ARE APPLICABLE W.E.F 01.04.2006 I.E . F.Y.2006-07. MORE THE FORM IN WHICH THE RETURN WAS TO BE FILED WERE NOT AVAILA BLE WITH THE DEPARTMENT, THEREFORE, I COULD NOT FILE THE RETURN OF FBT RETUR N IN TIME. NOW I FILE THE RETURN OF FBT IN RESPECT OF THE SUBJECT ASSESSMENT YEAR AN D PAID THE TAX DUE THEREON ALONG WITH THE INTEREST DUE THEREON. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE RE PLY. HE IMPOSED THE PENALTY UNDER SECTION 271FB OF THE ACT AMOUNTING TO RS.1,01,600/- @ RS.100/- PER DAY FOR THE DEFAULT OF 1016 DAYS. 3. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE C IT(A) AND REITERATED ITS SUBMISSIONS, HOWEVER, THE LEARNED CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER BY HOLDING AS UNDER: I HAVE GONE THROUGH THE PENALTY ORDER PASSED BY TH E AO AND HAVE ALSO CAREFULLY CONSIDERED THE WRITTEN SUBMISSIONS FURNIS HED BY THE LEARNED AR OF THE APPELLANT. THE VARIOUS GROUNDS OF APPEAL ARE BEING DECIDED AS UNDER: IN GROUND NO.1 OF APPEAL, IT HAS BEEN CONTENDED TH AT THE IMPUGNED ORDER IS AGAINST LAW AND FACTS AND THUS THE SAME NE EDS BE QUASHED. DURING APPELLATE PROCEEDINGS BEFORE ME, THE LEARNE D AR OF THE APPELLANT COULD NOT SUBSTANTIATE IN ANY MANNER AS TO HOW THE IMPUGNED ORDER IN THIS CASE WAS CONTRARY TO THE FACTS AS WELL AS THE PROVI SIONS OF LAW. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 3. ITA NO. 1 72(ASR)/2014 ASST. YEAR 2006-07 IN GROUND NO.2 OF APPEAL, IT HAS BEEN CONTENDED THA T THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY OF RS.1,01,600/- U/S 271FB OF TH E ACT. FROM THE PERUSAL OF ASSESSMENT RECORDS, IT IS FOUND THAT DURING ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT, 1961, THE AO NOTICED THAT THE ASSESSEE HAD NOT FILED ITS RETURN OF FRINGE BENEFITS PERTAIN ING TO THE ASSESSMENT YEAR 2006-07 ALTHOUGH IT HAD INCURRED EXPENSES ON ITEMS PROVIDE UNDER SECTION 115WB(2) OF THE ACT. ACCORDINGLY, THE AO AFTER RECO RDING REASONS, ISSUED NOTICE U/S 115WH OF THE IT ACT, 1961 REQUIRING THE ASSESSE E TO FILE ITS RETURN OF FRINGE BENEFITS. IN RESPONSE TO THIS NOTICE, THE ASSESSEE FILED THE FBT RETURN ON 14.08.2009 SHOWING VALUE OF FBT AT RS.2,410/-. ASSE SSMENT U/S 115WE(3) WAS COMPLETED ON 20.12.2010 DETERMINING THE VALUE OF FR INGE BENEFITS AT RS.4,007/- AND SIMULTANEOUSLY PENALTY PROCEEDINGS U/S 271FB WE RE ALSO INITIATED FOR NON- FILING OF RETURN OF FRINGE BENEFITS. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS EXPLAINED THAT THE ASSESSEE WAS ENTERTAINING A BONA FIDE BELIEF THAT THE PROVISIONS OF FBT WERE APPLICABLE W.E.F., 01.04.200 6 I.E. IN RESPECT OF THE FINANCIAL YEAR 2006-07 AND ALSO CONTENDED THAT RETU RN FORMS FOR FBT WERE NOT AVAILABLE WITH THE DEPARTMENT. THE AO, HOWEVER, WAS NOT SATISFIED WITH THE EXPLANATION TENDERED BY THE ASSESSEE BECAUSE ON THE ONE HAND THE ASSESSEE STATED THAT IT WAS ENTERTAINING A BONAFIDE BELIEF T HAT THE PROVISIONS OF FILING FBT RETURN WERE NOT APPLICABLE FOR THE ASSESSMENT YEAR 2006-07 AND ON THE OTHER HAND IT HAS BEEN CONTENDED THAT FBT RETURN FORMS WE RE NOT AVAILABLE WITH THE DEPARTMENT MEANING THEREBY THAT THERE WAS NO BONAFI DE BELIEF THAT THE FILING OF FBT RETURN WAS APPLICABLE FOR THE YEAR UNDER CONSID ERATION. ACCORDINGLY, THE AO IMPOSED PENALTY @ RS.100/- PER DAY FOR A PERIOD OF 1016 DAYS AT RS.1,01,600/-. BEFORE ME, THE CONTENTIONS RAISED BEFORE THE AO HAV E BEEN REITERATED. IT HAS ALSO BEEN CONTENDED THAT FOR FBT WAS PAID ALONG WITH INTEREST FOR LATE FILING OF RETURN AND THAT FOR A SMALL AMOUNT OF TAX OF RS. 1,348/-, PENALTY OF RS.1,01,600/- HAS BEEN IMPOSED. IT IS A FACT THAT THE ASSESSEE COULD NOT MAKE OUT A NY CASE THAT THERE WAS REASONABLE CAUSE FOR NOT FILING THE FBT RETURN IN T IME. ACCORDINGLY, I AM INCLINED TO AGREE WITH THE AO THAT THE FACTS OF THE CASE WARRANTED PENALTY U/S 4. ITA NO. 1 72(ASR)/2014 ASST. YEAR 2006-07 271FB OF THE ACT IN THIS CASE. IN THE CIRCUMSTANCES , THE ACTION OF THE AO IN IMPOSING A PENALTY OF RS.1,01,600/- IS UPHELD AND T HE GROUND OF APPEAL IN THIS REGARD IS DISMISSED. 4. AGGRIEVED THE ASSESSEE IS BEFORE US. 5. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE PROVISIONS OF FBT WERE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THIS WAS THE FIRST YEAR FOR FILING OF FBT RETURN AND ASSESSEE BONAFIDELY BELIEVED THAT THE PR OVISIONS OF FBT WERE APPLICABLE FORM ASST. YEAR 2007-08. HE FURTHER SUBM ITTED THAT FOR A SMALL FBT AMOUNT OF RS.2,410/-, THE ASSESSEE WOULD NOT HAVE T AKEN RISK OF INVITING PENALTY @ 100 PER DAY. HE FURTHER SUBMITTED THAT TH E PENALTY PROVISIONS UNDER SECTION 271FB WERE NOT MANDATORY AND AUTHORITIES BE LOW SHOULD HAVE CONSIDERED THE ARGUMENTS OF ASSESSEE FOR DELETION O F PENALTY. THE LEARNED AR HAS PLACED HIS RELIANCE ON THE FOLLOWING JUDGMENTS FOR THE PROPOSITION THAT WHERE THE ASSESSEE VIOLATES CERTAIN PROVISIONS OF L AW WITH BONAFIDE BELIEF THAT THOSE PROVISIONS WERE NOT APPLICABLE TO THE ASSESSE E, THE PENALTY WAS NOT IMPOSABLE. 1. CIT VS. AVET CHEMICALS (P) LTD. (P&H) 288 ITR 31 0 RECEIPT OF LOAN IN CASH IN EXCESS OF THE LIMITS ASS ESSEE UNDER BONAFIDE BELIEF OF THE LIMIT. NO PENALTY U/S 271B CAN BE LEV IED. 2. CIT VS. LOKHPAT FILM EXCHANVE(CINEMA)(RAJ) 304 I TR 172 & (MAD.) 417 DEPOSITION IN EXCESS OF LOAN LIMITS ASSESSEE UNDER BONAFIDE BELIEF THAT IT IS NOT APPLICABLE TO THE PARTNERS-REASONABLE CAUSE NO PENALTY FOR VIOLATING SECTION 269SS &269T. 3. CIT VS. SAJUMA CO-OP CREDIT AND SERVICE SOCIETY LTD. (P&H) 307 ITR 340 ASSESSEE UNDER BONAFIDE BELIEF THAT AUDIT U/S 44AB WAS NOT NECESSARY SINCE HIS ENTIRE INCOME WAS EXEMPT. NO PENALTY U/S 2711B CAN BE LEVIED. 5. ITA NO. 1 72(ASR)/2014 ASST. YEAR 2006-07 4. CIT VS. SIVA KUMAR (MAD) 354 ITR 9 CASH TRANSACTIONS BETWEEN FIRM AND PARTNERS. ASSESS EE ACTED UNDER BONAFIDE BELIEF THEREFORE, THERE WAS A REASONABLE C AUSE WITH IN THE MEANING OF SECTION 273B. 6. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT IF THE PLEA OF LEARNED AR THAT IT BEING THE FIRST YEAR OF PREVIOUS OF APPLICABILIT Y OF FBT PROVISION, THEN EVERY ASSESSEE CAN TAKE THIS PLEA. MOREOVER, HE SUBMITTED THAT ASS ESSEE HAD FILED RETURNS FOR ASST. YEAR 2007-08 AND 2008-09 AND MOREOVER, FROM THE ASS ESSMENT ORDER, IT IS CLEAR THAT ASSESSEE HAD STATED THAT IT COULD NOT FILE RETURN B ECAUSE FORMS WERE NOT AVAILABLE, THEREFORE, THE BONAFIDE BELIEF IS NOT THERE. HE FUR THER SUBMITTED THAT THE LEARNED AR HAS NOT ELABORATED THE RATIO OF JUDGMENTS RELIED UP ON HIM AND THEREFORE, NO COGNIZANCE CAN BE TAKEN OF ALL THE JUDGMENTS. 7. IN HIS REJOINDER, THE LEARNED AR SUBMITTED THAT THE RATIO OF JUDGMENTS AS ALREADY MENTIONED IS THAT WHERE THERE IS A BONAFIDE BELIEF THEN THE PENALTY PROVISION WERE NOT APPLICABLE TO THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE PROVISIONS OF FBT WERE APP LICABLE FROM 01.04.2006 I.E., FROM ASST. YEAR 2006-07 AND IT IS ALSO A FACT THAT THIS IS THE FIRST YEAR WHERE THE PROVISIONS OF FBT WERE APPLICABLE. THE FBT AMOUNT PAID BY ASSE SSEE ALONG WITH INTEREST IS TOO SMALL TO INVITE A PENALTY OF RS.1,01,600/-. IT IS I MPORTANT TO KNOW THAT SECTION 273B HAS BEEN INCORPORATED WHICH SAYS THAT IN SPITE OF P ROVISIONS CONTAINED IN SECTION 271FB, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OF THE ASSESSEE FOR ANY FAILURE IF HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR SUC H FAILURE. WE FIND THAT IN THE PRESENT CASE, THE ASSESSEE MAINTAINED BEFORE US AND ASSESSING OFFICER AND LEARNED CIT(A) THAT DUE TO ITS BONAFIDE BELIEF THAT THE PRO VISIONS OF APPLICABILITY OF FBT WERE 6. ITA NO. 1 72(ASR)/2014 ASST. YEAR 2006-07 APPLICABLE FROM ASST. YEAR 2007-08, THE ASSESSEE DI D NOT FILE RETURN FOR ASST. YEAR 2006-07. THOUGH THE ASSESSEE ALSO MAINTAINED THAT D UE TO NON AVAILABILITY OF FARMS OF RETURN THE SAME WAS NOT FILED. THERE IS NO PROVISIO N IN THE LAW AGAINST THE ASSESSEE WHICH PREVENTS THE ASSESSEE TO TAKE ALTERNATIVE PLE AS. WE FIND THAT THIS BEING THE FIRST YEAR OF APPLICABILITY OF PROVISIONS THE BENEFIT OF DOUBT CAN BE GIVEN TO ASSESSEE FOR ITS BELIEF THAT THESE WERE APPLICABLE FROM 2007-08 AND MOREOVER, THE AMOUNT OF FBT DOES NOT WARRANT IMPOSITION OF SUCH HEAVY AMOUNT OF PENA LTY. IN VIEW OF THE ABOVE, THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIR MED BY THE LEARNED CIT(A) IS DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2015. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 27.11.2015. /PK/ PS. COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S ADESH GRAM UDYOG SAMITI (REGD.), FIROZPUR. 2. THE INCOME TAX OFFICER, WARD-3(1), FIROZPUR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.