M/s. Anabond Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2603/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4533 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 07-09-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: K HEMALATHA ACA
• Keywords: Ignorance of law

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , '.. % , * BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.2603/MDS/2016 + + /ASSESSMENT YEAR: 2006-07 M/S.ANABOND LTD., TYPE-II, DR.V.S.I. ESTATE, THIRUVANMIYUR, CHENNAI-600 041. VS. THE THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-I(1), CHENNAI-34. [PAN: AACCA 4158 Q ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.K.HEMALATHA, ACA /0. 1 /RESPONDENT BY : MR.SUPRIYO PAL, JCIT 1 /DATE OF HEARING : 16.03.2017 1 /DATE OF PRONOUNCEMENT : 26.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 22.06.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 1, CHENNAI, IN ITA NO.42/09-10/A-III (NEW NO.ITA.102/CIT(A)-1/2009-10) FOR THE AY 2006- 07. ITA NO.2603/MDS/2016 :- 2 -: 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E PENALTY LEVIED U/S.271(1)(D) OF INCOME TAX ACT. DURING THE ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER (IN SHORT AO) FOUND THAT THE AS SESSEE HAS FILED FRINGE BENEFITS TAX (IN SHORT FBT) RETURNS FOR THE AY 20 06-07 DISCLOSING THE FRINGE BENEFITS AT RS.39,90,960/-. THE ASSESSMENT WAS COMPLETED U/S.115 WE(3) OF THE ACT ON 08.12.2008 AND WHILE COMPLETING THE ASSESSMENT, THE AO MADE THE FOLLOWING ITEMS AS ADDITION TOWARDS THE FRINGE BENEFITS AND RAISED THE DEMAND OF RS.5,07,734/- AS UNDER: TRAVELLING EXPENSES RS. 38,54,959.00 SALES PROMOTION RS. 33,52,261.00 SALES MEET EXPENSES RS. 3,34,838.00 TOTAL RS. 75,42,088.00 THE AO ALSO INITIATED PENALTY U/S.271(1)(D) OF INCOME TAX ACT. THE AO CALLED FOR THE EXPLANATION OF THE ASSESSEE. THE ASSESSEE FILED THE EXPLANATION STATING THERE WAS NO INTENTION TO CONCE AL OR UNDERSTATE THE FRINGE BENEFITS AND FURTHER STATED THAT THE PROVISI ONS OF FBT WERE NOT UNDERSTOOD CORRECTLY, SINCE IT WAS INTRODUCED WITH EFFECT FROM THE SUBJECT ASSESSMENT YEAR. NOT BEING CONVINCED WITH THE EXPL ANATION OF THE ASSESSEE, THE AO HAS LEVIED PENALTY OF RS.5,07,734/ - WHICH IS 100% OF TAX SOUGHT TO BE EVADED. 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) (IN SHORT LD.CIT(A)) AND THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO ST ATING THAT THE IGNORANCE OF LAW IS INEXCUSABLE AND IN VIEW OF CLEA R AND UNAMBIGUOUS PROVISIONS OF THE ACT THE CIT(A) HELD THAT THE ASSE SSEE HAS FURNISHED THE ITA NO.2603/MDS/2016 :- 3 -: INACCURATE PARTICULARS AND FIT CASE FOR PENALTY. AG GRIEVED BY THE ORDER OF THE LD.CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 4.0 DURING THE APPEAL HEARING, LEARNED AUTHORIZED R EPRESENTATIVE (IN SHORT LD.AR) ARGUED THAT THE AY 2006-07 IS THE FI RST YEAR OF INTRODUCTION OF FBT AND THERE WERE LOT OF ANOMALIES AND COMPLEXI TIES WHICH COULD NOT BE UNDERSTOOD BY THE ASSESSEE. NO SOONER THE MISTA KES WERE BROUGHT TO THE NOTICE OF THE ASSESSEE AT THE TIME OF ASSESSMEN T, THE ASSESSEE HAS ACCEPTED THE ADDITION AND PAID THE TAXES. THE LD. A.R. ARGUED THAT THERE WAS NO INTENTION TO EVADE THE TAXES OR CONCEAL THE FRINGE BENEFITS. THEREFORE, THE LD.AR REQUESTED TO CANCEL THE PENALT Y IMPOSED BY THE LOWER AUTHORITIES. THE LD.AR ALSO RELIED ON THE DE CISION OF HONBLE ITAT DELHI BENCH IN HINDUSTAN COCA COLA MARKETING PVT. L TD. V. DCIT, NEW DELHI [2014] 49 TAXMANN.COM 61 (DELHI TRIB.). 4.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE AY 2006-07 WAS THE FIRST YEAR OF INTRODUCTION OF FRINGE BENEFITS TAX AND THERE WAS A POSSIBILITY OF COMMITTING MISTA KES IN COMPUTING THE FRINGE BENEFITS DUE TO MISUNDERSTANDING OF THE PROV ISION. THE AO DETECTED THE MISTAKES IN THE FRINGE BENEFITS COMPUTED BY THE ASSESSEE, WHICH WAS ACCEPTED BY THE ASSESSEE AND PAID THE TAXES AND NO FURTHER APPEAL WAS FILED BY THE ASSESSEE. IN RESPONSE TO THE PENALTY NOTICE, THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE AO AS WELL AS THE LD.C IT(A) THAT IT WAS GENUINE MISTAKE DUE TO IGNORANCE AND NOT UNDERSTAND ING THE COMPLEXITIES OF COMPUTATION OF FBT. THE ASSESSEE ALSO RELIED ON THE DECISION OF ITA NO.2603/MDS/2016 :- 4 -: HINDUSTAN COCA COLA MARKETING PVT. LTD. V. DCIT, NE W DELHI [2014] 49 TAXMANN.COM 61 (DELHI TRIB.) WHEREIN IT WAS HELD TH AT ON APPEAL, THE ASSESSEE CONTENDED THAT THE SAID CALC ULATION MISTAKE WAS DONE BONA FIDELY IN CALCULATING THE VALUE FOR THE PURPOSE OF FBT AND THE SAME WAS A CASUAL MISTAKE WHICH WAS NOT COMMITTED DELIBERATELY OR FRAUDULENTLY FOR CONCEALING PARTICULARS OF FBT AND FURTHER SINCE THE ASSESSEE OFFERED IMPUGNED AMOUNT SUO MOTO FOR TAXATION, PENALTY SHOULD NOT BE LEVIED UPON IT. 5.0 IN THE INSTANT CASE, THE ASSESSEE FILED THE RET URN OF FRINGE BENEFITS AND THE ASSESSING OFFICER BROUGHT CERTAIN ITEMS OF EXPENSES RELATING TO TAXATION OF FBT WHICH WERE OMITTED TO BE INCLUDED I N THE FBT RETURN. THE ASSESSEE ACCEPTED THE PROPOSAL OF THE AO AND PAID T HE TAXES. AS RIGHTLY STATED BY THE LD.A.R IT WAS THE FIRST YEAR OF INTRO DUCTION OF FBT AND THERE WAS SOME CONFUSION AMONG THE TAX PAYERS WITH REGARD TO THE EXPENSES COMING UNDER THE SCOPE OF FBT. HENCE WE ARE OF THE OPINION THAT THE MISTAKE COMMITTED BY THE ASSESSEE IS BONA FIDE MIST AKE IN COMPUTING THE FBT RETURN AND THE CASE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE ITAT SUPRA. THEREFORE WE HOLD THAT THERE IS NO CASE FOR IMPOSING PENALTY U/S 271(1)(D) AND ACCORDINGLY WE CANCEL THE PENAL TY ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . % ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER ITA NO.2603/MDS/2016 :- 5 -: /CHENNAI, 6 /DATED: 26 TH MAY, 2017. TLN 1 /%7 87 /COPY TO: 1. . /APPELLANT 4. 9 /CIT 2. /0. /RESPONDENT 5. 7 / /DR 3. 9 ( ) /CIT(A) 6. + /GF