CORE DRIVELINES INDIA P. LTD, THANE V. ITO 10(3)(1), MUMBAI

ITA 2622/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3995 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MRS ARUNDATI A WALAWALKAR
• Keywords: Reasonable cause; Bonafide mistake
• Section: 273B; 143(3); 10B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL C CC C BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , ,, , ' ' ' ' # # # # , . BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI SANJAY ARORA SANJAY ARORA SANJAY ARORA SANJAY ARORA, AM , AM , AM , AM & & & & SHRI SHRI SHRI SHRI VIJAY VIJAY VIJAY VIJAY PAL RAO, JM PAL RAO, JM PAL RAO, JM PAL RAO, JM ./ I.T. I.T. I.T. I.T.A. NO. A. NO. A. NO. A. NO. 2622/MUM/2010 2622/MUM/2010 2622/MUM/2010 2622/MUM/2010 ( $% $% $% $% & & & & / ASSESSMENT YEAR :2006-07) CORE DRIVELINES INDIA P. LTD PLOT NO. B-3, MIDC, PHASE II, MANPADA RD, DOMBIVLAI (E) THANE-421204 % % % % / VS. ITO 10(3)(1) AAYAKAR BHAVAN, M. K. ROAD, MUMBAI ' ./ ( ./ PAN/GIR NO. : AACCC1294R ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , / APPELLANT BY : MRS. ARUNDATI A. WALAWALKAR *+') *+') *+') *+') - -- - , , , , /RESPONDENT BY : MR. T. ROUMUAN PAITE % % % % - -- - . . . . / DT. OF HEARING : 3 RD JULY 2013 /& /& /& /& - -- -. . . . / DT.OFPRONOUNCEMENT: 24 TH JULY 2013 0 / O R D E R PER : # , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 1.2.2010 OF COMMISSIONER OF INCOME TAX(APPEALS) ARI SING FROM THE PENALTY LEVIED U/S 271FB OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS AS UND ER: THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYING PENALTY UNDER SECTION 271FB OF ` 60,700/- WITHOUT CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF PENALTY PROCEEDINGS. THE APPELLANT PRAYS TO DELETE THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER. ITA NO. 2622/M/2010 CORE DRIVELLINES INDIA P. LTD. . 2 3. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANU FACTURING AND EXPORT OF ENGINEERING GOODS IN THE YEAR UNDER CONSI DERATION. THE ASSESSEE FILED RETURN OF INCOME AND DECLARED NIL IN COME AS THE ASSESSEE CLAIMED EXEMPTION U/S 10B OF THE INCOME TAX ACT. TH E ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT. SUBSEQU ENTLY, THE AO ISSUED NOTICE U/S 115WE(2) IN RESPECT OF FRINGE BENEFITS T AX (FBT). IN RESPONSE TO THE NOTICE, THE ASSESSEE FURNISHED THE DETAILS OF E XPENSES, WHICH WERE INCURRED AND DEBITED TO THE PROFIT & LOSS ACCOUNT. HOWEVER, THE AO NOTED THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE OF ` 2135/- ON ACCOUNT OF STAFF WELFARE FOR WHICH NO DETAILS HAVE BEEN SUBMIT TED BY THE ASSESSEE. ACCORDINGLY, THE AO COMPUTED THE TOTAL VALUE OF FRI NGE BENEFIT AT ` 2135/- ON WHICH FBT WAS COMPUTED AT THE RATE OF 20% AT ` 4 27/-. THE AO HAS ALSO INITIATED PENALTY PROCEEDINGS U/S 271FB DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE RETURN OF FRINGE BENEFI TS U/S 115WD OF THE INCOME TAX ACT. THE AO HAS LEVIED A PENALTY OF ` 60 ,700/- BEING ` 100/- PER DAY FOR DELAY OF 607 DAYS FILING THE FBT RETURN VIDE ORDER DATED 26.2.2009. THE ASSESSEE CHALLENGED THE ACTION OF TH E AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 4. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE IS A VERY SMALL UNIT/ORGANISATION AND THE ACCOUNTANT WHO WAS MAINTAINING THE ACCOUNTS FREQUENTLY CHANGED. BEING THE FIRST YEAR OF THE PROVISIONS OF FBT INTRODUCED IN THE INCOME TAX ACT, THE PERSONS HANDLING THE MATTER INADVERTENTLY DID NOT FILE THE RETURN IN RESPECT OF THE SMALL AMOUNT OF ` 2135/-. THIS MISTAKE IS UNINTENTIONAL A S THE TAX LIABILITY UNDER ITA NO. 2622/M/2010 CORE DRIVELLINES INDIA P. LTD. . 3 FBT IS ONLY ` 427/- WORKED OUT BY THE AO INCLUDING INTEREST. IT WAS FURTHER SUBMITTED THAT THE EXPENDITURE AMOUNT WAS ACTUALLY SPEND AS MISCELLANEOUS EXPENSES AND SHOWN UNDER THE HEAD STA FF WELFARE ACCOUNT. THIS IS THE FIRST YEAR IN WHICH SUCH EXPENDITURE HA S BEEN SHOWN UNDER THE HEAD STAFF WELFARE WHICH GOES INCIDENTALLY WITH THE FIRST YEAR WHEN THE FBT HAS BEEN INTRODUCED IN THE ACT. THEREFORE IN THESE FACTS AND CIRCUMSTANCES WHEN A VERY SMALL AMOUNT WAS INVOLVED , THE INADVERTENT MISTAKE OF NON-FILING THE RETURN FOR FRINGE BENEFIT SHOULD HAVE BEEN ACCEPTED AS BONAFIDE MISTAKE AND EXPLANATION. ON TH E OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE PROVISIONS OF SECTION 115WE WERE INVOKED BY THE AO WITH RESPECT TO THE EXPENDITURE OF ` 2135/- SHOW N BY THE ASSESSEE UNDER THE HEAD STAFF WELFARE. THE AO HAS NOT GIVEN ANY CONCLUSIVE FINDINGS EITHER IN THE ASSESSMENT ORDER PASSED U/S 115WF OR IN THE PENALTY ORDER U/S 271FB THAT THE SAID EXPENDITURE F ALLS UNDER THE CATEGORY OF FRINGE BENEFIT AS PROVIDED U/S 115WB. IN THE PEN ALTY PROCEEDINGS THE ASSESSEE HAS EXPLAINED THE REASONS AND CIRCUMSTANCE S VIDE LETTER DATED 11.10.2008 WHICH HAS BEEN REPRODUCED BY THE AO IN P ARA 6 AS UNDER: WE ARE IN RECEIPT OF THE ABOVE NOTICE AND WOULD LI KE TO SUBMIT AS UNDER IN RESPECT OF THE SAME. WE HAVE PAID FBT ALON G WITH INTEREST ` 186/- AS PER NOTICE OF DEMAND U/S 156 OF THE INCOME TAX ACT, 1961 AND REGARDING NOTICE FOR PENALTY UNDE R SECTION 271 DATED: 29.08.2008 WE WOULD LIKE TO SAY SOME THING M ORE AS PER GIVEN BELOW. OUR UNIT IS A VERY SMALL ORGANISATION AND THE ACCOU NTANT WHO WAS DOING THE ACCOUNTS KEEPS ON CHANGING. FBT WAS INTRO DUCED IN THAT ITA NO. 2622/M/2010 CORE DRIVELLINES INDIA P. LTD. . 4 VERY YEAR, AND THE PERSON HANDLING THE MATTER WOULD HAVE BEEN INADVERTENTLY IGNORED TO FILE THE RETURN IN RESPECT OF THIS SMALL AMOUNT ` 2135/-. THIS MISTAKE IS AN UNINTENTIONAL O NE AND THAT TOO NEGLIGIBLE ONE CONSIDERING THE AMOUNT. WE ARE EXTREMELY SORRY FOR THIS AND WE ASSURE YOU T HAT SUCH MISTAKE WILL NOT BE REPEATED ANY TIME. MOREOVER ACT UALLY THE AMOUNT SPENT WAS MISCELLANEOUS EXPENSE AND IT SOME HOW WENT INTO THE NEW HEAD OF STAFF WELFARE ACCOUNT CREATED ONLY THAT YEAR WHEN THE FBT WAS INTRODUCED. UNDER THESE CIRCUMSTANCES, CONSIDERING THE FACT THA T AMOUNT INVOLVED IS PETTY AMOUNT, OUR MISTAKE IN NOT FILING THE RETURN MAY PLEASE BE PARDONED. 6. THERE IS NO DISPUTE THAT THIS WAS THE FIRST YEAR IN WHICH THE FRINGE BENEFITS TAX PROVISION HAS BEEN INTRODUCED IN THE I NCOME TAX ACT. KEEPING IN VIEW THE SMALL AMOUNT OF ` 2135/- OF WHI CH THE FRINGE BENEFITS TAX LIABILITY COMES TO ` 427/-, IT CANNOT BE SAID T HAT THE NON-FILING OF RETURN OF FRINGE BENEFIT IS DELIBERATE AND WITH A MOTIVE T O AVOID TAX BY CONCEALING THE PARTICULARS. FURTHER THE ASSESSEE HA S PAID THE TAX AS WELL AS INTEREST WHICH SHOWS THAT THE NON-FILING OF THE FRINGE BENEFITS RETURN WAS DUE TO INADVERTENT AND BONAFIDE MISTAKE AS EXPL AINED BY THE ASSESSEE. HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE FIND THAT THE ASSESSEE HAS EXPLAINED A REASONABLE C AUSE FOR NON-FILING THE RETURN OF FRINGE BENEFIT, THEREFORE THE CASE OF THE ASSESSEE FALLS UNDER THE CATEGORY WHEN THE FAILURE IN COMPLIANCE OF THE PROV ISION WAS DUE TO A REASONABLE CAUSE IN TERMS OF SECTION 273B OF THE IN COME TAX ACT. ACCORDINGLY, WE DELETE THE PENALTY LEVIED SECTION 2 71FD. ITA NO. 2622/M/2010 CORE DRIVELLINES INDIA P. LTD. . 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF JULY 2013 0 - /& 1 2%3 24 TH - 4 SD/- SD/- ( ) (SANJAY ARORA) ACCOUNTANT MEMBER ( # ) $ (VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 24 TH JULY 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI