ACIT, CHENNAI V. M/s. Best & Crompton Engineering Ltd., CHENNAI

ITA 2785/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7416 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Reasonable cause
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 43B; 271(1)(b); 139; 92; 250; 44AB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , ' # BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 2785/MDS/2016 / ASSESSMENT YEAR : 2006-07 ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1(2), CHENNAI - 600 034. VS. M/S. BEST & CROMPTON ENGG. LTD., NO. 28, SIDCO INDUSTRIAL ESTATE, AMBATTUR, CHENNAI - 600 058. [PAN: AAACB 2753N ( / APPELLANT) ( / RESPONDENT) $% & / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT )*$% & / RESPONDENT BY : NONE & + /DATE OF HEARING : 13.03.2017 & + /DATE OF PRONOUNCEMENT : 23.03.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI IN ITA NO. 550/13-14/A-1, DATED 01.07.2016 U/S. 271(1)(D) AND 250 OF THE INCO ME TAX ACT. :-2-: I.T.A. NO. 2785/MDS/2016 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LD. CIT(A) ERRED IN DELETING THE PENALTY LE VIED U/S. 271(1)(D) OF THE INCOME TAX ACT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY HAD FURNISHED IN ACCURATE PARTICULARS WITH REFERENCE TO THE CONTRIBUTION TO THE SUPERANNUATION FUND, WHICH IS C HARGEABLE TO FBT. 2.2 THE LD. CIT(A) ERRED IN DELETING THE PENALTY LE VIED U/S. 271(1)(D) OF THE INCOME TAX ACT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY HAD FURNISHED IN ACCURATE PARTICULARS IN AS MUCH AS THE SUPERANNUATION FUND CONTRIBUTION WAS REDUCED FROM T HE MEMO OF TOTAL INCOME U/S. 43B OF THE INCOME TAX ACT, WHICH IS EQU IVALENT TO A DEBIT IN THE PROFIT AND LOSS ACCOUNT, ON WHICH FBT IS EXIGIB LE. 2.3 THE LD. CIT(A) ERRED IN DELETING THE PENALTY LE VIED U/S. 271(1)(D) OF THE INCOME TAX ACT, OBSERVING THAT THE PENALTY WAS LEVI ED EX-PARTE, WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER HA D ISSUED NECESSARY NOTICES AND HEARING LETTERS TO THE ASSESSEE, FOR WH ICH NO RESPONSE WAS FORTH COMING FROM THE ASSESSEE, RESULTING IN THE LE VY OF PENALTY. 3. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY HAS FILED THE RETURN OF FRINGE BENEFIT TAX FOR THE ASSESSMENT YEAR 2006-07 ON 28.11.2006 WITH FRINGE BENEFIT VALUE OF RS. 11,72,798/- AND THE RETURN OF FRINGE BENEFIT TAX WAS :-3-: I.T.A. NO. 2785/MDS/2016 PROCESSED AND ORDER U/S. 115WE(3) OF THE ACT WAS PA SSED ON 30.12.2008. WHEREAS, THE ASSESSING OFFICER SUBSEQUENTLY, FOUND IN THE SAID ASSESSMENT YEAR, ASSESSEE COMPANY HAS DEDUCTED AN AMOUNT OF RS . 22,44,365/- TOWARDS THE SUPERANNUATION FUND OF THE EMPLOYEES AND THE SU PERANNUATION EXPENDITURE IS CHARGEABLE TO FRINGE BENEFIT TAX. T HE LD. AO ISSUED NOTICE U/S. 115WH OF THE ACT ON 09.11.2011. IN THE ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT THE EXPENDITURE WAS INCURRED TOWARDS EMPLOYEES' SUPERANNUATION FUND AND DISALLOWED IN THE COMPUTATI ON OF INCOME FOR THE ASSESSMENT YEAR 2006-07 AND THE ENTRIES WERE SUBSE QUENTLY REVERSED IN THE ASSESSMENT YEAR 2007-08. BUT THE LD. AO FOUND AN A MOUNT OF RS. 38,76,109/- WAS CONTRIBUTED TO THE SUPERANNUATION F UND AND WAS CLAIMED AS DEDUCTION. SUCH CONTRIBUTION PERTAINS TO EARLIER Y EARS AND THE FBT SHALL BE APPLICABLE ONLY WHEN IT IS DEBITED TO THE PROFIT AN D LOSS ACCOUNT. THE ASSESSEE CLAIMED THE CONTRIBUTION TO THE SUPERANNUATION AS D EDUCTION U/S. 43B OF THE ACT FROM THE COMPUTATION OF TOTAL INCOME. THE LD. AO IS OF THE OPINION THAT THE CLAIM IN THE COMPUTATION OF INCOME IS EQUAL TO CLAIM MADE THE PROFIT & LOSS ACCOUNT AND SUCH EXPENDITURE IS LIABLE TO FRIN GE BENEFIT TAX AND WITH THESE OBSERVATIONS THE LD. AO HAS INITIATED PENALTY PROCEEDINGS U/S. 271(1)(D) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS AN D WAS OF THE OPINION THAT CONTRIBUTION TO THE EMPLOYEE SUPERANNUATION FUND AN D IS CHARGEABLE TO FRINGE BENEFIT TAX AND SINCE, NO REPLY WAS FILED BY THE AS SESSEE AND THE ASSESSING :-4-: I.T.A. NO. 2785/MDS/2016 OFFICER PASSED THE EXPARTE PENALTY ORDER LEVYING PE NALTY OF RS. 12 LAKHS VIDE ORDER DATED 13.09.2013. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR EXPLAINED THAT THE ASSESSEE COMPANY HAS NOT CONCEALED ANY INCOME OR FURNISHED INACCURAT E PARTICULARS AND THE FACTS WERE DISCLOSED IN THE TAX AUDIT REPORT U/S. 4 4AB OF THE ACT FILED ALONG WITH THE RETURN OF INCOME AND SUPPORTED WITH THE JU DICIAL DECISIONS OF HON'BLE SUPREME COURT AND HIGH COURTS. THE LD. CIT(A) CONS IDERED THE GROUNDS AND SUBMISSIONS ON THE PROVISIONS OF SECTION 271(1)(D) OF THE ACT AND OBSERVED THAT THE ASSESSEE HAS FILED EXPLANATIONS ON CONTRIB UTIONS TO THE SUPERANNUATION FUND RELATED TO ASSESSMENT YEARS 200 0-01 AND 2001-02 AND HAVE REASONABLE CAUSE. FURTHER, THE ASSESSEE HAS F URNISHED THE DETAILS IN THE TAX AUDIT REPORT U/S. 44AB OF THE ACT AND HENCE THE RE IS NO CONCEALMENT OF PARTICULARS OF FRINGE BENEFITS AND DELETED THE PENA LTY AND OBSERVED AT PAGE 4 PARA 9 OF THE ORDER WHICH READ AS UNDER: 'FROM THE FACTS DISCUSSED IN THE FOREGOING THE APP ELLANT CANNOT BE HELD TO HAVE DISPLAYED CONTUMACIOUS BEHAVIOUR IN OFFERING AN EXPLANATION OR SUBSTANTIATING THE SAME AT THE STAGE OF ASSESSMENT. THE PENALTY ITSELF HAS BEEN IMPOSED EXPARTE AS IS EVIDE NT FROM THE ORDER ALSO. THE APPELLANT HAS FILED THE NECESSARY FINANC IALS TO BACK ITS ASSERTION WITH REGARD TO THE CLAIM MADE IN RESPECT OF THE PROVISION FOR SUPERANNUATION FUND, WHICH WAS ALSO MENTIONED IN TH E ANNEXURE TO THE TAX AUDIT REPORT FOR THE PERIOD UNDER CONSIDERATION . HENCE, IN MY :-5-: I.T.A. NO. 2785/MDS/2016 CONSIDERED VIEW THE APPELLANT HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FRINGE BENEFIT NOR HAS FURNISHED ANY INAC CURATE PARTICULARS THEREOF. IF ANY THERE COULD BE A DIFFERENCE OF OPI NION ON THE EXIGIBILITY OF TAX ON THE IMPUGNED AMOUNT U/S. 115WE ITSELF. T AKING THE SUM TOTALITY OF FACTS BEFORE ME INTO ACCOUNT I DO NOT F IND THAT IT IS A FIT CASE FOR IMPOSITION OF PENALTY U/S. 271(1)(D). THE AO I S THEREFORE DIRECTED TO DELETE THE PENALTY AND MODIFY THE ORDER ACCORDINGLY .' 5. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS F ILED AN APPEAL BEFORE US. THE LD. DR ARGUED THAT THE LD. CIT(A) HAS ERRE D IN DELETING THE PENALTY WITHOUT APPRECIATING THAT THE ASSESSEE COMPANY HAS NOT FURNISHED ACCURATE PARTICULARS WHICH ARE CHARGEABLE TO FBT. THE ASSES SEE HAS CLAIMED DEDUCTION ON CONTRIBUTION TO SUPERANNUATION FUND UNDER THE PR OVISIONS OF SECTION 43B OF THE ACT AND SINCE THE ASSESSEE HAS NOT COOPERATED I N THE PENALTY PROCEEDINGS THE ASSESSING OFFICER HAS PASSED THE EX-PARTE PENAL TY ORDER AND PRAYED FOR SETTING ASIDE OF THE CIT(A) ORDER. CONTRA, THE LD. AR RELIED ON THE ORDERS OF THE CIT(A) AND SUPPORTED HIS ARGUMENTS WITH THE FAC TS OF TAX AUDIT REPORT OF BY THE ASSESSEE AND PRAYED FOR DISMISSAL OF THE REV ENUE GROUNDS. 6. WE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD AND JUDICIAL DECISIONS. THE SOLE CRUX OF THE ISSUE BEING THE LE VY OF PENALTY U/S. 271(1)(D) OF THE ACT IN RESPECT OF CLAIM OF CONTRIBUTION TO SUPERANNUATION FUND BY THE ASSESSEE IN THE COMPUTATION OF INCOME PERTAINING TO THE EARLIER YEARS 1999- 2000, 2000-01, 2001-02. THE ASSESSEE HAS DISCLOSED THE FACT OF CLAIM OF DEDUCTION BEFORE LOWER AUTHORITIES IN THE TAX AUDIT U/S. 44AB OF THE ACT. WE :-6-: I.T.A. NO. 2785/MDS/2016 FIND AS PER SUBMISSIONS BEFORE APPELLATE AUTHORITIE S THE SAID AMOUNT PERTAINING TO EARLIER ASSESSMENT YEARS AND WAS CLAI MED IN THE CURRENT ASSESSMENT YEAR, WHEREAS, THE PROVISIONS OF FRINGE BENEFIT TAX U/S. 115J WERE NOT APPLICABLE. WE FIND THE CHAPTER XIIH OF I NCOME TAX OF FRINGE BENEFITS WAS INTRODUCED IN THE FINANCE ACT, 2005 AP PLICABLE FROM 01.04.2016 I.E., ASSESSMENT YEAR 2006-07 AND THE SUPERANNUATIO N FUND CONTRIBUTION AMOUNT PERTAINS TO THE EARLIER ASSESSMENT YEARS. T HEREFORE, WE ARE OF THE OPINION THAT THE CONTRIBUTION DOES NOT COME INTO TH E PURVIEW OF FRINGE BENEFIT TAX WHICH IS EFFECTIVE FROM ASSESSMENT YEAR 2006-07 . CONSIDERING THE APPARENT FACTS MATERIAL ON RECORD, WE ARE OF THE OP INION THAT THE CIT(A) APPEAL HAS DISCUSSED THE ISSUE ON FACTS AND PROVISI ONS OF LAW AND RELIED ON THE JUDICIAL DECISIONS VIS-A-VIS, THE EXPLANATIONS OF THE ASSESSEE AND DIRECTED THE AO TO DELETE THE PENALTY. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHOLD THE SAME AN D DISMISS THE REVENUE GROUND. 7. IN THE RESULT, REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 23RD DAY OF MARCH , 2017 AT CHENNAI. SD/ - ( . ) ( A. MOHAN ALANKAMONY ) # / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) ) # /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 23RD MARCH, 2017 :-7-: I.T.A. NO. 2785/MDS/2016 JPV & )'+23 43-+ /COPY TO: 1. $%/ APPELLANT 2. )*$% /RESPONDENT 3. ! 5+ ( )/CIT(A) 4. ! 5+ /CIT 5. 367 )'+' /DR 6. 789 /GF