M/s Om Prakash Goyal & Co., Neemuch V. The ITO, Neemuch

ITA 405/IND/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66762 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Reasonable cause; Ignorance of law

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM ITA NO. 405/IND/2012 A.Y.2006-07 M/S OM PRAKSH GOYAL & COMPANY NEEMUCH PAN AAAFO 2932K :: APPELLANT VS INCOME TAX OFFICER NEEMUCH :: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 18.12.2012 DATE OF PRONOUNCEMENT 1 9 .12.2012 O R D E R PER R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 30 TH APRIL, 2012 FOR THE A.Y. 2006-07 IN THE MATTER OF IMPOSITION OF PENALTY U/S 271FB OF THE ACT. 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM RECORD WE FIND THAT THE RETURN OF FRI NGE BENEFIT TAX FOR THE ASSESSMENT YEAR 2006-07 WAS FIL ED BY THE ASSESSEE ON 31 ST DECEMBER, 2008. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO FURNIS H THE RETURN OF FRINGE BENEFIT TAX AS REQUIRED UNDER SUB- SECTION (1) OF SECTION 115WD OF THE ACT. ACCORDINGLY, PENA LTY U/S 271FB WAS IMPOSED. THIS WAS THE FIRST YEAR WHEN TH E PROVISIONS OF FRINGE BENEFIT TAX WERE INTRODUCED WI TH EFFECT FROM THE ASSESSMENT YEAR 2006-07. THE ASSES SEE WAS IGNORANT IN FILING SEPARATE RETURN OF FRINGE BE NEFIT TAX AND, THEREFORE, NO RETURN WAS FILED AND IMMEDIATELY AFTER THE ASSESSING OFFICER ISSUED THE NOTICE U/S 115WH, THE ASSESSEE FILED THE RETURN. 3. THE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE OR DER OF THE COORDINATE BENCH DATED 4 TH JUNE, 2012 IN THE CASE OF RAJWANTSINGH & PARTY & OTHERS WHEREIN ON THE PLE A OF REASONABLE GROUND FOR DELAY, THE PENALTY WAS RESTRI CTED TO THE AMOUNT OF FRINGE BENEFIT TAX IMPOSED BY THE 3 ASSESSING OFFICER. THE FINDINGS OF THE SAID ORDER ARE AS UNDER :- 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 DEPOSITED THE DUE TAXES AS WELL AS INTEREST THEREON. HOWEVER, THE ASSESSING OFFICER ALSO IMPOSED PENALTY FOR THE DELAY IN FILING OF THE RETURNS. THE LD. COUNSEL FOR THE ASSESSEE AR GUED THAT THERE WAS A REASONABLE CAUSE IN NOT FILING A SEPARATE RET URN OF FBT WHICH WAS INTRODUCED FOR THE FIRST TIME DURING THE YEAR UNDER CONSIDERATION, BEING THE IGNORANCE OF LAW BY THE AS SESSEE. AT THIS STAGE, IT IS IMPORTANT TO NOTE THAT WHAT IS A REASO NABLE CAUSE MAY DIFFER FROM PERSON TO PERSON AND SITUATION TO SITUA TION. THEIR LORDSHIPS OF THE HON'BLE DELHI HIGH COURT IN THE CA SE OF WOODWARD GOVERNOR INDIA (P) LTD. VS. CIT (2002) 253 ITR 745 HAVE EXPLAINED THE EXPRESSION 'REASONABLE CAUSE' AS APPLIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE. IT HAS BEEN EXP LAINED TO MEAN AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES WHICH ASSUMIN G THEM TO BE TRUE, WOULD REASONABLY LEAD ANY ORDINARY PRUDENT AN D CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED , TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. THE ASSESSEE IN THE PRESENT CASE HAS PLEADED THE IGNORA NCE OF THE RELEVANT PROVISIONS AS A REASONABLE CAUSE FOR DELAY IN FILING THE RETURN UNDER FBT ACT. HERE WE ARE REMINDED OF THE C ELEBRATED DECISION OF THE HON 'BLE 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 HAPPE N AND THERE IS NO MAXIM THAT EVERYBODY KNOWS THE LAW. PRECISELY, I T WAS HELD THAT 'THERE IS NO PRESUMPTION, THAT EVERY PERSON KN OWS THE LAW, BUT THAT IS NOT A CORRECT STATEMENT; THERE IS NO SU CH MAXIM KNOWN TO THE LAW'. THIS VERDICT IS AN AUTHORITY FOR THE P ROPOSITION THAT THE DICTUM : 'IGNORANCE OF LAW IS NOT EXCUSABLE' DO ES NOT HOLD GOOD IN ALL CASES. THE PLEA OF IGNORANCE OF LAW HAS TO BE DECIDED IN THE FACTS OF EACH CASE. IN A PARTICULAR SITUATIO N, THE AFORE- REFERRED MAXIM MAY HOLD GOOD, WHILE IN ANOTHER, IT MAY NOT. THE FACTS OF EACH CASE ARE REQUIRED TO BE EXAMINED CAUT IOUSLY BEFORE REACHING ANY CONCLUSION AS TO WHETHER THE GUILTY CAN BE SAID TO 4 HAVE KNOWLEDGE OF LAW OR NOT. IF THE SURROUNDING CI RCUMSTANCES NOT ONLY INDICATE BUT LEAD TO INEVITABLE CONCLUSION THA T THE ACCUSED WAS NOT OR COULD NOT HAVE THE KNOWLEDGE OF LAW, HE CANN OT BE PENALISED FOR HIS DEFAULT. 5. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUM STANCES AND THE REASONS STATED BY THE ASSESSEE ALL ALONG FOR DELAY IN FILING THE SEPARATE RETURNS OF FBT, WE DIRECT THE ASSESSING OF FICER TO RESTRICT THE AMOUNT OF 'PENALTY TO THE AMOUNT OF FRINGE BENE FIT TAX IMPOSED BY THE ASSESSING OFFICER. WE DIRECT ACCORDINGLY. 4. AS THE RELEVANT ASSESSMENT YEAR, UNDER CONSIDERA TION, IS 2006-07, THE ISSUE IS COVERED BY THE ABOVE ORDER OF THE TRIBUNAL. CONSIDERING THE REASONABLE CAUSE, WE DIRECT THE ASS ESSING OFFICER TO RESTRICT THE AMOUNT OF PENALTY TO THE AMOUNT OF FRINGE BENEFIT TAX IMPOSED BY THE ASSESSING OFFICER. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED IN PART. ORDER PRONOUNCED IN OPEN COURT ON 12.12.2012. SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED - 19.12.2012 COPY TO : APPELLANT, RESPONDENT, CIT, CIT(A), DR, GUARD FILE DN/-1818