DCIT, Mohali V. M/s JCT Electronics Ltd., Mohali

ITA 95/CHANDI/2015

• Counselvise Citation: 9521514 RSA 2015
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S K SOOD
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 95/CHD/2015 ASSESSMENT YEAR: 2008-09 THE DCIT, VS M/S JCT ELECTRONICS LTD., CIRCLE 6(1), A-32, INDL. AREA, PHASE-VIII, MOHALI. MOHALI. PAN: AAACJ4084A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI S.K.SOOD DATE OF HEARING : 18.11.2015 DATE OF PRONOUNCEMENT : 27.11.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-II CHANDIGARH DATED 28.11.2014 FOR ASSESSMENT YEAR 2008-09, CHALLENGING THE CANCELLATION OF PENALTY UNDER SECTION 271(1)(D) OF THE IT ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER NOTICED THAT ASSESSEE HAD NOT PAID ANY FRIN GE BENEFIT TAX ( HEREINAFTER REFERRED TO AS FBT) DURIN G THE YEAR UNDER CONSIDERATION AND WHEN QUESTIONED ABOUT THE 2 SAME, IT WAS SUBMITTED THAT THE ASSESSEE WAS DECLAR ED A SICK INDUSTRIAL UNDERTAKING BY BIFR ON 12.12.2005 A ND BIFR HAS STATED AS UNDER : 'THE INCOME TAX DEPARTMENT SHOULD CONSIDER TO EXEMP T THE COMPANY FROM THE PROVISIONS OF SECTION 115JB AND FR INGE BENEFIT TAX AND CAPITAL GAINS I TAX ON SALE OF MOHALI ASSETS UNDER THE INCOME TAX ACT DURING THE PERIOD OF REHAB ILITATION.' 3. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT ASSESSEE W AS LIABLE TO PAY FBT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE VALUE OF FRINGE BENEFITS WAS WORKED O UT AT RS. 59,63,050/- AND FBT WAS LEVIED IN RESPECT OF TH IS AMOUNT AND PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(D) OF THE ACT. THE ASSESSING OFFICE R VIDE SEPARATE ORDER LEVIED THE PENALTY. 4. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT AUDITORS HAD CLEARLY MENTIONED IN ANNEXURE-2 O F THE TAX AUDIT REPORT AS UNDER : N O PROVISION FOR FRINGE BENEFIT TAX HAS BEEN BY JCTEL AS STATED IN CLAUSE 11 (D) OF FORM NO. 3CD. IN VIEW OF THE DEEMED SANCTION OF THE INCOME TAX DEPARTMENT, AS PER SECTI ON 19(2) OF SICA,, NO PROVISION FOR FRINGE BENEFIT TAX OR MINIM UM ALTERNATE TAX IS REQUIRED TO BE MADE NOR IS THE REMISSION OR CESSATION OF INTEREST LIABILITY SUBJECT TO TAX UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961 SINCE RELIEFS/CONCESSIONS PROVIDED IN THE SCHEME SANCTIONED BY THE HON'BLE BIFR UNDER SECTION 17(3) HAVE AN OVER RIDING EFFECT ON THE PROVISIONS OF THE INCOME TAX ACT, 1961.' 3 5. THE ASSESSEE, THEREFORE, CONTENDED THAT THIS FAC T WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BUT ASSESSING OFFICER DID NOT CONSIDER IT PROPERLY. 6. THE LD. CIT(APPEALS) CONSIDERING THE ABOVE FACTS NOTED THAT AS THE FACT FOR NOT PROVIDING FBT AND NO T PAYING FBT WAS CLEARLY MENTIONED BY THE AUDITOR IN THE NOTES BELOW ANNEXURE-2 RELATING TO FRINGE BENEFITS, IT CANNOT BE SAID THAT ASSESSEE HAD CONCEALED ANY PARTICULARS OF FRINGE BENEFITS. THE ASSESSEE DISCL OSED ALL THE MATERIAL FACTS IN THE RETURN OF INCOME AND EXPLANATION OF THE ASSESSEE WAS BONAFIDE AND ACCORDINGLY, PENALTY WAS CANCELLED AND APPEAL OF TH E ASSESSEE WAS ALLOWED. 7. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD. DR CONTENDED THAT ASSESSING OFFICER LEVIED FBT AND LD. CIT(APPEALS) CONFIRMED THE ADDITION WITH TH E OBSERVATION THAT EXEMPTION FROM FBT CANNOT BE GRANT ED TO THE ASSESSEE. THEREFORE, PENALTY IS LEVIABLE. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. 8. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE MATERIAL ON RECORD, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE L D. CIT(APPEALS) IN CANCELING THE PENALTY. IT IS ADMIT TED FACT THAT IN THIS CASE, ASSESSEE WAS DECLARED A SIC K 4 INDUSTRIAL UNDERTAKING BY BIFR AND IN THEIR ORDER, THEY HAVE DIRECTED THE INCOME TAX DEPARTMENT TO CONSIDER TO EXEMPT THE ASSESSEE COMPANY FROM FRINGE BENEFIT TAX AND CAPITAL GAIN TAX ON SALE OF MOHALI ASSET UNDER THE INCOME TAX ACT DURING THE PERIOD OF REHABILITATION. THE ASSESSEE IN THE FBT PROCEEDINGS EXPLAINED THAT THIS RELIEF AND CONCESSION WAS GIVEN BY BIFR ON FBT AND UNDER SECTION 115JB, THEREFORE, THE CONSENT OF THE DEPARTMENT IS THERE AS PER SECTION 19(2) OF SICA AC T. HOWEVER, EXPLANATION OF THE ASSESSEE WAS NOT ACCEPT ED AND NOTED THAT BIFR ONLY DIRECTED TO CONSIDER EXEMP TION FROM THESE PROVISIONS. THE ASSESSING OFFICER, ULTI MATELY HELD THAT ASSESSEE WAS LIABLE TO PAY FBT IN ACCORDA NCE WITH THE PROVISIONS OF LAW. THE SAME FACTS WERE DISCLOSED BY ASSESSEE IN THE TAX AUDIT REPORT, THER EFORE, ASSESSEE DECLARED ALL THE RELEVANT FACTS IN THE RET URN OF INCOME AND AS SUCH, COULD NOT BE SAID TO HAVE CONCE ALED THE PARTICULARS OF FRINGE BENEFITS OR FURNISHED INACCURATE PARTICULARS OF FRINGE BENEFITS. THE EXPLANATION OF THE ASSESSEE IS NOT FOUND TO BE FALS E AND EXPLANATION OF THE ASSESSEE WAS BONAFIDE BASED ON T HE DIRECTIONS GIVEN BY BIFR. THEREFORE, THE LD. CIT(APPEALS), ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD CORRECTLY HELD THAT IT IS NOT A CASE OF CONCEALMENT OF FBT OR FURNISHING INACCURATE PARTICU LARS OF FBT. THE LD. CIT(APPEALS), THEREFORE, RIGHTLY CANCELLED THE PENALTY ON THE MATTER IN ISSUE. WE, 5 THEREFORE, DO NOT FIND ANY MERIT IN THE DEPARTMENTA L APPEAL AND THE SAME IS, ACCORDINGLY, DISMISSED. 9. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH NOV., 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD