M/s King Lion Electronics, Parwanoo V. ITO, Solan

ITA 979/CHANDI/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9116 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 979/CHD/2011 ASSESSMENT YEAR: 2006-07 M/S KING LION ELECTRONICS, VS THE ITO, VILLAGE NARYAL, PARWANOO, SECTOR 4, DISTT.-SOLAN. PARWANOO. PAN: AAGFK1060L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURINDER BABBA R RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 22.08.2016 DATE OF PRONOUNCEMENT : 23.08.2016 O R D E R PER BHAVNESH SAINI, JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS), SHIMLA DATED 20.07.2 011 FOR ASSESSMENT YEAR 2006-07 CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE DERIVED INCOME FROM MANUFACTURING VCD AND DVD PLAYERS. IT FILED ITS RETURN OF INCOME ON 31.10.20 06 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION UND ER SECTION 80IC OF THE ACT. IT WAS NOTICED DURING THE 2 ASSESSMENT PROCEEDINGS THAT VALUE OF FRINGE BENEFIT S WAS RS. 1,66,270/- FOR WHICH FRINGE BENEFIT TAX WORKED OUT TO RS. 56,034/-. HOWEVER, THE ASSESSEE HAD DEPOSIT ED FRINGE BENEFITS TAX OF RS. 20,162/- ONLY VIDE CHALL ANS DATED 01.05.2006 AND 09.02.2007. AS THE ASSESSEE HA D NOT DEPOSITED THE FULL TAX AND HAD ALSO NOT FILED I TS RETURN UNDER SECTION 115WD(1) OF THE ACT, IT WAS HE LD THAT ASSESSEE HAD CONCEALED PARTICULARS OF VALUE OF FRINGE BENEFITS AND PENALTY PROCEEDINGS UNDER SECTI ON 271(1)(C) OF THE ACT WERE INITIATED. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD PAID FRINGE BENEFIT TAX TO THE TUNE OF RS. 20,162/-. WHEN IT WAS NOTICED B Y THE DEPARTMENT THAT RETURN FOR FRINGE BENEFIT HAD NOT B EEN FILED, NOTICE UNDER SECTION 115WH WAS ISSUED AND ON LY IN COMPLIANCE TO THAT NOTICE, THE ASSESSEE DISCLOSE D THE CORRECT VALUE OF FRINGE BENEFIT. IT WAS, THEREFORE , CLEAR THAT HAD THE NOTICE NOT BEEN SENT TO THE ASSESSEE, ASSESSEE WOULD HAVE REMAINED QUITE AND EVADED THE REMAINING FRINGE BENEFIT TAX LEVIABLE. THE ASSESSIN G OFFICER, THEREFORE, HELD THE ASSESSEE TO BE IN DEFA ULT AND IMPOSED A PENALTY OF RS. 35,870/- ON THE VALUE OF F RINGE BENEFIT CONCEALED AFTER GIVING BENEFIT OF TAX PAID OF RS. 20,162/-. 3. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(APPEALS) AND SUBMISSIONS ARE REPRODUCED IN APPELLATE ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLA INED THAT PENALTY WAS INITIATED FOR THE SOLE REASON THAT 3 ASSESSEE DID NOT DEPOSIT FULL TAX AND HAD NOT FILED RETURN OF FBT UNDER SECTION 115WD(1) OF THE ACT. T HE ASSESSEE FILED RETURN OF INCOME ON 31.10.2006 ALONG WITH COMPLETE BALANCE SHEET AND PROFIT & LOSS ACCOUNT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ASSESSEE RECEIVED NOTICE OF FBT THEREAFTER. THE ASSESSEE, THEREAFTER FILED THE RET URN OF FBT DECLARING TOTAL VALUE OF FRINGE BENEFIT AT RS. 1,66,470/- ON WHICH FBT INCLUDING INTEREST WAS CALCULATED AT RS. 87,243/-. SINCE ASSESSEE HAD ALR EADY PAID FBT TAX OF RS. 20,162/- BEFORE THE CLOSE OF TH E ASSESSMENT YEAR 2006-07 AND RETURN FOR FRINGE BENEF IT VALUE HAVE BEEN ACCEPTED BY THE DEPARTMENT, THEREFO RE, IT IS NOT A CASE OF FURNISHING INACCURATE PARTICULA RS OR CONCEALING ANY INCOME. 4. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARA 5 TO 5.3 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 5. I HAVE PERUSED THE FACTS OF THE CASE AND ASSESSE D THE RIVAL SUBMISSIONS. THE LD. A.O. HAS HELD THAT THE APPELLA NT WAS FULLY AWARE OF THE PROVISIONS OF F.B. T. AS IT HAD PAID F.B. T. OF RS.20,162/- ON 01.05.2006 AND 09.02.2007. THE APPELLANT COMPANY HA D HOWEVER, PAID F B. T. ONLY ON A PORTION OF THE VALUE OF FRINGE BENE FITS AND KNOWINGLY EVADED THE PAYMENT OF BALANCE TAX. IT WAS FURTHER H ELD BY THE LD. A.O. THAT ONLY WHEN THE RETURN FOR F.B. T. WAS CALLED FO R VIDE NOTICE U/S 115 WH DATED 15.10.2008, DID THE ASSESSEE REFLECT THE E NTIRE F.B. IN ITS RETURN. THEREFORE, THE LD. A. O. HAS CONCLUDED THAT HAD THE RETURN NOT BEEN 4 CALLED FOR, THE APPELLANT WOULD HAVE KEPT SILENT BY PAYING ONLY THE PARTIAL F.B. T. ACCORDINGLY, A MINIMUM PENALTY OF RS. 35,84 9/-WAS IMPOSED. 5.1 THE LD. A.O. HAS STATED THAT THE PROVISION OF S ECTION U/S 271(1)(C) DO NOT CAME INTO PLAY, AUTOMATICALLY AND AS THE APPELLANT HAD PAID A SUM OF RS.20,162/- ON 01.05.2006 & 09.02.200 7, IT CANNOT BE SAID THAT THERE WAS ANY INTENTIONED DEFECT, OUT THE PART OF THE APPELLANT. IT ALSO BEEN PLEADED THAT SINCE THE RETURNED B.F.VALUE HAS BEEN ACCEPTED BY THE APPELLANT WITHOUT MAKING ADDITION THEREIN, T HERE IS NO FURNISHING OF INACCURATE PARTICULAR. IN THIS REGAR D, THE LD. A.O. HAS PLACED RELIANCE ON A NUMBER OF JUDICIAL PRONOUNCEME NTS 5.2 NO DOUBT, THE APPELLANT HAD DISPLAY CERTAIN SUMS OF F.B.T. BEFORE A NOTICE WAS ISSUED TO IT BY THE LD. A.O. HOWEVER, THE FACTS REMAINS THAT THE APPELLANT HAD FAILED TO PAY THE ENTIRE AMOUNT OF F. B ,7. THAT WAS DUE IN ITS CASE AND BUT FOR THE NOTICE ISS UE, THE BALANCE F.B.T. WOULD HAVE REMAINED UNPAID. 5.3 AS PER THE PROVISION OF SECTION 271(1)(C) OF TH E I.T. ACT, 1961, THE HONOUR TO PROVE THAT IT HAD NOT CONCEALED ANY I NCOME OR FURNISH INACCURATE PARTICULARS THEREOF IS ON THE APPELLANT. IN THE FACTS OF THE PRESENT CASE, THE LD. A.O. HAS HELD THAT THE APPELL ANT WAS FULLY AWARE OF THE PROVISION OF F.B.T. AND THAT IS WHY CE RTAIN FAX WAS DEPOSITED ON THIS ACCOUNT. THEREFORE, THE APPELLANT CAN'T EVEN TAKE A PLEA THAT IT WAS UNAWARE OF SUCH PROVISIONS. AS TO WHY IT CHOOSE NOT TO PAY FURTHER F.B.T. AND FILED ITS RETURN IN TIME, IS NOT BORNE FROM RECORDS. THE HONOUR WAS ALWAYS ON THE APPELLANT TO PROVE ITS BONAFIDE WHICH IT HAS FAILED TO DO. IN THE ALONE EV ENT ON FACTS I CONSTANT TO CONCLUDE THAT THE APPELLANT HAS GIVEN A FALSE EXPLANATION WITH THE MEANING OF EXPLANATION 1 TO SECTION 271(1) (C). FURTHER UNDER EXPLANATION 3 TO SET THE APPELLANT HAS IS DEE MED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME. ACCORDINGL Y, I SUSTAINED THE PENALTY OF RS. 38,870/-. 5. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY MERIT IN THE APPEAL OF THE ASSESSEE. IT IS ADM ITTED FACT THAT ASSESSEE DID NOT FILE RETURN FOR FBT VALU E WITHIN THE TIME PRESCRIBED UNDER THE LAW. THE LD. 5 COUNSEL FOR THE ASSESSEE SUBMITTED THAT DUE DATE OF FILING OF FBT RETURN WAS 31.10.2006 WHICH COULD BE EXTENDABLE UPTO 31.03.2007. THE ASSESSEE IN THE PRESENT CASE FILED THE RETURN OF FRINGE BENEFIT ON 12.12.2008 I.E. WHEN PRESCRIBED NOTICE WAS ISSUED UNDER FBT PROVISIONS AFTER TAKING OF THE CASE OF TH E ASSESSEE UNDER SCRUTINY. IT IS WELL SETTLED LAW TH AT CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS HAVE TO BE CONSIDERED IN THE ORIGINAL R ETURN OF INCOME, WHICH IN THE CASE OF THE ASSESSEE WAS NE VER FILED WITHIN THE PERIOD PRESCRIBED UNDER THE LAW. FURTHER, IT IS ADMITTED FACT THAT ASSESSEE HAD ASSE SSABLE INCOME UNDER FBT PROVISIONS. THE ASSESSEE DEPOSITE D RS. 20,162/- ONLY UNDER FBT PROVISIONS AND DID NOT DEPOSIT HIS ENTIRE AMOUNT OF FBT WHICH WAS ULTIMATE LY CALCULATED AT RS. 87,243/-. THUS, ASSESSEE HAD NOT DEPOSITED THE FULL TAX AND HAD ALSO NOT FILED ITS R ETURN UNDER THE FBT PROVISIONS. THEREFORE, ASSESSEE HAD CONCEALED THE PARTICULARS OF VALUE OF FRINGE BENEFI T AND IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF TH E ACT WHEN THE DEPARTMENT NOTICED THAT RETURN FOR FRINGE BENEFIT TAX HAD NOT BEEN FILED IN ACCORDANCE WITH L AW AND THAT ASSESSEE HAS NOT DISCLOSED CORRECT VALUE O F THE FRINGE BENEFIT. THEREFORE, IT IS CLEAR THAT ASSESS EE CONCEALED THE PARTICULARS OF VALUE OF FRINGE BENEFI T BECAUSE HAD THE NOTICE NOT BEEN ISSUED TO THE ASSES SEE, THE ASSESSEE WOULD HAVE NOT PAID THE CORRECT TAX UN DER FBT PROVISIONS. MERELY BECAUSE ASSESSEE FILED THE 6 BALANCE SHEET AND PROFIT & LOSS ACCOUNT ALONGWITH ORIGINAL RETURN OF INCOME UNDER SECTION 139(1) OF T HE ACT WOULD NOT AMOUNT TO COMPLETE DISCLOSURE OF THE FBT TAX IN ACCORDANCE WITH LAW. WHEN ASSESSEE DEPOSITED RS . 20,162/- THROUGH CHALLANS ON 01.05.2006 AND 09.02.2007, IT IS CLEAR THAT ASSESSEE WAS AWARE OF COMPLIANCE OF PROVISIONS OF FBT, THEREFORE, TOTALIT Y OF FACTS AND CIRCUMSTANCES CLEARLY PROVED THAT ASSESSE E HAS CONCEALED PARTICULARS OF VALUE OF FRINGE BENEFI T TAX. THE ASSESSING OFFICER WERE, THEREFORE, JUSTIFIED IN LEVYING MINIMUM PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE IS NO MERIT IN THE APPEAL OF THE ASSESS EE. SAME IS, ACCORDINGLY, DISMISSED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD AUGUST,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD