Sai Baba Paper Mart, Hyd, Hyderabad v. ITO, Ward-7(4), Hyd, Hyderabad

ITA 741/HYD/2016 | 2006-2007
Pronouncement Date: 30-09-2016

Appeal Details

RSA Number 74122514 RSA 2016
Assessee PAN AAKFS2012G
Bench Hyderabad
Appeal Number ITA 741/HYD/2016
Duration Of Justice 4 month(s) 12 day(s)
Appellant Sai Baba Paper Mart, Hyd, Hyderabad
Respondent ITO, Ward-7(4), Hyd, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 30-09-2016
Date Of Final Hearing 28-09-2016
Next Hearing Date 28-09-2016
Assessment Year 2006-2007
Appeal Filed On 18-05-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B HYDERABAD BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER I.T.A. NO. 741/HYD/2016 ASSESSMENT YEAR: 2006-07 M/S. SAI BABA PAPER MART HYDERABAD [PAN: AAKFS2012G] VS INCOME TAX OFFICER WARD-7(4) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI NAVEEN MALPANI AR FOR REVENUE : SMT U. MINICHANDRAN DR DATE OF HEARING : 28-09-2016 DATE OF PRONOUNCEMENT : 30-09-2016 O R D E R PER B. RAMAKOTAIAH A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-10 HYDERABAD DATED 22-03-2016 AGAINST THE LEVY OF PENALTY U/S. 271FB OF THE INCOME TAX ACT [ACT] FOR DELAY IN FILING THE RETURN OF FRINGE BENEFIT TAX [FBT]. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(A) ERRED IN SUSTAINING THE PENALTY AT RS. 60 400.00 WHICH IS TOTALLY CONTRARY TO THE FACT S AND EVIDENCE ON RECORD. 2. THE LEARNED CIT(A) FAILED TO NOTE THAT THIS WAS THE FIRST YEAR OF FBT PROVISIONS AND THE APPELLANT WAS UNDER THE BONAFIDE BELIEF THAT THE RETURN FILED BY THE APPELLANT WAS I N ORDER. I.T.A. NO. 741/HYD/2016 M/S. SAI BABA PAPER MART :- 2 -: 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APP ELLANT WAS NOT PROVIDED WITH REASONABLE AND SUFFICIENT CAUSE I N NOT FILING THE FBT RETURN IN TIME. 4. THE APPELLANT WAS IGNORANT OF THE PROVISIONS OF FBT INITIALLY AND THEREFORE WAS NO INTENTION TO NON COM PLY WITH THE STATUTORY PROVISIONS GOVERNING FBT AND THEREFORE TH E CIT(A) OUGHT TO HAVE CANCELLED THE ENTIRE PENALTY OF RS. 1 00 400.0 0 AND WITHOUT SUSTAINING THE PENALTY OF RS. 60 400.00. 5. THE LEARNED CIT(A) FAILED TO NOTE THAT THE APPEL LANT HAS FILED FBT RETURNS FOR THE SUBSEQUENT YEARS IN TIME AND THEREFORE THIS BEING THE FIRST YEAR OF FBT RETURN OUGHT TO HAVE CA NCELLED THE PENALTY IN ENTIRELY. GROUND NO. 6 IS GENERAL IN NATURE. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE A DEALE R IN DUPLEX BOARD ROUGH PAPER AND WASTER RUBBER ETC. FI LED RETURN OF INCOME FOR AY. 2006-07 ON 29-09-2006 DECLARING TOTAL INCOME AT RS. 6 91 540/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSING OFFICER (AO) NOTICED THAT CERTAIN EXPENSES W HICH ATTRACT FBT WERE DEBITED TO P&L A/C. NO RETURN OF FBT WAS FI LED BY ASSESSEE AND A NOTICE U/S. 115WH OF THE ACT WAS ISSUED IN RESPONSE TO WHICH ASSESSEE FILED RETURN OF FBT ON 02 -07-2009 DECLARING FRINGE BENEFIT OF RS. 1 39 930/- AS INTIM ATED BY AO AFTER THE NOTICE WAS ISSUED. AO COMPLETED THE ASSESSMENT OF FRINGE BENEFITS VIDE ORDER DT. 11-12-2009 U/S. 115WE(3) DUR ING THE COURSE OF WHICH PENALTY PROCEEDINGS U/S. 271FB WER E INITIATED. 2.1. DURING THE COURSE OF PENALTY PROCEEDINGS THE AO SOUGHT EXPLANATION OF ASSESSEE AND ASSESSEE CONTENDED THAT HE COULD NOT FILE THE RETURN IN TIME AS IT WAS FIRST YEAR AND RETURN FORMS WERE NOT AVAILABLE. HE FURTHER STATED THAT FINANC E MINISTER HAS ANNOUNCED IN THE BUDGET SPEECH THAT IN THE FIRST YEA R OF FBT I.T.A. NO. 741/HYD/2016 M/S. SAI BABA PAPER MART :- 3 -: THE I.T. DEPARTMENT COULD BE LENIENT. HOWEVER THE AO D ID NOT ACCEPT THE EXPLANATION FOR THE FOLLOWING REASONS AND PE NALTY WAS CALCULATED @ 100 PER DAY FOR DELAY OF 1004 DAYS AND LEVIED ACCORDINGLY. 1. THE RETURN FORMS WERE NOT AVAILABLE IS INCORRECT. THE RETURN FORMS WERE AVAILABLE WITH THE DEPARTMENT AS WELL AS IN TH E OPEN MARKET. THE DELAY IN FILING THE RETURN OF FRINGE BENEFITS I S MORE THAN TWO AND HALF YEARS AND THERE IS NO QUESTION OF NON-AVAILABI LITY OF FORMS FOR MORE THAN TWO AND HALF YEARS DOES NOT ARISE. 2. INSPITE OF DEBITING EXPENDITURE OF RS. 6 63 341/- T O THE P&L ACCOUNT THE ASSESSEE DID NOT CARE TO FILE THE RETURN OF FBT TILL A NOTICE U/S. 115WH OF THE ACT IS ISSUED TO THE ASSESSEE. THE AS SESSEE IS A VERY OLD ASSESSEE AND ENGAGED THE SERVICES OF AN ACCOUNT ANT AND A CHARTERED ACCOUNTANT AND THE PAYMENTS MADE TO THEM WERE BOOKED AS EXPENDITURE TO ITS PROFIT & LOSS ACCOUNT. 3. THE QUESTION OF TAKING LENIENT VIEW COMES ONLY WHER E A PARTICULAR HEAD OF EXPENDITURE FALLS UNDER THE PURVIEW OF FRIN GE BENEFITS OR NOT IN THE CASES OF NON-FILING OF RETURN TILL THE DATE OF RECEIPT OF NOTICE BY THE DEPARTMENT REQUIRING THE ASSESSEE TO FILE RETUR N OF FRINGE BENEFITS. 3. BEFORE THE LD. CIT(A) IT WAS CONTENDED THAT: I. DUE DATE FOR FILING FBT RETURN FOR AY. 2006-07 WAS EXTENDED AS PER CIRCULAR NO. 142/41/2005-TPL(PT) AN D THE NUMBER OF DAYS DELAYED COMES TO 973 DAYS INSTEAD O F 1004 DAYS COMPUTED BY THE ASSESSING OFFICER; II. FBT WAS INTRODUCED FOR THE FIRST YEAR W.E.F. 2006-07; III. THE ASSESSEE WAS IGNORANT IN FILING SEPARATE RETURNS FOR FBT; IV. THE RETURN WAS FILED IMMEDIATELY AFTER AO ISSUED NOTIC E U/S. 115WH; V. TAX DUES AND INTEREST THEREON WAS DEPOSITED; I.T.A. NO. 741/HYD/2016 M/S. SAI BABA PAPER MART :- 4 -: 3.1. ASSESSEE ALSO RELIED ON VARIOUS DECISIONS VIZ . WOODWARD GOVERNOR INDIA PVT. LTD. VS. CIT [253 ITR 745] DELHI. MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS. STATE OF UP [118 ITR 326] (SC). ADESH GRAM UDYOG SAMITHI (REG) VS. ITO FIROZPUR (ITAT AMRITSAR) ASHOK TRADING CO VS. ITO KOLKATA ITA NO. 141/KOL/2013 AND CORE DRIVEL INES INDIA P. LTD. VS. ITO MUMBAI ITA NO. 2622/MUM/2010. 4. LD. CIT(A) DID NOT AGREE FULLY BUT PARTLY CONFIR MED THE PENALTY BY STATING AS UNDER: 6.5. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CON SIDERED. IT IS SEEN THAT NOTICE U/S. 115WH WAS ISSUED ON 16.03.200 9 AND THE RETURN OF FBT WAS FILED ON 02.07.2009. THIS PERIOD OF 107 DA YS CANNOT BE EXCLUDED AS NOTICE WAS ISSUED BY THE ASSESSING OFFICER AND N O REASON WAS ADDUCED FOR DELAY IN FILING THE RETURN OF FBT EVEN AFTER ISSUE OF NOTICE CALLING FOR RETURN OF FBT. IT IS SEEN THAT FROM AY . 2007-08 ONWARDS THE ASSESSEE COMPUTED FRINGE BENEFIT TAX LIABILITY AS P ER THE ITR-V FOR THE AY. 2007-08 AND FORM 3CD AND 3CB FOR AY. 2007-08 VALUE OF FRINGE BENEFITS IN TERMS OF SEC. 115WC R.W.S. 115WB IN ANNEXURE-II WERE FILED. THE RETURN OF FRINGE BENEFIT WAS FILED WITHIN DUE DATES FOR SUBSEQUENT YEARS. 6.6. THE RETURN OF INCOME FOR AY. 2007-08 WAS FILED ON 29.10.2007 WHERE FBT WAS INCLUDED WHICH SUGGESTS THAT THE ASSE SSEE WAS AWARE OF THE PROVISIONS OF FBT BY 29.10.2007 BUT NO RETURN O F FBT WAS FILED FOR AY. 2006-07. THE PERIOD FROM 29.10.2007 TO 16.03.2009 C ANNOT BE CONSIDERED FOR ANY LENIENT VIEW AS THE ASSESSEE WAS AWARE OF H IS LIABILITY TO FILE RETURN OF FBT. THE RETURN OF INCOME FOR AY. 2006-0 7 WAS FILED ON 29.09.2006 AND FBT RETURN WAS NOT FILED. AS THIS I S FIRST YEAR OF INTRODUCTION OF FBT LENIENT VIEW CAN BE TAKEN FOR T HE PERIOD TILL FBT RETURN WAS FILED FOR AY. 2007-08. THE ASSESSEES CONTENTI ON THAT RETURN FORM WAS NOT AVAILABLE IS NOT A REASONABLE CAUSE AS ANN EXURE II TO FORM 3CD IS TO BE FILED BY THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED NOT TO LEVY PENALTY FOR THE PERIOD 29.09.2006 TO 29.10.2007 I.E . 395 DAYS. FOR THE BALANCE PERIOD I.E. 29.10.2007 TO 02.07.2009 THE PE NALTY IS SUSTAINED AS THERE IS NO REASONABLE CAUSE FOR NOT FILING THE RET URN OF FBT. THIS GROUND OF APPEAL IS PARTLY ALLOWED. I.T.A. NO. 741/HYD/2016 M/S. SAI BABA PAPER MART :- 5 -: 5. LD. COUNSEL REITERATED THE SUBMISSIONS AND RELIE D ON THE FOLLOWING CASE LAW: I. DECISION OF ITAT MUMBAI IN ITA NO. 2622/MUM/2010 I N THE CASE OF CORE DRIVELINES INDIA P. LTD. VS. ITO DT. 24 TH JULY 2013; II. DECISION OF ITAT KOLKATA IN ITA NO. 141/KOL/2013 IN THE CASE OF M/S. ASHOK TRADING CO. VS. ITO DT. 06 TH AUGUST 2015; III. DECISION OF ITAT AMRITSAR IN ITA NO. 172(ASR)/2014 IN THE CASE OF M/S. ADESH GRAM UDYOG SAMITI (REGD) VS. ITO DT. 27-11-2015; 6. LD. DR DISTINGUISHED THE CASE LAW AND RELIED ON T HE ORDER OF LD. CIT(A). 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL PLACED ON RECORD. THERE IS NO DISPUTE W ITH REFERENCE TO THE FACTS. IT IS ALSO A FACT THAT THIS IS THE FIRST YEA R OF APPLICABILITY OF FBT PROVISIONS. EVEN THE HON'BLE F INANCE MINISTER ADVISED THE DEPARTMENT TO BE LENIENT BEING THE FIRST YEAR . BEING THE FIRST YEAR OF APPLICABILITY OF THESE PROVISIONS BENE FIT OF DOUBT CAN BE EXTENDED TO ASSESSEE FOR THE CONTENTION THAT THE PRO VISIONS ARE APPLICABLE FROM AY. 2007-08. CONSIDERING THE FACT THAT IT FILED THE FBT RETURN FROM NEXT YEAR IN TIME AND ON RECEIPT OF NOT ICE ASSESSEE COMPLIED WITH THE PAYMENT OF TAX FIRST AND FIL ING OF RETURN IMMEDIATELY THEREAFTER AND ALSO PAID THE FURTHER DEMAN D OF INTEREST RAISED AFTER THE ORDER WE ARE OF THE OPINION THAT THE CASE OF THE ASSESSEE FALLS UNDER THE CATEGORY WHEN THE FAILURE IN COMPLIANCE OF I.T.A. NO. 741/HYD/2016 M/S. SAI BABA PAPER MART :- 6 -: THE PROVISIONS WAS DUE TO A REASONABLE CAUSE IN TERM S OF SECTION 273B OF THE I.T. ACT. THE SAID PROVISION PROVIDES TH AT NO PENALTY CAN BE LEVIED ON ASSESSEE FOR ANY FAILURE TO COMPLY WITH THE PROVISIONS IF HE HAS A REASONABLE CAUSE FOR SUCH FA ILURE. WE FIND THAT THIS BEING THE FIRST YEAR OF APPLICABILITY AND ASS ESSEE HAVING FURNISHED ALL THE DETAILS IN THE RETURN OF INCOME WHICH IS THE BASIS FOR THE NOTICE THE FACTS OF CASE DOES NOT WARRANT IMPOSI TION OF SUCH AMOUNT OF PENALTY. IN VIEW OF THE ABOVE THE PENALTY LEVIED BY AO BUT PARTLY CONFIRMED BY LD. CIT(A) IS HEREBY DELETED. 8. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30 TH SEPTEMBER 2016 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD DATED 30 TH SEPTEMBER 2016 TNMM I.T.A. NO. 741/HYD/2016 M/S. SAI BABA PAPER MART :- 7 -: COPY TO : 1. M/S. SAI BABA PAPER MART HYDERABAD C/O. KAPASI BANGAD & CO. CHARTERED ACCOUNTANTS 3-6-140/A FLA T NO. 402 CITY CENTRE HIMAYAT NAGAR HYDERABAD. 2. THE INCOME TAX OFFICER WARD-7(4) HYDERABAD. 3. CIT (APPEALS)-10 HYDERABAD. 4. CIT-(IT & TP) HYDERABAD. 5. D.R. ITAT HYDERABAD. 6. GUARD FILE.