S.K. Glass Company, Ludhiana vs Assessee

S.K. Glass Company, Vs. The Income Tax Officer, Chowk Dholewal, Ward V(4), Ludhiana. Ludhiana. PAN No. AADFS9765M

(Appellant) (Respondent)

Appellant by : None (Written Submission) Respondent by : Shri S.K.Mittal, DR

Date of hearing : 22.06.2015 Date of Pronouncement : 22.06.2015

PER H.L.KARWA, VP :

This appeal filed by the assessee is directed against

the order of the learned Commissioner of Income Tax

(Appeals)-2, Ludhiana dated 14.1.2015 relating to assessment

year 2007-08 in confirming the penalty of Rs.15,200/- levied

under section 271FB of the Income Tax Act, 1961 (In short

'the Act').

2. Briefly stated, the facts of the case are that the

original return declaring value of fringe benefits of

Rs.57,250/- was filed by the assessee on 31.3.2008. Later 2

on, notice under section 115WH of the Act was issued on

4.12.2009. In response to the said notice, the assessee again

submitted its return of fringe benefits tax on 8.12.2009

declaring total value of fringe benefits of Rs.57,250/-. The

assessment was completed under section 115WE(3) of the Act

vide order dated 20.12.2010 at total value of fringe benefits of

Rs.57,250/-. The Assessing Officer initiated penalty

proceedings under section 271FB of the Act and issued a show

cause notice to the assessee on 7.6.2011. In response to the

said notice, the assessee submitted its reply and the relevant

portion of the same is reproduced as under :

"That the return of fringe benefit was filed on 31/03/2008 for the assessment year 2007/08. Whereas this return was required to be filed by 30/11/2007. That the delay in filing the return was do to the facts. That the assessee was involved in civil litigation in the court because of tight financial position. He could not deposit the fringe benefit tax amounting of Rs. 23,120/-within time. As soon as the payment to the fringe benefit tax of amounting Rs. 23, 120/- was paid on 29/03/2008 immediately filed the return of fringe benefit tax on 31/03/2008. That the assessee also file return of fringe benefit tax in response to the notice u/s 115WH dated 04/12/2009 on 08/12/2009 declaring the same income was shown in the original return filed on 31/03/2008. So in view the above said facts it is very much clear the assessee was prevented by reasonable and sufficient cause for not filing the return of fringe benefit tax with in time. So it is requested to drop the penalty proceedings under section 271FB of the income tax Act. 1961 for the assessment year 2007/2008. As the assessee was prevented by reasonable and sufficient cause and the delay of 4 months in filing the fringe benefit tax return may be condone."

3. The Assessing Officer observed that the assessee

filed its return of FBT on 31.3.2008, which was late by five 3

months. He further observed that assessee's explanation for

default was not satisfactory and the penalty of Rs.15,200/-

(for the period 11.7.2007 to 31.3.2008) was imposed.

4. On appeal, the learned CIT (Appeals) confirmed the

penalty, and hence the assessee is in appeal before the

Tribunal.

5. I have perused the written submission filed on

behalf of the assessee and have also heard the learned D.R for

the Revenue at length. The main contention of the assessee

is that the amount of fringe benefits tax amounting to

Rs.23,120/- of fringe benefits of Rs.57,250/- was paid on

29.3.2008 and the corresponding details were submitted

through return filed on 31.3.2008. It is also stated that,

the copy of the return filed at that time was not traceable

and so the data was submitted again in response to notice

under section 115WH of the Act on 4.12.2009 issued by the

Assessing Officer on 8.12.2009. The payment of tax and

filing of FBT return was required to be made before the due

date i.e. 30.11.2007. As per the assessee, the Assessing

Officer knowing that the original return is not traceable by

the assessee, still not bothered to examine the records and

returns available with the department and accessible to him

and imposed penalty of Rs.15,200/- under section 271FB of

the Act for delay in filing return of FBT, by considering the

return filed on 31.3.2008 as original FBT return. The

assessee also contended that the return filed on 31.3.2008

was revised return . However, the original return of FBT as 4

well as income tax was already filed well in time on

31.10.2007. The return of income tax filed by the assessee

on 31.10.2007 was in itself the return of FBT also as w.e.f.

2007-08, the return of fringe benefits tax was merged in the

return of income tax and there was no statutory liability for

filing separate FBT return . As the return of income tax,

which was also the return of FBT was filed on 31.10.2007,

which is before the due date i.e. 30.11.2007, therefore, there

is no delay on the part of the assessee in filing FBT return

and so penalty under section 271FB of the Act should not be

imposed. Accordingly, the assessee's submission is that the

penalty levied under section 271FB of the Act may be

cancelled. The penalty under section 271FB of the Act is

leviable "if an employer, who is required to furnish a return

of fringe benefits, as required under sub-section (1) of section

115WD of the Act, fails to furnish such return within the

time prescribed under that sub-section, the Assessing Officer

may direct that such employer shall pay, by way of penalty, a

sum of Rs.100/- for every day during which the failure

continues". It is relevant to observe here that w.e.f.

assessment year 2007-08, the return of fringe benefits tax

was merged with the return of income tax (ITR-6) and thus

the necessity of filing separate return was done away for the

assesses who were obliged to file return of fringe benefits

tax. As such, the particulars of fringe benefits were to be

submitted in the return of income tax itself. It is observed

that the financial statements of the assessee were audited on

30.10.2007 and subsequently, return of income was e-filed on 5

31.10.2007. It is also claimed by the assessee that the value

of fringe benefits was determined as per law in the annexure-

II to the audit report at Rs.57,251/-. However, due to

mistake, the details were omitted in the return of income e-

filed and upon realization of mistake; a return declaring

fringe benefits was subsequently filed on 31.3.2008. In my

opinion, the penalty under section 271FB cannot be levied in

this case since the penal provision is for failure to furnish the

return within time. However, in the instant case, the return

was filed within time. Due to mistake, the details were

omitted in the return of income filed and upon realization of

mistake; return declaring fringe benefits was subsequently

filed on 31.3.2008. Considering the entire facts and

circumstances of the present case, I am of the opinion that

the penalty under section 271FB of the Act cannot be levied.

Section 273B of the Act provides that "No penalty under

section 271FB of the Act shall be imposable on the person or

the assessee, as the case may be, for any failure referred to in

the above provisions if he proves that there was reasonable

cause for the said failure". As I have already observed

hereinabove that w.e.f. 2007-08 return of FBT was merged

with the return of income tax (ITR-6) and therefore, there was

no obligation of filing the separate return of fringe benefits

tax. The requirement was that the particulars of fringe

benefits were to be submitted in the return of income tax

itself. The return of income tax was submitted well within

time and, therefore, there was no default on the part of the

assessee. It is also well settled law that no penalty should 6

be imposed when there is a technical and venial breach of the

provisions of Act or where the breach flows from the bonafide

belief that the no penalty is leviable in the manner prescribed

by the Statute. In the instant case, at the most, there was a

technical or minor breach of the provisions of the Act because

the assessee due to mistake, could not furnish the details in

the return of income filed and upon realization of mistake, a

return declaring fringe benefits was subsequently filed on

31.3.2008. In my opinion, in view of the settled law also,

no penalty is leviable even in this case. In view of the above,

I cancel the penalty of Rs.15,200/- imposed by the Assessing

Officer and confirmed by the learned CIT (Appeals) under

section 271FB of the Act.

6. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on this 22nd

day of June, 2015.

Sd/-

(H.L.KARWA) VICE PRESIDENT

Dated : 22 n d June, 2015

*Rati*

Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.

Assistant Registrar, ITAT, Chandigarh 7