BHELSIA DESIGN CLUSTER,CHENNAI vs. ITO, TRICHY

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ITA 2735/CHNY/2014Status: DisposedITAT Chennai08 January 2018AY 2007-084 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the non-inclusion of the expenditure for fringe benefit computation was an oversight due to mistake, not contumacious conduct. Therefore, the penalty levied was deleted.

What were the facts?

The assessee incurred expenditure on hospitality and gifts for a hotel meeting. This expenditure was initially agreed to be added to income as an omission or error. Subsequently, a penalty was levied under Section 271(1)(d) of the Income Tax Act.

What were the issues?

Whether a penalty under Section 271(1)(d) is leviable for an expenditure that was an oversight or mistake, rather than deliberate concealment or furnishing of inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(d)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN

Hearing: 08.01.2018Pronounced: 08.01.2018

आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:

1.

the Order of the Commissioner of Income Tax (Appeals), Tiruchirapalli, in ITA No.110/10-11/CIT(A)/Try. dated 21.05.2014 against the confirmation of the penalty levied u/s.271(1)(d) of the Act for the AY 2007-08.

2.

The appeal is delayed by 70 days. Necessary Affidavit has been filed. The Affidavit has not been shown to be wrong or false.

ITA No.2735/Mds/2014 :- 2 -:

Consequently, the delay is condoned and the appeal disposed off on merits.

3.

Shri N.Madhavan, ACIT represented on behalf of the Revenue and Shri S.Sridhar, Adv., represented on behalf of the assessee.

4.

It was submitted by the Ld.AR that in the course of assessment, it was noticed that the assessee had incurred expenditure on account of hospitality and gifts in respect of a meeting held in a Hotel. It was a submission that in the course of assessment, the assessee had specifically agreed to the addition on the ground that the same was an omission or an error with no other intent. It was a submission that the penalty u/s.271(1)(d) of the Act came to be initiated and levied on the assessee.

The assessee had submitted in the course of penalty proceedings that it was only a technical mistake or an error and that penalty was not liable to be levied on the assessee. It was a submission that the submissions of the assessee are rejected and penalty levied. It was a submission that on appeal, the Ld.CIT(A) had also confirmed the levy. It was a submission that this was a mistake on the part of the assessee and that all facts were placed before the AO. It was a submission that in view of the decision of the Hon’ble Supreme Court in the case of Price Water House Coopers Pvt. Ltd. v. CIT reported in [2012] 348 ITR 306, penalty as levied may be cancelled.

ITA No.2735/Mds/2014 :- 3 -:

5.

In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A).

6.

We have considered the rival submissions. A perusal of the Assessment Order shows that the AO has recorded the expenses on account of the hospitality and gifts was incurred in relation to the meeting held in a hotel and that the gifts represented the value of gold and silver coins presented as a token of mementos to various persons. The fact that the AO has recorded that the gifts were presented as token of mementos to various persons and not to the employees of the assessee clearly shows that the whole amount cannot be brought under the fringe benefit. This being so, considering the fact that the details of the expenditure had already been made available in the accounts of the assessee, it can fairly be concluded that the non-inclusion of the same for the purpose of fringe benefit computation is an oversight by mistake and not a contumacious conduct. This being so, applying the principles laid down by the Hon’ble Supreme Court in the case of Price Water House Coopers Pvt. Ltd. referred to supra, the penalty as levied on the assessee stands deleted.

ITA No.2735/Mds/2014 :- 4 -:

7.

In the result, the appeal filed by the assessee stands allowed.

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