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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI A. MOHAN ALANKAMONY & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The Revenue has filed an appeal against the order of Commissioner of Income Tax (Appeals)-1, Chennai in dated 01.07.2016 u/s. 271(1)(d) and 250 of the Income Tax Act.
:-2-: I.T.A. No. 2785/Mds/2016
The Revenue has raised the following grounds:
2.1 The Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(d) of the Income Tax Act, without appreciating the fact that the assessee company had furnished in accurate particulars with reference to the contribution to the superannuation fund, which is chargeable to FBT.
2.2 The Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(d) of the Income Tax Act, without appreciating the fact that the assessee company had furnished in accurate particulars in as much as the superannuation fund contribution was reduced from the memo of total income u/s. 43B of the Income Tax Act, which is equivalent to a debit in the profit and loss account, on which FBT is exigible.
2.3 The Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(d) of the Income Tax Act, observing that the penalty was levied ex-parte, without appreciating the fact that the Assessing Officer had issued necessary notices and hearing letters to the assessee, for which no response was forth coming from the assessee, resulting in the levy of penalty.
At the time of hearing, none appeared on behalf of the assessee. The Brief facts of the case are that the assessee company has filed the Return of fringe benefit tax for the assessment year 2006-07 on 28.11.2006 with fringe benefit value of Rs. 11,72,798/- and the Return of Fringe Benefit Tax was :-3-: I.T.A. No. 2785/Mds/2016 processed and order u/s. 115WE(3) of the Act was passed on 30.12.2008.
Whereas, the Assessing Officer subsequently, found in the said assessment year, assessee company has deducted an amount of Rs. 22,44,365/- towards the superannuation fund of the employees and the superannuation expenditure is chargeable to fringe benefit tax. The Ld. AO issued notice u/s. 115WH of the Act on 09.11.2011. In the assessment proceedings, it was explained that the expenditure was incurred towards employees' superannuation fund and disallowed in the computation of income for the assessment year 2006-07 and the entries were subsequently reversed in the assessment year 2007-08. But the Ld. AO found an amount of Rs. 38,76,109/- was contributed to the superannuation fund and was claimed as deduction. Such contribution pertains to earlier years and the FBT shall be applicable only when it is debited to the profit and loss account. The assessee claimed the contribution to the superannuation as deduction u/s. 43B of the Act from the computation of total income. The Ld. AO is of the opinion that the claim in the computation of income is equal to claim made the profit & loss account and such expenditure is liable to fringe benefit tax and with these observations the Ld. AO has initiated penalty proceedings u/s. 271(1)(d) of the Act for furnishing inaccurate particulars and was of the opinion that contribution to the employee superannuation fund and is chargeable to fringe benefit tax and since, no reply was filed by the assessee and the Assessing
:-4-: I.T.A. No. 2785/Mds/2016 Officer passed the exparte penalty order levying penalty of Rs. 12 lakhs vide order dated 13.09.2013.
Aggrieved by the order, the assessee filed an appeal before the CIT(A).
In the appellate proceedings, the Ld. AR explained that the assessee company has not concealed any income or furnished inaccurate particulars and the facts were disclosed in the Tax audit report u/s. 44AB of the Act filed along with the Return of income and supported with the judicial decisions of Hon'ble Supreme Court and High Courts. The Ld. CIT(A) considered the grounds and submissions on the provisions of section 271(1)(d) of the Act and observed that the assessee has filed explanations on contributions to the superannuation fund related to assessment years 2000-01 and 2001-02 and have reasonable cause. Further, the assessee has furnished the details in the Tax audit report u/s. 44AB of the Act and hence there is no concealment of particulars of fringe benefits and deleted the penalty and observed at Page 4 Para 9 of the order which read as under:
"From the facts discussed in the foregoing the appellant cannot be held to have displayed contumacious behaviour in offering an explanation or substantiating the same at the stage of assessment. The penalty itself has been imposed exparte as is evident from the order also. The appellant has filed the necessary financials to back its assertion with regard to the claim made in respect of the provision for superannuation fund, which was also mentioned in the annexure to the tax audit report for the period under consideration. Hence, in my
:-5-: I.T.A. No. 2785/Mds/2016 considered view the appellant has not concealed any particulars of income or fringe benefit nor has furnished any inaccurate particulars thereof. If any there could be a difference of opinion on the exigibility of tax on the impugned amount u/s. 115WE itself. Taking the sum totality of facts before me into account I do not find that it is a fit case for imposition of penalty u/s. 271(1)(d). The AO is therefore directed to delete the penalty and modify the order accordingly."
Aggrieved by the CIT(A) order, the Revenue has filed an appeal before us. The Ld. DR argued that the Ld. CIT(A) has erred in deleting the penalty without appreciating that the assessee company has not furnished accurate particulars which are chargeable to FBT. The assessee has claimed deduction on contribution to superannuation fund under the provisions of section 43B of the Act and since the assessee has not cooperated in the penalty proceedings the Assessing Officer has passed the ex-parte penalty order and prayed for setting aside of the CIT(A) order. Contra, the Ld. AR relied on the orders of the CIT(A) and supported his arguments with the facts of Tax Audit report of by the assessee and prayed for dismissal of the Revenue grounds.
We heard the Ld. DR and perused the material on record and judicial decisions. The sole crux of the issue being the levy of penalty u/s. 271(1)(d) of the Act in respect of claim of contribution to superannuation fund by the assessee in the computation of income pertaining to the earlier years 1999- 2000, 2000-01, 2001-02. The assessee has disclosed the fact of claim of deduction before lower authorities in the Tax Audit u/s. 44AB of the Act. We
:-6-: I.T.A. No. 2785/Mds/2016 find as per submissions before appellate authorities the said amount pertaining to earlier assessment years and was claimed in the current assessment year, whereas, the provisions of Fringe Benefit Tax u/s. 115J were not applicable. We find the chapter XIIH of Income Tax of Fringe Benefits was introduced in the Finance Act, 2005 Applicable from 01.04.2016 i.e., assessment year 2006-07 and the superannuation fund contribution amount pertains to the earlier assessment years. Therefore, we are of the opinion that the contribution does not come into the purview of Fringe Benefit Tax which is effective from assessment year 2006-07. Considering the apparent facts material on record, we are of the opinion that the CIT(A) appeal has discussed the issue on facts and provisions of law and relied on the judicial decisions vis-a-vis, the explanations of the assessee and directed the AO to delete the penalty. Accordingly, we are not inclined to interfere with the order of the CIT(A) and uphold the same and dismiss the Revenue ground.
In the result, Revenue appeal is dismissed.
Order pronounced on Thursday, the 23rd day of March, 2017 at Chennai.