Case Law Details
M/s. Gujrani & Co. Vs. Income Tax Officer (ITAT Kolkata)
It is observed that the audit expenses of Rs. 5,19,238/- were claimed to be incurred by the assessee- company towards traveling and conveyance of the Articled Clerks, who were C.A. students receiving training from the assessee- firm. It was contended by the assessee during the course of assessment proceedings as well as during the course of penalty proceedings that there being no employer-employee relationship between the assessee- firm and the Articled Clerks, the audit expenses did not fall under the ambit of FBT. Although this claim of the assessee was not accepted by the Assessing Officer on the ground that it was specifically submitted by the assessee earlier that the audit expenses were incurred by its Audit staff and Audit Clerks without any reference to the Articled Clerks undergoing training with it, it is observed that nothing has been brought on record by the Assessing Officer to establish that the claim of the assessee was wrong and the audit expenses in question were incurred on the Audit staff, which did not include Articled Clerks undergoing training with the assessee- firm as per the stipulation of the ICAI. No doubt, the assessee- firm also failed to bring anything on record to support and substantiate its explanation but such failure, in our opinion, can justify the addition made by the Assessing Officer to the value of Fringe Benefit but not the imposition of penalty under section 271(1)(d), especially when the audit expenses were separately debited by the assessee- firm in its Profit & Loss Account and all the relevant details of the same were fully and truly furnished by the assessee during the course of assessment proceedings before the Assessing Officer. Keeping in view all these facts and circumstances of the case, we are of the view that it is not a case where the assessee can be said to have furnished inaccurate particulars of Fringe Benefits to justify the imposition of penalty under section 271(1)(d). We, therefore, cancel the said penalty and allow this appeal of the assessee.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-21, Kolkata dated 16.03.2016, whereby he confirmed the penalty of Rs. 35,298/- imposed by the Assessing Officer under section 271(1)(d) of the Income Tax Act, 1961.
2. The assessee in the present case is a partnership firm of practicing Chartered Accountants. The return of income for the year under consideration was filed by it on 28.09.2009 declaring total income of Rs. 6,35,470/-. In the Profit & Loss Account filed along with the said return, a sum of Rs. 5,19,238/- was debited by the assessee on account of audit expenses. On verification of the said expenses, it was found by the Assessing Officer that the said expenses were incurred by the assessee on account of traveling and conveyance of its Audit Staff and Audit Clerks. According to the Assessing Officer, the said expenses were liable to be taken into account while calculating the value of Fringe Benefit and since it was not done by the assessee, he required the assessee to offer its explanation in the matter. In reply, it was submitted by the assessee that the audit expenses were incurred for Articled Clerks, who were C.A. students receiving training and since there was no employer-employee relationship between the assessee and the said Articled Clerks, the audit expenses did not fall under the ambit of FBT. This explanation offered by the assessee was not found acceptable by the Assessing Officer keeping in view that it was specifically submitted by the assessee during the course of assessment proceedings that the audit expenses were incurred by its Audit Staff and Audit Clerks while conducting the Audit assignments at client’s office or work place. He, therefore, included the audit expenses of Rs. 5,19,238/- while calculating the value of Fringe Benefit and also initiated penalty proceeding under section 271(1)(d). In reply to the show-cause notice issued by the Assessing Officer during the course of penalty proceedings, it was submitted by the assessee that there was no attempt made by it to furnish inaccurate particulars of Fringe Benefits, inasmuch as the expenses incurred on audit were properly and clearly shown in the Profit & Loss Account. This explanation of the assessee was not found acceptable by the Assessing Officer and he proceeded to impose penalty of Rs. 35,298/- under section 271(1)(d) on account of FBT sought to be evaded by the assessee.
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