Case Law Details
Brief of the Case
In the case M/s. Ashok Trading Co. Vs. ITO the Hon’ble Kolkata ITAT held that as per sub-section (2) of 115WD, if the assessee had not filed the return of Fringe Benefit but in the opinion of the AO he should have filed the return, the AO should issue notice requiring it to file such return, but no such notice was issued by the AO. Also, there was no charge of the department that the assessee concealed any particulars or submitted inaccurate particulars of income. Since it was the first year of applicability of FBT, when FBT return was required to be filed and due taxes were paid by assessee, therefore, the Hon’ble ITAT is of the opinion that the default on the part of the assessee cannot be considered as malafide and thus, the penalty for non-filing of return u/s 271FB was cancelled.
Facts of the Case
The assesese filed its return of income declaring total income of Rs.8.95,090/-. In the course of assessment proceedings, the AO noticed that the assessee did not file its return of FBT for the AY 2006-07, although there was taxable Fringe Benefits during the year. The AO after considering the assessee’s submissions added Rs.1,38,406/- as total Fringe Benefits of the assessee as undisclosed Fringe Benefits. As the assessee failed to file any return of FBT even within the time as provided under section 115WD(1), therefore, notice under section 115WH was issued by the AO to the assessee calling for return of FBT, but the assessee failed to furnish the same till completion of the assessment.
Accordingly Penalty u/s 271FB was initiated.
Contention of the Assessee
Ld. Counsel for the assessee submitted that the assessee was represented by CA and it was under the impression that all the statutory requirements have been complied with for filing return.
Contention of the Revenue
The Ld. DR of Department relied on the order of the Ld. CIT(A), wherein the Ld. CIT(A) confirmed the applicability of Penalty u/s 271FB as initiated by the AO. Before the Ld. CIT(A), it was submitted by the Ld. DR that this year was the first year of applicability of FBT under the Income Tax Act, 1961 and the assessee failed to file the return. However, the AO assessed the FBT as per the details filed by the assessee.
Held by CIT(A)
Ld. CIT(A) upheld the Order of the AO and confirmed the Penalty initiated u/s 271FB.
Held by ITAT
ITAT held that there is no dispute that the assessee was required to file the return of Fringe Benefit. As per sub-section (2) of section 115WD, if the assessee had not filed the return of Fringe Benefit but in the opinion of AO he should have filed the return, the AO would issue notice requiring it to file such return, but no such notice was issued by the AO. All the facts came to the notice of the AO only in the course of assessment proceedings and there is no charge of the Department that the assessee concealed any particulars or submitted inaccurate particulars of income. No doubt, there is specific requirement of filing the return of income, but since it was the first year of applicability of FBT, when FBT return was required to be filed and due taxes were paid by assessee.
Therefore, the Hon’ble ITAT is of the opinion that the default on the part of the assessee cannot be considered as malafide and it also cancelled the Penalty initiated by the AO u/s 271FB for non-filling of the Return.
