2019 (9) TMI 442 - AT - Income Tax

Penalty u/s.271(1)(d) - assessee has not filed any return of income under the provisions of FBT - HELD THAT - Assessee has not filed return of FBT even though assessee has incurred several expenditures, which attract FBT provisions. The AO has issued notice u/s.115WH of the Act on 31-10-2008 and in several occasions. Further, notices were issued to the assessee and assessee has not filed any return of income even though the above mistake was brought to the notice of the AR, who was appearing for the regular assessment u/s.143(3) of the Act. But assessee chose not to file return of income under the provisions of Section 115WD of the Act. The AO also issued penalty notice u/s. 271(1)(d) of the Act, initiating penalty proceedings. During the penalty proceedings also, assessee submitted that assessee has neither received any assessment order under FBT provisions nor received any demand notice or penalty notice. The same was served on 24-05-2010. If there is any objection, assessee could have filed submissions before the AO. Even though the penalty proceedings were completed on 31-05-2010. The assessee has chose not to respond to any of the proceedings u/s.115WE of the Act nor penalty proceedings. Therefore, in our considered view, it is a fit case for levy of penalty. Accordingly, we sustain the penalty u/s.271(1)(d) of the Act. Accordingly, the Ground raised by assessee is dismissed.

Summary

Issues:
1. Failure to file return of Fringe Benefit Tax (FBT) for AY 2006-07.
2. Initiation of re-assessment proceedings and penalty proceedings under section 271(1)(d) of the Income Tax Act.
3. Appeal before CIT(A) challenging the penalty imposition.
4. Grounds of appeal raised by the assessee.
5. Arguments presented by the Authorized Representative (AR) and the Departmental Representative (DR).
6. Adjudication on the penalty imposition and sustainment of penalty under section 271(1)(d) of the Act.

Analysis:

Issue 1: Failure to file return of Fringe Benefit Tax (FBT) for AY 2006-07
The assessee, engaged in the business of chit fund, failed to file the return of FBT despite its applicability. Re-assessment proceedings were initiated by the Assessing Officer (AO) upon noticing this omission. The assessment was eventually completed under section 115WF r.w.s. 115WG (FBT) of the Act. Penalty proceedings under section 271(1)(d) were also initiated due to non-compliance.

Issue 2: Initiation of re-assessment proceedings and penalty proceedings under section 271(1)(d) of the Income Tax Act
The AO issued notices for re-assessment under section 115WH of the Act, but the assessee did not respond adequately. Penalty proceedings were initiated, and despite opportunities given, the assessee did not provide any submissions on the levy and penalty. The penalty was levied under section 271(1)(d) of the Act, amounting to ?74,873.

Issue 3: Appeal before CIT(A) challenging the penalty imposition
The assessee appealed before the CIT(A), arguing that they were not aware of the FBT provisions, and any omission was unintentional. However, the CIT(A) confirmed the penalty, stating that lack of awareness of provisions is not a reasonable cause for non-compliance.

Issue 4: Grounds of appeal raised by the assessee
The grounds of appeal raised by the assessee included challenging the CIT(A)'s order as erroneous on facts and in law, and contesting the levy of penalty under section 271(1)(d) of the IT Act.

Issue 5: Arguments presented by the Authorized Representative (AR) and the Departmental Representative (DR)
The AR argued that the FBT provisions were withdrawn post a certain date, and therefore, the penalty should not be applicable. In contrast, the DR emphasized that the assessee had multiple opportunities to comply but failed to do so, and lack of awareness was not a valid excuse.

Issue 6: Adjudication on the penalty imposition and sustainment of penalty under section 271(1)(d) of the Act
Upon considering the submissions and records, it was noted that the assessee did not file the FBT return despite multiple notices and opportunities. The tribunal found it appropriate to levy the penalty under section 271(1)(d) of the Act, sustaining the penalty imposition. Consequently, the appeal of the assessee was dismissed, upholding the penalty.

In a subsequent appeal (ITA No.1248/Hyd/2016), where similar conduct and facts were observed, the penalty under section 271FB of the Act was also sustained, resulting in the dismissal of the appeal.