1991 (4) TMI 183 - AT - Income Tax

Summary

Issues:
- Appeal against Commissioner's order under section 285A of the Income-tax Act, 1961 for failure to furnish information in Form No. 52.
- Applicability of section 285A to the assessee.
- Ignorance of law as a ground for not furnishing information.
- Exclusion of material manufactured by the assessee from contract values.
- Bona fide belief as a defense against imposition of fine.
- Discretionary nature of fine under section 285A.
- Obligation to furnish information in Form No. 52.
- Reduction of fine imposed by the Commissioner.

Analysis:
The appeal before the Appellate Tribunal ITAT DELHI-E involved a case where the appellant firm, engaged in manufacturing and trading of tiles, contested the imposition of a fine under section 285A of the Income-tax Act, 1961 by the Commissioner of Income-tax, Delhi-X, for failure to furnish information in Form No. 52. The appellant argued that the provisions of section 285A were not applicable as the disclosed contract receipts included the sales amount of tiles manufactured by the assessee, thus not exceeding the threshold of Rs. 50,000 per contract.

The appellant further contended that their long-standing business history and the absence of prior invocation of section 285A supported their claim of ignorance of the law's applicability. Additionally, the appellant asserted a bona fide belief defense, citing relevant legal precedents such as the decision in ITO v. Madnani Engg. Works Ltd., emphasizing the absence of evidence showing deliberate disregard for statutory provisions.

On the other hand, the Departmental Representative supported the Commissioner's order, arguing against the appellant's ignorance claim due to representation by an experienced Chartered Accountant. It was highlighted that the inclusion of supply and services contracts under section 285A from 1-4-1976 precluded the exclusion of tile supply values from contract totals for information furnishing obligations.

Upon careful consideration, the Tribunal acknowledged the supply of tiles as integral to the contracts, necessitating information disclosure under section 285A when contract values exceeded Rs. 50,000. However, given the absence of evidence indicating intentional non-compliance and the appellant's misconceptions regarding their obligations, the Tribunal deemed a token fine of Rs. 1,000 as appropriate, significantly reducing the initial fine of Rs. 25,000 imposed by the Commissioner.

Ultimately, the Tribunal partially allowed the appeal, emphasizing the discretionary nature of fines under section 285A and the importance of fair and judicious exercise of such powers by tax authorities.