Income Tax Appellate Tribunal - Delhi
Northern (India) Tiles Corpn. vs Inspecting Assistant Commissioner on 4 April, 1991
Equivalent citations: [1992]42ITD464(DELHI)
ORDER
M.A. Bakhshi, Judicial Member
1. This appeal by the assessee is directed against the order of the Commissioner of Income-tax, Delhi-X, New Delhi passed under Section 285A of the Income-tax Act, 1961. The appellant firm is engaged in the manufacturing and trading of mosaic plain and chequered tiles. Besides the assessee has also executed contracts of which the turnover has been disclosed at Rs. 19,41,923. The CIT initiated proceedings for imposition of fine under Section 285A for assessee's failure to furnish the information in Form No. 52 as required by Section 285A read with Rule 120 of the Income-tax Rules, 1962. The assessee pleaded ignorance of law as a ground for not furnishing the information. It was also pleaded that provisions of Section 285A were not applicable to the assessee as the amount of contract receipts disclosed by the assessee was inclusive of the amount of sales made on account of titles manufactured by the assessee.
2. According to the learned counsel for the assessee, Shri Ramanand Ayer, if the material manufactured by the assessee is excluded from the total amounts received on account of each contract executed by the assessee the value of each contract would not exceed Rs. 50,000 and accordingly, the provisions of Section 285A would not be attracted. The learned counsel further contended that the assessee was in business for the last 20 years and had executed contracts like those executed in the year in appeal. The revenue has never invoked Section 285A in the assessee's case giving credence to the assessee's plea that Section 285A was not attracted to assessee's case.
3. In the alternative, the learned counsel contended that the assessee having acted under a bona fide belief fine under Section 285A is not warranted. Shri Ayer referred to the decision of the Hon'ble Supreme Court in the case of ITO v. Madnani Engg. Works Ltd. [1979] 118 ITR 1, wherein Their Lordships of the Supreme Court have observed that there is no presumption that everybody knows the law. According to the learned counsel, there is nothing on record to justify the inference that the assessee has consciously acted in disregard to the statutory provisions of law. According to the learned counsel for the assessee, the assessee was ignorant which justifies cancellation of fine imposed by the Commissioner. He relied upon the decision of the Andhra Pradesh High Court in the case of Addl. CIT v. Khayam Constructions [1980] 123 ITR 573 in support of the proposition that the fine imposable under Section 285A is not mandatory but only discretionary and the power has got to be exercised by the Commissioner Judiciously and fairly keeping in view the facts and circumstances of each case.
4. The learned Departmental Representative Smt. Shebha Bhattacharya, supported the order of the Commissioner of Income-tax. It was contended by her that the assessee was represented by experienced Chartered Accountant and as such, the plea regarding ignorance of law cannot be accepted. According to the learned Departmental Representative the contract for supply and services has been included within the purview of Section 285A with effect from 1-4-1976 and as such, the value of supply of tiles cannot be excluded from the total value of contracts in order to determine the assessee's obligation of furnishing the information in Form No. 52 as provided under Section 285A. She accordingly, urged for confirming the fine imposed by the Commissioner of Income-tax.
5. We have given our careful consideration to the rival contentions. In our view the supply of tiles was part of each contract executed by the assessee and accordingly, wherever the value of the contract exceeded Rs. 50,000 the assessee was under obligation to furnish information in Form No. 52 as per provisions of Section 285A. However, keeping in view the fact that the revenue did not point out the default committed by the assessee for several years it is not unbelievable that the assessee carried the wrong notion of law in respect of its obligation under Section 285A. There being no material on record,that the assessee has acted deliberately in defiance of law, we are of the view that only a token fine is justified in this case. We accordingly, reduce the fine to Rs. 1,000 as against Rs. 25,000 imposed by the Commissioner. Excess fine shall be refunded to the assessee if the same has already been collected.
6. For statistical purposes, the appeal is party allowed.