TaxTMI 
TaxTMI 
2026 (6) TMI 298
X X X X Extracts X X X X
X X X X Extracts X X X X
....st the Commissioner of Income Tax (Appeals-I), New Delhi's orders both dated 26.03.2014, passed in case Nos. 20/12-13 & 21/12-13, involving proceedings u/s 271(1)(d) of the Act; respectively Case called twice. None appears at the assessee's behest. It is accordingly proceeded ex-parte. 2. We next advert to the assessee's instant twin appeals ITA Nos. 4885 & 4886/Del/2011/ It emerges from a combined perusal of a case records as well as valuable assistance coming from Revenue side represented by the learned CIT(DR) that both the lower authorities' respective identical assessments framed on 25.05.2010 and 29.12.2010 appear to have treated the assessee's expenses incurred on free/concessional tickets, hospitality charges, conveyance/travelling expenses, goods as well as hotel boarding and lodging expenses; involving varying sums, as attracting assessment under the head "fringe benefits" which stand upheld in the CIT(A) lower appellate discussion. We make it clear that there is not much a dispute in principle that the learned Assessing Officer had referred the matter to the special auditor u/s 142(2) of the Act which followed the latter's special audit report submitted on 25.03.20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....10 of The Code of Civil Procedure, 1908], I decline to go into specific additions and the merits thereof, except as may be required to examine whether its non-disclosure would attract penalty. The matter in issue in this appeal is whether the additions to the value of fringe benefits made by the revenue and confirmed by the CIT(A) constitutes 'concealment' or filing of 'inaccurate particulars' so as to attract penalty u/s 271(1)(d). In order to determine this question, I shall apply the tests laid down in Dilip N Shroffs case (supra) as affirmed in the Reliance Petroproducts case (supra). I shall also examine some related issues such as whether it is a case of two opinions or disallowance of legal claim, and whether reasonable cause is essential to escape attracting penalty. 3.3 In Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519/161 Taxman 218 (SC), Hon'ble Supreme Court ruled that irrespective of the deletion of the word 'deliberately' from the statue [Section 271(1)(c)] by the Finance Act 1964, in view of the quasi-criminal nature of penalty proceedings and application of strict construction, the primary burden is on the revenue to establish t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the point of mens rea that the judgment in Dilip N. Shroff's case (supra) was upset. In Dharamendra Textile Processors' case (supra), after quoting from section 271 extensively and also considering section 271(1)(c), the Court came to the conclusion that since section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of section 271(1)(c) read with Explanations indicated with the said section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff's case (supra) was overruled by this Court in Dharamendra Textile Processors' case (supra), was that according to this Court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in case of Dilip N. Shroff (supra). However, it must be pointed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l tickets issued by the airline companies, no provision for the same has been made upto 31.03.2008 in the books of account amounting to Rs. 466 lac (Previous Year Rs. 225 lac)." Further, in the Notes to Annexure II to the Tax Audit Report of the appellant for FY 2007-08, it has been specifically disclosed that "Free/concessional tickets are issued to the employees on standby / subject to load basis unlike tickets issued to the general public. Pending consideration and response on the representation filed by the BAR (I) and 96th Parliament Report recommending removal of such Fringe Benefits Tax (FBT), the value of such tickets have considered as NIL." I find that even though the amount of Rs. 7,07,98,860/- was not included in the return of taxable fringe benefits, there was adequate disclosure in regard to said amount representing value of free /concessional tickets to employees and, therefore, it cannot be concluded that the appellant had hidden or concealed something or filed 'inaccurate' particulars relating thereto. I further find from the documents that the claim that this benefit to its employees is subject to 'load basis' or availability of vacant seats, which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ervice, catering and in-flight services are mostly charged services and, therefore, the question of any 'hospitality' and any fringe benefit arising therefrom does not arise. So far as interrupted flight expenses, flight delay expenses and denied pax expenses are concerned, no doubt many of these expenses, such as food & beverages, hotel stay, etc., are in the nature of 'hospitality' expenses. However, these expenses are incurred due to contractual and/or legal obligation of the appellant towards the passengers/customers and meant to compensate for the delay/cancellation / denied boarding. What is paid in consequence of contractual or legal obligation cannot be said to be giving rise to any benefit. It is expenditure only meant to safeguard the commercial interest of the appellant company and save it from damages. In my considered opinion, such expenses do not result in any fringe benefit and cannot be brought to tax within the said provisions. Accordingly, with regard to any addition on this count, it cannot be said that the appellant has filed 'inaccurate particulars' relating thereto. I also find that my two predecessor CIT(A) have differed in their view ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....axable u/s 115WB(2)(Q), and the exception made u/s 115WC(2)(f) establishes this difference. Therefore, it cannot be said that non-inclusion of Rs. 99,05,210/- in the return amounts to filing 'inaccurate' particulars so as to attract penalty u/s 271(1)(d). I hold accordingly. 3.9 The next item amounting to Rs. 1,38,271/- represents chargeable value of 'crew-travelling expenses - international' included under tour and travel expenses. The case of the appellant is that this is per diem allowance given to the crew on international flights in consequence of DGCA regulations and for operational needs and, as it does not result in any benefit to the employees, it is not chargeable to FBT. From the description given by the appellant, it appears that these expenses are covered under clause (G) to section 115WB(2) and not clause (Q). Had the appellant applied this clause, it would have offered this benefit to tax at the same rate of 5% as per the concession provided u/s 115WC(2)(da). No doubt the expenditure is in consequence of DGCA regulations and for operational needs, but the provisions of law are to be applied correctly and to this extent the appellant can be sa....