DCIT, Pune V. Shri Vallabh Nagari Pat. Sanstha Ltd., Pune

ITA 1102/PUN/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3070 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Bonafide belief; Reasonable cause; Ignorance of law
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 1102/PN/2010 : A.Y. 2006-07 DY. CIT CIR. 10, PUNE APPELLANT VS. SHRI VALLABH NAGARI PATSANSTHA LTD., BRAHMAN BUDHWAR PETH, A/P JUNNAR, DIST. PUNE. PAN AABAS 3376 F RESPONDENT APPELLANT BY: SHRI ABHAY DAMLE RESPONDENT BY: NONE ORDER PER SHALENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-V PUNE DATED 14-5-2010 FOR A.Y. 2006-07 ON THE GROUND THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY OF RS. 3,07,125/- LEVIED U/S 271E OF THE ACT. 2. AT THE TIME OF HEARING OF THIS APPEAL, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, SINCE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE, WE HAVE PROCEEDED TO DISPOSE OFF THIS CASE AFTER HEARING TH E LEARNED DR. PAGE 2 OF 5 ITA NO. 1102/PN/2010 VALLABH NAGARI PATSANSTHA MARYADIT A.Y. 2006-07 3. AFTER HEARING THE SUBMISSIONS OF THE LEARNED DR AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT T HE ISSUE RAISED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THIS BENC H OF THE TRIBUNAL IN THE CASE OF SHARAD GRAMIN BIGAR SHE TI SAH. PAT SANSTHA VS. ASSTT. CIT RANGE 10, PUNE IN I TA NO. 53/PN/2009 FOR A.Y. 2005-06 WHEREIN VIDE ITS ORDER DATED 19-11-2010 THE TRIBUNAL HAS DISCUSSED THE ISSUE AT LENGTH AND DECIDED THE MATTER IN FAVOU R OF THE ASSESSEE BY OBSERVING AS UNDER: 2. IN SUPPORT OF THE GROUND, LEARNED AR SUBMITTED THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT THERE WAS A REASONABLE CAUSE WITH THE ASSESSEE FOR NOT COMPLYIN G WITH THE PROVISIONS OF SEC. 269T OF THE IT ACT. TH E ASSESSEE ENTERTAINED A BONAFIDE BELIEF THAT PROVISI ONS OF SECTION 269T WERE NOT APPLICABLE TO IT. HE POINTED OUT THAT MOST OF THE MEMBERS OF THE MANAGING COMMITTEE OF THE ASSESSEE ARE NOT MUCH EDUCATED. THUS, THE MEMB ERS AS WELL AS THE OTHER STAFF HAVE NO KNOWLEDGE TO INT RICATE WITH THE PROVISIONS OF THE ACT. THEY WERE UNDER TH E BONAFIDE BELIEF THAT SINCE THE ASSESSEE IS A CREDIT CO- OPERATIVE SOCIETY, DEALING ONLY WITH ITS MEMBERS, T HE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT WER E INAPPLICABLE TO IT. THIS BONAFIDE BELIEF WAS FURTH ER, REINFORCED BY THE FACT THAT NEITHER THE STATUTORY A UDITORS NOR THE TAX AUDITORS OF THE ASSESSEE APPRAISED IT A BOUT THE CORRECT LEGAL PROVISIONS. ALL ITS TRANSACTIONS OF ACCEPTANCE OF DEPOSITS ARE GENUINE AND THE IDENTITY OF ALL THE DEPOSITORS ARE BEYOND ANY DOUBT. THE LEARNED A R SUBMITTED THAT THE A.O HAS NOT DOUBTED THE GENUINEN ESS OF THE TRANSACTIONS OF THE DEPOSITS. HE SUBMITTED THAT THE BONAFIDE BELIEF ENTERTAINED BY THE ASSESSEE IN THE MATTER CONSTITUTES A REASONABLE CAUSE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 273B OF THE AC T. HE ALSO POINTED OUT THAT THE PUNE BENCH OF THE TRIBUNA L HAVE BEEN TAKING A CONSISTENT VIEW WITH A BONAFIDE BELIEF PAGE 3 OF 5 ITA NO. 1102/PN/2010 VALLABH NAGARI PATSANSTHA MARYADIT A.Y. 2006-07 THAT THE PROVISIONS ARE INAPPLICABLE AND CONSTITUTE S A REASONABLE CAUSE AND HENCE PENALTY CANNOT BE LEVIED U/S 271E OF THE ACT ON THE CO-OPERATIVE SOCIETY FOR TEC HNICAL OR VENIAL BREACH OF THE PROVISIONS. HE CITED THE F OLLOWING DECISIONS: I) M/S. VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT IN ITA NO. 1290/PN/2008 II) CIT VS. BANDHKAM KHATE SEVAKACHI SAHAKARI PAT SANSTHA MARYADIT IN ITA NO. 156 OF 2009, ORDER DATED 18-3-2009. III) CIT VS. EETAHI AGENCIES 248 ITR 525 (BOM) AND IV) CIT VS. JAYABHAWANI GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA LTD. IN ITA NO. 29 OF 2009 (BOMBAY HIGH COURT) ORDER DATED 20-3-2009 (SLP DISMISSED BY THE HON'BLE SUPREME COURT, (2010) 322 ITR 12 (STATUTE) 3. THE LEARNED DR ON THE OTHER HAND TRIED TO JUSTIF Y THE ORDER IMPUGNED WITH THE SUBMISSIONS THAT THE ASSESSEE HAS UNDISPUTEDLY VIOLATED THE PROVISIONS O F SECTION 269T OF THE ACT AND IGNORANCE OF LAW CANNOT BE TREATED AS A REASONABLE CAUSE TO DELETE THE PENALTY . 4. CONSIDERING THE ABOVE SUBMISSIONS, THERE IS NO DOUBT THAT IGNORANCE OF LAW CAN ALWAYS BE TREATED A REASONABLE CAUSE TO JUSTIFY THE NON-ATTRACTION OF P ENAL PROVISIONS U/S 271E OF THE ACT BUT THE LEGISLATURE KEEPING IN MIND POSSIBILITY OF IT HAS GIVEN DISCRET ION TO THE DEPARTMENT U/S 273B OF THE ACT, NOT TO LEVY U/S 271E OF THE ACT. THUS, FOR AVAILING THE BENEFIT U/S 273B OF THE ACT, THE ASSESSEE IS REQUIRED TO ESTABLISH THAT THE RE WAS REASONABLE CAUSE FOR ITS FAILURE IN COMPLYING WITH THE PROVISIONS OF SECTION 269T OF THE ACT. IN THE PRES ENT CASE, WE DO NOT FIND REASON TO DOUBT THE ABOVE SAID REASONABLE CAUSE FURNISHED BY THE ASSESSEE BEFORE T HE LOWER AUTHORITIES AND THE TRIBUNAL, THAT IT BEING A CREDIT CO-OPERATIVE SOCIETY DEALING ONLY WITH ITS MEMBERS, WAS UNDER IMPRESSION THAT THE PROVISIONS OF SEC. 269SS AND 269T OF THE ACT WERE INAPPLICABLE TO IT. THIS EXPL ANATION FINDS STRENGTH FROM THIS VERY FACT THAT NEITHER THE STATUTORY AUDITORS NOR THE TAX AUDITORS OF THE ASSE SSEE SOCIETY APPRAISED IT ABOUT THE CORRECT LEGAL PROVIS IONS IN THIS REGARD, AS SUBMITTED BY THE LEARNED AR. IN TH E CASE PAGE 4 OF 5 ITA NO. 1102/PN/2010 VALLABH NAGARI PATSANSTHA MARYADIT A.Y. 2006-07 OF CIT VS. EETAHI AGENCIES (SUPRA) THERE WAS FAILUR E TO COMPLY WITH THE PROVISIONS OF SECTION 269T OF THE A CT AND PENALTY U/S 271E WAS LEVIED. THE TRIBUNAL FOUND TH AT THE ASSESSEE HAD COMMITTED VIOLATION OF SECTION 269 T UNDER A GENUINE BELIEF THAT SEC. 269T HAD NO APPLIC ATION TO DEPOSITS AND THAT IT ONLY APPLIED TO LOANS. THE DEPARTMENT PREFERRED APPEAL AGAINST SAID ORDER OF T HE TRIBUNAL BEFORE THE HONBLE HIGH COURT WHEREIN, THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD THAT THE PENALTY WAS RIGHTLY DELETED BY THE TRIBUNA L. AGAIN IN THE CASE OF CIT VS. JAYABHAWANI GRAMIN BIG AR SHETI SAHAKARI PAT SANSTHA LTD. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO UPHOLD THE DECISION OF THE TRIBUNAL ACCEPTING REASONABLE CAUSE U/S 273B IN CASE OF VIOLATION OF THE PROVISIONS OF SEC. 269SS OF THE ACT. THE DEPARTMENT HAD PREFERRED SLP BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT WHICH HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT REPORTED IN (2010) 322 ITR 12 (STATUTE). RESPECTFULLY FOLLOWING DECISIONS OF T HE HONBLE COURTS, WE ARE OF THE VIEW THAT THERE WAS REASONABLE CAUSE WITH THE ASSESSEE IN NURTURING A BONAFIDE BELIEF THAT THE PROVISIONS OF SEC. 269T WE RE NOT APPLICABLE IN ITS CASE. WE, THEREFORE, SET ASIDE T HE FIRST APPELLATE ORDER ON THE ISSUE AND DIRECT THE A.O TO DELETE THE PENALTY IN QUESTION LEVIED U/S 271E OF THE ACT. THE GROUNDS RAISED ARE ACCORDINGLY ALLOWED. 4. FACTS BEING SIMILAR, SO FOLLOWING THE SAID DECIS ION OF THE TRIBUNAL IN THE CASE OF SHARAD GRAMIN BIGAR SHETI SAH. PAT SANSTHA (SUPRA), WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY OF RS. 3,07,125/- LEVIED U/S 271E OF THE ACT. PAGE 5 OF 5 ITA NO. 1102/PN/2010 VALLABH NAGARI PATSANSTHA MARYADIT A.Y. 2006-07 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THE 15 TH DECEMBER 2010. SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 15 TH DECEMBER 2010 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- V PUNE 4. THE CIT- V PUNE 5. THE D.R, B BENCH, PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE