Indian Mercantile Co-operative Bank Ltd., Lucknow V. Director of Income Tax (I & CI), Lucknow

ITA 121/LKW/2015

• Counselvise Citation: 12123714 RSA 2015
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Ignorance of law
• Section: 273B; 27

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.121 TO 124/LKW/2015 FINANCIAL YEARS :2008-09 TO 2011-12 INDIAN MERCANTILE CO - OPERATIVE BANK LTD., 26-A, CANTT ROAD, LUCKNOW TAN LKNI 05058 E VS. DIRECTOR OF INCOME TAX (I & CI) LUCKNOW (APPELLANT) (RESPONDENT) A SSESSEE BY SHRI SUBHAM RASTOGI, C.A. RE VENUE BY SMT. ALKA SINGH, D.R DATE OF HEARING 1 4 /0 8 /201 5 DATE OF PRONOUNCEMENT 2 0 / 0 8 / 2 0 1 5 O R D E R PER SUDHANSHU SRIVASTAVA , J.M. : 1. THESE FOUR APPEALS ARE PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS - II), LUCKNOW, DATED 26.11.2014, CONFIRMING IMPOSITION OF PENALTY U/S 271FA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). THESE A PPEALS PERTAIN TO F.YS. 2008-09, 2009-10, 2010-11 & 2011-12. FOR F.Y. 2008-09, THE PENALTY IMPOSED IS RS.1,44,800/-, FOR F.Y. 2009-10 IT IS RS.1,08,300/-, FOR F.Y. 2010-11 IT IS RS.71,900/- AND FOR F.Y. 201 1-12 IT IS RS.35,300/-. ALL THESE APPEALS ARE BEING DISPOSED OF BY THIS COM MON ORDER. 2 2. ON A CAREFUL PERUSAL OF THE ORDERS PASSED U/S 27 1FA OF THE ACT, WE FIND THAT AS PER ITEM NO.1 OF THE TABLE IN RULE 114 E(2) OF THE I.T. RULES, 1962, IT IS SPECIFIED THAT A BANKING COMPANY TO WHI CH THE BANKING REGULATION ACT, 1949, APPLIES (INCLUDING ANY BANK O R BANKING INSTITUTION REFERRED TO IN SECTION 51 OF THAT ACT) IS REQUIRED TO FILE ANNUAL INFORMATION RETURN (AIR) IN RESPECT OF TRANSACTIONS OF CASH DEPOSITS AGGREGATING TO TEN LAKH RUPEES OR MORE IN A YEAR IN ANY SAVINGS BANK ACCOUNT OF THE PERSON MAINTAINED IN THAT BANK. THE DUE DATE OF FILING THE AIR IS 31 ST AUGUST IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH THE TRANSACTION IS REGISTERED OR RECORDED. IN THE E VENT OF FAILURE TO FURNISH THE AIR, PENALTY IS LEVIABLE U/S 271FA OF T HE ACT. SECTION 271FA READS AS UNDER:- IF A PERSON WHO IS REQUIRED TO FURNISH AN AIR, AS REQUIRED UNDER SUB-SECTION (1) OF SECTION 285BA, FAILS TO FU RNISH SUCH RETURN WITHIN THE TIME PRESCRIBED UNDER THAT SUB SE CTION, THE IT AUTHORITY PRESCRIBED UNDER THAT SUB-SECTION MAY DIRECT THAT SUCH PERSON SHALL PAY , BY WAY OF PENALTY, A SUM OF ONE HUNDRED RUPEES FOR EVERY DAY DURING WHICH THE FAILU RE CONTINUES. 3. ADMITTEDLY, THE ANNUAL INFORMATION RETURNS (AIRS ) WERE NOT FURNISHED BY THE DUE DATES IN ANY OF THE YEARS IN A PPEAL BEFORE US. IT IS SEEN FROM THE RECORDS THAT THERE WAS A DELAY OF 144 8 DAYS IN F.Y. 2008- 09, DELAY OF 1083 DAYS IN F.Y. 2009-10, DELAY OF 71 9 DAYS IN F.Y. 2010- 3 11 AND DELAY OF 353 DAYS IN F.Y. 2011-12.. IT IS AL SO SEEN FROM THE RECORDS THAT IN RESPONSE TO THE SHOW CAUSE NOTICE F OR IMPOSITION OF PENALTY U/S 271FA OF THE ACT, THE ASSESSEE SUBMITTE D BEFORE THE DIRECTOR OF INCOME TAX (I & CI), LUCKNOW THAT THE D ELAY IN FILING ANNUAL INFORMATION RETURN WAS UNINTENTIONAL AND UNDER THE WRONG NOTION THAT THEY WERE NOT REQUIRED TO FILE THE RETURN. IT WAS S UBMITTED BEFORE THE DIT (I & CI) THAT THE MISTAKE WAS DUE TO NOT PROPER LY UNDERSTANDING THE PROVISIONS OF THE ACT AND IT WAS PRAYED THAT A LENI ENT VIEW MAY BE TAKEN. IT IS ALSO SEEN FROM THE RECORDS THAT IN SUP PORT OF ITS CONTENTIONS, THE ASSESSEE HAD FILED AN 'OPINION' FROM M/S SANDEE P PRAKASH & CO., CHARTERED ACCOUNTANTS ON 18.12.2012 BEFORE THE DIRE CTOR OF INCOME TAX (I & CI) LUCKNOW WHEREIN IT WAS THE EXPERT OPINION OF THE CHARTERED ACCOUNTANT THAT IN VIEW OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GREATER BOMBAY CO-OPERATIVE BANK LTD. V S. UNITED YARN TEX PVT. LTD. & ORS. (CASE NO.432/2004), COOPERATIVE SO CIETIES DO NOT FALL WITHIN THE MEANING OF BANKING COMPANY AS REFERRED TO IN RULE 114E OF THE INCOME TAX RULES, 1962. IT WAS THE OPINION OF T HE CHARTERED ACCOUNTANT THAT COOPERATIVE SOCIETIES DOING BANKING BUSINESS ARE NOT OBLIGED TO FILE ANNUAL INFORMATION RETURN U/S 285BA OF THE ACT R.W.R. 114E OF THE IT RULES. THE ASSESSEE CLAIMED THAT DUE TO IGNORANCE OF THE 4 LEGAL PROVISIONS AND PLACING FURTHER RELIANCE ON TH E OPINION OF THE CHARTERED ACCOUNTANT, THE AIRS WERE NOT FILED WITHI N THE DUE DATES. 4. THE APPEALS OF THE ASSESSEE BEFORE THE LD. CIT( A - II) LUCKNOW WERE DISMISSED ON THE GROUND THAT IGNORANCE OF LAW IS NOT A PLEA AND THAT FOR IMMUNITY AGAINST PENALTY A REASONABLE CAUS E HAS TO BE ESTABLISHED WHICH WAS ABSENT IN THE CASE OF THE ASS ESSEE. 5. IN THE APPEALS BEFORE US, THE LD. AR OF THE ASSE SSEE SUBMITTED THAT DELAY IN FURNISHING AIRS WAS NOT INTENTIONAL B UT DUE TO IGNORANCE OF THE LEGAL PROVISION. THE ASSESSEE IS A COOPERATIVE BANK AND THE OFFICERS ARE NOT WELL CONVERSANT WITH THE LEGAL PROVISIONS O F THE INCOME TAX ACT. ON ACCOUNT OF IGNORANCE OF THE CONCERNED OFFICER, , THE AIRS WERE FILED ONLY WHEN THE DEFAULT WAS POINTED OUT BY THE DEPART MENT. THE LD. COUNSEL FOR THE ASSESSEE FURTHER MADE A REFERENCE T O THE PROVISIONS OF SECTION 273B AND SUBMITTED THAT NO PENALTY U/S 271F A SHOULD BE LEVIED FOR IGNORANCE OF LEGAL COMPLEXITIES OF THE INCOME T AX ACT WHICH WILL FALL WITHIN THE DEFINITION OF 'REASONABLE CAUSE' AS ENVI SAGED IN SECTION 273B OF THE ACT. THE LD. AR FOR THE ASSESSEE ALSO PLACE D RELIANCE ON THE JUDGMENT OF COORDINATE BENCH OF THIS TRIBUNAL IN IT A NO. 699/LKW/2013 IN THE CASE OF RAIBAREILLY DISTRICT COOPERATIVE BAN K LTD. VS. DIRECTOR OF 5 INCOME TAX (I&CI), LUCKNOW AND SUBMITTED THAT THIS ISSUE IS COVERED BY THE ORDER OF THE COORDINATE BENCH. LD. AR ALSO DREW OUR ATTENTION TO PAGES 8 TO 10 OF THE PAPER BOOK WHICH CONTAIN THE O PINION OF THE CHARTERED ACCOUNTANT M/S SANDEEP PRAKASH AND CO. ON WHICH THE ASSESSEE COOPERATIVE BANK HAD RELIED ON AND NOT FIL ED THE ANNUAL INFORMATION RETURN INITIALLY. 6. LD. DR HAS ON THE OTHER HAND HAS PLACED HEAVY RE LIANCE ON THE ORDERS OF DIRECTOR OF INCOME TAX (I & CI), LUCKNOW. 7. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE R IVAL SUBMISSION, WE FIND THAT THE ASSESSEE IS A COOPERATIVE BANK AND IT IS QUITE POSSIBLE THE OFFICER OF THE BANK MAY NOT BE AWARE OF THE LEG AL COMPLEXITIES OF THE INCOME TAX ACT, THEREFORE, THE CONTENTION OF TH E ASSESSEE THAT THE DELAY WAS CAUSED ON ACCOUNT OF IGNORANCE OF THE CON CERNED PERSON ABOUT THE COMPLEXITY OF THE INCOME TAX ACT CANNOT B E OUT RIGHTLY DISBELIEVED. MOREOVER, THE ASSESSEE HAS ALSO DEMONS TRATED THAT IT ACTED ON THE EXPERT OPINION OF A CHARTERED ACCOUNTANT AN D THAT ITS FAILURE TO FILE THE ANNUAL INFORMATION RETURNS (AIRS) WAS BASE D ON SUCH EXPERT ADVICE. IN OUR VIEW, THE EXPLANATION FURNISHED BY T HE ASSESSEE IS PLAUSIBLE AND AMOUNTS TO A REASONABLE CAUSE U/S 273 B OF THE ACT. 6 8. ACCORDINGLY, WE ARE OF THE CONSIDERED OPINION TH AT IN THE FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ITA NO.699/LKW/2013 REFERRED TO ABOVE, THE PENAL TY LEVIED U/S 271FA IS NOT MAINTAINABLE AND WE DELETE THE SAME IN ALL THE FOUR YEARS. 9. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASS ESSEE STAND ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- ( A. K. GARODIA ) (SU DHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER AKS DATED:20./08/2015 COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR