The Nizamabad District Co-operative Central Bank Limited, Nizamabad V. Director of Income Tax (Intelligence & Criminal Investigation), Hyderabad

ITA 1296/Hyd/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2987 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2018
• Assessment Year: 2016-2017
• Appeal Filed On: 25-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: U. MINI CHANDRAN
• Keywords: Right to appeal; Set aside
• Section: 273B; 234B; 80P; 201; 13

Judgement Text

ITA NOS 1291 TO 1296 OF 2017 NIZAMABAD DISTT COOP CENTRAL BANK LTD NIZAMABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1291 TO 1296/HYD/2017 (ASSESSMENT YEARS: 2010-11 TO 2015-16) THE NIZAMABAD DISTRICT COOPERATIVE CENTRAL BANK LTD, NIZAMABAD PAN:AACAT3615K VS DIRECTOR OF INCOME TAX (I&CI), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SMT. U. MINICHANDRAN, DR O R D E R PER BENCH: ALL THESE APPEALS ARE FILED BY THE ASSESSEE FOR THE A.YS 2010-11 TO 2015-16. IN ALL THESE APPEALS, THE ASSES SEE IS CHALLENGING THE ORDER OF THE DIT (I&CI), HYDERABAD, PASSED U/S 271FA OF THE ACT, DATED 11.4.2017. 2. IT IS SEEN THAT THESE APPEALS ARE THE FIRST APPE ALS FILED BY THE ASSESSEE DIRECTLY. AT THE TIME OF HEARING, T HE LEARNED DR HAS BROUGHT TO OUR NOTICE THE DECISION OF THE COORD INATE BENCH OF THE TRIBUNAL IN ITA NO.687/HYD/2017, DATED 10.11.20 17 IN THE CASE OF THE CITIZEN COOPERATIVE SOCIETY LTD, HYDERA BAD VS. DIT (I&CI), WHEREIN, AFTER CONSIDERING THE PROVISIONS O F THE ACT, THE DATE OF HEARING: 15.05 . 201 8 DATE OF PRONOUNCEMENT: 23.05.2018 ITA NOS 1291 TO 1296 OF 2017 NIZAMABAD DISTT COOP CENTRAL BANK LTD NIZAMABAD. PAGE 2 OF 6 TRIBUNAL HAS HELD THAT ITAT IS NOT THE FORUM TO ENT ERTAIN THE APPEAL. RELEVANT PARAGRAPHS ARE REPRODUCED AS UNDER : 2. SINCE THE PROVISIONS OF SECTION 253 OF THE ACT D OES NOT SPECIFY THE ORDER OF PENALTY U/S. 271FA AS AN APPEALABLE OR DER BEFORE THE ITAT, THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE APPEAL NOT BE DISMISSED AS NOT MAINTAINABLE. IN REPLY, THE ASSESS EE HAS SUBMITTED THE FOLLOWING IN SUPPORT OF THE CONTENTIONS THAT AP PEAL IS MAINTAINABLE: '8. ADMISSIBILITY OF APPEAL BY THE HON'BLE ITAT: 8.1 THE HON'BLE ITAT ISSUED A DEFICIENCY MEMO DT. 2 0-07- 2017 DIRECTING THE ASSESSEE-APPELLANT TO EXPLAIN AS TO WHETHER SUCH ORDER UNDER SEC. 271FA IS AN APPEALABLE ORDER BEFORE THE HON'BLE ITAT; AND COVERING THE SAME, A DETAILED REP LY DT. 28-07- 2017 WAS FILED WITH THE HON'BLE TRIBUNAL AND A COPY OF THE SAME IS ANNEXED IN THE FORM OF PAPER BOOK FOR READY REFEREN CE. THE SUBSTANCE OF SUCH REPLY AS UNDER: (1) THE EVEN THE AUTHORITY LEVYING THE ABOVE PENALT Y UNDER SEC. 271FA, VIZ., THE DIRECTOR OF INCOME TAX RECORDED IN THE ANNEXED DEMAND NOTICE IN FORM NO.7 TO THE EFFECT TH AT APPEAL COULD BE PREFERRED TO THE CIT (A); (2) WHEN THE OFFICE OF THE ABOVE DIRECTORATE WAS CO NTACTED BY THE ASSESSEE-APPELLANT BY DEPUTING ITS G.M., SEEKING CL ARIFICATION AS TO HOW THE APPEAL COULD BE FILED WITH AN AUTHORITY WHO IS PARALLEL TO THE HON'BLE DIRECTOR, SUCH CLARIFICATION WAS NOT GI VEN BY THE DIRECTORATE; (3) HOWEVER, TAKING NOTICE OF THE FACT THAT PENALTY UNDER SEC. 271FA WAS ALSO REFERRED TO IN SEC. 273B OF THE ACT, IT IS FELT BY THE ASSESSEE-APPELLANT THAT SUCH LEVY IS NOT MANADOTRY AS IN THE CASE OF LEVY OF INT. UNDER SEC. 234-A & 234B ETC., AND THAT SUCH LEVY IS ONLY DISCREATIONARY AND HENCE THERE LIES AN APPEAL AGAINST THE ORDER UNDER SEC. 271FA AS PER THE PROVI SIONS OF LAW. (4) THAT AS PER THE PROVISIONS CONTAINED IN CLAUSE '6' APPENDED TO SUB SEC. 1 OF SEC. 253 OF THE ACT, AN ORDER PASSED BY THE PRINCIPAL CIT/CIT UNDER SEC. 271 OF THE ACT IS ALSO CONSTRUED TO BE AN ORDER WHICH COULD BE APPEALED AGAINST BEFORE THE HON'BLE ITAT. (5) THAT THE ABOVE LEGAL PROVISIONS ALSO CAME UP FO R CONSIDERATION OF THE HON'BLE ITAT ON THE LAST DATE OF HEARING WHI CH TOOK PLACE ON 23-08-2017 AND FOR THE ABOVE SUBMISSIONS, IT IS REQUESTED THAT THE ABOVE APPEAL MAY KINDLY BE ADMITTED FOR ADJUDIC ATION OF THE ISSUE INVOLVED THEREIN. ITA NOS 1291 TO 1296 OF 2017 NIZAMABAD DISTT COOP CENTRAL BANK LTD NIZAMABAD. PAGE 3 OF 6 9. VALIDITY OF ORDER UNDER SEC. 271FA OF THE ACT: 9.1 AS PER RULE 114E OF LT. RULES, THE INFORMATION REFERRED TO IN AIR READ WITH SEC. 285BA OF THE ACT, ONLY A BANKING COMPANY AND COOP. BANK ARE BOUND TO FURNISH THE ABO VE INFORMATION WHEREAS THE ASSESSEE'S CASE, BEING A CO OPERATIVE SOCIETY, IS NOT COVERED BY SEC. 285BA OF THE ACT. I T IS SUBMITTED THAT THE ASSESSEE CAME INTO EXISTENCE ORIGINALLY W. E.F. 31- 05-1997 AS A MUTUALLY AIDED COOPERATIVE CREDIT SOCIETY HAVI NG BEEN REGISTERED UNDER SEC. 5 OF ANDHRA PRADESH MUTUALLY AIDED COOP. SOCIETIES ACT., 1995 WITH REGISTRATION NO. AMC/RR/D CO/97 BY THE REGISTRAR OF MUTUALLY AIDED COOP. SOCIETIES., R.R. DIST., LATER ON, IT GOT REGISTERED UNDER THE MULTI STATE COOP. SOCIE TIES ACT, 2002 IN TERMS OF CERTIFICATE DT. JULY 26,2005 ISSUED BY CEN TRAL REGISTRAR OF COOPERATIVE SOCIETIES, KRISH BHAVAN, NEW DELHI. 9.2 THOUGH THE ISSUE PERTAINING TO THE CLAIM UNDER SEC. 80P(2)(A)(I) OF THE ACT IS PENDING ADJUDICATION IN THE FORM OF APPEALS ON DIFFERENT JUDICIAL FORUMS FOR DIFFERENT ASSESSMENT YEARS, VIZ., BEFORE THE HON'BLE AP HIGH COURT (FOR THE A.YS. 2006- 07, 2007-08 AND 2008-09); BEFORE THE HON'BLE ITAT, HYDERABAD (FOR THE A.YS. 2010-11,2011-12 AND 2013-14 AND 2014 - 15) YET THE HON'BLE ITAT, B-BENCH, HYDERABAD ALLOWE D THE ASSESSEE'S CLAIM UNDER SEC. 80(2)(A)(I) OF THE ACT FOR THE A.Y. 2012- 13 - VIDE ORDER IN ITA. NO. MA NO. 31/HYD/2016 IN I TA NO. 1295/HYD/2015 DT 04-03-2016 READ WITH ORDER DT 15-0 7-2016 IDENTIFYING ITS STATUS AS COOP. SOCIETY NOT FALLING WITHIN THE SCOPE OF BANKING REGULATION ACT REFERRED TO IN SEC. 80P (4)OF THE ACT; 9.3 EVEN THE HON'BLE SUPREME COURT HELD IN ITS LATE ST ORDER IN CIVIL APPEAL NO. 10245/2017, DT 08-082017 TO THE EF FECT THAT THE ASSESSEE IS NOT A COOPERATIVE BANK VIDE PARA 24 THE REOF. HOWEVER, THE HON'BLE S.C. DENIED SUCH CLAIM UNDER S EC. 80P(2)(A)(I) OF THE ACT ON SOME OTHER GROUNDS HOLDI NG TO THE EFFECT THAT THE ASSESSEE IS ALSO RENDERING SERVICES TO NOM INAL MEMBERS AND A M.A. AGAINST SUCH FINDING IS PENDING ADJUDICATION BEFORE THE HON'BLE SUPREME COURT. 9.4 HOWEVER, THE FACT REMAINS IN THE INSTANT CASE I S THAT THE ASSESSEE'S STATUS CANNOT BE REGARDED AS A COOP. BAN K AS PER THE DECISIONS OF THE HON'BLE ITAT IN ASSESSEE'S SAME CA SE FOR THE A.Y. 2012-13 AND EVEN AS PER THE LATEST ORDER OF THE HON 'BLE SUPREME COURT FOR THE A.Y. 2009-10 AS ENVISAGED ABOVE. THUS THE PROVISIONS CONTAINED IN SEC. 285BA READ WITH RULE 1 14E OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE'S CASE AND THUS THE LEVY UNDER SEC. 271FA MAY BE VOID ABINITIO. HENCE, IT IS PRAYED THAT THE IMPUGNED PENALTY UNDER SEC. 271FA MAY BE ORDERED TO BE SET ASIDE TREATING THE SAME AS NON ES T. IN LAW'. ITA NOS 1291 TO 1296 OF 2017 NIZAMABAD DISTT COOP CENTRAL BANK LTD NIZAMABAD. PAGE 4 OF 6 3. ASSESSEE'S COUNSEL, SHRI D.L. NARASIMHA RAO, APP EARED AND EXPLAINED THAT APPEAL IS MAINTAINABLE AND DIT BEING A PARALLEL AUTHORITY, HIS ORDER CANNOT BE SUBJECTED TO AN APPE AL BEFORE THE LD.CIT(A). THEREFORE, ASSESSEE CHOOSE TO FILE AN AP PEAL BEFORE THIS FORUM. 4. LD.CIT-DR, HOWEVER, OBJECTED TO FILE AN APPEAL D IRECTLY WHEN STATUTE DOES NOT PROVIDE. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE PROVISIONS OF THE ACT. SECTION 271FA IS A PENALTY W HICH IS LEVIABLE BY THE PRESCRIBED INCOME TAX AUTHORITY. THE ORDER O F THE DIT INDICATES THAT HE IS NOMINATED TO BE BY THE INCOME TAX AUTHORITY FOR ACCEPTING THE RETURNS TO BE FILED U/S. 285BA(1) . THEREFORE, IT SEEMS THE DIT HAS INVOKED THE POWERS OF 271FA FOR L EVYING OF PENALTY. EVEN THOUGH THERE IS NO SPECIFIC PROVISION FOR APPEAL BEFORE THIS FORUM, NOR BEFORE THE CIT(A), LD.DIT SP ECIFICALLY GAVE THE OPTION TO ASSESSEE TO FILE THE APPEAL BEFORE TH E LD.CIT(A). ASSESSEE, HOWEVER TOOK ITS OWN OPINION, IN THE ABSE NCE OF CLARIFICATION SOUGHT FROM DIT(I&CI) AND PREFERRED T HE APPEAL BEFORE THIS FORUM. 5.1. IN THE COURSE OF ARGUMENTS, ASSESSEE'S COUNSEL WAS ADVISED TO PREFER AN APPEAL BEFORE THE LD.CIT(A) AS DIRECTED B Y THE DIT(I&CI) AFTER LEVYING THE PENALTY IN THE DEMAND N OTICE. IF THE ORDER HAS BEEN PASSED BY THE LD.CIT(A), THIS FORUM CAN ENTERTAIN THE APPEAL ON SUCH AN ORDER. OTHERWISE, ASSESSEE CA N CHOOSE TO FILE A WRIT PETITION BEFORE THE HON'BLE HIGH COURT, AS THIS FORUM IS ONLY A STATUTORY AUTHORITY CONSTITUTED UNDER THE IN COME TAX ACT AND THE RIGHT OF APPEAL ON EVERY ORDER HAS TO BE ST ATUTORILY PROVIDED EITHER TO THE CIT(A) OR TO THE ITAT AS THE CASE MAY BE. SINCE A PENALTY ORDER U/S. 271FA IS NOT DIRECTLY AP PEALABLE ORDER BEFORE THIS FORUM, THE APPEAL PREFERRED BY ASSESSEE IS LIABLE TO BE DISMISSED. 6. HOWEVER, BEFORE CONCLUDING IT IS NOT OUT OF PLAC E TO STATE THAT THE PAPER BOOK FURNISHED BEFORE THIS FORUM INDICATE S THAT ASSESSEE DID IN FACT FILE STATEMENT U/S. 285BA(1) BEFORE THE INCOME TAX AUTHORITIES SO THE PENALTY LEVIED FOR NOT FILING U/ S 271FA DOES NOT ARISE. VIDE A LETTER DT.27-10-2016, THE ITO, HQRS., IN THE OFFICE OF DIT(I&CI) INFORMED THE ASSESSEE THAT IN ABOUT 120 N UMBER OF TRANSACTIONS, PAN WAS NOT MENTIONED. IT WAS FURTHER INFORMED THAT 'IT MAY BE NOTED THAT FURNISHING OF INCOMPLETE AND INCORRECT INFORMATION IS LIABLE FOR PENALTY U/S. 271FAA OF TH E ACT'. ASSESSEE WAS ASKED TO UPDATE THE DATA BY QUOTING PAN BY 04-1 1-2016. HOWEVER, THE DIT(I&CI) ISSUED A SHOW CAUSE NOTICE D T. 31-10- 2016 (I.E., WITHIN THE TIME GIVEN TO ASSESSEE FOR R ECTIFYING THE RETURN) AS TO WHY A PENALTY U/S. 271FA SHOULD NOT B E LEVIED. AS PLACED ON RECORD, AN EXPLANATION WAS INDEED FILED B Y ASSESSEE ON 06-12- 2016, ASKING FOR A FORTNIGHT TIME AND FURTHE R ANOTHER LETTER WAS FILED ON 28-12-2016 EXPLAINING THE FACTUAL AND LEGAL POSITION WITH REFERENCE TO LEVY OF PENALTY U/S. 271FA. THERE IS NO MENTION ITA NOS 1291 TO 1296 OF 2017 NIZAMABAD DISTT COOP CENTRAL BANK LTD NIZAMABAD. PAGE 5 OF 6 OF THESE REPLIES GIVEN BY ASSESSEE IN THE PENALTY O RDER PASSED BY THE DIT. NOT ONLY THAT THE PENALTY ORDER REFERS TO A SHOW CAUSE LETTER DT. 29-01-2016, WHEREAS SHOW CAUSE ISSUED BY THE ITO, HQRS., IS DT. 27-10-2016. THE FIRST SENTENCE OF THE PENALTY ORDER INDICATES THAT 'ASSESSEE IS A PERSON COVERED AS A R EGISTRAR OR SUB- REGISTRAR APPOINTED U/S. 6 OF THE REGISTRATION ACT, 1908'. HOWEVER, AS SEEN FROM THE FACTS, ASSESSEE IS NOT A REGISTRAR OR SUB-REGISTRAR APPOINTED UNDER SUB-CLAUSE (6) OF THE REGISTRATION ACT, BUT CLAIMING STATUS OF A BANKING COMPANY, WHICH IS ALSO YET TO BE ADJUDICATED FINALLY, AS STATED IN REPLY BEFORE THIS FORUM. EVEN CALCULATION OF 557 DAYS FOR LEVY OF PENALTY AT RS. 100/- IS NOT VERIFIABLE, GIVEN THE DATES INVOLVED. IT SEEMS TO B E A CASE WHERE SHOW CAUSE NOTICE WAS ISSUED U/S. 271FAA (FOR FURNI SHING INACCURATE STATEMENT) BUT PENALTY WAS LEVIED U/S. 2 71FA FOR NON- FILING OF STATEMENT. ASSESSEE DID INDEED FILE A RET URN/STATEMENT IN TIME AND IF THE DEFICIENCIES ARE NOT RECTIFIED, WIT HIN THE TIME ALLOWED IT HAS TO BE TREATED AS 'INVALID RETURN' UN DER SECTION 285BA(4). NO SUCH ACTION SEEMS TO HAVE BEEN TAKEN B Y THE INCOME TAX AUTHORITY BEFORE LEVY OF PENALTY U/S. 271FA. NO T ONLY TAKING THE STATUS OF ASSESSEE BUT ALSO THE DATES INVOLVED ALONG WITH THE FACT THAT ASSESSEE DID FILE A RETURN AS PER THE PRO VISIONS INDICATES THAT THERE IS NO APPLICATION OF MIND BY THE DIT(I&C I) BEFORE LEVY OF PENALTY. THERE MAY BE MERIT IN ASSESSEE'S CONTEN TIONS THAT PENALTY IS NOT WARRANTED ON THE FACTS OF THE CASE. HOWEVER, AS THIS FORUM CANNOT ENTERTAIN THE APPEAL ITSELF, WITHOUT C ONSIDERING THE MERITS OF THE CONTENTIONS, APPEAL MEMO IS DISMISSED AS INFRUCTUOUS. 3. THE FACTS AND CIRCUMSTANCES BEFORE US BEING THE SAME, WE DISMISS THE ASSESSEES APPEALS IN LIMINI WITH LIBERTY TO THE ASSESSEE TO APPROACH THE RELEVANT FORUM WITH APPROP RIATE APPLICATIONS FOR CONDONATION OF DELAY, IF ANY, IN F ILING OF THE APPEALS. 4. IN THE RESULT, ASSESSEES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 23 RD MAY 2018. VINODAN/SPS ITA NOS 1291 TO 1296 OF 2017 NIZAMABAD DISTT COOP CENTRAL BANK LTD NIZAMABAD. PAGE 6 OF 6 COPY TO: 1 CHIEF EXECUTIVE OFFICER, THE NIZAMABAD DISTT. COO P. CENTRAL BANK LTD, HEAD OFFICE, YELLAMMAGUTTA, NIZAMABAD, TELANGA NA 503001 2 DIRECTOR OF INCOME TAX (INTELLIGENCE & CRIMINAL I NVESTIGATION), 4 TH FLOOR, AAYKAAR BHAVAN, BASHEERBAGH, HYDERABAD 3 THE DR, ITAT HYDERABAD 4 GUARD FILE BY ORDER