Shri Chatrapati Shivaji Maharaj Sahakari Bank Niyamith, Kalaburagi V. Director Of Income Tax (Intelligence & Criminal Investigation), Bengaluru

ITA 1332/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3100 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2020
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMESH KUMAR
• Assessee Lawyers: SREEHARI KUSTA
• Keywords: Principle of natural justice; Reasonable cause; Set aside
• Section: 273B; 271D; 271E; 250; 271B; 272A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 1332 TO 1341 /BANG/201 9 (ASSESSMENT YEAR S : 2006 - 07 TO 2015 - 16 ) SHRI CHATRA PATI SHIVAJI MAHARAJ SAHAKARI BANK NIYAMITHA, GHANSHAM HOUSING COMPLEX, KALABURAGI. .APPELLANT PAN AAAAG 2337F VS. DIRECTOR OF INCOME TAX, (INTELLIGENCE & CRIM INOLOGY INVESTIGATION) BANGALORE. RESPONDENT. ASSESSEE BY: SHRI SREEHARI KUSTA, ADVOCATE. REVENUE BY: SHRI A. RAMESH KUMAR, JCIT (D.R) DATE OF HEARING : 05.03 .20 20 DATE OF PRONOUNCEMENT : 11 .03 .20 20 O R D E R PER BENCH : THE SE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE DIFFERENT ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS), GULBARGA UNDER SECTION 271FA AND 250 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). SINCE THE ISSUES ARE COMMON AND 2 ITA NOS.1332 TO 1341/BANG/2019 IDENTICAL IN ALL THESE APPEALS, THEY ARE CLUBBED AND HEARD TOGETHER AND CONSOLIDATED ORDER IS PASSED. FOR THE SAKE OF CONVENIENCE, WE S H ALL TAKE UP ITA NO.1 3 32/BANG/2019 AND THE FACTS NARRATED THEREIN. 2. THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL : 3 ITA NOS.1332 TO 1341/BANG/2019 3 . THE BRIEF FACTS OF THE CASE ARE THA T THE ASSESSEE IS A CO - OPERATIVE BANK CARRYING ON BUSINESS OF BANKING AS PER THE BANKING REGULATION ACT AND THE KARNATAKA CO - OPERATIVE SOCIETIES ACT, 1959 WITH LICENSE FRO M RESERVE BANK OF INDIA (RBI). THERE WAS INSPECTION CONDUCTED ON THE ASSESSEES BANK PREMISES BY THE REVENUE, AS THE ASSESSEE HAS NOT FILED THE ANNUAL INF OR MATION RETURN (AIR) FOR THE FINANC IAL YEARS 2005 - 06 TO 2014 - 15.AND SHOW CAUSE N OTICE WAS ISSUED FOR LEVYING PENALTY UNDER SECTION 271FA OF THE ACT AS TH E ASSESSEE HAS NOT FILED THE ANNUAL INFORMATION RETURN (AIR) UNDER THE SECTION 285BA(2) OF THE ACT R. W . RULE 114E OF THE I.T. RULES 1962. WHEREAS T HE AIR RETURN FOR THE F.Y . 2005 - 06 HAS TO BE FIL ED ON OR BEFORE 31.3.2006.T HE ASSESSING OFFICER FOUND THAT THERE ARE THREE TRANSACTIONS WHICH WERE TO BE REPORTED IN AIR , AND THE ASSESSE E HAS FILED THE INFORMATION ON 11.3.2016.FURTHER T HE ASSESSEE HAS FILED EXPLANA TIONS FOR NOT FILING THE INFORMATION AND SW ORN STATEMENT WAS RECORDED.T HE ASSESSING OFFICER WAS NOT SAT ISFIED WITH THE EXPLANATIONS AS THE ASSESSEE HAS NOT EXPLAINED REASONABL E CAUSE FOR NON - FILING OF AIR . SINCE T HE ASSESSEE HAS NOT FILED REPORTABLE TRANSACTION WITHIN 4 ITA NOS.1332 TO 1341/BANG/2019 THE DUE DATE, HENCE AO LEVIED PENALTY UNDER SECTION 271FA OF THE ACT BY ORDER DT.26.4.2017. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT (APPEALS). BUT T HE CIT (APPEAL S) HAS CONCURRED WITH THE ACTION OF THE ASSESSING OFFICER IN LEVYING THE PENALTY AND DISMISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF CIT (APPEALS), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271FA OF THE ACT IRRESPECTIVE OF THE FACT THAT THE AMENDMENT TO RULE 114E OF I T RULES 1962, THAT SUBMITTING THE INFOR MATION BY THE CO - OPERATIVE BANK WAS INCLUDED FROM 1.4.2016 AND WHEREAS, THE PERIOD IN T HE PRESENT CASE IS PRIOR TO THE AMENDMENT.T HE LEARNED AUTHORIZED REPRESENTATIVE SUBSTANTIATED THE ARGUEMENTS WITH THE FINANCIAL STATEMENT S AND THE LIST OF STAFF DURING TH E F.Y. 2005 - 06 TO DEMONSTRAT E THAT THE ASSESSEE BANK B RANCH WORKS WITH LIMITED STAFF , FURTHER THERE WAS A BONA FIDE BELIEF THAT THE PROVISIONS UNDER SECTION 285BA(2) OF THE ACT SHALL NOT APPLY .T HE ASSESSING OFFICER HAS NOT CONSIDERED THE GENUINE EXPLANATI ON S IN THE PENALTY PROCEEDINGS FOR NOT SUBMITTING THE INFORMATION WITHIN THE DUE DATE AND THERE EXISTS A REASONABLE CAUSE UNDER SECTION 273B OF THE ACT AND RELIED ON JUDICIAL DECISIONS AND PRAYED FOR DELETION OF PEN ALTY . CONTRA, THE LEARNED DEPARTMENTAL R EPRESENTATIVE SUPPORTED THE ORDERS OF THE CIT (APPEALS). 5 ITA NOS.1332 TO 1341/BANG/2019 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE MATRIX OF THE DISPUTED ISSUE AS ENVISAGED BY THE LEARNED AUTHORIZED REPRESENTATIVE ON THE LEVY OF PENALTY U NDER S ECTION 271FA OF THE ACT ON THE CO - OPERATIVE BANK FOR NON - FILING INFORMATION OF TRANSACTION S IN THE ANNUAL INFORMATION RETURN (AIR),UNDER THE PROVISIONS OF SECTI O N 285BA(2) OF THE ACT R.W RULE114E OF I T RULES 1962. WE FOUND AS PER RULE 114E OF I T RULES 1962, THE CO - OPERATIVE BANK WAS NOT INCLUDED PRIOR TO AMENDMENT EFFECTIV E FROM 1.4.2016. WE FOUND THE AMENDMENT TO RULE 114E OF IT RULES1962, IS AS UNDER: SL.NO. NATURE AND VALUE OF TRANSACTION CLASS OF PERSON (REPORTING PERSON) (1) (2) (3) 1. A BANKING COMPANY OR A CO - OPERATIVE BANK TO WHICH THE BANKING REGULATION ACT, 1949 (10 OF 1949) APPLIES (INCLUDING ANY BANK OR BANKING INSTITUTION REFERRED TO IN SECTION 51 OF THAT ACT). CASH DEPOSITS AGGREGATING TO TEN LAKH RUPEES OR MORE IN A YEAR IN ANY SAVINGS ACCOUNT OF A PERSON MAINTAINED IN THAT BANK. 6. WE, ON PERUSAL OF THE PROVISIONS FOUND THAT THE CO - OPERATIVE BANK HAS BEEN INCLUDED IN THE AMENDMENT W.E.F 1.4.2016 AND IS NOT DISPUTED. THE LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE CLAIM RELYI NG ON JUD ICIAL DECISIONS AND PROVISIONS OF BANKING REGULATION ACT READ AS UNDER : 6 ITA NOS.1332 TO 1341/BANG/2019 FURTHER O N PERUSAL OF THE PAPER BOOK IN RESPECT OF THE FINANCIAL STATEMENT S FILED FOR ASST. YEARS 2006 - 07 TO 2015 - 16, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMISSIONS ARE THA T THE ASS ESSEE HAS ONLY ONE BRANCH AND SMALL OPERATIONAL ACTIVITIES AND FILED LIST OF STAFF IN THE BANK AT PAGES 45 TO 55 , WHERE IN THE PRESENT F INANCIAL YEAR THERE ARE ONLY 8 PERSONS AND WAS INCREASED TO 11 FROM F.Y. 20 11 - 12. WE FOUND STRENGTH IN THE SUBMISSION OF LEARNED AUTHORIZED REPRESENTATIVE THAT THE ASSESSEE BANK WAS IN BONA FIDE BELIEF THAT THERE IS NO REQUIREMENT TO FILE THIS STATEMENT AS THE LAW IS APPLICATION FROM 1.4.2016. WE FOUND UNDER THE PROVISIONS OF S ECTION 273B OF THE ACT WHERE PENALTY NEED NOT BE IMPOSED , IF TH ERE EXISTS A 7 ITA NOS.1332 TO 1341/BANG/2019 REASONABLE CAUSE. WE CONSIDER APPROPRIATE TO THE PROVISIONS OF SECTI O N 273B WHICH IS READ AS UNDER : 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF CLAUSE ( B ) OF SUB - SECTION (1) OF SECTION 271 , SECTION 271A , SECTION 271AA , SECTION 271B , SECTION 271BA , SECTION 271BB , SECTION 271C , SECTION 271CA , SECTION 271D , SECTION 271E , SECTION 271F , SECTION 271FA , SECTION 271FAB , SECTION 271FB , SECTION 271G , SECTION 271GA , SECTION 271GB , SECTION 271H , SECTIO N 271I , SECTION 271J , CLAUSE ( C ) OR CLAUSE ( D ) OF SUB - SECTION (1) OR SUB - SECTION (2) OF SECTION 272A , SUB - SECTION (1) OF SECTION 272AA OR SECTION 272B O R SUB - SECTION (1) OR SUB - SECTION (1A) OF SECTION 272BB OR SUB - SECTION (1) OF SECTION 272BBB OR CLAUSE ( B ) OF SUB - SECTION (1) OR CLAUSE ( B ) OR CLAUSE ( C ) OF SUB - SECTION (2) OF SECTION 273 , NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. WE, ON PERUSAL OF THE FACTS OF THE CASE AND THE EXPLANATIONS AND THE GROUNDS OF APPEAL DULY SUPPORTED BY T HE PAPER BOOK AND JUDICIAL DECISIONS ARE OF THE VIEW THAT THE AMENDMENT TO RULE 114E OF IT RULES HAS BEEN EFFECTIVE FROM 1.4.201 6 AND , FURTHER THE ASSESSING OFFICER HAS LEVIED PENALTY FOR THE F.Y. 2005 - 06 IN THE YEAR 2017 AND THERE WAS NO PROVISION UNDER R ULE 114E TO INCLUDE CO - OPERATIVE BANKS. WE FOUND THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE ARE REALISTIC CONSIDERING SMALL ACTIVITY OF THE BANK AND LIMITED STAFF WHICH CANNOT BE OVERLOOKED. ACCORDINGLY CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE AND THE FACTS, WE FOUND THERE IS A REASONABLE CAUSE IN NO T SUBMITTING THE INFORMATION AS THE ASSESSEE WAS UNDER BONA FIDE BELIEF . ACCORDINGLY WE SET ASIDE THE ORDER OF CIT (APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY AND ALLO W THE GROUNDS OF APPEAL OF THE ASSESSEE. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED. 8 ITA NOS.1332 TO 1341/BANG/2019 7. SIMILARLY, FOR THE ASST. YEARS 2007 - 08 TO 2015 - 16, THE ISSUES ARE SIMILAR AND IDENTICAL, THE DECISION TAKEN IN ITA NO.1332/BANG/2019 AS DISCUSSED IN THE ABOVE P ARA GRAPHS ARE EQUALLY APPLICABLE. A CCORDINGLY , FOR THESE APPEALS ALSO, THE ORDER OF CIT (APPEALS) IS SET ASIDE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY AND ALLOW THE GROUNDS OF APPEAL OF ASSESSEE. 8. IN THE RESULT, THE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 2006 - 7 TO 2015 - 16 ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. S D / - S D / - ( A.K. GARODIA ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 1 1 .03 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE