ITO, Ward 1(1), Jalgaon, V. Sahakar Mitra Shri Chandrakant Hari Badhe Sir Patsanstha, Jalgaon

ITA 1493/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49755 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 31-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C M NAIK
• Assessee Lawyers: GAJANAN U CHATANKAR
• Keywords: Bonafide belief; Reasonable cause; Ignorance of law
• Section: 273B; 27

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. 1492 & 1493/PN/2009 ( A.Y. 2005-06 ) I.T.O. WARD 1(1) JALGAON APPELLANT VS. SAHAKAR MITRA SHRI CHANDRAKANT HARI BADHE SIR PATSANSTHA A/P VARANGAON, DIST. JALGAON PAN AAABL 0046 R RESPONDENT APPELLANT BY: SHRI C.M. NAIK RESPONDENT BY: SHRI GAJANAN U. CHATANKAR ORDER PER SHALENDRA KUMAR YADAV, JM BOTH THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST SEPARATE ORDERS OF THE CIT(A)II NASIK BOTH DATED 6-10-2009 FOR A.Y. 2005-06 ON THE GROUND THE CIT(A) HAS ERRED IN CANCELING THE PENALTY LEVIED U/ S 271D AND 271E OF THE ACT BY THE A.O, RESPECTIVELY. 2. IN SUPPORT OF THE GROUND, LEARNED DR SUBMITTED T HAT THE CIT(A) HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE HOLDING THAT THERE WAS A REASONABLE CAUSE IN CONTRAVENING THE PR OVISIONS OF SECTION 269SS AND 269T OF THE ACT. HE RELIED ON THE ORDER OF THE A.O. ON HE OTHER HAND, THE LEARNED COUNSEL FOR THE PAGE 2 OF 5 ITA NO. 1492 & 1493/N/2009 SAHAKAR MITRA SHRI CHANDRAKANT H. BUDHE SIR PATSANSTHA A.Y. 2005-06 ASSESSEE SUBMITTED THAT THE ASSESSEE ENTERTAINED A BONAFIDE BELIEF THAT PROVISIONS OF SECTION 269SS AND 269T WE RE 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 MEMBERS AS WELL AS THE OTHER S TAFF HAVE NO KNOWLEDGE TO INTRICATE WITH THE PROVISIONS OF TH E ACT. THEY WERE UNDER THE BONAFIDE BELIEF THAT SINCE THE ASSES SEE IS A CREDIT CO-OPERATIVE SOCIETY, DEALING ONLY WITH ITS MEMBERS, THE 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 AUDITORS NOR THE TAX AUDITORS OF THE ASSESSEE APPRAISED IT ABOUT THE COR RECT LEGAL PROVISIONS. ALL ITS TRANSACTIONS OF ACCEPTANCE OF DEPOSITS ARE GENUINE AND THE IDENTITY OF ALL THE DEPOSITORS ARE BEYOND ANY DOUBT. THE LEARNED AR SUBMITTED THAT THE A.O HAS N OT DOUBTED THE GENUINENESS OF THE TRANSACTIONS OF THE DEPOSITS. HE SUBMITTED THAT THE BONAFIDE BELIEF ENTERTAINED B Y THE ASSESSEE IN THE MATTER CONSTITUTES A REASONABLE CAU SE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 273B OF TH E ACT. HE ALSO POINTED OUT THAT THE PUNE BENCH OF THE TRIBUNA L HAVE BEEN TAKING A CONSISTENT VIEW WITH A BONAFIDE BELIE F THAT THE PROVISIONS ARE INAPPLICABLE AND CONSTITUTES A REASO NABLE CAUSE AND HENCE PENALTY CANNOT BE LEVIED U/S 271D AND 271 E OF THE PAGE 3 OF 5 ITA NO. 1492 & 1493/N/2009 SAHAKAR MITRA SHRI CHANDRAKANT H. BUDHE SIR PATSANSTHA A.Y. 2005-06 ACT ON THE CO-OPERATIVE SOCIETY FOR TECHNICAL OR VE NIAL BREACH OF THE PROVISIONS. HE CITED THE FOLLOWING 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. CONSIDERING THE ABOVE SUBMISSIONS, THERE IS NO D OUBT THAT IGNORANCE OF LAW CAN ALWAYS BE TREATED A REASO NABLE CAUSE TO JUSTIFY THE NON-ATTRACTION OF PENAL PROVIS IONS U/S 271D AND 271E OF THE ACT BUT THE LEGISLATURE KEEPIN G IN MIND POSSIBILITY OF IT HAS GIVEN DISCRETION TO THE DEPAR TMENT U/S 273B OF THE ACT, NOT TO LEVY U/S 271D AND 271E OF T HE ACT. THUS, FOR AVAILING THE BENEFIT U/S 273B OF THE ACT, THE ASSESSEE IS REQUIRED TO ESTABLISH THAT THERE WAS REASONABLE CAUSE FOR ITS FAILURE IN COMPLYING WITH THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT. IN THE PRESENT CASE, WE DO NOT FI ND REASON TO DOUBT THE ABOVE SAID REASONABLE CAUSE FURNISHED BY THE PAGE 4 OF 5 ITA NO. 1492 & 1493/N/2009 SAHAKAR MITRA SHRI CHANDRAKANT H. BUDHE SIR PATSANSTHA A.Y. 2005-06 ASSESSEE BEFORE THE LOWER AUTHORITIES AND THE TRIBU NAL, THAT IT BEING A CREDIT CO-OPERATIVE SOCIETY DEALING ONLY WI TH ITS MEMBERS, WAS UNDER IMPRESSION THAT THE PROVISIONS O F SEC. 269SS AND 269T OF THE ACT WERE INAPPLICABLE TO IT. THIS EXPLANATION 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 PROVISIONS IN THIS REGARD, AS SUBMITTED BY THE LEARNED AR. 4. WE FOUND THAT IN THE CASE OF CIT VS. EETAHI AGEN CIES (SUPRA) THERE WAS FAILURE TO COMPLY WITH THE PROVIS IONS OF SECTION 269T OF THE ACT AND PENALTY U/S 271D AND 27 1E WAS LEVIED. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD C OMMITTED VIOLATION OF SECTION 269T UNDER A GENUINE BELIEF TH AT SEC. 269T HAD NO APPLICATION TO DEPOSITS AND THAT IT ONLY APP LIED TO LOANS. THE DEPARTMENT PREFERRED APPEAL AGAINST SAI D ORDER OF THE 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 TRIBUNAL. AGAIN IN THE CASE OF CIT VS. JAYABHAWANI GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA LTD. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO UPHOLD THE DECISION OF THE TRIBUNAL ACCE PTING REASONABLE CAUSE U/S 273B IN CASE OF VIOLATION OF T HE PROVISIONS OF SEC. 269SS OF THE ACT. THE DEPARTMENT HAD PREFERRED SLP BEFORE THE HONBLE SUPREME COURT AGAI NST THE PAGE 5 OF 5 ITA NO. 1492 & 1493/N/2009 SAHAKAR MITRA SHRI CHANDRAKANT H. BUDHE SIR PATSANSTHA A.Y. 2005-06 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 DECISI ONS OF THE HONBLE COURTS, WE ARE OF THE VIEW THAT THERE WAS R EASONABLE CAUSE WITH THE ASSESSEE IN NURTURING A BONAFIDE BEL IEF THAT THE PROVISIONS OF SEC. 269SS AND 269T OF THE ACT WERE N OT APPLICABLE IN ITS CASE. WE, THEREFORE, UPHOLD THE ORDER THE FIRST APPELLATE AUTHORITY IN CANCELING THE PENALTY IMPOSE D BY THE A.O. U/S 271D AND 271E OF THE ACT. THE GROUNDS RAIS ED ARE ACCORDINGLY DISMISSED. 5. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THE 11 TH MAY 2011. SD/- SD/- (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 11 TH MAY 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- II, NASIK 4. THE CIT- II NASIK 5. THE D.R, B BENCH, PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE