Shrinath Co.Op. Credit Society Ltd., Sabarkantha V. The Income Tax Officer, Ward-2, Himatnagar

ITA 1812/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0963 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: ASHWIN C SHAH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1812/AHD/2013 / ASSTT. YEAR: 2009-2010 SHRINATH CO.OP. CREDIT SOCIETY LTD. KHADAYATA BOARD NR. ST. STAND KODASA 383 315. DIST: SABARKANTHA 383 315 PAN : AAAAS 4774 N ITO, S.K. WARD - 2 HIMATNAGAR. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI ASHWIN C. SHAH, AR REVENUE BY : SHRI O.P. MEENA, SR.DR / DATE OF HEARING : 22/07/2016 / DATE OF PRONOUNCEMENT: 01/08/2016 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.CIT(A)-VIII, AHMEDABAD DATED 22.5.2013 PASSED FO R THE ASSTT.YEAR 2009-10. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.21,826/- IMPOSED UNDER SECTION 271B OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS COOPERATIVE SOCIETY. IT HAS NOT CARRIED OUT AUDIT OF ITS ACCOUNTS WITHIN THE TIME LIMIT PRESCRIBED FOR GETTING THE ACCOUNTS AUDITED. THUS, THE LD.AO HAS ITA NO.1812/AHD/2013 2 IMPOSED PENALTY OF RS.21,826/- AT THE RATE OF HALF- PERCENT OF GROSS- RECEIPTS. APPEAL TO THE CIT(A) DID NOT BRING ANY R ELIEF TO THE ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT THE GROSS RECEIPTS OF THE ASSESSEE WAS OF RS.43,65,166/ -. IT WAS MORE THAN THRESHOLD LIMIT FOR GETTING THE ACCOUNTS AUDITED UN DER SECTION 44AB OF THE ACT. HE CONTENDED THAT THE ASSESSEE IS A CO-OP ERATIVE SOCIETY. ITS INCOME WAS EXEMPT UNDER SECTION 80P(2) OF THE INCOM E TAX ACT. THE AO HAS MISCONCEPTION THAT AFTER INSERTION OF SUB-SE CTION (4) OF SECTION 80P, THE INCOME OF THE ASSESSEE WOULD BE TAXABLE. ULTIMATELY, IT HAS BEEN SETTLED IN LARGE NUMBER OF CASES THAT THE INTE REST INCOME OF CREDIT CO-OPERATIVE SOCIETY WILL NOT BE TAXABLE, AND THE A SSESSEE WILL BE ENTITLED FOR EXEMPTION UNDER SECTION 80P(2)(I). ON THE ST RENGTH OF HONBLE KARNATAKA HIGH COURTS DECISION IN THE CASE OF M/S. KORAMANGALA CLUB VS. ITO, RENDERED IN ITA NOS.279 & 280/2010, IT WAS CONTENDED THAT THE ASSESSEE HAS A BONA FIDE BELIEF THAT SINCE ITS INCOME WILL NOT BE TAXABLE, THEREFORE, BONA FIDE IT DID NOT GET ITS ACCOUNTS AUDITED. THE LD.COUNSEL FOR THE ASSESSEE FURTHER RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. H ARSIDDH CONSTRUCTIONS P. LTD. (244 ITR PAGE 417). THE LD.D R, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE REVENUE AUTHORIT IES AND CONTENDED THAT THE ASSESSEE FAILED TO SHOW ANY SUCH BONA FIDE BEFORE THE REVENUE AUTHORITIES. 5. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. THE HONBLE GUJARAT HIGH COURT I N THE CASE OF CIT VS. HARSIDDH CONSTRUCTION P. LTD. (SUPRA), HAS MADE REF ERENCE TO THE ITA NO.1812/AHD/2013 3 DECISION OF THE HONBLE APEX COURT IN THE CASE OF H INDUSTAN STEEL LTD. VS. STATE OF ORISSA, 83 ITR 26 (SC) AND OBSERVED TH AT THE HONBLE SUPREME COURT HAS HELD THAT PENALTY CANNOT BE IMPOS ED MERELY BECAUSE IT IS LAWFUL TO DO SO. THE QUESTION WHETHER PENALT Y SHOULD BE IMPOSED FOR FAILURE TO PERFORM ITS STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A C ONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE PENALTY WILL BE JUSTI FIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FRO M A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNE R PRESCRIBED BY THE STATUTE. IN THE PRESENT CASE ALSO, THE STAND OF T HE ASSESSEE WAS THAT IT WAS ENTITLED FOR DEDUCTION UNDER SECTION 80P(2) FROM TH E DATE IT CAME TO EXISTENCE. THIS FACT HAS OPERATED UPON THE MANAGEM ENT FOR NOT GETTING THE ACCOUNTS AUDITED IN TIME. I AM OF THE VIEW THA T THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE TO DEFY THE LAW. IT HAS COMMITTED A LAPSE UNDER A BONA FIDE BELIEF, THEREFORE, I ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/08/2016