The Mandya District Co-operative Central Bank Limited, Mandya V. The Director Of Income Tax (Intelligence and Criminal Investigation), Bangalore

ITA 447/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2970 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 16-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Set aside
• Section: 13

Judgement Text

ITA NO.447/BANG/2019 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD., MANDYA IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO. 447/BANG/2019 ASSESSMENT YEAR: 2014 15 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD. MANDYA DCC BANK BUILDING NAGAMANGALA ROAD HPO, V.V. ROAD MANDYA 571 401 PAN NO : AAAAT1518K VS. THE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI G. VENKATESH, A.R. RESPONDENT BY : SHRI RAJENDRA CHANDEKAR, D.R. DATE OF HEARING : 11.03.2020 DATE OF PRONOUNCEMENT : 13.03.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 12-04-2019 PASSED BY LD CIT(A)-13, BENG ALURU AND IT RELATES TO THE ASSESSMENT YEAR 2014-15. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY OF RS.3,97,100/- LEVIED U/S 271FA OF THE ACT. ITA NO.447/BANG/2019 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD., MANDYA PAGE 2 OF 7 2. THE FACTS RELATING TO THE ISSUE ARE DISCUSSED IN BRIEF. THE IMPUGNED PENALTY HAS BEEN LEVIED BY THE DIRECTO R OF INCOME TAX (INTELLIGENCE & CRIMINAL INVESTIGATION), (HEREINAFTER DIT) BENGALURU. IT WAS NOTICED BY T HE DIRECTOR OF INCOME TAX THAT THE ASSESSEE HAS NOT FU RNISHED ANNUAL INFORMATION RETURN (HEREINAFTER AIR) AS RE QUIRED U/S 285BA(1) READ WITH RULE 114E OF INCOME TAX RULE S FOR THE FINANCIAL YEAR 2013-14. THE ABOVE SAID RETURN WAS REQUIRED TO BE FILED ON OR BEFORE 31.08.2014. IF T HE ABOVE SAID RETURN IS NOT FILED BEFORE THE DUE DATE, THE A SSESSEE IS LIABLE TO PAY PENALTY U/S 271FA OF THE ACT. 3. SINCE THE ASSESSEE HAS NOT FILED THE AIR U/S 285BA(1) OF THE ACT, THE DIT ISSUED A NOTICE U/S 285BA(5) OF THE ACT ON 23-01-2015 ASKING THE ASSESSEE TO FURNISH THE AI R. IN RESPONSE TO THE SAME, THE ASSESSEE FURNISHED THE AI R ON 27-02-2015 MANUALLY. AS PER THE PROVISIONS OF SEC.285BA(2), THE AIR HAS TO BE FILED ELECTRONICALL Y. 4. HENCE THE DIT DID NOT RECOGNISE THE MANUAL RE TURN. SINCE THE DIT HELD THAT THE ASSESSEE HAS NOT FILED AIR, HE INITIATED PENALTY PROCEEDINGS U/S 271FA OF THE ACT. SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE, HE LEVIED A PENALTY OF RS.3,97,100/-, COMPUTED @ RS.100/- PER D AY FROM 01-09-2014 TO THE DATE ON WHICH THE TIME SPECI FIED IN THE NOTICE ISSUED U/S 285BA(5) OF THE ACT EXPIRED ( I.E, TILL ITA NO.447/BANG/2019 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD., MANDYA PAGE 3 OF 7 28-02-2015) AND @ RS.500/- PER DAY FROM 01-03-2015 TO 27-03-2017. 5. THE ASSESSEE CHALLENGED THE PENALTY LEVIED U /S 271FA OF THE ACT BY FILING APPEAL BEFORE LD CIT(A), BUT T HE SAME WAS DISMISSED. HENCE THE ASSESSEE HAS FILED THIS AP PEAL BEFORE US. 6. THE LD A.R SUBMITTED THAT THERE WAS REASONAB LE CAUSE FOR THE ASSESSEE IN NOT FILING THE AIR. HE SUBMITT ED THAT THE PROVISIONS OF RULE 114E SPECIFICALLY INCLUDED CO- OPERATIVE BANK WITH EFFECT FROM 01-04-2016. HE IN VITED OUR ATTENTION TO THE PROVISIONS OF RULE 114E BEFORE AMENDMENT AND POST AMENDMENT. HE SUBMITTED THAT TH E PRE-AMENDED PROVISIONS ARE APPLICABLE TO THE YEAR U NDER CONSIDERATION AND THE RELEVANT PORTION READ AS UNDE R :- A BANKING COMPANY TO WHICH BANKING REGULATION ACT, 1949 (10 OF 1949), APPLIES (INCLUDING ANY BANK OR BANKING INSTITUTION REFERRED TO IN SECTION 51 OF TH E ACT.) HE SUBMITTED THAT THE ABOVE SAID PORTION WAS AMENDE D BY IT (TWENTY-SECOND AMENDMENT) RULES 2015 W.E.F. 01-0 4- 2016 AS UNDER:- 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 THE ACT.) ITA NO.447/BANG/2019 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD., MANDYA PAGE 4 OF 7 HE SUBMITTED THAT THE CO-OPERATIVE BANKS WERE SPECIFICALLY INCLUDED WITH EFFECT FROM 01-04-2016 A ND HENCE THERE WAS A VIEW THAT THE CO-OPERATIVE BANKS ARE NOT REQUIRED TO FURNISH AIR INFORMATION. IN VIEW OF TH E ABOVE SAID AMBIGUITY, THE ASSESSEE HAS NOT FILED THE AIR INFORMATION. HE SUBMITTED THAT THE ASSESSEE HAS FU RNISHED THE ABOVE SAID EXPLANATION BEFORE LD CIT(A). HOWEV ER, THE LD CIT(A) HAS TAKEN THE VIEW THAT THE AMENDMENT MAD E WITH EFFECT FROM 1.4.2016 IS CLARIFICATORY IN NATUR E AND HENCE THE SAME WOULD APPLY TO THE YEAR UNDER CONSIDERATION ALSO. THE LD A.R SUBMITTED THAT THE AMBIGUITY DEMONSTRATED BY THE ASSESSEE CONSTITUTES A REASONABLE CAUSE WITHIN THE MEANING OF PROVISIONS O F SEC.273B OF THE ACT. ACCORDINGLY HE PRAYED THAT TH E IMPUGNED PENALTY BE DELETED. 7. THE LD D.R, HOWEVER, SUBMITTED THAT THE ASSE SSEE SHALL FALL UNDER THE CATEGORY OF BANKING COMPANY AND HENCE THE ASSESSEE HAS COMPLIED WITH THE NOTICE ISS UED U/S 285BA(5) OF THE ACT. HE SUBMITTED THAT THE AMENDME NT MADE IN RULE 114E BY INSERTING CO-OPERATIVE BANK IS ONLY CLARIFICATORY IN NATURE. HE SUBMITTED THAT ALL THE ASSESSEES ARE COVERED BY SEC.285BA(1) OF THE ACT AND HENCE TH ERE EXISTS NO AMBIGUITY AS CONTENDED BY LD A.R. ITA NO.447/BANG/2019 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD., MANDYA PAGE 5 OF 7 8. IN THE REJOINDER, THE LD A.R SUBMITTED THAT T HE EXPRESSIONS BANKING COMPANY AND CO-OPERATIVE BANKS HAVE SPECIFIC MEANING UNDER THE BANKING REGULATIONS ACT. 9. WE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE ORIGINAL PROVISIONS OF RULE 114E OF INCOME TAX RULES DID NOT INCLUDE CO-OPERATIVE BANK AND IT WAS INSERTED ONLY IN THE AMENDED PROVISIONS OF R ULE 114E, WHICH CAME INTO EFFECT FROM 1.4.2016. ACCORD INGLY, IN OUR VIEW, THERE IS MERIT IN THE SUBMISSION OF TH E LD A.R THAT THERE EXISTED AN AMBIGUITY AS TO WHETHER THE C O- OPERATIVE BANKS ARE REQUIRED TO COMPLY WITH THE PRO VISIONS OF RULE 114E OF THE ACT, MEANING THEREBY, THE BONAF IDE BELIEF OF THE ASSESSEE SHALL CONSTITUTE REASONABLE CAUSE IN TERMS OF SEC.273B OF THE ACT FOR THE FAILURE IN FUR NISHING THE AIR FOR THE YEAR UNDER CONSIDERATION. IN THIS VIEW OF THE MATTER, THE IMPUGNED PENALTY IS LIABLE TO BE DE LETED. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT (A) AND DIRECT THE AO TO DELETE THE IMPUGNED PENALTY LEVIED U/S 271FA OF THE ACT FOR THE YEAR UNDER CONSIDERATION. ITA NO.447/BANG/2019 THE MANDYA DISTRICT CO-OP. CENTRAL BANK LTD., MANDYA PAGE 6 OF 7 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.3.2020. SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 13 TH MARCH, 2020. /VG/ COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.