The Jammu Central Co-operative Bank Ltd, Jammu V. The Dy. Commissioner of Income-tax, Jammu

ITA 509/ASR/2014

• Counselvise Citation: 50920914 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDADR
• Assessee Lawyers: P N ARORA
• Keywords: Proportionate interest; Reasonable cause
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR [JAMMU CAMP, JAMMU] BEFORE HONBLE SHRI A.D.JAIN, JUDICIAL MEMBER, AND HONBLE SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 509(ASR)/2014 ASSESSMENT YEARS: 2008-09 THE JAMMU CEN TRAL CO - OPERATIVE BANK LTD SEHKARI BHAWAN, RAIL HEAD COMPLEX, JAMMU PAN : AAAJT 1015 C VS. THE DEPUTY C.I.T. CIRCLE 1 JAMMU (APPELLANT) (RESPONDENT) I.T.A. NOS. 611 TO 613(ASR)/2014 ASSESSMENT YEARS: 2004-05 TO 2006-07 THE DEPUTY C.I.T. CIRCLE 1 JAMMU VS. THE JAMMU CENTRAL CO - OPERATIVE BANK LTD SEHKARI BHAWAN, RAIL HEAD COMPLEX, JAMMU PAN : AAAJT 1015 C ASSESSEE BY: SHRI P.N. ARORA DEPARTMENT BY: SHRI R.K. SHARDA(DR.) DATE OF HEARING: 01.12.2015 DATE OF PRONOUNCEM ENT: 03.12.2015 ITA NOS. 509, 611 TO 613(ASR)/2014 A.YS 2008-09, 2004-05 TO 2006-07 2 ORDER PER A.D. JAIN, J.M:- THE ABOVE APPEALS OF THE ASSESSEE AND THE DEPARTME NT INVOLVE IDENTICAL ISSUES. THEREFORE, FOR THE SAKE OF CONVE NIENCE AND BREVITY, WE ARE DISPOSING OF THEM TOGETHER BY THIS COMMON ORDER. FIRST WE TAKE UP ASSESSEES APPEAL FOR A.Y 2008-09. ITA NO. 509/ASR/2014 2. THIS IS ASSESSEES APPEAL FOR A.Y. 2008-09. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED OF THE ACTION OF THE LD. CIT( A) IN DELETING THE PENALTY OF RS. 1 LAKH IMPOSED BY THE AO U/S 271B OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT, F OR SHORT]. 3. THE STAND OF THE ASSESSEE, AS MAINTAINED BEFORE THE TAXING AUTHORITIES, REMAINS THAT DUE TO PROLONGED AGITATIO N OF SHRI AMARNATH SANGARSH SAMITI AT JAMMU, ALL THE BANKING ACTIVITIES VIRTUALLY CAME TO A STAND-STILL AND THE BRANCHES OF THE BANK BEING SITUATED OUTSIDE JAMMU CITY HAD CAUSED DELAY IN CON DUCTING TAX AUDIT WITHIN THE STATUTORY PERIOD PRESCRIBED UNDER THE ACT. IT HAS ITA NOS. 509, 611 TO 613(ASR)/2014 A.YS 2008-09, 2004-05 TO 2006-07 3 BEEN SUBMITTED THAT THERE WERE 70 BRANCHES OF THE B ANK, SPREAD OVER IN REMOTE AREAS, RENDERING IT WELL NIGH, IMPOS SIBLE TO GET AUDIT CONDUCTED IN TIME. 4. THE LD. DR, ON THE OTHER HAND, STRONGLY RELIED O N THE IMPUGNED ORDER AND CONTENDED THAT THE STATUTORY REQ UIREMENTS WERE MANDATORY AND THEY WERE REQUIRED TO BE MET IN SPIRIT AS WELL AS IN FORM, WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. 5. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE L IGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THE GRIEVANCE OF THE ASSESSEE TO BE JUSTIFIED. THERE IS NO DENIAL THAT AGITATION WAS RAKED UP BY SHRI AMARNATH SANGARSH SAAMITI AT JAMMU. THAT THE FALL-OUT THEREOF CONTINUED UNABATED, REMAINS UNDISPUTED. IT IS ALSO A MATTER PATENT ON RECORD, THAT THE BANK IS HAVING 70 BRANCHES WHICH ARE SEPARATE AND IN REMOTE AREAS OF JAMMU, RENDERIN G ACCESS TO THESE BRANCHES IMPRACTICABLE, IF NOT IMPOSSIBLE. I T WAS THESE FACTORS WHICH LED TO THE DELAY IN THE AUDIT BEING N OT GOT CONDUCTED EVEN WITHIN THE EXTENDED TIME. THEREFORE, FINDING THIS TO BE A ITA NOS. 509, 611 TO 613(ASR)/2014 A.YS 2008-09, 2004-05 TO 2006-07 4 REASONABLE CAUSE FOR THE DELAY INCURRED, THE SAME I S HEREBY CONDONED AND THE PENALTY IS DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NOS. 611 TO 613/ASR/2014 7. IN THESE APPEALS, THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS GONE WRONG IN ALLOWING RELIEF TO THE ASSESSEE A ND WHILE DOING SO, HAS NOT CONSIDERED THE SPECIAL BENCH ORDER OF T HE TRIBUNAL IN THE CASE OF ITO VS. M/S DAGA CAPITAL MANAGEMENT SER VICES LTD. [2009] 312 ITR [AT][MUMBAI][SB], WHEREIN IT HAS BEE N HELD THAT PROPORTIONATE INTEREST NEEDS TO BE DISALLOWED U/S 1 4A OF THE ACT R.W.R 8D OF THE INCOME-TAX RULES, WHICH IS APPLICAB LE RETROSPECTIVELY, BEING A PROCEDURAL PROVISION. 8. HERE, IT IS SEEN THAT AS PER THE AO, THE ASSESSE E HAD MADE INVESTMENT IN SHARES AND BONDS AND WAS EARNING DIVI DEND INCOME EXEMPT FROM INCOME. AS SUCH, THE AO HELD THE PROVI SIONS OF SECTION 14A OF THE ACT R.W.R 8D OF THE RULES TO BE ATTRACTE D. ITA NOS. 509, 611 TO 613(ASR)/2014 A.YS 2008-09, 2004-05 TO 2006-07 5 9. THE ASSESSEE, ON THE OTHER HAND, MAINTAINS, AS E VER, THAT THERE WAS NO DIVIDEND INCOME EARNED BY THE ASSESSEE IN ANY OF THE THREE A.YS AND, THEREFORE, THE PROVISIONS OF SECTIO N 14A OF THE ACT WERE WRONGLY APPLIED. AS PER THE ASSESSEE, RULE 8D CAME INTO EXISTENCE W.E.F A.Y 2007-08 AND THE A.YS UNDER CONS IDERATION WERE PRIOR THERETO, THEREBY RENDERING THE APPLICABILITY OF THE RULE 8D OTIOSE. THESE CONTENTIONS OF THE ASSESSEE HAVE BEE N FOUND TO BE CORRECT BY THE LD. CIT(A). 10. APROPOS THE GRIEVANCE OF THE DEPARTMENT, THE ON LY CONTENTION, AS ALSO STATED IN THE GROUND OF APPEAL PHRASED, IS THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N M/S DAGA CAPITAL MANAGEMENT [P] LTD [SUPRA] HAS WRONGLY BEEN TAKEN INTO CONSIDERATION. 11. IN THIS REGARD, THERE IS NO DENIAL TO THE DECIS ION OF THE SPECIAL BENCH OF THE TRIBUNAL [SUPRA]. HOWEVER, THE APPLIC ABILITY THEREOF HAS NOT BEEN ESTABLISHED BY THE DEPARTMENT, SINCE T HERE IS NO EFFECTIVE REBUTTAL TO THE FINDING OF THE LD. CIT(A) THAT THE PROVISIONS OF SECTION 14A OF THE ACT DO NOT COME INTO PLAY, SI NCE THE ASSESSEE ITA NOS. 509, 611 TO 613(ASR)/2014 A.YS 2008-09, 2004-05 TO 2006-07 6 HAS SPECIFICALLY STATED OF NOT HAVING EARNED ANY DI VIDEND INCOME IN ANY OF THE THREE YEARS UNDER CONSIDERATION AND THIS CONTENTION REMAINS UNDISPUTED. NOW, WHEREAS THE PROVISIONS OF SECTION 14A OF THE ACT ARE THEMSELVES NOT ATTRACTED AND INAPPLICAB LE, THERE IS NO QUESTION OF APPLYING THE PROVISIONS OF RULE 8D OF T HE RULES TO THE CASE OF THE ASSESSEE IN ANY OF THE A.YS. 12. FOR THE ABOVE DISCUSSION, THE GRIEVANCE OF THE DEPARTMENT IS FOUND TO BE SHORN OF MERIT AND IS REJECTED AS SUCH. THE APPEALS OF THE DEPARTMENT FOR ALL THE THREE A.YS ARE DISMISSED . 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED, WHEREAS THE THREE APPEALS OF THE DEPARTMENT STAND DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER, 2015. SD/- SD/- (T.S. KAPOOR) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD DECEMBER, 2015 VL/ ITA NOS. 509, 611 TO 613(ASR)/2014 A.YS 2008-09, 2004-05 TO 2006-07 7 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.