The Aska Co-op. Central Bank Ltd, Ganjam V. ACIT, Berhampur

ITA 510/CTK/2011

• Counselvise Citation: 51022114 RSA 2011
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 07-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: P N DAVE
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM, AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 510/CTK/2011 (ASSESSMENT YEAR 2005 - 06) THE ASKA CO - OP. CENTRAL BANK LTD., ASKA , GANJAM. PAN:AAAAT 9059 P VERSUS ASST.COMMI SSIONER OF INCOME - TAX, BERHAMPUR CIRCLE, BERHAMPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.N.DAVE, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 07.05.2012 DATE OF PRONOUNCEMENT : 11.05.2012 ORDER SHRI K.K.GUPTA, AM : THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY ISSUE REGARDING CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S.271B OF THE I.T.ACT,1961 FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE ASSESSEE IS A CO - OPERATIVE BANK BEING GOVERNED BY THE RESERVE B ANK OF INDIA FOR ITS BANKING BUSINESS AND THE REGISTRAR OF CO - OP. SOCIETIES FOR RENDERING THE FINANCIAL STATEMENTS. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NEVER BEEN SUBJECTED TO AUDIT BY A CHARTERED ACCOUNTANT IN TERMS OF SECTION 2 88(2) CONSIDERED BY THE LEARNED CIT(A) . THE ASSESSING OFFICER DID NOT INITIATE PENALTY PROCEEDINGS U/S.271B IN HIS ORDER U/S.143(3) CLEARLY INDICATES THAT THE PENALTY U/S.271B HAS BEEN LEVIED ON THE FINDING THAT THE ASSESSEE HAD FILED THE RETURN ON 25.1.20 06 WHEN THE REPORT OF THE AUDITOR U/S.44AB AND FORM 3CD AND 3CA REMAINED UNSIGNED. HOLDING A VIEW THAT THE ASSESSEE HAD NOT FILED ANY PROOF REGARDING ASSIGNMENT OF AUDITORS NEITHER IN THE ASSESSMENT PROCEEDINGS NOR DURING THE PENALTY PROCEEDINGS , IMPOSED P ENALTY U/S.271B TO THE MAXIMUM OF 1 LAKH. IT WAS SUBMITTED TO THE ASSESSING OFFICER DURING THE PENALTY PROCEEDINGS THAT THE FINAL AUDIT REPORT WAS OBTAINED BEFORE 30 TH SEPTEMBER, 2005 AND INADVERTENTLY THE AUDITOR HAD NOT PUT HIS NAME AND SIGNATURE ALONG WITH THE ITA NO.510/CTK/2011 2 DATE WHICH WAS REQUIRED TO BE FILED WAS FILED BEFORE THE LEARNED CIT(A). THEREAFTER THE LEARNED CIT(A) TOOK COGNIZANCE OF SECTION 288(2) BY HOLDING THAT THE AUDITOR OF THE REGISTRAR OF CO - OPERATIVE SOCIETIES WAS NOT THE ACCOUNTANT FOR THE PURPOSE OF AUDIT U/S.44AB. HE SUSTAINED THE PENALTY IMPOSED BY THE ASSESSING OFFICER ON THE GROUND OF NOT OBTAINING AND NOT FURNISHING THE REPORT U/S.44AB BY THE DUE DATE AS WELL NOT HAVING BEEN SIGNED BY THE ACCOUNTANT DEFINED UNDER THE ACT. 3. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT D URING THE COURSE OF PENALTY PROCEEDING BEFORE THE LEARNED ASSESSING OFFICER THE ASSESSEE FILED A WRITTEN SUBMISSION ALONG WITH THE EVIDENCE WHICH CLEARLY EXP LAINS THAT THE AUDIT REPORT WAS OBTAINED BY THE ASSESSEE ON 30.09.2005 I.E., BEFORE THE DUE DATE OF FILING OF INCOME TAX RETURN U/S.139 (1) OF THE ACT FOR THE ASSESSMENT YEAR 2005 - 2006 I.E., 31.10.2005. HE FILED THE C OPY OF THE WRITTEN SUBMISSION ALONG WITH LETTER FROM THE OFFICE OF THE ASSISTANT AUDITOR GENERAL OF CO - OPERAT IVE SOCIETIES, ASKA AUDIT CIRCLE, ASKA PLACED AT PAGES 4 TO 8 OF THE PB. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BROUGHT A NEW ISSUE THAT THE FORM NO. 3CA IS NOT SIGNED BY AN ACCOUNTANT WHO HAS BEEN DEFINED AS CHARTERED ACCOUNTANT U /S.288 OF THE I .T.ACT, 1961 AND ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE . THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF APPEAL HEARING BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ASSESSEE FILED A WRITTEN SUBMISSION ALONG WITH FOR M NO. 3CA AS PROVIDED UNDER RULE 6G (1)(A) OF THE I.T.RULES, 1962 WHICH STATES THAT: THE REPORT OF AUDIT OF THE ACCOUNTS OF A PERSON REQUIRED TO BE FURNISHED UNDER SECTION 44AB SHALL (A) IN THE CASE OF A PERSON WHO CARRIES ON BUSINESS OR PROFESSION AND W HO IS REQUIRED BY OR UNDER ANY OTHER LAW TO GET HIS ACCOUNTS AUDITED, BE IN FORM NO. 3CA. ASSESSEE BEING A CO - OPERATIVE BANK AND ITS ACCOUNTS ARE AUDITED UNDER ORISSA CO - OPERATIVE SOCIETIES ACT AND THE ITA NO.510/CTK/2011 3 AUDITORS ARE ALSO APPOINTED BY OFFICE OF THE ASSISTAN T AUDITOR GENERAL OF CO - OPERATIVE SOCIETIES, ASKA AUDIT CIRCLE, ASKA AND ACCORDINGLY THEY ARE ELIGIBLE AND ENTITLED TO AUDIT AND SIGNED THE FORM NO. 3CA AS PROVIDED UNDER I.T.RULES, AND ALSO AS PER THE NOTES NO.2 (III) TO FORM NO. 3CA WHICH SAYS THAT, AN Y PERSON WHO IS, BY VIRTUE OF ANY OTHER LAW, ENTITLED TO AUDIT THE ACCOUNTS OF ASSESSEE FOR THE RELEVANT PREVIOUS YEAR. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT O N THE AFORESAID FACTS AND GROUNDS OF APPEAL THE AUDIT REPORT SIGNED BY THE FINAL AUDITOR ON 30.09.2005 AS CERTIFIED BY THE OFFICE OF THE ASSISTANT AUDITOR GENERAL OF CO - OPERATIVE SOCIETIES MAY BE ACCEPTED AND THE PENALTY LEVIED MAY BE ANNULLED IN THE INTEREST OF JUSTICE . 4. THE LEARNED DR POINTED OUT THAT THE FINANCIAL AUDITOR OF THE REGISTRA R OF CO - OPERATIVE SOCIETIES IS NOT THE ACCOUNTANT WHO CAN ONLY BE AN ACCOUNTANT AS DEFINED UNDER THE PROVISIONS OF THE I.T.ACT. THE PLEA TAKEN BY THE L EARNED AR OF THE ASSESSEE WHEN F ORM 3CA REQUIRES ANY PERSON WHO HAS BY VIRTUE OF ANY OTHER LAW ENTITLED T O AUDIT THE ACCOUNTS OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR IS AN AFTERTHOUGHT INSOFAR AS THE FINANCIAL AUDITOR WAS NOT LEGALLY ENTITLED OR AUTHORIZED TO SIGN THE FORM 3CD. THIS DEFICIENCY WAS NOTED BY THE ASSESSING OFFICER WHILE LEVYING THE PENALT Y WAS CONF IRMED BY THE LEARNED CIT(A) IN AS MANY WORDS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE CONTENTION OF THE LOWER AUTHORITIES BEGAN ON THE BELATED FILING OF RETURN WH EN THE OFFICE OF THE SOCIETIES A UDITOR G ENERAL OF CO - OP. SOCIETIES ACKNOWLEDGE D THE FACT THAT THE STATUTORY AUDIT REPORT OF THE ASSESSEE WAS DOCUMENTED WITH THE REGISTRAR ON THE AUDIT CERTIFICAT E ISSUED AND WAS VERY MUCH AVAILABLE ON 30 TH SEPTEMBER, 2005 WHEN THE FINANCIAL AUDITOR INSCRIBED THE DATE ON FORMS 3CD AND 3CA AS 20 TH ITA NO.510/CTK/2011 4 SEPTEMBER, 2005. IT WAS NEVER THE CASE AS CONSIDERED BY THE LEARNED CIT(A) THAT THE AUDITOR OF THE REGISTRAR OF CO - OP . S OCIETIES WAS NOT THE ACCOUNTANT AS DEFINED U/S.288(2). IT WAS NOT THE CASE OF THE LEARNED CIT(A) TO SUGGEST THAT ONLY CAS ARE ALLOWED TO AUDIT WHEN THE ASSESSEE ENTITIES ARE GOVERNED BY RULES AND REGULATIONS NAMELY PUBLIC SECTOR UNDERTAKINGS, BANKS, CO - OP. SOCIETIES AND NGOS FUNCTIONING FOR THE REQUIREMENT FOR THEIR AUDIT ALONG WITH THE REQUIREMENT OF THE I.T.ACT FOR SUBMISSION OF AUDIT REPORT U/S.44AB.NO CA THEREFORE COULD HAVE TAKEN THE PLACE OF THE AUDITOR FROM THE OFFICE OF THE AUDITOR GENERAL OF CO - O P . SOCIETIES DILUTES THE VERY FINDING OF THE ASSESSING OFFICER THAT THE AUDITOR HAD SIGNED THE VERY FINANCIAL STATEMENTS WHICH WERE ADOPTED BY THE MANAGEMENT BEING THE MAJOR HEAD OFFICE SECRETARY AND MANAGEMENT IN - CHARGE OF THE BANK. ON PERUSAL OF THE ASSES SMENT ORDER, WE FIND THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE APPROPRIATE TO THE EXTENT THAT THE VERY FINANCIAL STATEMENTS AS WERE RELIED UPON BY THE ASSESSING OFFICER WERE ACCEPTED WITHOUT HOLDING A VIEW THAT THE SAME HAD NOT BEEN AUDITED U/S.44AB . IT WAS NOT ANT E DATED WHEN NO DATE WAS MENTIONED OF HAVING CARRIED OUT THE AUDIT BY SEPTEMBER, 2005 WHICH HAS BEEN ESTABLISHED/ CONFIRMED BY THE CORRESPONDENCES RESTING WITH THE REGISTRAR OF CO - OP./SOCIETIES WHEN COPIES OF THE AUDIT CERTIFICATE HAS BEEN EN DORSED TO VARIOUS AUTHORITIES SUC H AS SECRETARIES OF CE NTRAL CO - O P. BANK OF THE STATE OF ORISSA, A.G.,ORISSA , BHUBANESWAR , ORISSA STATE CO - O P. BANK LTD., BHUBANESWAR, AG OF CO - OP. SOCIETIES, ORISSA, COMMISSIONER - CUM - SECRETARY OF CO - OP. DEPARTMENT, GOVERNM ENT OF ORISSA. IN OTHER WORDS AT NO POINT OF TIME, IT CAN BE SAID THAT THE FINANCIAL AUDITOR WHO HAD SIGNED THE AUDIT REPORT ON SEPTEMBER, 2005 WAS NOT AUTHORIZED TO SIGN THE REPORT IN LAW GOVERNING THE PROVISIONS OF CO - OPERATIVE SOCIETIES ACT. THE SUBMISS ION OF THE LEARNEDDR THAT THE FINAL AUDITOR OF THE REGISTRAR OF CO - OPERATIVE SOCIETIES WAS NOT ITA NO.510/CTK/2011 5 AUTHORIZED TO SIGN THE AUDIT REPORT IS MISPLACED. T HE CO - OP. SOCIETIES ACT REQUIRES THE ACCOUNTS TO BE AUDITED BY THE AUDITOR OF THE REGISTRAR OF CO - OP. SOCIETIE S ONLY. UNDISPUTEDLY THE AUDIT REPORT HAD BEEN OBTAINED BEFORE FILING OF THE RETURN WITHIN THE DUE DATE WAS FILED BELATEDLY CANNOT BE A GROUND FOR LEVY OF PENALTY U/S.271B. IN VIEW OF THE ABOVE, THE PENALTY OF 1,00,000 LEVIED U/S.271B IS CANCELLED BY ALLO WING THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSE E IS ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 11.05.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COP Y OF THE ORDER FORWARDED TO : 1. THE APPELLANT: THE ASKA CO - OP. CENTRAL BANK LTD., ASKA , GANJAM. 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, BERHAMPUR CIRCLE, BERHAMPUR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLIC ATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.