Sharad Gramin Bigarsheti Sahakari Patsanstha, V. Addl.CIT, Range 10, Pune,

ITA 53/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3154 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 13-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Keywords: Bonafide belief; Reasonable cause; Ignorance of law
• Section: 273B; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER I.T.A. NO. 53/PN/2009 ( A.Y. 2005-06 ) SHARAD GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA ATP NIRGUDSAR TAL. AMBEGAON, PUNE PAN AABAS8790 H APPELLANT VS. ASSTT. CIT RANGE 10, PUNE RESPONDENT APPELLANT BY: SHRI SUNIL GANOO RESPONDENT BY: SHRI S.K. AMBASTHA ORDER PER SHALENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 15-10-2008 FOR A.Y. 2005-06 ON THE GROUND THE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED U/S 271E OF THE ACT B Y THE A.O. 2. IN SUPPORT OF THE GROUND, LEARNED AR SUBMITTED T HAT THE CIT(A) HAS FAILED TO APPRECIATE THAT THERE WAS A RE ASONABLE CAUSE WITH THE ASSESSEE FOR NOT COMPLYING WITH THE PROVISIONS OF SEC. 269T OF THE IT ACT. THE ASSESSEE ENTERTAIN ED A BONAFIDE PAGE 2 OF 6 ITA NO. 53/PN/2009 SHARAD GRAMIN BIGAR SHETI SAH. PAT SANSTHA A.Y. 2005-06 BELIEF THAT PROVISIONS OF SECTION 269T WERE NOT APP LICABLE TO IT. HE POINTED OUT THAT MOST OF THE MEMBERS OF THE MANA GING COMMITTEE OF THE ASSESSEE ARE NOT MUCH EDUCATED. T HUS, THE MEMBERS AS WELL AS THE OTHER STAFF HAVE NO KNOWLEDG E TO INTRICATE WITH THE PROVISIONS OF THE ACT. THEY WER E UNDER THE BONAFIDE BELIEF THAT SINCE THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCIETY, DEALING ONLY WITH ITS MEMBERS, THE PROVISI ONS OF SECTION 269SS AND 269T OF THE ACT WERE INAPPLICABLE TO IT. THIS BONAFIDE BELIEF WAS FURTHER, REINFORCED BY THE FACT THAT NEITHER THE STATUTORY AUDITORS NOR THE TAX AUDITORS OF THE ASSESSEE APPRAISED IT ABOUT THE CORRECT LEGAL PROVI SIONS. 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 NOT DOUBTED T HE GENUINENESS OF THE TRANSACTIONS OF THE DEPOSITS. H E SUBMITTED THAT THE BONAFIDE BELIEF ENTERTAINED BY THE ASSESSE E IN THE MATTER CONSTITUTES A REASONABLE CAUSE WITHIN THE ME ANING OF THE PROVISIONS OF SECTION 273B OF THE ACT. HE ALSO POINTED OUT THAT THE PUNE BENCH OF THE TRIBUNAL HAVE BEEN TAKIN G A CONSISTENT VIEW WITH A BONAFIDE BELIEF THAT THE PRO VISIONS ARE INAPPLICABLE AND CONSTITUTES A REASONABLE CAUSE AND HENCE PENALTY CANNOT BE LEVIED U/S 271E OF THE ACT ON THE CO- OPERATIVE SOCIETY FOR TECHNICAL OR VENIAL BREACH OF THE PROVISIONS. HE CITED THE FOLLOWING DECISIONS: PAGE 3 OF 6 ITA NO. 53/PN/2009 SHARAD GRAMIN BIGAR SHETI SAH. PAT SANSTHA A.Y. 2005-06 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. THE LEARNED DR ON THE OTHER HAND TRIED TO JUSTIF Y THE ORDER IMPUGNED WITH THE SUBMISSIONS THAT THE ASSESS EE HAS UNDISPUTEDLY VIOLATED THE PROVISIONS OF SECTION 269 T OF THE ACT AND IGNORANCE OF LAW CANNOT BE TREATED AS A REASONA BLE CAUSE TO DELETE THE PENALTY. 4. 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 271E OF THE ACT BUT THE LEGISLATURE KEEPING IN MIND POSSIBILITY OF IT HAS GIVEN DISCRETION TO THE DEPARTMENT U/S 27 3B OF THE ACT, NOT TO LEVY U/S 271E OF THE ACT. THUS, FOR AVA ILING THE BENEFIT U/S 273B OF THE ACT, THE ASSESSEE IS REQUIR ED TO PAGE 4 OF 6 ITA NO. 53/PN/2009 SHARAD GRAMIN BIGAR SHETI SAH. PAT SANSTHA A.Y. 2005-06 ESTABLISH THAT THERE WAS REASONABLE CAUSE FOR ITS F AILURE IN COMPLYING WITH THE PROVISIONS OF SECTION 269T OF TH E ACT. IN THE PRESENT CASE, WE DO NOT FIND REASON TO DOUBT TH E ABOVE SAID REASONABLE CAUSE FURNISHED BY THE ASSESSEE BEF ORE THE LOWER AUTHORITIES AND THE TRIBUNAL, THAT IT BEING A CREDIT CO- OPERATIVE SOCIETY DEALING ONLY WITH ITS MEMBERS, WA S UNDER IMPRESSION THAT THE PROVISIONS OF SEC. 269SS AND 26 9T OF THE ACT WERE INAPPLICABLE TO IT. THIS EXPLANATION FIND S STRENGTH FROM THIS VERY FACT THAT NEITHER THE STATUTORY AUDI TORS NOR THE TAX AUDITORS OF THE ASSESSEE SOCIETY APPRAISED IT A BOUT THE CORRECT LEGAL PROVISIONS IN THIS REGARD, AS SUBMITT ED BY THE LEARNED AR. IN THE CASE OF CIT VS. EETAHI AGENCIES (SUPRA) THERE WAS FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269T OF THE ACT AND PENALTY U/S 271E WAS LEVIED. THE TR IBUNAL FOUND THAT THE ASSESSEE HAD COMMITTED VIOLATION OF SECTION 269T UNDER A GENUINE BELIEF THAT SEC. 269T HAD NO A PPLICATION TO DEPOSITS AND THAT IT ONLY APPLIED TO LOANS. THE DEPARTMENT PREFERRED APPEAL AGAINST SAID ORDER OF THE TRIBUNAL BEFORE THE HONBLE HIGH COURT WHEREIN, THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD THAT THE PENALTY WAS RIGHT LY DELETED BY THE TRIBUNAL. AGAIN IN THE CASE OF CIT VS. JAYA BHAWANI GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA LTD. (SUPRA ) THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO UPHOL D THE DECISION OF THE TRIBUNAL ACCEPTING REASONABLE CAUSE U/S 273B PAGE 5 OF 6 ITA NO. 53/PN/2009 SHARAD GRAMIN BIGAR SHETI SAH. PAT SANSTHA A.Y. 2005-06 IN CASE OF VIOLATION OF THE PROVISIONS OF SEC. 269S S OF THE ACT. THE DEPARTMENT HAD PREFERRED SLP BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGMENT OF THE HONBLE BOMBAY HI GH COURT WHICH HAS BEEN DISMISSED BY THE HONBLE SUPREME COU RT REPORTED IN (2010) 322 ITR 12 (STATUTE). RESPECTFUL LY FOLLOWING DECISIONS OF THE HONBLE COURTS, WE ARE OF THE VIEW THAT THERE WAS REASONABLE CAUSE WITH THE ASSESSEE IN NURTURING A BONAFIDE BELIEF THAT THE PROVISIONS OF SEC. 269T WE RE NOT APPLICABLE IN ITS CASE. WE, THEREFORE, SET ASIDE T HE FIRST APPELLATE ORDER ON THE ISSUE AND DIRECT THE A.O TO DELETE THE PENALTY IN QUESTION LEVIED U/S 271E OF THE ACT. THE GROUNDS RAISED ARE ACCORDINGLY ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 19 TH NOVEMBER 2010. SD/- SD/- (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 19 TH NOVEMBER 2010 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- III, PUNE 4. THE CIT- IV PUNE 5. THE D.R, B BENCH, PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PAGE 6 OF 6 ITA NO. 53/PN/2009 SHARAD GRAMIN BIGAR SHETI SAH. PAT SANSTHA A.Y. 2005-06 PUNE