Kashipur Urban Co-operative Bank, Uttrakhand V. JCIT (TDS), Dehradun

ITA 5598/DEL/2014

• Counselvise Citation: 559820114 RSA 2014
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 28-10-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 15-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

ITA NO. 5598/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 5598 /DEL/201 4 A.Y. : 20 12 - 13 KASHIPUR URBAN COOPERATIVE BANK LTD., BAZPUR ROAD, KASHIPUR, DISTT. U.S. NAGAR, UTTARAKHAND 244713 (PAN:AAAJK0203F) VS. JOINT COMMISSIONER OF INCOME TAX (TDS), 13-A, SUBHASH ROAD, DEHRADUN (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. P. DAM KANUNJNA, SR. DR DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 2 22 28 88 8- -- -10 1010 10- -- -201 201 201 2015 55 5 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 28 2828 28- -- -10 1010 10- -- -201 201 201 2015 55 5 ORDER ORDER ORDER ORDER ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER DA TED 25.8.2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, DEHRADUN PERTAINING TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS U NDER:- 1. THE CIT(A) HAS ERRED IN FACTS AND IN LAW, IN CO NFIRMING THE PENALTY OF RS. 62,456/- U/S. 271(1)(C) OF THE I.T. ACT, 1961 AS TH E ASSESSEE IS A COOPERATIVE SOCIETY HAVING A BANKING BUSINESS, THE REFORE SQUARELY COVERED UNDER SECTION 194A(3)(V) OF THE I.T. ACT, FOR NON T DS PROVISIONS TO SUCH INCOME PAID TO ITS MEMBERS. ITA NO. 5598/DEL/2014 2 2. THE PENALTY UNDER SECTION 271C CANNOT BE INVOKED IN VIEW OF THE PROVISIONS OF SECTION 273B OF THE INCOME TAX ACT AS THE APPELL ANT HAD REASONABLE CAUSE FOR TDS FAILURE. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED THAT THE EV IDENCES THAT THE DEPOSITERS ARE MEMBERS OF THE BANK WERE NOT PRODUCED BEFORE AO,AS THIS MATTER IS NOT DISPUTED. 4. ANY OTHER GROUND, WHICH MAY BE TAKEN AT THE TIME OF HEARING OF APPEAL. 3. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED, THEREFORE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF CONV ENIENCE. 4. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS A UTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, HOWEVE R, THE ASSESSEE HAS SENT THE LETTER DATED 23.10.2015 ENCLOSING THEREWITH A LETTE R DATED 19.9.2015 WHEREIN HE HAS STATED THAT THE ISSUE IN DIPSUTE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE QUANTUM APPEAL PASSED IN ITA NO. 53 29/DEL/2013 VIDE ORDED DATED 14.11.2014, A COPY OF THE SAID ORDER IS ALSO ENCLOSED WITH THIS LETTER WHICH IS PLACED ON RECORD AND ACCORDINGLY REQUESTED THAT THE PENALTY PROCEEDINGS MAY KINDLY BE DROPPED. KEEPING IN VIEW THE FACTS A ND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE A GAIN AND AGAIN TO THE ASSESSEE, THEREFORE, I AM DECIDING THE PRESENT APP EAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 5. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE LD. DR AND PERUSED THE RECORDS . NONE WAS PRESENT ON BEHALF OF THE ASSESSEE, HOWEVER, THE ASSESSEE HAS S ENT A LETTER DATED ITA NO. 5598/DEL/2014 3 23.10.2015 ENCLOSING THEREWITH A LETTER DATED 19.9. 2015 WHEREIN HE HAS STATED THAT THE ISSUE IN DIPSUTE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE QUANTUM APPEAL PASSED IN ITA NO. 5329/DEL/2013 VIDE ORDED DATED 14.11.2014 AND REQUESTED THAT THE PENALTY IN DISPUT E MAY BE DROPPED. DURING HEARING, IN ORDER TO VERIFY THE CONTENTIONS RAISED BY THE ASSESSEE IN ITS AFORESAID LETTER DATED 19.9.2015, I DIRECTED THE BENCH CLERK TO SHOW ME THE ORIGINAL FILE IN WHICH THE ORDER DATED 14.11.2014 WAS PASSED IN ITA NO. 5329/DEL/2013. THE RELEVANT ORIGINAL FILE WAS PRDOUCED BEFORE ME AND I HAVE PERUSED THE SAID FILE AND FOUND THAT THE CONTENTION OF THE ASSESSEE RAI SED AS AFORSAID IN HIS LETTER DATED 19.9.2015 ARE GENUINE. FOR THE SAKE OF CON VEINECE, I AM REPRODUCING THE OPERATIVE PORTION OF THE ORDER PASSED BY THE I TAT, D DELHI BENCH IN ITA NO. 5329/DEL/2013 (AY 2012-13) VIDE ORDER DATED 14 .11.2014 AS UNDER:- 3. IN THE INSTANT CASE, THE ITO(TDS) HELD THAT ASS ESSEE, COOPERATIVE SOCIETY WAS LIABLE TO DEDUCT TDS ON INTEREST PAID O N TIME DEPOSIT UNDER SEC. 194A OF THE ACT, IN AN ORDER U/S 201(1)/201(1A ) OF THE ACT. AND AS SUCH DIRECTED THE ASSESSEE TO PAY TOTAL TAX LIABILI TY OF RS. 69,950/- ON INTEREST PAID OF RS. 6,24,564/- ON TIME DEPOSIT. 4. THE CIT(A) HAS CONFIRMED THE ACTION OF THE ITO(T DS) BY HOLDING AS UNDER: ITA NO. 5598/DEL/2014 4 3.1 THE FACTS OF THE CASE, AVERMENTS OF LD. AR AND FINDINGS OF LD. AO HAVE BEEN CONSIDERED. RIGHT AT THE OUTSET IT NEE DS TO BE MENTIONED THAT THE CIRCULAR 9 (SUPRA) IS NO LONGER A GOOD AND POTENT BINDING FORCE ON DEPARTMENTAL OFFICIALS SINC E IT HAS BEEN QUASHED BY THE HONBLE BOMBAY HIGH COURT THROUGH TH E JALGAON DISTRICT CENTRAL COOPERATIVE BANK LTD. REPORTED IN 265 ITR 423. COGNIZANCE OF THIS QUASHING HAS ALSO BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT URBAN COO PERATIVE BANK FEDERATION REPORTED IN 209 TAXMAN 340 (GUJ.) AT PAR A 6. IT IS THUS CLEAR THAT THE SAID CIRCULAR CEASES TO EXIST AND CA NNOT BE A GUIDE FOR CONSIDERING THE ISSUE AT HAND IN ITS LIGHT. REG ARDING THE CASE OF VISHKHAPATNAM COOPERATIVE BANK LTD. REPORTED IN 47 SOT 295 (VISH) THE FINDINGS WOULD HAVE HAD CONSIDERABLE PER SUASIVE VALUE IF THE IMPORTANCE OF THE QUASHING OF CIRCULAR 9 (SUPRA ) HAD BEEN CONSIDERED AS A VALID INPUT IN DECIDING WHETHER THE SAID PAYMENT WAS HIT BY THE RELEVANT PROVISIONS OF TDS OR NOT. SINCE THIS FACT HAS NOT BEEN DISCUSSED IT IS RESPECTFULLY SUBMITTED THA T THIS DECISION DESERVES TO BE DIFFERED WITH SINCE BLINDLY FOLLOWIN G THE SECTION 194A(3)(V) WOULD RENDER SECTION 194A(3)(VIIA) OF TH E ACT OTIOSE SINCE IT SPECIFICALLY CALLS FOR DEDUCTION OF TAX AT SOURC E ON PAYMENTS REGARDING DEPOSITS WITH, AMONG OTHER, COOPERATIVE B ANKS AND THE CIRCULAR ATTEMPTING TO CLARIFY THIS MATTER HAS BEEN QUASHED. THUS A COMBINED READING OF BOTH SECTIONS 194A(3)(V) AND 19 4A(3)(VIIA) WOULD INDICATE DEDUCTION OF TAX AT SOURCE ON TIME D EPOSITS. HERE IS ALSO NEEDS TO BE MENTIONED THAT THE EXPLANATORY MEM ORANDUM ON THE INSERTION OF SECTION 194A THROUGH THE FINANCE A CT, 1991 STATES THAT THE INTENTION WAS TO BRING WITHIN THE TAX NET INCOMES ARISING ITA NO. 5598/DEL/2014 5 FROM TIME DEPOSITS WITH BANKING COMPANIES AND COOPE RATIVE SOCIETIES. THUS, THE INTERPRETATION FOLLOWED BY THE LD. AO DESERVES TO BE SUPPORTED AND THIS GROUND IS DISMISSED. 5. ON CAREFUL CONSIDERATION OF THE FACTS, WE FIND T HAT AN IDENTICAL ISSUE HAD COME UP IN THE CASE OF VISHAKAPATNAM CO-OPERATIVE B ANK VS. DIT, ITA NO. 5/2011 & 19/2011, VIZAG BENCH OF ITAT, WHEREIN IT WAS HELD AS UNDER: WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF THE ASSESSEE AND ALSO THE DECISION RENDERED BY LD. CIT(A). SECTION 1 94A(3) OF THE ACT PRESCRIBES THE MONETARY LIMITS AND ALSO A LIST OF P AYMENTS WHICH ARE EXEMPT FROM THE REQUIREMENT OF COMPLYING WITH THE P ROVISIONS OF TDS PRESCRIBED UNDER SUB-SECTION (1) OF THAT SECTI ON. CLAUSE (V) OF SECTION 194A(3), ON WHICH RELIANCE WAS PLACED BY TH E ASSESSEE, READS AS UNDER: TO SUCH INCOME CREDITED OR PAID BY A COOPERATIVE S OCIETY TO A MEMBER THEREOF OR TO ANY OTHER COOPERATIVE SOCIET Y. ON A PLAIN READING OF THE SECTION 194A(3)(V), WE NOTICE THAT THE SAID SECTION PROVIDES BLANKET EXEMPTION TO THE INTE REST PAID BY ANY COOPERATIVE SOCIETY TO ITS MEMBERS. THE TERM COOPERATIVE SOCIETY HAS BEEN DEFINED U/S 2(19) OF THE ACT AS UNDER: COOPERATIVE SOCIETY MEANS A COOPERATIVE SOCIETY REGISTERED UNDER THE COOPERATIVE SOCIETIES ACT, 191 2 (2 OF ITA NO. 5598/DEL/2014 6 1912), OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF COOPERATIVE SOCIE TIES. IT CAN BE SEEN THAT NEITHER SEC. 2(19) NOR SEC. 194 A(3) MAKES ANY DISCRIMINATION BETWEEN THE COOPERATIVE SOCIETIE S CARRYING ON BANKING BUSINESS AND OTHER COOPERATIVE SOCIETIES. HOWEVER, AS PER SEC. 194A(3), THE SAID E XEMPTION IS AVAILABLE ONLY TO THE INTEREST PAYMENTS MADE TO ITS MEMBERS OR TO ANY OTHER COOPERATIVE SOCIETY. IN THE INSTANT CASE, IT IS THE CLAIM OF THE ASSESSEE THAT ALL THE INTEREST PAYMENTS HAVE BEEN MADE ONLY TO ITS MEMBERS. IN THA T CASE, THE ASSESSEE IS SQUARELY COVERED BY THE EXEMPTION P ROVIDED U/S 194A(3)(V) OF THE ACT. ACCORDINGLY WE FIND NO R EASON WITH THE DECISION OF LD. CIT(A) ON THIS ISSUE. 6. APPLYING THE AFORESAID RATIO, WE HOLD THAT ASSES SEE WAS NOT OBLIGED TO DEDUCT TDS ON THE INTEREST PAID TO ITS MEMBERS ON T IME DEPOSITS U/S 194(A) OF THE ACT. ACCORDINGLY THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE DEMAND RAISED IS DELETED. 7. IN THE RESULT, THE APPEAL IS ALLOWED 7. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERD VIE W THAT SINCE THE MAIN DEMAND HAS BEEN DELETED IN THE QUANTUM APPEAL, AS A FORESAID AND THE VERY BASIS OF LEVYING THE PENALTY HAS GONE, THEREFOR E, THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) CANNOT STAND IN THE EYES OF LAW. AC CORDINGLY, THE PENALTY LEVIED UNDER SECTION 271(1)(C) IS DELETED. ITA NO. 5598/DEL/2014 7 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/10/2015. SD/- [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 28/10/2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES