The Citizen Co-operative Society Limited, Hyderabad, Hyderabad V. DIT (I&CI), Hydeabad, Hyderabad

ITA 687/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2405 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 17-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Keywords: Right to appeal; Set aside
• Section: 6; 273B; 234B; 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 687/HYD/2017 ASSESSMENT YEAR: 2015-16 THE CITIZEN CO-OPERATIVE SOCIETY LTD., HYDERABAD [PAN: AAAAT3952F] VS DIRECTOR OF INCOME TAX (I & CI), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI D.L. NARASIMHA RAO, AR FOR REVENUE : SHRI PATHLAVATH PEERYA, CIT-DR DATE OF HEARING : 01-11-2017 DATE OF PRONOUNCEMENT : 10-11-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE PENALTY OF RS. 55,700/- LEVIED U/S. 271FA OF THE INCOME TAX ACT [ACT] BY THE DIT(I&CI), HYDERABAD DT. 10-03-2017. ASSESSEE PREFER RED TO FILE THE APPEAL BEFORE THIS FORUM IN FORM 36 ENCLOSING THE NOTI CE OF DEMAND ISSUED BY THE SAID DIT DT. 10-03-2017, WHEREIN IN COLUMN NO. 6, IT IS SPECIFICALLY NOTED THAT ASSESSEE MAY PRESE NT THE APPEAL TO THE CIT(A) WITHIN THIRTY DAYS OF THE RECEIPT OF THE SAI D NOTICE. 2. SINCE THE PROVISIONS OF SECTION 253 OF THE ACT DOES NOT SPECIFY THE ORDER OF PENALTY U/S. 271FA AS AN APPEALABLE ORD ER BEFORE THE ITAT, THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE A PPEAL SHOULD I.T.A. NO. 687/HYD/2017 :- 2 - : NOT BE DISMISSED AS NOT MAINTAINABLE. IN REPLY, THE AS SESSEE HAS SUBMITTED THE FOLLOWING IN SUPPORT OF THE CONTENTIONS THA T APPEAL IS MAINTAINABLE: 8. ADMISSIBILITY OF APPEAL BY THE HON'BLE ITAT: 8.1 THE HON'BLE ITAT ISSUED A DEFICIENCY MEMO DT. 2 0-07-2017 DIRECTING THE ASSESSEE-APPELLANT TO EXPLAIN AS TO W HETHER SUCH ORDER UNDER SEC. 271FA IS AN APPEALABLE ORDER BEFORE THE HON'BL E ITAT; AND COVERING THE SAME, A DETAILED REPLY DT. 28-07-2017 WAS FILED WITH THE HON'BLE TRIBUNAL AND A COPY OF THE SAME IS ANNEXED IN THE F ORM OF PAPER BOOK FOR READY REFERENCE. THE SUBSTANCE OF SUCH REPLY AS UNDER: (1) THE EVEN THE AUTHORITY LEVYING THE ABOVE PENALT Y UNDER SEC. 271FA, VIZ., THE DIRECTOR OF INCOME TAX RECORDED IN THE AN NEXED DEMAND NOTICE IN FORM NO.7 TO THE EFFECT THAT APPEAL COULD BE PRE FERRED TO THE CIT (A); (2) WHEN THE OFFICE OF THE ABOVE DIRECTORATE WAS CO NTACTED BY THE ASSESSEE-APPELLANT BY DEPUTING ITS G.M., SEEKING CL ARIFICATION AS TO HOW THE APPEAL COULD BE FILED WITH AN AUTHORITY WHO IS PARALLEL TO THE HON'BLE DIRECTOR, SUCH CLARIFICATION WAS NOT GIVEN BY THE D IRECTORATE; (3) HOWEVER, TAKING NOTICE OF THE FACT THAT PENALTY UNDER SEC. 271FA WAS ALSO REFERRED TO IN SEC. 273B OF THE ACT, IT IS FEL T BY THE ASSESSEE-APPELLANT THAT SUCH LEVY IS NOT MANADOTRY AS IN THE CASE OF L EVY OF INT. UNDER SEC. 234-A & 234B ETC., AND THAT SUCH LEVY IS ONLY DISCR EATIONARY AND HENCE THERE LIES AN APPEAL AGAINST THE ORDER UNDER SEC. 271FA AS PER THE PROVISIONS OF LAW. (4) THAT AS PER THE PROVISIONS CONTAINED IN CLAUSE '6' APPENDED TO SUB SEC. 1 OF SEC. 253 OF THE ACT, AN ORDER PASSED BY T HE PRINCIPAL CIT/CIT UNDER SEC. 271 OF THE ACT IS ALSO CONSTRUED TO BE A N ORDER WHICH COULD BE APPEALED AGAINST BEFORE THE HON'BLE ITAT. (5) THAT THE ABOVE LEGAL PROVISIONS ALSO CAME UP FO R CONSIDERATION OF THE HON'BLE ITAT ON THE LAST DATE OF HEARING WHICH TOOK PLACE ON 23-08-2017 AND FOR THE ABOVE SUBMISSIONS, IT IS REQUESTED THAT THE ABOVE APPEAL MAY KINDLY BE ADMITTED FOR ADJUDICATION OF THE ISSUE IN VOLVED THEREIN. I.T.A. NO. 687/HYD/2017 :- 3 - : 9. VALIDITY OF ORDER UNDER SEC. 271FA OF THE ACT: 9.1 AS PER RULE 114E OF LT. RULES, THE INFORMATION REFERRED TO IN AIR READ WITH SEC. 285BA OF THE ACT, ONLY A BANKING COMPANY AND COOP. BANK ARE BOUND TO FURNISH THE ABOVE INFORMATION WHEREAS THE ASSESSEE'S CASE, BEING A COOPERATIVE SOCIETY, IS NOT COVERED BY SEC. 285BA OF THE ACT. IT IS SUBMITTED THAT THE ASSESSEE CAME INTO EXISTEN CE ORIGINALLY W.E.F. 31- 05-1997 AS A MUTUALLY AIDED COOPERATIVE CREDIT SOCI ETY HAVING BEEN REGISTERED UNDER SEC. 5 OF ANDHRA PRADESH MUTUALLY AIDED COOP. SOCIETIES ACT., 1995 WITH REGISTRATION NO. AMC/RR/DCO/97 BY T HE REGISTRAR OF MUTUALLY AIDED COOP. SOCIETIES., R.R. DIST., LATERO N, IT GOT REGISTERED UNDER THE MULTI STATE COOP. SOCIETIES ACT, 2002 IN TERMS OF CERTIFICATE DT. JULY 26,2005 ISSUED BY CENTRAL REGISTRAR OF COOPERATIVE SOCIETIES, KRISH BHAVAN, NEW DELHI. 9.2 THOUGH THE ISSUE PERTAINING TO THE CLAIM UNDER SEC. 80P(2)(A)(I) OF THE ACT IS PENDING ADJUDICATION IN THE FORM OF APPEALS ON DIFFERENT JUDICIAL FORUMS FOR DIFFERENT ASSESSMENT YEARS, VIZ., BEFORE THE HON'BLE AP HIGH COURT (FOR THE A.YS. 2006-07, 2007-08 AND 2008-09); BEFORE THE HON'BLE ITAT, HYDERABAD (FOR THE A.YS. 2010-11,2011-12 AND 2013-14 AND 2014- 15) YET THE HON'BLE ITAT, B-BENCH, HYDERABAD ALLOWE D THE ASSESSEE'S CLAIM UNDER SEC. 80(2)(A)(I) OF THE ACT FOR THE A.Y . 2012-13 - VIDE ORDER IN ITA. NO. MA NO. 31/HYD/2016 IN ITA NO. 1295/HYD/201 5 DT 04-03-2016 READ WITH ORDER DT 15-07-2016 IDENTIFYING ITS STATU S AS COOP. SOCIETY NOT FALLING WITHIN THE SCOPE OF BANKING REGULATION ACT REFERRED TO IN SEC. 80P (4)OF THE ACT; 9.3 EVEN THE HON'BLE SUPREME COURT HELD IN ITS LATE ST ORDER IN CIVIL APPEAL NO. 10245/2017, DT 08-082017 TO THE EFFECT THAT THE ASSESSEE IS NOT A COOPERATIVE BANK VIDE PARA 24 THERE OF. HOWEVER, T HE HON'BLE S.C. DENIED SUCH CLAIM UNDER SEC. 80P(2)(A)(I) OF THE AC T ON SOME OTHER GROUNDS HOLDING TO THE EFFECT THAT THE ASSESSEE IS ALSO REN DERING SERVICES TO NOMINAL MEMBERS AND A M.A. AGAINST SUCH FINDING IS PENDING ADJUDICATION BEFORE THE HON'BLE SUPREME COURT. 9.4 HOWEVER, THE FACT REMAINS IN THE INSTANT CASE I S THAT THE ASSESSEE'S STATUS CANNOT BE REGARDED AS A COOP. BANK AS PER TH E DECISIONS OF THE HON'BLE ITAT IN ASSESSEE'S SAME CASE FOR THE A.Y. 2 012-13 AND EVEN AS PER THE LATEST ORDER OF THE HON'BLE SUPREME COURT F OR THE A.Y. 2009-10 AS ENVISAGED ABOVE. THUS THE PROVISIONS CONTAINED IN S EC. 285BA READ WITH RULE 114E OF THE ACT ARE NOT APPLICABLE TO THE ASSE SSEE'S CASE AND THUS THE LEVY UNDER SEC. 271FA MAY BE VOID ABINITIO. HEN CE, IT IS PRAYED THAT THE IMPUGNED PENALTY UNDER SEC. 271FA MAY BE O RDERED TO BE SET ASIDE TREATING THE SAME AS NON EST. IN LAW. I.T.A. NO. 687/HYD/2017 :- 4 - : 3. ASSESSEES COUNSEL, SHRI D.L. NARASIMHA RAO, APP EARED AND EXPLAINED THAT APPEAL IS MAINTAINABLE AND DIT BEING A PARALLEL AUTHORITY, HIS ORDER CANNOT BE SUBJECTED TO AN APPEAL BEFORE THE LD.CIT(A). THEREFORE, ASSESSEE CHOOSE TO FILE AN AP PEAL BEFORE THIS FORUM. 4. LD.CIT-DR, HOWEVER, OBJECTED TO FILE AN APPEAL DI RECTLY WHEN STATUTE DOES NOT PROVIDE. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE PROVISIONS OF THE ACT. SECTION 271FA IS A PENALTY WH ICH IS LEVIABLE BY THE PRESCRIBED INCOME TAX AUTHORITY. THE ORDER O F THE DIT INDICATES THAT HE IS NOMINATED TO BE BY THE INCOME TAX AU THORITY FOR ACCEPTING THE RETURNS TO BE FILED U/S. 285BA(1). T HEREFORE, IT SEEMS THE DIT HAS INVOKED THE POWERS OF 271FA FOR LEV YING OF PENALTY. EVEN THOUGH THERE IS NO SPECIFIC PROVISION FOR APPEAL BEFORE THIS FORUM, NOR BEFORE THE CIT(A), LD.DIT SPEC IFICALLY GAVE THE OPTION TO ASSESSEE TO FILE THE APPEAL BEFORE THE LD.C IT(A). ASSESSEE, HOWEVER TOOK ITS OWN OPINION, IN THE ABSENCE OF CLARIFICATION SOUGHT FROM DIT(I&CI) AND PREFERRED THE APPEAL BEFORE THIS FORUM. 5.1. IN THE COURSE OF ARGUMENTS, ASSESSEES COUNSEL W AS ADVISED TO PREFER AN APPEAL BEFORE THE LD.CIT(A) AS DIRECTED B Y THE DIT(I&CI) AFTER LEVYING THE PENALTY IN THE DEMAND NOT ICE. IF THE ORDER HAS BEEN PASSED BY THE LD.CIT(A), THIS FORUM C AN ENTERTAIN THE APPEAL ON SUCH AN ORDER. OTHERWISE, ASSESSEE CAN CHOOSE TO FILE A WRIT PETITION BEFORE THE HON'BLE HIGH COURT, AS THIS FORUM IS ONLY A STATUTORY AUTHORITY CONSTITUTED UNDER THE INCOME TA X ACT I.T.A. NO. 687/HYD/2017 :- 5 - : AND THE RIGHT OF APPEAL ON EVERY ORDER HAS TO BE STATUTO RILY PROVIDED EITHER TO THE CIT(A) OR TO THE ITAT AS THE CAS E MAY BE. SINCE A PENALTY ORDER U/S. 271FA IS NOT DIRECTLY APPE ALABLE ORDER BEFORE THIS FORUM, THE APPEAL PREFERRED BY ASSESSEE I S LIABLE TO BE DISMISSED. 6. HOWEVER, BEFORE CONCLUDING IT IS NOT OUT OF PL ACE TO STATE THAT THE PAPER BOOK FURNISHED BEFORE THIS FORUM INDICATES TH AT ASSESSEE DID IN FACT FILE STATEMENT U/S. 285BA(1) BEFORE THE IN COME TAX AUTHORITIES SO THE PENALTY LEVIED FOR NOT FILING U/S 271FA DOES NOT ARISE. VIDE A LETTER DT.27-10-2016, THE ITO, HQRS., IN THE OFFICE OF DIT(I&CI) INFORMED THE ASSESSEE THAT IN ABOUT 120 NUMBE R OF TRANSACTIONS, PAN WAS NOT MENTIONED. IT WAS FURTHER INFOR MED THAT IT MAY BE NOTED THAT FURNISHING OF INCOMPLETE AND INCORRECT INFORMATION IS LIABLE FOR PENALTY U/S. 271FAA OF TH E ACT . ASSESSEE WAS ASKED TO UPDATE THE DATA BY QUOTING PAN BY 04-11-20 16. HOWEVER, THE DIT(I&CI) ISSUED A SHOW CAUSE NOTICE DT. 31-10-2016 (I.E., WITHIN THE TIME GIVEN TO ASSESSEE FOR RECTIFYING THE RETURN) AS TO WHY A PENALTY U/S. 271FA SHOULD NOT BE LEVIED. AS PLACED ON RECORD, AN EXPLANATION WAS INDEED FILED BY ASSESSEE ON 06-12- 2016, ASKING FOR A FORTNIGHT TIME AND FURTHER ANOTHER L ETTER WAS FILED ON 28-12-2016 EXPLAINING THE FACTUAL AND LEGAL POSITION WITH REFERENCE TO LEVY OF PENALTY U/S. 271FA. THERE IS N O MENTION OF THESE REPLIES GIVEN BY ASSESSEE IN THE PENALTY ORDER PASSED BY THE DIT. NOT ONLY THAT THE PENALTY ORDER REFERS TO A SHOW CAUSE LETTER DT. 29-01-2016, WHEREAS SHOW CAUSE ISSUED BY THE ITO, HQRS., IS DT. 27-10-2016. THE FIRST SENTENCE OF THE PENALTY ORDE R INDICATES THAT ASSESSEE IS A PERSON COVERED AS A REGISTRAR OR S UB-REGISTRAR APPOINTED U/S. 6 OF THE REGISTRATION ACT, 1908. HOWEVE R, AS SEEN I.T.A. NO. 687/HYD/2017 :- 6 - : FROM THE FACTS, ASSESSEE IS NOT A REGISTRAR OR SUB-REGI STRAR APPOINTED UNDER SUB-CLAUSE (6) OF THE REGISTRATION ACT, BUT CLAIMING STATUS OF A BANKING COMPANY, WHICH IS ALSO Y ET TO BE ADJUDICATED FINALLY, AS STATED IN REPLY BEFORE THIS FO RUM. EVEN CALCULATION OF 557 DAYS FOR LEVY OF PENALTY AT RS. 1 00/- IS NOT VERIFIABLE, GIVEN THE DATES INVOLVED. IT SEEMS TO BE A CASE WHERE SHOW CAUSE NOTICE WAS ISSUED U/S. 271FAA (FOR FURNIS HING INACCURATE STATEMENT) BUT PENALTY WAS LEVIED U/S. 271F A FOR NON- FILING OF STATEMENT. ASSESSEE DID INDEED FILE A RETUR N/STATEMENT IN TIME AND IF THE DEFICIENCIES ARE NOT RECTIFIED, WITHIN TH E TIME ALLOWED IT HAS TO BE TREATED AS INVALID RETURN UNDER SECTION 285BA(4). NO SUCH ACTION SEEMS TO HAVE BEEN TAKEN BY THE INCOME TAX AUTHORITY BEFORE LEVY OF PENALTY U/S. 271FA. NOT ONLY TAKING THE STATUS OF ASSESSEE BUT ALSO THE DATES INVOLVED ALONG WITH THE FACT THAT ASSESSEE DID FILE A RETURN AS PER THE PROVISIO NS INDICATES THAT THERE IS NO APPLICATION OF MIND BY THE DIT(I&CI) B EFORE LEVY OF PENALTY. THERE MAY BE MERIT IN ASSESSEES CONTENTIONS THAT PENALTY IS NOT WARRANTED ON THE FACTS OF THE CASE. HOWEVER, AS TH IS FORUM CANNOT ENTERTAIN THE APPEAL ITSELF, WITHOUT CONSIDERING TH E MERITS OF THE CONTENTIONS, APPEAL MEMO IS DISMISSED AS INFRUCTUOU S. 7. IN THE RESULT, MEMORANDUM OF APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 10 TH NOVEMBER, 2017 TNMM I.T.A. NO. 687/HYD/2017 :- 7 - : COPY TO : 1. THE MANAGING DIRECTOR, THE CITIZEN CO-OPERATIVE SOCIETY LTD., 11-7-194, CITIZEN HOUSE, HUDA COLONY, SAROOR NAGAR, HYDERABAD. 2. THE DIRECTOR OF INCOME TAX (I&CI), HYDERABAD. 3. D.R. ITAT, HYDERABAD. 4. GUARD FILE.