Charotar Nagrik Sahkari Bank Ltd., Anand V. The ACIT, Anand Circle, Anand

ITA 739/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8914 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-09-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 09-03-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: M G PATEL
• Keywords: Reasonable cause
• Section: 273B; 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI R.V.EASWAR, VICE-PRESIDENT AND A.N. PAHUJA, ACCOUNTANT MEMBER) ITA NO.739/AHD/2005 [ASSTT.YEAR : 2002-2003] CHAROTAR NAGRIK SAHKARI BANK LTD. CHIMAN SATHI BHAVAN SUBHASH ROAD, ANAND. VS. ACIT, ANAND CIRCLE ANAND. ASSESSEE BY : SHRI M.G.PATEL REVENUE BY : SHRI C.K.MISHRA O R D E R PER R.V.EASWAR, VICE-PRESIDENT : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE LEVY OF PENALTY OF RS.1,00,000 /- UNDER SECTION 271B FOR THE ASSESSMENT YEAR 2002-2003. 2. THE ASSESSEE IS A BANK IN THE CO-OPERATIVE SECTO R. IT WAS REQUIRED TO OBTAIN THE TAX AUDIT REPORT ON OR BEFORE 31-10-2002 UNDER SECTION 44AB OF THE INCOME TAX ACT. THE REPORT WAS NOT OBTAINED. THE AO INITIATED PENALTY PROCEEDINGS FOR THE FAILURE TO OBTAIN THE TAX AUDIT REPORT AND IN RESPONSE TO THE NOTICE, THE ASSESSEE STATED IN WRITING THAT (A) IN ALL THE EARLIER YEARS THE RETURNS OF INCOME ALONG WITH THE AUDITED ACCOUNTS WERE FILE D IN TIME; (B) FOR THE YEAR UNDER APPEAL THE STATUTORY AUDIT WAS TO BE CARRIED OUT BY THE AUDITOR AS INSTRUCTED BY THE DISTRICT REGISTRAR BY LETTER DATE D 1-9-2002 WHICH PREVENTED THE ASSESSEE FROM APPOINTING CHARTERED ACCOUNTANT T O CARRY OUT THE AUDIT UNDER SECTION 44AB; (C) THE DISTRICT REGISTRAR AUDITOR CO MMENCED THE AUDIT IN AUGUST 2002 AND SUBMITTED THE REPORT IN NOVEMBER, 2 002, (D) THAT IN THE MEANTIME THE RESERVE BANK OF INDIA HAD DIRECTED THE ASSESSEE TO CLOSE ITS BUSINESS BY THEIR COMMUNICATION DATED 20-12-2001; ( E) THAT IN THESE CIRCUMSTANCES THE ASSESSEE COULD NOT APPOINT THE CH ARTERED ACCOUNTANT FOR PERFORMING HIS DUTIES UNDER SECTION 44AB. PAGE - 2 ITA NO.739/AHD/2005 -2- 3. THE AO WAS NOT CONVINCED BY THE AFORESAID EXPLAN ATION OF THE ASSESSEE AND LEVIED THE IMPUGNED PENALTY AGAINST WHICH THE A SSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE SAME AND HENCE THE PRESENT APPEAL. 4. WE HAVE CONSIDERED THE FACTS AND THE RIVAL CONTE NTIONS. IT IS NOT IN DISPUTE THAT THE BUSINESS OF THE ASSESSEE BANK WAS ORDERED TO BE CLOSED BY THE RESERVE BANK OF INDIA ON 20-12-2001, THAT IS DURING THE PREVIOUS YEAR ENDED 31-3-2002 WHICH IS THE YEAR UNDER APPEAL. OBVIOUSL Y THIS MUST HAVE CAUSED CONSIDERABLE TURMOIL AND DIFFICULTIES FOR THE BANK AND ITS AFFAIRS WOULD HAVE BEEN RENDERED TOPSY-TURVY. THE DISTRICT REGISTRAR OF CO-OPERATIVE SOCIETIES WAS DIRECTED TO AUDIT THE ACCOUNTS OF THE ASSESSEE AND HE COMPLETED THE SAME ONLY ON 30TH NOVEMBER, 2002 WHEN HE SUBMITTED THE R EPORT. IT WOULD HAVE BEEN VERY DIFFICULT, AS WE CAN APPRECIATE, FOR THE ASSESSEE-BANK TO GET ITS ACCOUNTS, WHATEVER THEY WERE AND IN WHATEVER STATE THEY WERE, AUDITED UNDER SECTION 44AB WHEN THE AUDIT BY THE DISTRICT REGISTR AR WAS IN PROGRESS. THE CIT(A) HAS STATED THAT THE AUDIT BY THE DISTRICT RE GISTRAR OF CO-OPERATIVE SOCIETIES WAS NECESSITATED DUE TO FINANCIAL IRREGUL ARITIES ALLEGEDLY COMMITTED BY THE ASSESSEE. IT WAS IN THESE CIRCUMSTANCES, THA T THE ASSESSEE COULD NOT GET ITS ACCOUNTS AUDITED UNDER SECTION 44AB. IN OUR HUMBLE OPINION THE ABOVE CIRCUMSTANCES CONSTITUTE REASONABLE CAUSE FOR THE D EFAULT WITHIN THE MEANING OF SECTION 273B WHICH IS APPLICABLE TO CASES OF DEFAUL T PUNISHABLE UNDER SECTION 271B. WE ACCORDINGLY CANCEL THE PENALTY. 5. WE HAVE ALSO BEEN REFERRED TO THE JUDGMENT OF TH E HIGH COURT OF UTTARKHAND IN CIT, DEHRADUN VS. IQBALPUR CO-OPERATI VE CANE DEVELOPMENT UNION LTD., (2009) 179 TAXMAN 27 IN WHICH IT WAS HE LD THAT THE TRIBUNAL COMMITTED NO ERROR OF LAW IN CANCELLING THE PENALTY IMPOSED UNDER SECTION 271B ON THE GROUND THAT THE INCOME OF THE ASSESSEE WAS FULLY EXEMPT UNDER SECTION 80P AND NO TAX WAS PAYABLE. THIS DECISION A LSO APPLIES TO THE PRESENT PAGE - 3 ITA NO.739/AHD/2005 -3- CASE BECAUSE BY ORDER DATED 27-7-2006 IN ITA NOS.37 0 & 371/AHD/2006 (ASSTT.YEAR : 2000-2001 AND 2002-2003) THE TRIBUNAL HAS, IN THE ASSESSEES OWN CASE, HELD THAT THE INCOME OF THE ASSESSEE IS E XEMPT UNDER SECTION 80P(2)(A)(I) OF THE ACT. IT IS STATED BEFORE US ON BEHALF OF THE ASSESSEE THAT BY VIRTUE OF THE ABOVE ORDER, NO TAX IS PAYABLE BY THE ASSESSEE. EVEN FOR THIS REASON, THE ASSESSEE IS NOT LIABLE TO PAY THE PENAL TY ON THE BASIS OF THE JUDGMENT OF THE HIGH COURT OF UTTARKHAND CITED ABOVE. 6. IN THE RESULT, THE PENALTY IS CANCELLED AND THE APPEAL OF THE ASSESSEE IS ALLOWED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT 25 TH SEPTEMBER, 2009. SD/- SD/- (A.N. PAHUJA) ACCOUNTANT MEMBER (R.V.EASWAR) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 25-09-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD