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Income Tax Appellate Tribunal, COCHIN “SMC” BENCH, COCHIN
Before: Shri George Mathan
This is an appeal filed by the assessee against the order of the learned CIT(A), Kottayam dated 17.02.2020 for ay 2015-16.
In the appeal the assessee has raised the following grounds: -
“A. On the facts and circumstances of the case and in law the Commissioner of Income Tax (Appeals) erred in holding that the notice issued by the Income Tax Officer (TDS), Kottayam was valid, without considering that the information called for u/s 133(6) was irrelevant for any purpose under the Income tax Act 1969 for the reason that the details required relates to the TDS on interest paid to the depositors and the appellant being a Primary Agricultural Credit Society was not bound to deduct tax at source from the interest paid to its depositors, by virtue of clause (vii)(a) of sub section (3) of Section 194A of the Income Tax Act 1969. B. On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals) erred in arriving into a conclusion that the Income tax Officer (TDS) is an authority to call for information under Section 133(6) of Income tax Act without appreciating the fact that the power to call for information under section 133(6) is vested on the Assessing
ITA No. 308/Coch/2020 2 Kaduthuruthy Regional Service Co-Op Bank Ltd. Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals) and therefore the Income Tax Officer (TDS) is not an authority to invoke provision under the said section. C. The Commissioner of Income-tax (Appeals) ought to have seen that the information under Section 133(6) shall be called for only for the purpose of the Income Tax Act 1961 and no such purpose was mentioned in the notice issued by the Income Tax Officer (TDS), Kottayam. D. The Commissioner of Income-tax (Appeals) ought to have seen that the information called for under Section 133(6) should be useful for, or relevant to any enquiry as instructed in Para 4.3 of Chapter 4 of Manual of Office Procedure which states that the Assessing Officer, the Addl, Commissioner and the Commissioner (Appeals) may, u/s 133 call for certain information relevant for any proceedings under the Act. E. The Appellant prays that the penalty of Rs. 21,500/- imposed by the Joint Commissioner of Income Tax (TDS), Trivandrum in respect of non-furnishing of information called for under Section 133(6) by the Income Tax Officer (TDS), Kottayam be deleted. F. The Commissioner (Appeals) has not considered and answered the questions of law raised in the grounds of appeal, by a speaking order. G. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of appeal.” 3. The appeal filed by the assessee is time barred by 21 days. The assessee has filed an affidavit for delay of 15 days. In the affidavit the assessee submits that it had filed an appeal before the CIT(A) Kottayam and the same was disposed off on 17.02.2020 and the assessee received the appellate order on 15.05.2020 through e-mail. The appeal has been filed by the assessee by post and the same has been registered on 10.08.2020. The assessee has been intimated regarding the defect vide notice dated 30.09.2020. The assessee has filed a revised affidavit for condonation of delay of 21 days. In both the affidavits the reason for delay is the same being “that the Tax Consultant could not attend to the matter due to outbreak of Covid-19 and lock down announced by the Government. In any case it is noticed that the Hon'ble Supreme Court has suspended the Limitation Act from March, 2020 and has recognised the problem caused due to the Covid pandemic in respect of filing of appeals.
ITA No. 308/Coch/2020 3 Kaduthuruthy Regional Service Co-Op Bank Ltd. The Limitation Act stands suspended as on today also. Consequently I accept the reason given by the assessee and condone the delay in filing the appeal and proceed to dispose of the appeal of the assessee on merits.
When the appeal was posted for hearing on 12.10.2020 a person claiming to be Shri T.C. Vinod, Secretary of the assessee Co-operative bank participated in the video hearing. He was directed to file his authorisation for representing the appeal. Further, a defect memo had also been issued to the assessee on 23.10.2020 intimating that the authorisation has not been filed with the appeal. On 27.10.2020 when the matter came up for hearing none participated. Consequently an e-mail was sent to the assessee as follows:
“This appeal filed by the assessee has been posted on multiple occasions. On 12.10.2020, a person claiming to be Shri T.C. Vinod, Secretary of the Kaduthuruthy Regional Service Co-Operative Bank, had participated in the video hearing. He was directed to file his authorisation for representing the appeal. He submitted that other than what is raised in the grounds of appeal, the assessee has nothing more to submit. In reply to queries from the SMC the response was “no comments”. The appeal was adjourned to 27.10,2020. Till date no authorisation has been received. Further, it is noticed that the issues in the appeal are covered by the decision of the Coordinate Bench of this Tribunal in the following cases: 1. ITA No. 473/Coch/2015 : Kakoor Service Co-Operative Bank Ltd. 2. ITA No. 243/Coch/2013 : Panangad Service Co-Op. Bank Ltd. 3. ITA No. 544/Coch/2015 : Muhamma Service Co-Op. Bank Ltd. 4. ITA No. 190/Coch/2016 : Udayamperoor Service Co-Op. Bank Ltd. 5. ITA No. 126/Coch/2017 : Puthucode Service Co-Op. Bank Ltd. 6. ITA No. 158/Coch/2017 : Elavally Service Co-Op. Bank Ltd. 7. ITA No. 153/Coch/2017 : Vallapuzha Service Co-Op. Bank Ltd. 8. ITA No. 146/Coch/2017 : Orumanayur Service Co-Op. Bank Ltd. 9. ITA No. 194/Coch/2017 : Athanavad Service Co-Op. Bank Ltd. 10. ITA No. 159/Coch/2017 : Mullassery Service Co-Op. Bank Ltd. 11. ITA No. 197/Coch/2017 : Purathur Service Co-Op. Bank Ltd. 12. ITA No. 196/Coch/2017 : Tripangode Service Co-Op. Bank Ltd. 13. ITA No. 195/Coch/2017 : Tirunavaya Service Co-Op. Bank Ltd. 14. ITA No. 152/Coch/2017 : Chavakkad Service Co-Op. Bank Ltd. 15. ITA No. 204/Coch/2017 : Kurumbathur Service Co-Op. Bank Ltd. 16. ITA No. 206/Coch/2017 :Kalpakanchery Service Co-Op. Bank Ltd. 17. ITA No. 200/Coch/2017 : Edarikode Service Co-Op. Bank Ltd. 18. ITA No. 198/Coch/2017 : Ananthavoor Service Co-Op. Bank Ltd. 19. ITA No. 202/Coch/2017 : Marakkara Service Co-Op. Bank Ltd.
ITA No. 308/Coch/2020 4 Kaduthuruthy Regional Service Co-Op Bank Ltd. 20. ITA No. 201/Coch/2017 : Ariyallur Service Co-Op. Bank Ltd. 21. ITA No. 217/Coch/2017 : Edathala Service Co-Op. Bank Ltd. 22. ITA No. 324/Coch/2017 : Enanallor Service Co-Op. Bank Ltd. 23. ITA No. 284/Coch/2017 : Cheranallur Service Co-Op. Bank Ltd. 2. Copies of these orders are provided to both sides in the interest of natural justice to give them an opportunity to make submissions in respect of the same. Final opportunity is being granted to the assessee by adjourning the matter to 3rd November, 2020. The defect memo issued to the assessee has also not been replied to.” 5. The appeal was adjourned to 3rd November, 2020. Again none appeared on behalf of the assessee. The appeal was adjourned to 4th November, 2020. Again on account of non representation by the assessee the appeal was adjourned to 5th November, 2020. In the interest of natural justice copies of the orders by which the issue raised by the assessee in its appeal stood covered was also granted to the assessee. There is no response.
The learned D.R. vehemently supported the orders of the AO and the CIT(A). It was submitted that even before the learned CIT(A) only written submissions have been field. It was the submission that the Hon'ble Supreme Court has as early as in the case of Kathiroor service Co- Operative Bank reported in 360 ITR 243 under identical circumstances had held that the ITO had the power to issue notice under Section 133(6) of the Act to determine through general enquiry for the purpose of identifying persons who are likely to have taxable income and whether they are in compliance of the Act. Here in the present case notice under Section 133(6) had been issued to the assessee seeking for the details of the persons to whom interest payment exceeding �10,000/- was made by the appellant for the specified period. The claim of the assessee that they did not have to deduct TDS as they are exempt is in fact a contumacious act in direct defiance against the provisions of the law. It was the submission that under no stretch of imagination can it be even presumed that the assessee did not know of the decision of the Hon'ble Supreme Court in the case of Kathiroor Service Co-Operative Bank Ltd. nor is it a plausible explanation that the assessee is exempt from deducting TDS in the
ITA No. 308/Coch/2020 5 Kaduthuruthy Regional Service Co-Op Bank Ltd. absence of any order thereto. It was the submission that such contumacious conduct on the part of the assessee is liable to be dealt with harshly. It was the submission that the orders of the learned CIT(A) and that of the AO are liable to be upheld. It was further submitted that the penalty levied under Section 272A(2)(c) of the Act is liable to be confirmed.
The assessee has not given any reply to the submissions of the learned D.R. The assessee has also not been able to substantiate any of the grounds which has been raised by it. In fact a perusal of the ground as raised by the assessee in Ground No. D shows that the assessee is well informed of the proceedings before the AO and their powers and office procedures. Admittedly the assessee has been absolutely non-cooperative in any of the proceedings. The assessee has not shown as to whether even after the present proceedings have been initiated the information has been submitted or whether TDS has been deducted subsequently. Other than filing appeals and not representing the same, nor giving explanation in respect of the grounds raised only delay tactics are being adopted. No reasonable cause has also been shown. This being so, respectfully following the decisions in the cases referred above wherein it has been categorically held by the Coordinate SMC in the case of Kakoor Service Co- Operative Bank Ltd. as under “8 I have heard the rival contentions and perused the material on record. From the grounds raised and the argument note submitted by the assessee, I am of the view that three contentions are raised by the assessee in this appeal; namely; (i) ITO (Intelligence) does not have jurisdiction to issue notice u/s 133(6) of the I T Act; (ii) the order passed u/s 272A(2)(c) is barred by limitation; (iii) there was reasonable cause, as mentioned in section 273B of the Act for non furnishing information sought u/s 133(6); therefore, penalty u/s 272A(2) ( c) of the I T Act is to be quashed. 8.1 I shall take up for adjudication each of the above three contentions as under: i) ITO (Intelligence) does not have jurisdiction to issue notice u/s 133(6) of the I T Act;
ITA No. 308/Coch/2020 6 Kaduthuruthy Regional Service Co-Op Bank Ltd. Section 133(6) of the I T Act 1961 is unambiguous and clear. The department under the said section has power to call for information in relation to such points or matters which would be useful for, or relevant to any proceeding under the Act, from 'any person' including a 'Banking Company' or 'any Officer' thereon. Later, an amendment was introduced as per the Finance Act, 1995 whereby, the words "enquiry or" were inserted before the word "proceeding" in Section 133(6), also adding the '2nd proviso' to the said provision, with effect from 1. 7.1995. The effect of the said amendment is that, the power to call for information under the un- amended Act, which was confined only in relation to a 'pending proceeding' came to be widened, and even in a case where no proceeding was pending, such information could be called for as part of the enquiry, subject to the rider that, such power was not to be exercised by any income tax authority below the rank of Director or Commissioner without the prior approval of the Director or the Commissioner, as the case may be. The said amendment was brought about as a measure to tackle tax evasion effectively, as clarified by the Central Board of Direct Taxes (CBDT) vide Circular no. 717 dated 14.8.1995 , which reads as follows: "Power to call for information when no proceeding is pending.— . 41.2 At present the provisions of sub-section (6) of section 133 empower Income-tax authorities to call for information which is use ful for, or relevant to, any proceeding under the Act which means that these provisions can be invoked only in cases where the proceedings are pending and not otherwise. This acts as a limitation or a restraint on the capability of the Department to tackle evasion effectively. It is, therefore, thought necessary to have the power to gather information which after proper enquiry, will result in initiation of proceedings under the Act. 41.3 With a view to having a clear legal sanction, the existing provisions to call for information have been amended. Now, the income- tax authorities have been empowered to requisition information which will be useful for or relevant to any enquiry or proceedings under the Income-tax Act in the case of any person. The Assessing Officer would, however, continue to have the power to requisition informa tion in specific cases in respect of which any proceeding is pending as at present. However, an Income-tax authority below the rank of the Director or Commissioner can exercise this power in respect of an inquiry in a case where no proceeding is pending, only with the prior approval of the Director or the Commissioner." 8.2 In the instant case, notice u/s 133(6) of the Act was issued by the ITO (Intelligence) after obtaining necessary approval from the Director of Income Tax (Intelligence). The Hon’ble Supreme Court in the case of Kathiroor Service Co-op Bank Ltd vs CIT (CIB) & others, reported in 360 ITR 243 have considered an identical case and
ITA No. 308/Coch/2020 7 Kaduthuruthy Regional Service Co-Op Bank Ltd. decided that the ITO(CIB) has power to issue notice u/s 133(6) of the I T Act. The relevant findings of the Hon’ble Supreme Court, read as follows: “19. In view of the aforesaid, we are of the view that the powers under section 133(6) are in the nature of survey and a general enquiry to identify persons who are likely to have taxable income and whether they are in compliance with the provisions of the Act. It would not fall under the restricted domains of being "area specific" or "case specific". Section 133(6) does not refer to any enquiry about any particular person or assessee, but pertains to information in relation to "such points or matters" which the assessing authority issuing notices requires. This clearly illustrates that the information of general nature can be called for and names and addresses of depositors who hold deposits above a particular sum is certainly permissible. 20. In the instant case, by the impugned notice the assessing authority sought for information in respect of its customers which have cash transactions or deposits of Rs. 1,00,000 or above for a period of three years, without reference to any proceeding or enquiry pending before any authority under the Act. Admittedly, in the present case, notice was issued only after obtaining approval of the Commissioner of Income-tax, Cochin. In the light of the aforesaid, we are of the considered opinion that the assessing authority has not erred in issuing the notice to the assessee-financial institution requiring it to furnish information regarding the account holder with cash transactions or deposits of more than Rs. 1,00,000. 21. Therefore, we hold that the Division Bench of the High Court was justified in its conclusion that for such enquiry under section 133(6) the notice could be validly issued by the assessing authority. 22. In view of the above, the appeal requires to be dismissed and accordingly, stands dismissed.” 8.3 In the light of the judgment of the Hon’ble Apex Court (supra) and the aforesaid reasoning, I am of the view that the ITO (Intelligence) has jurisdiction to issue notice u/s 133(6) of the I T Act. (ii) the order passed u/s 272A(2)(C) is barred by limitation; 8.4 Section 275(1)(c) of the Act prescribed the time limit for imposition of penalty u/s 272A(2)(c) of the I T Act. Section 275(1)(c ) of the I T Act, reads as follows: “275(1)………………………………………………….. (c ) in any other case after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.”
ITA No. 308/Coch/2020 8 Kaduthuruthy Regional Service Co-Op Bank Ltd. 8.5 Admittedly, penalty proceedings u/s 272A(2)(c) was initiated on 12.8.2014 by issuance of notice u/s 274 of the I T Act and the order imposing penalty u/s 272A(2)(c) was passed on 19.9.2014. Therefore, the penalty order is well within the time limit prescribed u/s 275(1)(c ) of the Act. The Judgment of the Hon’ble Rajasthan High Court, relied on by the ld AR of the assessee, in the case of CIT vs Sri Jithendra Singh Rathore, is not applicable to the facts of the instance case. In the case considered by the Hon’ble Rajasthan High Court the penalty proceedings u/s 271D was initiated by issuing notice on 25.3.2003 and the penalty order was passed only on 30.9.2003 by which time, six months period mentioned u/s 275(1)(c ) had already expired. The contention of the ld AR that notice issued u/s 133(6) should be reckoned for considering the time limit u/s 275(1)( c) of the Act is de-void of any merits; because Section 275(1)( c) prescribes the time limit only from the date of initiation of penalty proceedings; namely issuance of notice u/s 274 of the Act. For the aforesaid reasons, I hold that the order passed by the Jt Director of Income Tax (Intelligence) is a valid order. (iii) there was reasonable cause, as mentioned in section 273B of the Act for non furnishing information sought u/s 133(6); therefore, penalty u/s 272A(2) ( c) of the I T Act is to be quashed: 8.6 The assessee has not offered any valid reason for not furnishing the information called for u/s 133(6) of the Act. Many of the notices issued by the ITO (Intelligence) were never responded to by the assessee. In many instances the Assessing Officer has mentioned that when they had approached, the assessee Society, for seeking information u/s 133(6) of the Act, there was total lack of co-operation on the part of the assessee society as well as threat (reference order imposing penalty u/s 272A(2)(c ) in appeals ITA No.202/C/2017 and ITA NO.217/C/2017). Since there is no reasonable cause furnished by the assessee as mentioned u/s 273B of the I T Act for non furnishing of information sought by the ITO(intelligence) u/s 133(6) of the Act, I am of the view that the order imposing penalty cannot be quashed. It is ordered accordingly. 9 In the result, the appeal in ITA No.473/Coch/2015 is dismissed. 10 Both the parties have agreed that the facts considered by the Tribunal in ITA No 473/C/2015 are identical to the facts of the other appeals. Therefore, for the reasons stated in para 8 to 8.6, the appeals in ITA Nos 243/Coch/2013, 544/Coch/2015, 190/Coch/ 2016, 126/Coch/2017, 158/Coch/2017, 153/Coch/ 2017, 146/C/ 2017, 194/C/2017, 159/C/2017, 197/C/2017, 196/C/ 2017, 195/C/2017, 152/C/2017, 204/C/2017, 206/C/ 2017, 200/C/ 2017, 198/C/2017, 202/C/2017, 201/C/2017 and 217/C/2017 are dismissed. 11 To sum-up, all the 21 appeals filed by the different assessees are dismissed.”
ITA No. 308/Coch/2020 9 Kaduthuruthy Regional Service Co-Op Bank Ltd. I find that the facts in the present case are identical to the facts in the above cases. Consequently I hold that the learned CIT(A) is justified in upholding the order passed under Section 272A(2)(c) of the Act.
In the result, the appeal filed by the assessee is dismissed
Order pronounced in the open court on 5th November, 2020. Sd/- (George Mathan) Judicial Member
Cochin, Dated: 5th November, 2020
Copy to:
The Appellant 2. The Respondent 3. The CIT(A) -Kottayam, 4. The CIT - (TDS), Kochi, 5. The DR, ITAT, Cochin 6. Guard File By Order
//True Copy// Assistant Registrar ITAT, Cochin n.p.