THE SOUTH CANARA DISTRICT CENTRAL CO-OPERATIVE BANK LTD,MANGALORE vs. THE DIRECTOR OF INCOME TAX (INTELLIGENCE AND CRIMINAL INVESTIGATION), BENGALURU

Page 2 of 4 2. The Ld. A.R. submitted that the assessee is a co-operative bank. He submitted that the impugned penalty was levied by Ld. Director of Income Tax (Intelligence & Criminal Investigation) in all the eight years for filing Annual Information Return, which is required is required to be filed as per provisions of section 285BA(2) read with Rule 114E of the Income Tax Rules beyond the due date prescribed. The Ld. A.R. submitted that the assessee is a co- operative bank and the co-operative banks were specifically included in rule 114E only w.e.f. 1.4.2016 only. Hence, there was an ambiguity as to whether the co-operative banks are required to comply with the provisions of rule 114E of the rules or not. Hence, there was delay in filing the annual information return, which was on account of bona fide belief only. The Ld. A.R. submitted that the above said bonafide belief shall constitute a reasonable cause in terms of section 273B of the Act. In support of his submissions, he placed his reliance on the order dated 13.3.2020 in the case of The Mandya District Co-op. Central Bank Ltd. Vs. DIT (I&CI) in dated 13.3.2020. Accordingly, he prayed for deletion of penalty levied u/s 271FA of the Act in all the 3 years under consideration.

Page 3 of 4 6. The Ld A.R submitted that there was reasonable cause for the assessee in not filing the AIR. He submitted that the provisions of Rule 114E specifically included “co-operative Bank” with effect from 01-04- 2016. He invited our attention to the provisions of Rule 114E before amendment and post amendment. He submitted that the pre-amended provisions are applicable to the year under consideration and the relevant portion read as under :- “A Banking Company to which Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of the Act.)” He submitted that the above said portion was amended by IT (Twenty- second Amendment) Rules 2015 w.e.f. 01-04-2016 as under:- “A Banking Company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of the Act.)” He submitted that the “co-operative banks” were specifically included with effect from 01-04-2016 and hence there was a view that the co- operative banks are not required to furnish AIR information. In view of the above said ambiguity, the assessee has not filed the AIR information. He submitted that the assessee has furnished the above said explanation before Ld CIT(A). However, the Ld CIT(A) has taken the view that the amendment made with effect from 1.4.2016 is clarificatory in nature and hence the same would apply to the year under consideration also. The Ld A.R submitted that the ambiguity demonstrated by the assessee constitutes a reasonable cause within the meaning of provisions of sec.273B of the Act. Accordingly he prayed that the impugned penalty be deleted.