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Income Tax Appellate Tribunal, BANGALORE BENCHES “ A ” BENCH: BANGALORE
Before: SHRI A.K. GARODIA & SHRI PAVAN KUMAR GADALE
O R D E R PER BENCH : These are the appeals filed by the assessee against the different orders of Commissioner of Income Tax (Appeals), Gulbarga under Section 271FA and 250 of the Income Tax Act, 1961 (in short 'the Act'). Since the issues are common and 2 to 1341/Bang/2019 identical in all these appeals, they are clubbed and heard together and consolidated order is passed. For the sake of convenience, we shall take up and the facts narrated therein.
The assessee has raised the following grounds of appeal :
3. The Brief facts of the case are that the assessee is a co-operative Bank carrying on business of banking as per the Banking Regulation Act and the Karnataka Co-operative Societies Act, 1959 with license from Reserve Bank of India (RBI). There was inspection conducted on the assessee’s bank premises by the Revenue, as the assessee has not filed the Annual Information Return (AIR) for the Financial Years 2005-06 to 2014-15.And show cause notice was issued for levying penalty under Section 271FA of the Act as the assessee has not filed the Annual Information Return (AIR) under the Section 285BA(2) of the Act r.w. Rule 114E of the I.T. Rules1962. Whereas the AIR return for the F.Y. 2005-06 has to be filed on or before 31.3.2006.The Assessing Officer found that there are three transactions which were to be reported in AIR, and the assessee has filed the information on 11.3.2016.Further the assessee has filed explanations for not filing the information and sworn statement was recorded.The Assessing Officer was not satisfied with the explanations as the assessee has not explained reasonable cause for non-filing of AIR. Since the assessee has not filed reportable transaction within 4 to 1341/Bang/2019 the due date, hence Ao levied penalty under Section 271FA of the Act by order dt.26.4.2017. Aggrieved by the order, the assessee has filed an appeal with the CIT (Appeals).But the CIT (Appeals) has concurred with the action of the Assessing Officer in levying the penalty and dismissed the appeal of assessee. Aggrieved by the order of CIT (Appeals), the assessee has filed an appeal before the Tribunal.
4. At the time of hearing, the learned Authorized Representative submitted that the CIT (Appeals) has erred in confirming the levy of penalty under Section 271FA of the Act irrespective of the fact that the Amendment to Rule 114E of I T Rules 1962, that submitting the information by the Co-operative Bank was included from 1.4.2016 and whereas,the period in the present case is prior to the amendment.The learned Authorized Representative substantiated the arguements with the financial statements and the list of staff during the F.Y. 2005-06 to demonstrate that the assessee bank branch works with limited staff, Further there was a Bona Fide belief that the provisions under Section 285BA(2) of the Act shall not apply.The Assessing Officer has not considered the genuine explanations in the penalty proceedings for not submitting the information within the due date and there exists a reasonable cause under Section 273B of the Act and relied on judicial decisions and prayed for deletion of penalty. Contra, the learned Departmental Representative supported the orders of the CIT (Appeals).
5 to 1341/Bang/2019 5. We heard the rival submissions and perused the material on record. The sole matrix of the disputed issue as envisaged by the learned Authorized Representative on the levy of penalty under Section 271FA of the Act on the co-operative bank for non-filing information of transactions in the Annual Information Return (AIR),under the provisions of Section 285BA(2) of the Act r.w Rule114E of I T Rules 1962. We found as per Rule 114E of I T Rules 1962, the co-operative bank was not included prior to amendment effective from 1.4.2016. We found the amendment to Rule 114E of IT Rules1962, is as under:
Sl.No. Nature and value of transaction Class of person (reporting person) (1) (2) (3) 1. A banking company or a co-operative bank to Cash deposits aggregating to which the Banking Regulation Act, 1949 (10 of ten lakh rupees or more in a 1949) applies (including any bank or banking year in any savings account of institution referred to in section 51 of that Act). a person maintained in that bank.
We, on perusal of the provisions found that the co-operative bank has been included in the amendment w.e.f 1.4.2016 and is not disputed. The learned Authorized Representative supported the claim relying on judicial decisions and provisions of Banking Regulation Act read as under :
Further on perusal of the Paper Book in respect of the financial statements filed for Asst. Years 2006-07 to 2015-16, the learned Authorized Representative submissions are that the assessee has only one Branch and small operational activities and filed list of staff in the bank at pages 45 to 55, where in the present financial year there are only 8 persons and was increased to 11 from F.Y. 2011-12. We found strength in the submission of learned Authorized Representative that the assessee bank was in Bona Fide belief that there is no requirement to file this statement as the law is application from 1.4.2016. We found under the provisions of Section 273B of the Act where penalty need not be imposed, if there exists a 7 to 1341/Bang/2019 reasonable cause.We consider appropriate to the provisions of Section 273B which is read as under : “ 273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, section 271H, section 271I, section 271J, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.” We, on perusal of the facts of the case and the explanations and the grounds of appeal duly supported by the Paper Book and judicial decisions are of the view that the amendment to Rule 114E of IT Rules has been effective from 1.4.2016 and, further the Assessing Officer has levied penalty for the F.Y. 2005-06 in the year 2017 and there was no provision under Rule 114E to include co-operative banks. We found the submissions of the learned Authorized Representative are realistic considering small activity of the Bank and limited staff which cannot be overlooked. Accordingly considering the principles of natural justice and the facts, we found there is a reasonable cause in not submitting the information as the assessee was under Bona Fide belief. Accordingly we set aside the order of CIT (Appeals) and direct the Assessing Officer to delete the penalty and allow the grounds of appeal of the assessee. In the result, the assessee appeal is allowed.
8 to 1341/Bang/2019 7. Similarly, for the Asst. Years 2007-08 to 2015-16, the issues are similar and identical, the decision taken in as discussed in the above paragraphs are equally applicable. Accordingly, for these appeals also, the order of CIT (Appeals) is set aside and direct the Assessing Officer to delete the penalty and allow the grounds of appeal of assessee.
8. In the result, the assessee’s appeals for the Assessment Years 2006-7 to 2015- 16 are allowed. Pronounced in the open court on the date mentioned on the caption page.