Income Tax Appellate Tribunal - Bangalore
The Mandya District Co-Operative ... vs The Director Of Income Tax ... on 13 March, 2020
ITA No.447/Bang/2019
The Mandya District Co-op.
Central Bank Ltd., Mandya
IN THE INCOME TAX APPELLATE TRIBUNAL
"B'' BENCH: BANGALORE
BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER
AND
SMT. BEENA PILLAI, JUDICIAL MEMBER
ITA No. 447/Bang/2019
Assessment Year: 2014 - 15
The Mandya District Co-op.
Central Bank Ltd. The Director of Income Tax
Mandya DCC Bank Building (Intelligence and Criminal
Nagamangala Road Vs. Investigation)
HPO, V.V. Road Bengaluru
Mandya 571 401
PAN NO : AAAAT1518K
APPELLANT RESPONDENT
Appellant by : Shri G. Venkatesh, A.R.
Respondent by : Shri Rajendra Chandekar, D.R.
Date of Hearing : 11.03.2020
Date of Pronouncement : 13.03.2020
ORDER
PER B.R. BASKARAN, ACCOUNTANT MEMBER:
The assessee has filed this appeal challenging the order dated 12-04-2019 passed by Ld CIT(A)-13, Bengaluru and it relates to the assessment year 2014-15. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the penalty of Rs.3,97,100/- levied u/s 271FA of the Act.
ITA No.447/Bang/2019The Mandya District Co-op.
Central Bank Ltd., Mandya Page 2 of 7
2. The facts relating to the issue are discussed in brief. The impugned penalty has been levied by the Director of Income tax (Intelligence & Criminal Investigation), (hereinafter "DIT") Bengaluru. It was noticed by the Director of Income tax that the assessee has not furnished Annual Information Return (hereinafter "AIR") as required u/s 285BA(1) read with Rule 114E of Income tax Rules for the financial year 2013-14. The above said return was required to be filed on or before 31.08.2014. If the above said return is not filed before the due date, the assessee is liable to pay penalty u/s 271FA of the Act.
3. Since the assessee has not filed the AIR u/s 285BA(1) of the Act, the DIT issued a notice u/s 285BA(5) of the Act on 23-01-2015 asking the assessee to furnish the AIR. In response to the same, the assessee furnished the AIR on 27-02-2015 manually. As per the provisions of sec.285BA(2), the AIR has to be filed electronically.
4. Hence the DIT did not recognise the manual return. Since the DIT held that the assessee has not filed AIR, he initiated penalty proceedings u/s 271FA of the Act. Since there was no response from the assessee, he levied a penalty of Rs.3,97,100/-, computed @ Rs.100/- per day from 01-09-2014 to the date on which the time specified in the notice issued u/s 285BA(5) of the Act expired (i.e, till ITA No.447/Bang/2019 The Mandya District Co-op.
Central Bank Ltd., Mandya Page 3 of 7 28-02-2015) and @ Rs.500/- per day from 01-03-2015 to 27-03-2017.
5. The assessee challenged the penalty levied u/s 271FA of the Act by filing appeal before Ld CIT(A), but the same was dismissed. Hence the assessee has filed this appeal before us.
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.)"ITA No.447/Bang/2019
The Mandya District Co-op.
Central Bank Ltd., Mandya Page 4 of 7 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.
7. The Ld D.R, however, submitted that the assessee shall fall under the category of "banking company" and hence the assessee has complied with the notice issued u/s 285BA(5) of the Act. He submitted that the amendment made in Rule 114E by inserting "co-operative bank" is only clarificatory in nature. He submitted that all the assessees are covered by sec.285BA(1) of the Act and hence there exists no ambiguity as contended by Ld A.R. ITA No.447/Bang/2019 The Mandya District Co-op.
Central Bank Ltd., Mandya Page 5 of 7
8. In the rejoinder, the Ld A.R submitted that the expressions Banking company and co-operative banks have specific meaning under the Banking Regulations Act.
9. We heard rival contentions and perused the record.
We notice that the original provisions of Rule 114E of Income tax Rules did not include "co-operative bank" and it was inserted only in the amended provisions of Rule 114E, which came into effect from 1.4.2016. Accordingly, in our view, there is merit in the submission of the ld A.R that there existed an ambiguity as to whether the co-
operative banks are required to comply with the provisions of Rule 114E of the Act, meaning thereby, the bonafide belief of the assessee shall constitute reasonable cause in terms of sec.273B of the Act for the failure in furnishing the AIR for the year under consideration. In this view of the matter, the impugned penalty is liable to be deleted.
Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned penalty levied u/s 271FA of the Act for the year under consideration.
ITA No.447/Bang/2019The Mandya District Co-op.
Central Bank Ltd., Mandya Page 6 of 7
10. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 13.3.2020.
Sd/- Sd/-
(Beena Pillai) (B.R. Baskaran)
Judicial Member Accountant Member
Bangalore,
Dated 13th March, 2020.
/VG/
Copy to:
1. The Applicant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR, ITAT, Bangalore.
6. Guard file
By order
Asst. Registrar, ITAT, Bangalore.