Income Tax Appellate Tribunal - Cochin
The Karannur Service Co-Op Bank Ltd , ... vs The Ito, Wd-1(2),, Kozhikkode on 30 June, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri George George K., Judicial Member and
Shri Laxmi Prasad Sahu, Accountant Member
SP Nos. 29 & 30/Coch/2021
(Arising out of ITA Nos. 248 & 249/Coch/2020)
(Assessment Year: 2015-16)
The Karannur Service The Income Tax Officer
Co-Op Bank Ltd. Ward - 1(2)
Elathur P.O. Vs. Kozhikkode
Kozhikkode 673303
PAN - AABAK9507A
Applicant Respondent
Applicant by: Shri Raghunathan, Advocate
Respondent by: Smt. J.M. Jamuna Devi, Sr. D.R.
Date of Hearing: 30.06.2022
Date of Pronouncement: 30.06.2022
ORDER
Per: L.P. Sahu, A.M. These are stay petitions filed by the assessee for staying collection of outstanding of Rs.139,36,98,644/- and Rs.89,87,25,827/- respectively against the penalties imposed under Section 271D & 271E of the Income Tax Act, 1961 (hereinafter "the Act").
2. The assessee is a primary agricultural credit society registered as per the Kerala Societies Act, 1969. The assessee filed its return of income for AY 2015-16 on 26.10.2015 showing nil taxable income after claiming deduction of Rs.89,69,142/- under Section 80P(2)(a)(1) of the Act, 1961. During the course of assessment proceedings the AO found that there were violation of section 269SS/269T and he referred the case for initiation of penalty under Section 271D/271E of the Act and accordingly penalties were imposed. Against this order the assessee filed appeal before the 2 SP Nos. 29 & 30/Coch/2021 The Karannur ServiceCo-Op Bank Ltd.
learned CIT(A). During the pendency of appeal the assessee was) directed to deposit Rs.12.00 crores against which the assessee filed writ petition before the Hon'ble Kerala High Court vide Writ Petition No. 3620 of 2019. The Hon'ble High Court had modified and the assessee was directed to pay Rs. 2.00 crores in two instalments. The learned CIT(A) confirmed the penalties by observing that the assessee has contravened the provisions of Sections 269SS/269T of the Act and is, therefore, liable to penalty under Section 271D/271E of the Act. Aggrieved, the assessee filed appeal before the Tribunal and he also filed stay petitions No. 29 & 30/Coch/2021.
3. The learned A.R. has filed a written submission as under:-
1: The Appellant is a Co:Operative Society registered under the Kerala State Co:Operative Societies Act - classified as "PRIMARY AGRICULTURAL CERDIT SOCIETY". The Society operates several branches within its territorial limits. With respect to their members, the Appellant so carries out banking operations like extending credit facilities and loans as also acceptance of deposits and operation of bank accounts during the ordinary course of its operations.
2: The Appellants have been filing their Returns of Income under the Incometax Act claiming exemption under Sec. 80P of the Act and claim of exemption was being allowed until the assessment year 2012.13 when for the first time, the Assessing Authority maintained that the appellants were not entitled to the benefits of See. 80P of the Act. However, the Appellate Authority found that the claims were admissible while considering the appeals against the assessments for 2012.13 and 2013.14 and the appeals filed by the Department against these orders have been dismissed. The Assessing Authority thereafter completed the assessment for 2015.16 as per orders dated 13.12.2017, once again refusing exemption claimed under Sec. 80P of the Act which order is now under challenge in appeal before the First Appellate Authority. 3: While completing the assessment for 2015.16 as per orders dt. 13.12.2018, the Assessing Authority also maintained that the Appellants had violated the provisions of Sec. 269SS by taking deposits in excess of Rs. 20,000/= in cash and Sec. 269T by repaying such deposits in cash and observing thus: "I am of the view that Sections 269SS and 269T of the Incometax Act 1961 is applicable to the assessee and hence will be proposed for levying the penalty u/s 271D and 271E of the Incometax Act, 1961 to the concerned authorities".3 SP Nos. 29 & 30/Coch/2021
The Karannur ServiceCo-Op Bank Ltd.
4: Thereafter, the Assessing authority referred the case for initiation of penalties vide his letter dated 01.01.2018. The Joint Commissioner thereafter issued separate notices to the assessee on 02.01.2018 proposing to impose penalties u/s 271D and 271E. These notices were responded to by the appellants where various contentions were raised submitting that imposition of penalty is not warranted. These contentions were overruled by him who, as per orders dated 27.07.2018, imposed penalties u/ss 271D [Rs. 1403698,644/= and 271E [Rs.908725,827/=] for violation of provisions of Ss. 269SS and 269T. The above orders were challenged before the Commissioner of IT [Appeals], Kozhikode in IT A-10424/CIT /ClT /2018.19 a nd IT A-10426/CIT /ClT /2018.19. Before the appellate authority, the Appellants raised specific contentions which were all overruled by the Appellate Authority who dismissed the appeals as per orders dated 26.07.2018. During the pendency of the first appeal, the Petitioner, as per the directions of the Hon'ble High Court in WPC No. 3620/2019 paid Rs. One crore towards the penalty imposed. 6: The grounds of appeal would disclose that the Petitioners have a good case to present in appeal and that the penalties are not legally sustainable. Further the Petitioner is running a Credit Society offering banking facilities to its members only and they will be put to irreparable loss and injury if proceedings were to be pursued by the authorities to collect the penalties imposed. It is therefore prayed that this Hon'ble Tribunal may be pleased to pass orders staying the collection of the penalties pending disposal of the appeals. "
The learned A.R. submitted that the penalty orders passed by the AO are barred by limitation because it was not passed within 6 months from the initiation of penalty proceedings. The penalty orders were passed on 7th July, 2918 and the assessment order was passed on 13th December, 2917. Therefore, he pleaded to stay the collection on outstanding demand pending the appeals. He further submitted that the assessee is not in as position to pay the demand raised by the Revenue Department. Accordingly he requested for staying the collection of penalties.
4. The learned D.R. relied on the orders of the lower authorities and she submitted that the assessee has violated the provisions of Section 268SS/269T of the Act, therefore, the authorities below have rightly imposed penalty as per provisions of Section 269SS/269T of the Act. She further submitted that the learned JCIT has examined this issue and 4 SP Nos. 29 & 30/Coch/2021 The Karannur ServiceCo-Op Bank Ltd.
found that the assessee is a primary agricultural society and not a banking company as well as co-operative society. Therefore the proviso of Sections 269SS/269T will not apply. She further submitted that the penalty orders passed by the JCIT is not barred by limitation as per the decision of the Hon'ble jurisdictional High Court. In view of which the assessee has no good case and opposed granting of stay of penalty.
5. We have heard both parties and perused the record. The assessee has requested before us for stay of the penalty under Section 271D of Rs.139,36,98,728/- and under Section 271E of the Act of Rs. 89,97,25,827/-. We are of the opinion that the assessee has no good case in hand regarding period of limitation of the penalty orders on the basis of the judgement of the Hon'ble jurisdictional High Court in the case of Grahalakshmi Vision vs. CIT 379 ITR 100 wherein similar question was raised regarding imposition of penalty under Section 271D of the Act beyond the period of 6 months of passing the assessment order and the Hon'ble High Court rejected the contention of the assessee by holding as under: -
"10. Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply.
11. The only case of the assessee is that if the period of limitation prescribed in Section 271(1)(c) is reckoned from the date of the assessment order dated 6.11.2007, the penalty order passed by the Joint Commissioner on 29.7.2008 is beyond the time permitted 5 SP Nos. 29 & 30/Coch/2021 The Karannur ServiceCo-Op Bank Ltd.
in the above section. As we have already held, the initiation of the penalty proceedings is not by the Assessing Officer but by the Joint Commissioner and if that be so, the order levying penalty passed by the Joint Commissioner is within the time prescribed in Section 275(1)(c).
12. Insofar as the judgment of the Apex Court in D.M.Manasvi v. Commissioner of Income Tax, Gujarat II [1972] 86 ITR 557 is concerned, that was a case where penalty was levied under Section 271(1)(c) and as is evident from the provision itself, the proceedings under that Section are to be initiated on the basis of the satisfaction of the officers mentioned therein including the Assessing Officer. Unlike the provisions of Section 271(1)(c), under the provisions of Section 271D and E, the exclusive authority is conferred on the Joint Commissioner. Therefore, the principles laid down in the judgment of the Apex Court cannot be called in aid to impugn the concurrent findings of the lower authorities. Therefore, the first contention raised by the learned counsel for the assessee deserves to be rejected and we do so."
6. The learned A.R. before us, also enable to demonstrate that the proviso of Sections 269SS & 269T of the Act shall not apply on the assessee. The assessee has accepted in cash more than the prescribed limit and he has repaid the same to the depositors in cash. Therefore considering the totality of facts and circumstances of the case the assessee has to pay 20% of the outstanding demand as per Section 254(2)(A) of the Act. The calculation of 20% of the demand is as under: -
Section 271D Section 271E Penalty Rs.140,36,98,644 Penalty Rs.90,97,25,827 Less Paid Rs. 1,00,00,000 Less Paid Rs. 1,00,00,000 Outstanding Rs.139,36,98,644 Outstanding Rs.89,97,25,827 20% Rs. 27,07,39,728 20% Rs.17,19,45,165
7. Since the assessee has requested that the assessee is suffering from financial crisis, therefore we are giving liberty to the assessee to pay the sum in two instalments within a period of 30 days from the date of this order. Subject to the payment as stated above stay of demand for penalty are granted for 180 days or till the disposal of the appeal whichever is earlier.
6 SP Nos. 29 & 30/Coch/2021The Karannur ServiceCo-Op Bank Ltd.
8. Registry is directed to post the appeal for early hearing. If the assessee seeks adjournment the stay granted will be cancelled.
9. In the result, the stay petition filed by the assessee is partly allowed.
Dictated and pronounced in the open Court on 30th June, 2022.
Sd/- Sd/-
(George George K.) (Laxmi Prasad Sahu)
Judicial Member Accountant Member
Cochin, Dated: 30th June, 2022
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) -Kozhikkode
4. The CIT - Kozhikkode
5. The DR, ITAT, Cochin
6. Guard File
By Order
//True Copy//
Assistant Registrar
ITAT, Cochin
n.p.