Income Tax Appellate Tribunal - Lucknow
Indian Mercantile Co-Operative Bank ... vs Assessee on 20 August, 2015
1
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH "B", LUCKNOW
BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER
AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA No.121 to 124/LKW/2015
Financial Years :2008-09 to 2011-12
Indian Mercantile Co-operative Vs. Director of Income Tax (I & CI)
Bank Ltd., 26-A, Cantt Road, Lucknow
Lucknow
TAN LKNI 05058 E
(Appellant) (Respondent)
Assessee by Shri Subham Rastogi, C.A.
Revenue by Smt. Alka Singh, D.R
Date of hearing 14/08/2015
Date of pronouncement 20/08/2015
ORDER
PER SUDHANSHU SRIVASTAVA , J.M. :
1. These four appeals are preferred by the assessee against the order of the Commissioner of Income Tax (Appeals - II), Lucknow, dated 26.11.2014, confirming imposition of penalty u/s 271FA of the Income Tax Act, 1961 (for short the 'Act'). These appeals pertain to F.Ys. 2008-09, 2009-10, 2010-11 & 2011-12. For F.Y. 2008-09, the penalty imposed is Rs.1,44,800/-, for F.Y. 2009-10 it is Rs.1,08,300/-, for F.Y. 2010-11 it is Rs.71,900/- and for F.Y. 2011-12 it is Rs.35,300/-. All these appeals are being disposed of by this common order. 2
2. On a careful perusal of the orders passed u/s 271FA of the Act, we find that as per Item No.1 of the Table in Rule 114E(2) of the I.T. Rules, 1962, it is specified that a banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act) is required to file Annual Information Return (AIR) in respect of transactions of cash deposits aggregating to ten lakh rupees or more in a year in any savings bank account of the person maintained in that bank. The due date of filing the AIR is 31st August immediately following the financial year in which the transaction is registered or recorded. In the event of failure to furnish the AIR, penalty is leviable u/s 271FA of the Act. Section 271FA reads as under:-
"If a person who is required to furnish an AIR, as required under sub-section (1) of section 285BA, fails to furnish such return within the time prescribed under that sub section, the IT authority prescribed under that sub-section may direct that such person shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues".
3. Admittedly, the Annual Information Returns (AIRs) were not furnished by the due dates in any of the years in appeal before us. It is seen from the records that there was a delay of 1448 days in F.Y. 2008- 09, delay of 1083 days in F.Y. 2009-10, delay of 719 days in F.Y. 2010- 3 11 and delay of 353 days in F.Y. 2011-12.. It is also seen from the records that in response to the show cause notice for imposition of penalty u/s 271FA of the Act, the assessee submitted before the Director of Income Tax (I & CI), Lucknow that the delay in filing Annual Information Return was unintentional and under the wrong notion that they were not required to file the return. It was submitted before the DIT (I & CI) that the mistake was due to not properly understanding the provisions of the Act and it was prayed that a lenient view may be taken. It is also seen from the records that in support of its contentions, the assessee had filed an 'opinion' from M/s Sandeep Prakash & Co., Chartered Accountants on 18.12.2012 before the Director of Income Tax (I & CI) Lucknow wherein it was the expert opinion of the Chartered Accountant that in view of the decision of the Hon'ble Supreme Court in the case of Greater Bombay Co-operative Bank Ltd. Vs. United Yarn Tex Pvt. Ltd. & Ors. (Case No.432/2004), cooperative Societies do not fall within the meaning of 'Banking company' as referred to in Rule 114E of the Income Tax Rules, 1962. It was the opinion of the Chartered Accountant that cooperative societies doing banking business are not obliged to file Annual Information Return u/s 285BA of the Act r.w.r. 114E of the IT Rules. The assessee claimed that due to ignorance of the 4 legal provisions and placing further reliance on the opinion of the Chartered Accountant, the AIRs were not filed within the due dates.
4. The appeals of the assessee before the Ld. CIT(A - II) Lucknow were dismissed on the ground that ignorance of law is not a plea and that for immunity against penalty a reasonable cause has to be established which was absent in the case of the assessee.
5. In the appeals before us, the Ld. AR of the assessee submitted that delay in furnishing AIRs was not intentional but due to ignorance of the legal provision. The assessee is a cooperative bank and the officers are not well conversant with the legal provisions of the Income Tax Act. On account of ignorance of the concerned officer, , the AIRs were filed only when the default was pointed out by the Department. The Ld. Counsel for the assessee further made a reference to the provisions of section 273B and submitted that no penalty u/s 271FA should be levied for ignorance of legal complexities of the Income Tax Act which will fall within the definition of 'reasonable cause' as envisaged in section 273B of the Act. The Ld. AR for the assessee also placed reliance on the judgment of coordinate Bench of this Tribunal in ITA No. 699/LKW/2013 in the case of Raibareilly District Cooperative Bank Ltd. Vs. Director of 5 Income Tax (I&CI), Lucknow and submitted that this issue is covered by the order of the coordinate Bench. Ld. AR also drew our attention to pages 8 to 10 of the paper book which contain the opinion of the Chartered Accountant M/s Sandeep Prakash and Co. on which the assessee cooperative bank had relied on and not filed the Annual Information Return initially.
6. Ld. DR has on the other hand has placed heavy reliance on the orders of Director of Income Tax (I & CI), Lucknow.
7. Having given a thoughtful consideration to the rival submission, we find that the assessee is a cooperative bank and it is quite possible the Officer of the bank may not be aware of the legal complexities of the Income Tax Act, therefore, the contention of the assessee that the delay was caused on account of ignorance of the concerned person about the complexity of the Income Tax Act cannot be out rightly disbelieved. Moreover, the assessee has also demonstrated that it acted on the expert opinion of a Chartered Accountant and that its failure to file the Annual Information Returns (AIRs) was based on such expert advice. In our view, the explanation furnished by the assessee is plausible and amounts to a reasonable cause u/s 273B of the Act. 6
8. Accordingly, we are of the considered opinion that in the facts of the case and respectfully following the decision of the coordinate Bench in ITA No.699/LKW/2013 referred to above, the penalty levied u/s 271FA is not maintainable and we delete the same in all the four years.
9. In the result, all the four appeals of the assessee stand allowed.
(Order was pronounced in the open court on the date mentioned on the caption page) Sd/- Sd/-
( A. K. GARODIA ) (SUDHANSHU SRIVASTAVA)
Accountant Member Judicial Member
Aks
Dated:20./08/2015
Copy of the order forwarded to :
1.The Appellant
2.The Respondent.
3.Concerned CIT
4.The CIT(A)
5.D.R., I.T.A.T., Lucknow Asstt. Registrar