The ITO, Ward-5(3),, Baroda v. Shri Krishna Sahakari Bank Ltd., Baroda

ITA 1133/AHD/2012 | 2007-2008
Pronouncement Date: 30-07-2012 | Result: Dismissed

Appeal Details

RSA Number 113320514 RSA 2012
Assessee PAN AAALS0073P
Bench Ahmedabad
Appeal Number ITA 1133/AHD/2012
Duration Of Justice 2 month(s) 5 day(s)
Appellant The ITO, Ward-5(3),, Baroda
Respondent Shri Krishna Sahakari Bank Ltd., Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-07-2012
Assessment Year 2007-2008
Appeal Filed On 25-05-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH BEFORE: SHRI D.K. TYAGI JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT ME MBER I.T.A. NO.1133/AHD/2012 A. Y.2007-08 THE INCOME TAX OFFICER WARD-5(3) BARODA APPELLANT VS. SHRI KRISHNA SAHAKARI BANK LTD. (TAKEN OVER BY ABHYUDAYA CO- OPERATIVE BANK LTD.) NEAR SHREE KRISHNA BHAVAN NR. CHAMPANER GATE BANK ROAD BARODA PAN-AAALS0073P RESPONDENT DEPARTMENT BY : SHRI Y.C. SURTI SR. D.R. ASSESSEE BY : SHRI M.K. PATEL A.R. DATE OF HEARING : 30.07.2012 DATE OF PRONOUNCEMENT 30.07.2012 / ORDER PER : D.K. TYAGI JUDICIAL MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A)-V BARODA DATED 14.03.2012 DELETING THE PENALTY OF RS.24 29 7 83/- LEVIED U/S 271E OF THE ACT FOR CONTRAVENTION OF PROVISION OF SECTION 269T OF THE ACT. 2. THE FACTS RELATING TO THE IMPOSITION OF PENALTY OF RS.24 29 783/- U/S 271E OF THE ACT AS THOUGH EMERGED FROM THE ORDER OF LD. CIT(A) ARE AS UNDER:- THE FIRST GROUND OF APPEAL IS DIRECTED AGAINST THE IMPOSITION OF PENALTY OF RS.24 29 783/- UNDER SECTI ON 271E OF THE I.T. ACT 1961 FOR THE YEAR UNDER APPEAL. THE FACTS AS I.T.A. NO.1133/AHD/2012 A. Y.2007-08 2 EMERGED FROM THE BODY OF PENALTY ORDER ARE THAT THE APPELLANT BANK IS A REGISTERED COOPERATIVE SOCIETIES UNDER TH E REGISTRATION OF COOPERATIVE SOCIETIES ACT AND ENGAGED IN THE BUS INESS OF BANKING-BORROWING AND LENDING OF DEPOSITS. THE RET URN OF INCOME FOR A.Y. 2007-08 WAS FILED ON 24.10.2007 DEC LARING TOTAL LOSS OF RS.43 17 851/-. THE ADDL. CIT RANGE-5 BAR ODA RECEIVED A REFERENCE FROM THE AO WRD-5 BARODA THAT WHILE RE PAYING THE DEPOSITS THE APPELLANT BANK HAD VIOLATED THE PROVI SIONS OF SECTION 269T IN RESPECT OF TOTAL AMOUNT OF RS.24 29 783/- WHICH WAS PAID IN CASH. THUS THE APPELLANT BANK WAS LIA BLE FOR PENALTY UNDER PROVISIONS SECTION 271E OF THE ACT. THE ADDL . CIT RANGE- 5 BARODA FURTHER NOTICED THAT THE SAME DEFAULT WAS COMMITTED BY THE APPELLANT IN EARLIER YEARS TOO FOR WHICH NO JUSTIFIABLE EXPLANATION COULD BE FURNISHED BY THE APPELLANT. T HE DEFAULT IN THE YEAR UNDER CONSIDERATION WAS A REPEATED ONE AND THERE WAS NO PROPER JUSTIFICATION. FURTHER THE EXPLANATION O FFERED BY THE APPELLANT IN THIS REGARD WAS FOUND NOT TENABLE ON T HE GROUND THAT THE REPEATED DEFAULT WAS COMMITTED YEAR AFTER YEAR IN UTTER DISREGARD TO THE PROVISIONS OF SECTION 269T OF THE ACT. A PENALTY U/S 271E WAS IMPOSED IN THE CASE OF APPELLANT IN EA RLIER YEARS TOO. IN VIEW OF THESE FACTS THE ADDL. C.I.T. RAN GE-5 BARODA IMPOSED PENALTY OF RS.24 29 783/- UNDER SECTION 271 E OF THE I.T. ACT 1961. 3. IN APPEAL LD. CIT(A) DELETED THIS PENALTY FOLLO WING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AS WELL AS THE OBSERVATION OF THE AO AND THE ARGUMENTS ADVANCED BY THE AR. LOOKING TO THE FACT THAT PREVIOUS YEAR UNDER CONSID ERATION WAS THE YEAR IN WHICH ALL PROBLEMS WITH THE BANK WERE D ETECTED AND PENALTY U/S 271E LEVIED IN RESPECT OF EARLIER YEARS HAS BEEN DELETED BY MY PREDECESSOR VIDE ORDER NO.CAB/(A)-V/6 9/08-09 DATED 3.12.2009 FOR A.Y. 2005-06 AND ORDER NO.CAB/( A)- V/53/09-10 DATED 15.2.2010 FOR A.Y. 2006-07. APPEA L FILED BY THE DEPARTMENT AGAINST ORDER FOR A.Y.2006-07 HAS BE EN DISMISSED BY HONBLE ITAT AHMEDABAD VIDE ITS ORDER ITA NO.1270/AHD/2010 DATED 22.2.2011. SINCE FACTS ARE IDENTICAL TO THOSE OF A.Y. 2005-06 AND A.Y. 2006-07 RESPECTFULL Y FOLLOWING THE ORDER OF MY PREDECESSORS FOR A.Y. 2005-06 AND A .Y. 2006-07 PENALTY OF RS.24 29 783/- LEVIED BY THE ADDL. CIT R ANGE-5 BARODA U/S 271E OF I.T. ACT IS HEREBY DELETED. I.T.A. NO.1133/AHD/2012 A. Y.2007-08 3 FURTHER AGGRIEVED NOW THE REVENUE IS IN APPEAL BE FORE US. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT HONBLE ITAT IN ASSESSEES OWN CASE FOR THE A.Y. 20 06-07 ON IDENTICAL FACTS HAS CONFIRMED THE ORDER OF LD. CIT(A) DELETING THE PENA LTY U/S 271(1)(C) VIDE ITS ORDER DATED 22.02.2011 IN ITA NO.1270/AHD/2010 WHEREIN F OLLOWING WAS HELD:- WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN VIEW OF OVERALL ECONOMIC FAILURE OF MANY CO-OPERATIVE BA NKS LIKE THE MADHAVPURA MERCANTILE CO-OPERATIVE BANK THE DEPOSITORS INSISTED ON REPAYMENT OF THEIR FIXED DEP OSITS IN CASH. THE ASSESSEE FURTHER STATED THAT ITS DEPOSIT ORS WERE EITHER LOWER OR MIDDLECLASS FAMILIES AND HAD KEPT T HEIR LIFE TOME SAVINGS WITH THEM. THE ASSESSEE ALSO STATED T HAT MAJORITY OF THE TERM DEPOSITS HOLDERS WERE ALSO HAV ING SAVING ACCOUNTS WITH THE BANK AND REPAYMENT OF THE FDR AMOUNT ON MATURITY WAS ONLY TECHNICAL DEFAULT WITHO UT ANY DISHONEST INTENTION. THE LD. COUNSEL FOR THE ASSES SEE RELIED ON THE DECISION OF THIS TRIBUNAL OF AMRITSAR BENCH IN THE CASE OF THE FARIDKOT BATHINDA KSHETRIYA GRAMIN BANK V. JCTI (2003) 81 TTJ 706 (ASR) HWEREIN THE TRIBUNA L HAS HELD IN PARA-5:- 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO GONE THROUGH THE ORDERS O F THE AUTHORITIES BELOW. THE DECISIONS CITED AT THE TIME OF HEARING OF THE APPEAL WHERE DULY CONSIDERED BY US. IN THIS CASE THE JT. CIT. BHATINDA IMPOSED A PENALTY OF RS.26 31 657/- UNDER S.271E OF THE ACT. IN FURTHER APPEAL THE CIT(A) DELETED THE PENALTY OF RS.1 51 622 AND SUSTAINED THE PENALTY OF RS.24 80 037. THE ASSESSEE IS A REGIONAL RURAL BANK ESTABLISHED UNDER THE REGIONAL RURAL BANKS ACT 1976 SEC.18 OF THE SAID ACT PROVIDES THAT THE MAIN IMPORTANT OPERATION OF THE BANK IS TO PROVIDE LOANS AND ADVANCES PARTICULARLY TO THE WEAKER SECTIONS O F THE SOCIETY BY MOBILIZING DEPOSITS FROM THE SAME SECTIO N. IT IS STATED THAT THE BANK PAYS PER CENT HIGHER RATE OF INTEREST AS COMPARED TO THE OTHER NATIONALIZE BANKS TO ENCOURAGE SAVINGS IN THE WEAKER SECTIONS OF THE SOC IETY. THE OFFICERS AND STAFF OF THE BANK PRIMARILY DEAL W ITH ILLITERATE AGRICULTURISTS FARM LABOURERS AND OTHER WEAKER SECTION OF THE SOCIETY. IT WAS ALSO BROUGHT TO OUR NOTICE THAT IN 1995-96 AT THE TIME OF BANKING REFORMS 14 8 REGIONAL RURAL BANKS OUT OF 196 IN INDIA WERE LOSS MAKING I.T.A. NO.1133/AHD/2012 A. Y.2007-08 4 AND ON THE VERGE OF CLOSURE. KEEPING IN VIEW THIS FACT THE GOVERNMENT OF INDIA INSTRUCTED THESE BANKS AND TRAD E UNIONS TO GENERATE MORE DEPOSITS AND TO MAKE DIFFER ENT TYPE OF ADVANCES TO SERVICE. IT IS STATED THAT AFT ER 1989 THE PAY SCALES OF THE NATIONALIZED BANKS HAVE BEEN REVISED TWICE BUT NO REVISION OF THE PAY SCALES HAS BEEN MA DE IN THE CASE OF REGIONAL RURAL BANKS. THE ASSESSEE-BAN K WAS THE LAST REGIONAL RURAL BANK ESTABLISHED IN 1986 U NDER THE REGIONAL RURAL BANK ACT AND NO NEW REGIONAL RURAL B ANK HAS BEEN ESTABLISHED DUE TO THE FACT THAT THE REGIO NAL RURAL BANKS WERE LOSS MAKING UNITS. THAT IN CONTEXT TO T HE ABOVE STATED FACTS/CONDITIONS THE STAFF AND OFFICER S OF THE BANK WORKED HARD TO MOBILIZE DEPOSITS FROM THE VARI OUS SECTIONS OF THE SOCIETY. FURTHERMORE IT IS STATED THAT THE STAFF OF THE ASSESSEE-BANK WAS WORKING IN THE AREA WHERE THEIR EXPOSURE TO THE BANKING AND OTHER LAWS LIKE INCOME- TAX WAS VERY LIMITED. THE ASSESSEE-BANK HAD NO TRA INING COLLEGE OF ITS OWN AS INCOME OTHER NATIONALIZED BAN KS. IN THE ABOVE BACKGROUND THIS PLEA OF THE ASSESSEE CAN NOT BE REJECTED THAT AT THE RELEVANT TIME THE PAYMENT PAS SING OFFICER IN BANK WAS NEW AND HAD NO KNOWLEDGE ABOUT THE INCOME-TAX LAW PARTICULARLY THE PROVISIONS OF S. 269T R/W S. 271E OF THE IT ACT 1961. HOWEVER THE DEPARTME NTAL AUTHORITIES HAVE ALSO NOT REJECTED THIS CONTENTION OF THE AS. ON THIS COUNT IT CAN BE HELD THAT DUE TO IGNORANCE OF LAW THE CONCERNED OFFICER WAS UNDER THE BONA FIDE BELIE F THAT REPAYMENTS EXCEEDING RS.20 000 CAN BE MADE IN CASH ALSO. IT IS TRUE THAT THE STAFF OF THE ASSESSEE-BA NK WERE WORKING WITHIN THE ARE OF OPERATION OF THE BANK ONL Y AND THEIR EXPOSURE TO THE BANK AND OTHER WORKS LIKE INC OME- TAX WAS VERY LIMITED AND THIS PLEA OF THE ASSESSEE HAS DEFINITE WEIGHTAGE IN THE PRESENTED CONTEXT. FURTH ERMORE IT IS AN ADMITTED FACT THAT THE ASSESSEE-BANK HAD N O TRAINING COLLEGE OF ITS OWN AS IN THE CASE OF NATIO NALIZED BANKS. SEC.271E R/W S. 273B OF THE IT ACT 1961 P ROVIDES THAT IF THE ASSESSEE PROVIDES THAT IT WAS PREVENTED BY REASONABLE CAUSE FROM COMPLYING WITH THE PROVISIONS OF ABOVE SECTIONS NO PENALTY CAN BE IMPOSED. THE COU RTS OF THE COUNTRY HAVE HELD THAT IGNORANCE OF LAW CAN BE TAKEN AS A VALID PLEA FOR NON-COMPLIANCE OF PROVISIONS OF INCOME- TAX LAW AND RULES. AT THE SAME TIME IT HAS ALSO B EEN HELD BY THE VARIOUS BENCHES OF THE TRIBUNAL THAT ORDINAR ILY A PLEA AS TO THE IGNORANCE OF LAW CANNOT SUPPORT THE BREACH OF A STATUTORY PROVISION BUT THE FACT OF SUCH AN I NNOCENT MISTAKE DUE TO IGNORANCE OF THE RELEVANT PROVISIONS OF LAW COUPLED WITH THE FACT THAT THE TRANSACTIONS IN QUES TION WERE GENUINE AND BONA FIDE TRANSACTIONS AND WERE I.T.A. NO.1133/AHD/2012 A. Y.2007-08 5 UNDERTAKEN DURING THE REGULAR COURSE OF THE BUSINES S WILL CONSTITUTE A REASONABLE CAUSE. AT THIS STAGE WE M AY ALSO TAKE SUPPORT FROM THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CAS OF MOTILAL PADAMPAT SUGAR MILLS CO . LTD. VS. STATE OF U.P.(1979) 118 ITR 325 (SC) WHEREIN I T HAS BEEN HELD THAT THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS OFTEN SAID THAT EVERYO NE IS PRESUMED TO KNOW THE LAW BUT THAT IS NOT A CORRE CT STATEMENT. THERE IS NO SUCH MAXIM KNOW TO LAW. IN THE INSTANT CASE IT WAS THE CONTENTION OF THE ASSE SSEE THAT THE STAFF OF THE ASSESSEE-BANK WERE ACTING IN A BOO KS OF ACCOUNT FIDE BELIEF THAT NO OFFENCE IS BEING MADE W HILE MAKING THE PAYMENTS OF VARIOUS DEPOSITS IN CASH. D URING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE FIL ED THE AFFIDAVITS AND PRODUCED EVIDENCE REGARDING IDENTITY OF THE DEPOSITORS. IT IS NOTICED THAT THE DEPARTMENT HAS NOT IMPEACHED THE TRANSACTION AS NON-GENUINE. AT THE S AME TIME IT IS ALSO NOT THE CASE OF THE DEPARTMENT THA T THE DEPOSITORS WERE BENAMI. IN THAT VIEW OF THE MATTER IT CAN BE SAFELY HELD THAT THE BONA FIDE BELIEF COUPLED WI TH THE GENUINENESS OF THE TRANSACTIONS CONSTITUTE A REASON ABLE CAUSE AS PROVIDED UNDER S. 273B OF THE ACT. 5.2 IN THE CASE OF SHREENATH BUILDERS VS. DY. CIT (SUPRA) IT HAS BEEN HELD REVEALS THAT THE USE OF TH E EXPRESSION SHALL BE LIABLE TO PAY IN S. 271D AND 271E AND THE PROVISIONS OF S. 273B PROVIDING THAT NO PEN ALTY WOULD BE LEVIABLE IF THE PERSON CONCERNED PROVES TH AT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE CLE ARLY INDICATES THAT THESE PROVISIONS GIVE A DISCRETION T O THE AUTHORITIES TO IMPOSE THE PENALTY OR NOT TO IMPOSE THE PENALTY. SUCH A DISCRETION HAS TO BE EXERCISED IN A JUST AND FAIR MANNER HAVING REGARD TO THE ENTIRE RELEVAN T FACTS AND MATERIALS EXISTING ON RECORDS. WHILE TAKING S UCH A VIEW THE TRIBUNAL (AHMEDABAD BENCH) HAD APPLIED TH E RATIO OF THE DECISION OF THE ANDHRA PRADESH HIGH CO URT IN THE CASE OF ITO VS. LAKSHMKI ENTERPRISES & ORS. (1 990) 185 ITR 595 (AP). 6. WE FIND IN THE INSTANCE CASE THAT THE CONTENTION OF THE ASSESSEE THAT THE STAFF OF ASSESSEE-BANK WAS AC TING ON A BONA FIDE BELIEF THAT NO OFFENCE HAS BEEN MADE OU T WHILE MAKING THE PAYMENTS OF VARIOUS DEPOSITS IN CASH. D URING THE COURSE OF PROCEEDINGS BEFORE THE LOWER AUTHORIT IES IT WAS CONSISTENTLY CONTENDED THAT THE IDENTITY OF THE DEPOSITORS ARE NOT IN DOUBT AND THE TRANSACTIONS AR E GENUINE ONE. IT ALSO NOT THE CASE OF THE REVENUE T HE I.T.A. NO.1133/AHD/2012 A. Y.2007-08 6 DEPOSITORS WERE BENAMI. ACCORDINGLY IT CAN BE SAF ELY SAID THAT THE BONA FIDE BELIEF COUPLED WITH GENUINENESS OF THE TRANSACTIONS CONSTITUTE A REASONABLE CAUSE AS PROVI DED U/S 273B OF THE ACT FOR REPAYMENT OF FDRS IN CASH BY BA NK. AT THE SAME TIME WE ARE OF THE VIEW THAT ORDINARY A P LEA AS TO THE IGNORANCE OF LAWS CANNOT SUPPORT THE BREACH OF A STATUTORY PROVISION BUT THE FACT OF SUCH AN INNOCE NT MISTAKE DUE TO IGNORANCE OF THE RELEVANT PROVISIONS OF LAW COUPLED WITH THE FACT THAT THE TRANSACTIONS IN QUES TION WERE GENUINE AND BONA FIDE TRANSACTIONS AND WERE UNDERTAKEN DURING THE REGULAR COURSE OF THE BUSINES S WILL CONSTITUTE A REASONABLE CAUSE. IN VIEW OF THE ABOV E DISCUSSION WE CONFIRM THE ORDER OF CIT(A) DELETING THE PENALTY AND THIS ISSUE OF REVENUES APPEAL IS DISMI SSED. 5. IN VIEW OF THE ABOVE THE ORDER PASSED BY LD. C IT(A) DELETING THE PENALTY U/S 271(1)(C) IS HEREBY UPHELD 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30.07.2012 SD/- SD/- (ANIL CHATURVEDI) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD 6. THE GUARD FILE BY ORDER AR ITAT AHMEDABAD