ITO, Wd, 1, Ahmednagar v. Ahmednagar Zilla Mathadi, Ahmednagar

ITA 1355/PUN/2010 | 2003-2004
Pronouncement Date: 18-03-2011 | Result: Dismissed

Appeal Details

RSA Number 135524514 RSA 2010
Assessee PAN AAAAA3782E
Bench Pune
Appeal Number ITA 1355/PUN/2010
Duration Of Justice 4 month(s)
Appellant ITO, Wd, 1, Ahmednagar
Respondent Ahmednagar Zilla Mathadi, Ahmednagar
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 18-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year 2003-2004
Appeal Filed On 18-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI D. KARUNAKARA RAO AM ITA NO. 1355/PN/2010 : A.Y. 2003-04 I.T.O. WARD 1 AHMEDNAGAR APPELLANT VS. AHMEDNAGAR ZILLA MATHADI KAMGARANCHI SAHAKARI PATSANSTHA LTD. AHMEDNAGAR PAN AAAAA3782 E RESPONDENT ITA NO. 1360/PN/2010 : A.Y. 2003-04 AHMEDNAGAR ZILLA MATHADI KAMGARANCHI SAHAKARI PATSANSTHA LTD. AHMEDNAGAR PAN AAAAA3782 E APPELLANT VS. I.T.O. WARD 1 AHMEDNAGAR RESPONDENT ASSESSEE B Y : NONE DEPARTMENT BY : SHRI ABHAY DAMLE O R D E R PER D. KARUNAKARA RAO A.M. THE CROSS APPEALS RELATE TO THE SAME ASSESSEE. THE Y WERE THEREFORE HEARD TOGETHER AND ARE BEING DISPOSED OF F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AS FAR AS APPEAL FILED BY THE REVENUE IS CONCERNED THE ISSUE RELATES TO DELETION OF PENALTY OF RS. 11 48 600/- U /S 271D OF THE INCOME-TAX ACT 1961. IN ITS APPEAL THE ASSESSEE H AS CHALLENGED THE DECISION OF CIT(A) IN UPHOLDING THE PENALTY IMP OSED BY THE A.O U/S 271E OF THE ACT AMOUNTING TO RS. 2 15 000/-. TH E ASSESSMENT YEAR INVOLVED IN BOTH THESE CASES IS A.Y. 2003-04. ITA 1355 & 1360/PN/10 AHMEDNAGAR ZILLA M.K. SAH PAT SANSTHA A.Y. 2003-04 2 3. TAKING UP THE REVENUES APPEAL FIRST THE LEARNE D DEPARTMENTAL REPRESENTATIVE FAIRLY AGREES THAT THE ISSUE IS SQUA RELY COVERED BY THE DECISION OF THIS BENCH IN THE CASE OF VISHAL PURANDAR NAGARI SA HAKARI PAT SANSTHA MARYADIT IN ITA NO. 1290/PN/2008 AND 1291/PN/2008 FOR A.Y 20 05-06 WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 22ND DECEMBER 2008. IN THE SAID ORDER THE TRIBUNAL INTER-ALIA OBSERVED AS UNDE R: '5. WE HAVE HEARD THE RIVAL CONTENTIONS AT CONSIDER ABLE LENGTH. WE HAVE ALSO PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 6. THE ASSESSEE AS WE HAVE NOTED EARLIER IS A CRE DIT COOPERATIVE SOCIETY - PAT SANSTHAN AS IT IS KNO WN IN THE VERNACULAR LANGUAGE. THESE PAT SANSTHANS ARE QUITE A COMMON PHENOMENON IN THIS PART OF THE COUNTRY AND THEY REN DER SERVICES WHICH ARE SOMEWHAT CLOSE TO THE SERVICES U SUALLY RENDERED BY THE COOPERATIVE BANKS IN THE SENSE THE Y ACCEPT DEPOSITS FROM THE MEMBERS AND GIVE LOANS TO THE MEM BERS. THESE INSTITUTIONS USUALLY WORK AT THE LEVEL OF TAL UKAS AND MOFFUSIL TOWNS. THERE IS NO DOUBT THAT THESE ARE NO T BANKS AND ARE NOT PERMITTED TO CARRY OUT THE BANKING BUSINESS BUT IT IS ALSO TRUE THAT THERE IS A FAIR DEGREE OF SIMILARITY IN THE SERVICES RENDERED BY THESE CREDIT COOPERATIVE SOCIETIES AND COOPERATIVE BANKS. IN THESE CIRCUMSTANCES THE BONAFIDES OF AS SESSEES BELIEF FOR BEING ENTITLED TO THE SAME TREATMENT A S BANKING INSTITUTIONS CANNOT BE REJECTED OUTRIGHT . THIS IS SURELY AN INCORRECT VIEW BUT WHEN AN AUTHORITY IS EXAMINING AN EXPLANATION IN THE CONTEXT OF A PENALTY PROCEEDINGS ALL THAT THE AUTHORITY HAS TO SEE IS WHETHER OR NOT SUCH AN EXPLANATION STANDS THE PREPONDERANCE OF PROBABILITIES AND WHET HER THERE ARE ANY INCONSISTENCIES OR FALLACIES IN SUCH AN EXP LANATION WHICH DEMONSTRATE THAT THE EXPLANATION IS A MAKE BE LIEVE STORY. 7. THE QUESTION WHETHER OR NOT THE LEGAL POSITION A DOPTED BY THE ASSESSEE IS CORRECT OR NOT CANNOT BE THE ONL Y BASIS ON WHICH PENALTY MATTERS ARE DECIDED OR ELSE THERE IS NO NEED FOR ANY HEARING ONCE THE LAPSE ON THE PART OF THE ASSES SEE IS ESTABLISHED NOR CAN SECTION 273 B HAVE ANY RELEVAN CE IN SUCH A SITUATION. IT IS IMPORTANT TO BEAR IN MIND THAT S ECTION 273 B COMES INTO PLAY WHEN THE ASSESSEE HAS COMMITTED A L APSE BUT THE ASSESSEE CAN DEMONSTRATE THAT THERE WAS REASONA BLE CAUSE FOR HAVING COMMITTED THAT LAPSE. THE FACTS RE LATING TO THE FACTORS LEADING TO A LAPSE CAN ONLY BE KNOWN TO THE PERSONS COMMITTING THAT LAPSE ARE BEST IN THE KNOWL EDGE OF PERSON COMMITTING THE LAPSE AND THEREFORE THE ON US ON HIM TO ELABORATE THE SAME. HOWEVER IT IS INHERENTLY I MPOSSIBLE FOR ANYONE TO SUBSTANTIATE WITH COGENT EVIDENCE AND MA TERIAL AS BEING INSISTED BY THE LEARNED DEPARTMENTAL REPRE SENTATIVE SOMETHING LIKE A BONAFIDE BELIEF WHICH IS A STATE O F MIND. ALL THAT CAN BE DONE IN SUCH A SITUATION IS TO EXPLAIN THE CIRCUMSTANCES AND FACTORS LEADING TO SUCH A BELIEF AND IN OUR CONSIDERED VIEW UNLESS A FALLACY OR INCONSISTENCY IS FOUND IN THE SAME OR UNLESS SUCH AN EXPLANATION FAILS THE T EST OF ITA 1355 & 1360/PN/10 AHMEDNAGAR ZILLA M.K. SAH PAT SANSTHA A.Y. 2003-04 3 PROBABILITIES THE SAME IS TO BE TREATED AS A REASO NABLE EXPLANATION COVERED FOR THE PURPOSES OF SECTION 273 B. 8. THE OTHER ASPECT OF THE MATTER IS WHETHER OR NOT IGNORANCE OF LAW CAN BE AN ACCEPTABLE EXPLANATION AND WHETHER SUCH AN EXPLANATION CAN BE ACCEPTABLE FOR I NDIVIDUALS OR GROUPS OF INDIVIDUALS ALONE AND NOT JURIDICAL PERSONS. THIS ISSUE IS NOW WELL SETTLED BY THE HONBLE SUPRE ME COURT IN THE CASE OF MOTILAL PADMAPAT SUGAR MILLS (SUPRA) WH EREIN THEIR LORDSHIPS HAVE OBSERVED THAT IT MUST BE REMEMBERED THAT THERE IS NO PRESUMPTION THAT EVERYO NE IS PRESUMED TO KNOW THE LAW. IT IS OFTEN SAID THAT EVE RYONE IS PRESUMED TO KNOW THE LAW BUT THAT IS NOT A CORRECT STATEMENT; THERE IS NO SUCH MAXIM KNOWN TO LAW AND INTERESTINGLY THESE OBSERVATIONS WERE MADE IN THE C ONTEXT OF AN ARTIFICIAL JURIDICAL PERSON I.E. A COMPANY. REF ERRING TO THESE OBSERVATIONS OF THE HONBLE SUPREME COURT A CO ORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUDERSHAN AU TO AND GENERAL FINANCE VS CIT ( 60 ITD 177) OBSERVED AS F OLLOWS: THE IGNORANCE OF LAW MAY OR MAY NOT CONSTITUTE A VA LID EXCUSE FOR JUSTIFYING WITH A PROVISION OF THE STATU TE. IT WILL DEPEND UPON THE NATURE OF DEFAULT. IF IT IS MERELY TECHNICAL OR VENIAL BREACH NO PENALTY WOULD BE IMPOSSIBLE BE CAUSE THE LEVY OF PENALTY WOULD NECESSARILY IMPLIES EXIST ENCE OF SOME GUILTY INTENTION ON THE PART OF THE DEFAULTER OR THE OFFENDER. IN ORDER TO DETERMINE THE EXISTENCE OR AB SENCE OF GUILTY INTENTION ON THE PART OF THE ASSESSEE ONE W ILL HAVE TO CONSIDER ALL THE SURROUNDING FACTS AND CIRCUMSTA NCES. WHETHER BY COMMITTING DEFAULT OF NON COMPLIANCE WIT H A STATUTORY PROVISION OF LAW AN ASSESSEE HAS DERIVED BENEFIT GAIN OR ADVANTAGE WHETHER BY SUCH A DEFAU LT OR NON COMPLIANCE THE ASSESSEE HAS DEFRAUDED THE REVEN UE OR CAUSED ANY LOSS TO THE REVENUE ? THESE ARE SOME OF THE FACTORS WHICH WILL HAVE TO SERIOUSLY CONSIDERED BEF ORE CONSIDERING THE FACT AS TO WHETHER IGNORANCE OF LA W ON THE PART OF THE ASSESSEE OR HIS CONSULTANT CAN CONSTITU TE VALID EXCUSE OR REASONABLE CAUSE FOR THE PURPOSE OF SECTI ON 273B 9. WE ARE IN RESPECTFUL AGREEMENT WITH THE VIEWS SO STATED BY THE CO ORDINATE BENCH. VIEWED IN THIS PERSPECTI VE AND BEARING IN MIND ENTIRETY OF THE CASE AS ALSO THE F ACT THAT THE ASSESSING OFFICER HAS IN SOME OF THE CASES ACCEPTED THE SAME EXPLANATION IN THE OTHER YEARS WE ARE OF THE CONSI DERED VIEW THAT THE EXPLANATION OF THE ASSESSEE DESERVES TO BE ACCEPTED. IT WAS A WIDESPREAD EVEN IF ERRONEOUS BELIEF THAT THE PROVISIONS OF SECTION 269-T DO NOT APPLY TO THE CRE DIT COOPERATIVE SOCIETIES AND IT IS ALSO EVIDENT FROM THE FACT THAT EVEN THE CBDT HAS TAKEN NOTICE OF IMPOSITION OF RES ULTANT PENALTIES IN LARGE NUMBER OF CASES AND ISSUED A CI RCULAR HIGHLIGHTING THAT THESE PENALTIES SHOULD NOT BE IMP OSED INDISCRIMINATELY AND WITHOUT CONSIDERING THE SCHEME OF SECTION 273 B. SUCH A WIDESPREAD BELIEF BY ITSELF CAN BE VIEWED AS A REASONABLE CAUSE FOR ASSESSEES BONAFIDE BELIEF. 10. HAVING SAID THAT WE MAY ALSO ADD THAT IT IS NO T A CASE WHERE EVEN AFTER THE ASSESSEE AFTER HAVING COME TO KNOW OF THE CORRECT LEGAL POSITION DUE TO INCOME TAX DEPART MENTS ACTION AGAINST HIM CONTINUES TO FOLLOW THE SAME PRA CTICE. ONCE THE ASSESSEE COMES TO KNOW AS TO WHAT IS THE CORREC T LEGAL ITA 1355 & 1360/PN/10 AHMEDNAGAR ZILLA M.K. SAH PAT SANSTHA A.Y. 2003-04 4 POSITION OR AT LEAST THE REVENUES STAND ON THAT IS SUE THERE IS NO QUESTION OF HIS HAVING BONAFIDE BUT INCORRECT BE LIEF ABOUT THE LEGAL POSITION. THAT IS A DIFFERENT SITUATION A ND WE ARE NOT AT ALL CONCERNED WITH SUCH A SITUATION IN THE PRESE NT CASE. THIS DECISION CANNOT HAVE ANY PRECEDENCE VALUE IN S UCH A SITUATION. 11. WITH THE AFORESAID CAVEAT WE UPHOLD THE GRIEVA NCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DE LETE THE IMPUGNED PENALTY. THE ASSESSEE GETS THE RELIEF ACCO RDINGLY.' 4. THE VIEW SO TAKEN IN THE ABOVE CASES HAS BEEN CO NFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DATED 18-3-2009 IN THE CASE OF CIT VS. BANDHKAM KHATE SEVAKANCHI SA HAKARI PATSANSTHA MARYADIT WHEREIN THEIR LORDSHIPS HAVE H ELD THAT AFTER POSITION OF LAW IS BROUGHT TO THE NOTICE OF THE ASS ESSEE THE ASSESSEE HAS STARTED TAKING MONEY BY CHEQUE IN SUCH A SITUA TION TRIBUNAL'S CANCELING PENALTY U/S 271D DOES NOT CALL FOR ANY IN FERENCE. KEEPING THIS IN VIEW ALSO THE PENALTY INDEED DESERVES TO BE DELETED . 5. RESPECTFULLY FOLLOWING THE AFORESAID VIEW TAKEN BY US IN THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT (SUPR A) WE DECIDE THE MATTER IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE PENALTY WA S NOT LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. OUR ATTENTION HAS N OT BEEN INVITED TO ANY VARIATIONS IN THE MATERIAL FACTS OF THE PRESENT CAS E VIZ-A-VIS THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT AND A S SUCH THERE IS NO REASON TO TAKE ANY OTHER VIEW IN THE MATTER THAN THE VIEW SO TAKEN BY US IN THE TRIBUNALS ORDER MENTIONED SUPRA. IN THIS VIEW OF THE MATTER WE UPHOLD THE ORDER OF THE CIT(A) AND DELETE THE LEVY OF PENALTY U/S 271D OF THE ACT ON THE ASSESSEE. 6. SIMILARLY THE ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORD ER O THE TRIBUNAL IN THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADI T (SUPRA) AS DISCUSSED ABOVE. IN THIS VIEW OF THE MATTER WE REVERSE THE DECISION OF THE CIT(A) IN UPHOLDING THE LEVY OF PENALTY IMPOSED U/S 271E OF THE ACT. ITA 1355 & 1360/PN/10 AHMEDNAGAR ZILLA M.K. SAH PAT SANSTHA A.Y. 2003-04 5 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED WHILE THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 18 TH MARCH 2011 SD/- SD/- ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER PUNE DATED THE 18 TH MARCH 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ACIT 3. CIT-I PUNE 4. CIT(A)-I PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE