Agricultural Produce Market Committee[KUBS], Amalner v. ITO, Jalgaon

ITA 1809/PUN/2012 | 2004-2005
Pronouncement Date: 25-10-2013 | Result: Allowed

Appeal Details

RSA Number 180924514 RSA 2012
Assessee PAN AAAAK6643E
Bench Pune
Appeal Number ITA 1809/PUN/2012
Duration Of Justice 1 year(s) 1 month(s) 15 day(s)
Appellant Agricultural Produce Market Committee[KUBS], Amalner
Respondent ITO, Jalgaon
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-10-2013
Assessment Year 2004-2005
Appeal Filed On 10-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NOS.1808 TO 1812/PN/2012 (A. Y. : 2003-04 TO 2005-06 2007-08 & 2008-09) AGRICULTURAL PRODUCE MARKET COMMITTEE (KUBS) DHULE ROAD AMALNER 425 401. PAN : AAAAK6643E . APPELLANT VS. INCOME TAX OFFICER WARD 2 (2) JALGAON. . RESPONDENT APPELLANT BY : MR. SUNIL GANOO RESPONDENT BY : MR. B. Y. CHAVAN DATE OF HEARING : 15-10-2013 DATE OF PRONOUNCEMENT : 25-10-2013 ORDER PER G. S. PANNU AM THE CAPTIONED FIVE APPEALS ARE DIRECTED AGAINST A C ONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II NASHIK DATED 17.07.2012 WHICH IN TURN HAS ARISEN FROM A COMMON ORDER PASS ED BY THE ASSESSING OFFICER DATED 27.05.2011 FOR THE LEVY OF PENALTY UN DER SECTION 271B OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) PERTAINI NG TO THE ASSESSMENT YEARS 2003-04 TO 2005-06 2007-08 & 2008-09. 2. IN ALL THE APPEALS THE ONLY ISSUE RAISED IS WITH REGARD TO THE LEVY OF PENALTY UNDER SECTION 271B OF THE ACT IN IDENTICAL CIRCUMSTANCES AND THEREFORE APPEAL PERTAINING TO THE ASSESSMENT YEAR 2003-04 VI DE ITA NO.1808/PN/2012 IS TAKEN AS A LEAD CASE. 3. THE APPELLANT IS AN AGRICULTURAL PRODUCE MARKET COMMITTEE (IN SHORT APMC) WHICH IS CONSTITUTED UNDER MAHARASHTRA AGR ICULTURAL PRODUCE ITA NOS.1808 TO 1812/PN/2012 A.Y. 2003-04 TO 2 005-06 2007-08 & 2008-09 MARKETING (REGULATION) ACT 1963. THE APPELLANT IS A STATUTORY BODY CONSTITUTED TO REGULATE MARKETING OF AGRICULTURAL AND OTHER PRO DUCE WITHIN ITS AREA. UPTO THE ASSESSMENT YEAR 2002-03 ASSESSEE WAS CLAIMING EXEM PTION AS A LOCAL AUTHORITY AND AS A CONSEQUENCE OF AMENDMENT MADE TO SECTION 10(20) OF THE ACT BY THE FINANCE ACT 2002 W.E.F. 01.04.2003 THE INCOME OF ASSESSEE BECAME TAXABLE. FOR ASSESSMENT YEAR 2003-04 ORIGIN ALLY NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE ASSESSING OFFICER IS SUED A NOTICE UNDER SECTION 148 OF THE ACT ON 09.03.2010 IN RESPONSE T O WHICH APPELLANT FILED ITS RETURN OF INCOME ON 12.05.2010 AND THE ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 09.11.2010 AT A TOTAL INCOME OF RS.10 02 510/-. IT WAS NOTICED THAT THE R ETURN OF INCOME WAS ACCOMPANIED BY FINANCIAL ACCOUNTS WHICH WERE AUDITE D BY THE STATUTORY AUDITORS. HOWEVER THE ASSESSING OFFICER NOTICED TH AT SINCE THE GROSS RECEIPTS OF THE ASSESSEE EXCEEDED RS.40 00 000/- ASSESSEE W AS ALSO OBLIGED TO GET ITS ACCOUNT AUDITED IN TERMS OF SECTION 44AB OF THE ACT WITHIN THE STIPULATED TIME WHICH WAS NOT DONE. A SHOW-CAUSE NOTICE DATE D 09.11.2010 WAS ISSUED REQUIRING THE ASSESSEE TO EXPLAIN WHY PENALTY UNDER SECTION 271B OF THE ACT BE NOT LEVIED FOR SUCH DEFAULT. THE ASSESSEE MADE V ARIOUS SUBMISSIONS TO JUSTIFY THAT THERE WAS A REASONABLE CAUSE FOR NOT C OMPLYING WITH THE REQUIREMENTS OF SECTION 44AB OF THE ACT AND THUS PL EADED THAT NO PENALTY UNDER SECTION 271B OF THE ACT CAN BE LEVIED. AFTER CONSIDERING THE POINTS PUT-FORTH BY THE ASSESSEE THE ASSESSING OFFICER WA S NOT SATISFIED AND VIDE ORDER DATED 27.05.2011 LEVIED A PENALTY UNDER SECTI ON 271B OF THE ACT AMOUNTING TO RS.24 560/- WHICH HAS ALSO SINCE BEEN SUSTAINED BY THE CIT(A). NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A) A SSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US THE PRIMARY PLEA RAISED BY THE ASSESS EE IS THAT UPTO THE PRECEDING ASSESSMENT YEAR 2002-03 IT WAS RECOGNIZE D AS A LOCAL AUTHORITY AND THE ENTIRE INCOME WAS EXEMPT IN TERMS OF SECTIO N 10(20) OF THE ACT. THAT ITA NOS.1808 TO 1812/PN/2012 A.Y. 2003-04 TO 2 005-06 2007-08 & 2008-09 THE ASSESSEE IS NOT INCORPORATED WITH A PROFIT MOTI VE SO AS TO OPERATE IN A FORMAL BUSINESS ENVIRONMENT AND THUS IT WAS UNDER A BONAFIDE BELIEF THAT EVEN IN THE ASSESSMENT YEAR 2003-04 ONWARDS ITS INCOME C ONTINUED TO REMAIN EXEMPT AS A LOCAL AUTHORITY AND WAS UNAWARE OF TH E AMENDMENTS MADE IN LAW BY THE FINANCE ACT 2002. THE LEARNED COUNSEL POINTED OUT THAT ASSESSEE CAME TO REALIZE THE AMENDMENT IN TAXING STATUTE ONL Y WHEN A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 09.03.2010. IT IS POINTED OUT THAT IN ANY CASE ASSESSEE HAD GOT THE ACCOUNTS AUDITED IN TERM S OF THE STATUTORY REQUIREMENTS AND THE DEFAULT FOR NON-COMPLYING WITH THE REQUIREMENT OF SECTION 44AB OF THE ACT WAS UNDER A BONAFIDE BELIEF . THE LEARNED COUNSEL POINTED OUT THAT EVEN THE DEPARTMENT DID NOT TAKE A NY ACTION CONSEQUENT TO THE AMENDMENT MADE W.E.F. ASSESSMENT YEAR 2003-04 T ILL THE MATTERS REACHED THE HONBLE SUPREME COURT IN THE CASE OF AGRICULTUR AL PRODUCE MARKET COMMITTEE NARELA VS. CIT & ANR. (2008) 305 ITR 1 ( SC). FOR ALL THE ABOVE REASONS THE PLEA OF THE ASSESSEE IS THAT IT WAS UN DER A BONAFIDE BELIEF THAT INCOME IS EXEMPT AND THAT A GENUINE PLEA OF IGNORAN CE OF LAW CAN BE A GROUND TO DELETE THE IMPUGNED PENALTY. IN THIS CONNECTION THE LEARNED COUNSEL REFERRED TO THE JUDGEMENT OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS. SCHELL INTERNATIONAL (2005) 278 ITR 630 (BOM) WHEREIN A BONAFIDE BELIEF OF THE ASSESSEE FOR NOT BEING AWARE THE REQUIREMENTS O F LAW HAS BEEN HELD TO BE A REASONABLE EXPLANATION SO AS TO DELETE PENALTY UN DER SECTION 272A(2)(C) OF THE ACT FOR NOT FILING OF SPECIFIED FORMS TO THE DE PARTMENT. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW BY POINTING OUT THAT IGNORANCE OF LAW CANNOT BE A GROUND FOR DE LETING THE PENALTY FOR NON- COMPLIANCE WITH THE PROVISIONS OF SECTION 44AB OF T HE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE THE PENALTY HAS BEEN LEVIED UNDER SECTION 271B OF THE A CT FOR THE FAILURE OF THE ITA NOS.1808 TO 1812/PN/2012 A.Y. 2003-04 TO 2 005-06 2007-08 & 2008-09 ASSESSEE TO GET ITS ACCOUNTS AUDITED AS PER THE REQ UIREMENTS OF SECTION 44AB OF THE ACT. SECTION 273B OF THE ACT PROVIDES THAT P ENALTY MAY NOT BE IMPOSED FOR ANY FAILURE REFERRED TO SECTION 271B OF THE ACT IF ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR SUCH FAILURE. AS P ER THE APPELLANT IT WAS UNAWARE THAT FROM ASSESSMENT YEAR 2003-04 ONWARDS I TS INCOME WAS LIABLE TO BE TAXED IN VIEW OF THE AMENDMENT MADE TO SECTION 1 0(20) OF THE ACT BY THE FINANCE ACT 2002 W.E.F. 01.04.2003. THE ASSESSEE P OINTED OUT THAT IT GOT ITS ACCOUNTS AUDITED AS PER THE STATUTORY REQUIREMENTS APPLICABLE TO THE CO-OPERATIVE SOCIETIES AND THAT IF IT WAS AWARE OF THE REQUIREMENTS OF SECTION 44AB OF THE ACT THE SAME WOULD ALSO HAVE BEEN COMP LIED WITH. THE AFORESAID EXPLANATION TOWARDS IGNORANCE OF THE PROVISIONS OF LAW HAS NOT BEEN ACCEPTED AS REASONABLE BY THE LOWER AUTHORITIES. NO DOUBT TH ERE CANNOT BE A GENERAL RULE THAT IGNORANCE OF LAW CAN CONSTITUTE AN EXCUSE BUT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS. STATE OF UTTAR PRADESH (1979) 118 ITR 326 (SC) THERE IS N O PRESUMPTION THAT EVERYONE KNOWS THE LAW. IT IS ALSO A WELL SETTLED P ROPOSITION THAT PENALTY CANNOT BE LEVIED MERELY BECAUSE IT IS LAWFUL TO DO SO AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V S. STATE OF ORISSA (1972) 83 ITR 26 (SC). IN THE PRESENT CASE IN OUR VIEW T HERE IS NO MATERIAL TO SAY THAT ASSESSEE ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF ANY CONTUMACIOUS OR DISHONEST CONDUCT IN NOT GETTING IT S ACCOUNT AUDITED IN THE MANNER REQUIRED UNDER SECTION 44AB OF THE ACT. THER EFORE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE INCLINE D TO SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELE TE THE PENALTY IMPOSED UNDER SECTION 271B OF THE ACT AMOUNTING TO RS.24 56 0/-. WE HOLD SO. 7. SINCE THE FACTS AND CIRCUMSTANCES IN THE OTHER A SSESSMENT YEARS ARE PARI-MATERIA TO THE ASSESSMENT YEAR 2003-04 OUR DECISION IN AS SESSMENT YEAR 2003-04 WOULD APPLY MUTATIS-MUTANDIS IN THE OTHER ASSESSMENT YEARS ALSO. ITA NOS.1808 TO 1812/PN/2012 A.Y. 2003-04 TO 2 005-06 2007-08 & 2008-09 8. IN THE RESULT ALL THE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 25 TH OCTOBER 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II NASHIK; 4) THE CIT-II NASHIK; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE