ITO,, Ahmednagar v. Akole Taluka Shikshak Va Shiksheketar Maryadit,, Ahmednagar

ITA 533/PUN/2010 | 2003-2004
Pronouncement Date: 28-10-2010 | Result: Dismissed

Appeal Details

RSA Number 53324514 RSA 2010
Assessee PAN AAAAA5489Q
Bench Pune
Appeal Number ITA 533/PUN/2010
Duration Of Justice 6 month(s) 19 day(s)
Appellant ITO,, Ahmednagar
Respondent Akole Taluka Shikshak Va Shiksheketar Maryadit,, Ahmednagar
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-10-2010
Assessment Year 2003-2004
Appeal Filed On 09-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 533/PN/10 (ASST. YEAR 2003-04) ITO WARD 1 AHMEDNAGAR .... APPELLANT VS. AKOLE TALUKA SHIKSHAK VA SHIKSHEKETAR MARYADIT TAL. AKOLE DIST. AHMEDNAGAR PAN NO. AAAAA5489Q . RESPONDENT APPELLANT BY : SHRI ABAY DAMLE RESPONDENT BY : NONE ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER O F THE CIT(A)-I PUNE DATED 29/10/2009. SEVERAL GROUNDS HAVE BEEN RAISED BY THE REVENUE WHICH ARE NARRATIVE AS ALSO ARGUMENTATIVE IN NATURE HOWEVER REVOLVE S AROUND THE SINGLE ISSUE OF DELETION OF PENALTY OF RS.3 75 828/- LEVIE D U/S 271D OF THE INCOME TAX ACT 1961 FOR A.Y 2003-04 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY AGREES THAT THE ISSUE IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF TH IS BENCH IN THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT IN ITA NO. 1290/PN/2008 AND 1291/PN/2008 FOR A.Y 2005-06 WHICH WE HAVE DECIDED I N FAVOUR OF THE ASSESSEE BY WAY OF AN ORDER DATED 22ND DECEMBER 2008. IN THE SAID ORDER WE HAVE INTER- ALIA OBSERVED AS UNDER: '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 ITA NO. 533/PN/10 A.Y 2003-04 PAGE 2 OF 4 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 BUSI NESS BUT IT IS ALSO TRUE THAT THERE IS A FAIR DEGREE OF SIMILAR ITY IN THE SERVICES RENDERED BY THESE CREDIT COOPERATIVE SOCIE TIES AND COOPERATIVE BANKS. IN THESE CIRCUMSTANCES THE BON AFIDES OF ASSESSEES BELIEF FOR BEING ENTITLED TO THE SAME TREATMENT AS 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 PROCEEDI NGS ALL THAT THE AUTHORITY HAS TO SEE IS WHETHER OR NOT SUC H AN EXPLANATION STANDS THE PREPONDERANCE OF PROBABILITI ES AND WHETHER THERE ARE ANY INCONSISTENCIES OR FALLACIES IN SUCH AN EXPLANATION WHICH DEMONSTRATE THAT THE EXPLANATION IS A MAKE BELIEVE 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 A SSESSEE 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 RELATING TO THE FACTORS LEADING TO A LAPSE CAN ONLY BE KNOWN TO THE PERSONS COMMITTING THAT LAPSE ARE BEST IN THE KNOWLEDGE OF PERSON COMMITTING THE LAPSE AND THEREFORE THE ONUS ON H IM TO ELABORATE THE SAME. HOWEVER IT IS INHERENTLY IMPO SSIBLE 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 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 EVERYONE IS PRESUMED T O KNOW THE LAW. IT IS OFTEN SAID THAT EVERYONE IS PRESUMED TO KNOW THE LAW BUT THAT IS NOT A CORRECT STATEMENT; THERE IS NO SUCH MAXIM KNOWN TO LAW AND INTERESTINGLY THESE OBSERV ATIONS ITA NO. 533/PN/10 A.Y 2003-04 PAGE 3 OF 4 WERE MADE IN THE CONTEXT OF AN ARTIFICIAL JURIDICAL PERSON I.E. A COMPANY. REFERRING TO THESE OBSERVATIONS OF THE HON BLE SUPREME COURT A CO ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SUDERSHAN AUTO AND GENERAL FINANCE VS CIT ( 60 ITD 177) OBSERVED AS FOLLOWS: THE IGNORANCE OF LAW MAY OR MAY NOT CONSTITUTE A V ALID 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 BECAU SE THE LEVY OF PENALTY WOULD NECESSARILY IMPLIES EXISTENCE OF SOME GUILTY INTENTION ON THE PART OF THE DEFAULTER OR TH E OFFENDER. IN ORDER TO DETERMINE THE EXISTENCE OR ABSENCE OF GUIL TY INTENTION ON THE PART OF THE ASSESSEE ONE WILL HAVE TO CONSI DER ALL THE SURROUNDING FACTS AND CIRCUMSTANCES. WHETHER BY COM MITTING DEFAULT OF NON COMPLIANCE WITH A STATUTORY PROVISIO N OF LAW AN ASSESSEE HAS DERIVED BENEFIT GAIN OR ADVANTAGE WH ETHER BY SUCH A DEFAULT OR NON COMPLIANCE THE ASSESSEE HAS D EFRAUDED THE REVENUE OR CAUSED ANY LOSS TO THE REVENUE ? THE SE ARE SOME OF THE FACTORS WHICH WILL HAVE TO SERIOUSLY CO NSIDERED BEFORE CONSIDERING THE FACT AS TO WHETHER IGNORANC E OF LAW ON THE PART OF THE ASSESSEE OR HIS CONSULTANT CAN CONS TITUTE 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-SS DO NOT APPLY TO THE CR EDIT 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 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. ITA NO. 533/PN/10 A.Y 2003-04 PAGE 4 OF 4 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.' 3. 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 HELD 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. 4. RESPECTFULLY FOLLOWING THE AFORESAID VIEW TAKEN B Y US IN THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT (SUPRA) WE DECIDE THE MATTER IN FAVOUR OF THE ASSESSEE AND HOLD THAT THE PENALTY WAS NOT LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. OUR ATTENTION HAS NOT BEEN INVITED TO ANY VARIATIONS IN THE MATERIAL FACTS OF THE PRESENT CASE V IZ-A-VIS THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT AND AS SUC H THERE IS NO REASON TO TAKE ANY OTHER VIEW IN THE MATTER THAN THE VIEW SO TA KEN 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. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 28 TH OCTOBER 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ITO WARD 11(1) PUNE 2. ASSESSEE 3. CIT(A)-I PUNE 4. CIT-I PUNE 5. DR ITAT A BENCH PUNE BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE