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TMI Blog2023 (9) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... embers of the Sahakari. The assessee's business activities carried on are similar to the business of banking carried on by Co-operative Banks formed and registered under the Karnataka Societies Act, 1959. There was a survey under section 133A of the Act on 24.01.2018 at the headquarters of the assessee at Bellary. In the course of survey, it was noticed that assessee has not filed Annual Information Report (AIR) for the Assessment Years 2006-07 to 2014-15, despite the fact that the assessee had reportable transactions in terms of section 285BA(2) of the Act. Accordingly, show cause notice dated 26.09.2018 was issued for imposing penalty under section 271FA of the Act since assessee had not filed AIR as per the provisions of section 285BA(2) of the Act r.w.r. 114E of the Income Tax Rules, 1962. The assessee filed objections to the notice issued under section 271FA of the Act. The AO not being satisfied with the explanation submitted by the assessee, imposed penalty under section 271FA of the Act. The details of the Assessment Year and penalty imposed under section 271FA of the Act are as under: Assessment Year Penalty levied in INR 2006-07 4,19,700 2007-08 3,83,200 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bonafide belief that it was not required to file the AIR return under the facts and in the circumstances of the appellant's case. 3.1 The learned CIT[A] erred in upholding the penalty imposed u/s. 271FA of the Act without appreciating the aforesaid explanation of the appellant constituted enable cause for failure to comply with the provisions of 285BA and hence, in terms of section 273B of the Act, the penalty imposed ought to have been cancelled. 3.2 The learned CIT[A] further erred in not following the binding decisions of the Hon'ble ITAT relied upon by the appellant on the ground that the Hon'ble RAT has not looked into the fact that co- operative banks are governed by the Banking Regulation Act, 1949, which failure to follow the binding decision of the ITAT amount to judicial indiscipline. 4. Without prejudice to the above the learned CIT [Appeals] failed to appreciate that the learned JDIT (I & CI) was not the prescribed authority in terms of section 285BA[1] of the Act, as it stood for the relevant assessment year Lander appeal and consequently, the order imposing penalty is a nullity and the same requires to be annulled. 5. Without prejudice to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is set out in the impugned orders of CIT(A), hence the same is not reiterated here. The Rule under 114E(2) of the Rules lists out the persons who are required to furnish the AIR in terms of section 285BA of the Act. It is clear that in terms of Sl.Nos.1 and 2 of the Table under Rule 114E(2) of the Rules, before 01.04.2015 only banking companies or banking institutions (which includes the provisions of section 51 of the Banking Regulation Act, 1949) but not the provisions of section 56 or Part V of the Banking Regulation Act, 1949, that deals with Co-operative Societies were required to file the AIR. The co-operative banks have been brought within the ambit of Sl. Nos.1 to 4 of Table under Rules 114E(2) after 01.04.2015 and prior to that, the assessee being a Souhardha Sahakari, there was ambiguity as to whether Co-operative Banks are required to comply with the provisions of Rule 114E of the Rules, meaning thereby, the bonafide belief of the assessee would constitute a reasonable cause as mandated as per section 273B of the Act for the failure to furnish AIR for the relevant years under consideration. On identical facts, the Bangalore Benches of the Tribunal in the case of Mandya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posits aggregating to ten lakh rupees or more in a year in any savings account of a person maintained in that bank. 6. We, on perusal of the provisions found that the co-operative bank has been included in the amendment w.e.f 1.4.2016 and is not disputed. The learned Authorized Representative supported the claim relying on judicial decisions and provisions of Banking Regulation Act read as under : 'Section 5i in BANKING REGULATION ACT. 1949 1[51. Application of certain provisions to the State Bank of India and other notified banks.---21" (1) Without prejudice to the provisions of the State Bank of India Act, 1955 (23 of 1955), or any other enactment, the provisions of section 10, 13 to 15, 17 253 [19 to 21A, 23 to 28, 29 (excluding sub-section (3)] 265[sub-sections (1B), (1C), and (2) of section 30], 31, 34,35,35A, 36 [excluding clause (d) of sub-section (1)], 45Y to 45ZF, 46 to 48],50,52 and 53 shall also apply, so far as maybe, to and in relation to the State Bank of India 253 [or any corresponding new bank or a Regional Rural Bank or any subsidiary bank] as they apply to and in relation to banking companies: PROVIDED that,- (a) nothing contained in clause (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be imposed, if there exists a reasonable cause. We consider appropriate to the provisions of Section 273B which is read as under : " 273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271M section 271FAB, section 271FB, section 271G, section 271GA, section 271GB, section 271H, section 271I, section 271J, clause (c) or clause (d) of sub- section (1) or sub-section (2) of section 272A sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-section (1A) of section 272BB or sub-section (1) of section 272BB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure." We, on perusal of the facts of the case and the explanations and the grounds of appeal duly supported by the Paper Book and judicial decisions are of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Gujarat High Court has partly allowed the appeal of the assessee on the ground that the assessee was not aware of the statutory provisions in as much as the income of the assessee was exempt u/s 80P[2][a][i] of the Act and the assessee became aware of the said provisions only upon the issuance of the notice u/s. 285BA[5] of the Act and has therefore held that the same constitutes reasonable cause u/s. 273B of the Act till the date of issuance of the notice and no penalty u/s. 271FA of the Act was leviable till such date. Thus, the Hon'ble High Court has also considered the plea of reasonable cause as applicable in the said case. 13. In view of the above, the reliance placed by the learned AO and CIT(A) on the aforesaid judgement of the Hon'ble Gujarat High Court is misplaced since the same is distinguishable from the facts of the present case. 14. As mentioned earlier, the Bangalore Bench of Tribunal in cases cited supra had considered that Rule 114E of the IT Rules was substituted to include co-operative banks w.e.f 01.04.2015 and has held that the ambiguity of the provisions constitutes reasonable cause under section 273B of the Act. 15. Therefore, on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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