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2023 (9) TMI 1148 - AT - Income TaxPenalty u/s 271FA - not filing the Annual Information Report (AIR) for the relevant AY - main contention of AR before the Tribunal was that there is reasonable cause as mandated u/s 273B for not filing the AIR for the relevant AY - ambiguity as to whether the cooperative banks are required to comply with the provisions of Rule 114E - HELD THAT - 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. As decided in the case of Mandya District Co-operative Bank Ltd 2020 (3) TMI 1455 - ITAT BANGALORE there is merit in the submission of the ld A.R that there existed an ambiguity as to whether the cooperative banks are required to comply with the provisions of Rule 114E of the Act, meaning thereby, the bonafide belief of the assessee shall constitute reasonable cause in terms of sec.273B of the Act for the failure in furnishing the AIR for the year under consideration. In this view of the matter, the impugned penalty is liable to be deleted. The assessee has demonstrated reasonable cause under section 273B of the Act and considering the same, we delete the levy of penalty under section 271FA - Appeals of the assessee are allowed.
Issues Involved:
1. Jurisdiction of the JDIT (I & CI) to pass orders under section 271FA. 2. Limitation period for imposing penalty under section 271FA. 3. Applicability of Rule 114E of the IT Rules to the assessee for filing AIR. 4. Requirement of specific notice under section 285BA(5). 5. Existence of "reasonable cause" under section 273B for not filing AIR. Summary: Jurisdiction of the JDIT (I & CI): The assessee contended that the JDIT (I & CI) did not have jurisdiction to pass the impugned orders under section 271FA of the Act. This contention was rejected by the First Appellate Authority (FAA). Limitation Period for Imposing Penalty: The assessee argued that the orders imposing penalty were barred by limitation as the penalty proceedings were initiated after an expiry of 12 years from the end of the assessment year. The FAA dismissed this contention. Applicability of Rule 114E of the IT Rules: The assessee claimed that Rule 114E(2) was applicable only after 01.04.2015, and hence, they were not liable to furnish AIR for the years in question. The Tribunal agreed with the assessee, citing that prior to 01.04.2015, there was ambiguity regarding whether co-operative banks were required to file AIR. The Tribunal referred to similar cases where it was held that the ambiguity constituted a "reasonable cause" under section 273B of the Act. Requirement of Specific Notice under Section 285BA(5): The assessee contended that no specific notice was issued under section 285BA(5) directing them to file AIR within sixty days. This contention was also dismissed by the FAA. Existence of "Reasonable Cause" under Section 273B: The Tribunal found that the assessee had a bona fide belief that they were not required to file AIR due to the ambiguity in Rule 114E before its amendment. The Tribunal cited multiple cases where similar ambiguity was considered a reasonable cause for not imposing penalties under section 271FA. Conclusion: The Tribunal concluded that the ambiguity in Rule 114E before 01.04.2015 constituted a reasonable cause under section 273B of the Act. Consequently, the penalties imposed under section 271FA for the Assessment Years 2006-07 to 2014-15 were deleted. The appeals of the assessee were allowed.
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