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TMI Blog2013 (12) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... cooperative department - Following Hindustan Steel Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court] - There is a rule that ignorance of law is no excuse but there is no presumption that every one knows the law - Decided in favour of assessee. - ITA No. 1798 and 1799/PN/2012 - - - Dated:- 22-10-2013 - Shri Shailendra Kumar Yadav And Shri R. K. Panda,JJ. For the Appellant : Shri Sunil Ganoo For the Respondent : Shri Prashanth Godkar ORDER Per R. K. Panda, AM :- The above 2 appeals filed by the assessee are directed against the separate orders dated 17-07-2012 of the CIT(A)-II, Nashik relating to Assessment years 1004-05 and 2005-06 respectively. 2. Levy of penalty of Rs.63,106/- for A.Y. 2004-05 and Rs.56,02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending 30th September every year and the books of accounts are duly audited by the co-operative auditor. Since the income of the assessee was exempt under the provisions of section 10(20) of the I.T. Act it was not required/under obligation to file the return of income. 3.1 It was submitted that the definition of local authority was restricted by the Finance Act, 2002 w.e.f. 01-04-2003 and APMC was excluded from the local authority. Since the assessee was ignorant about the amendment in the provisions of section 10(20) withdrawing the exemption and since no tax consultant was appointed by the assessee local authority, therefore, it was not aware of the provisions of section 44AB. Only after the decision of the Hon'ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y u/s.271B. He accordingly levied penalty of Rs.63,105/- u/s.271B. 5. In appeal the Ld.CIT(A) upheld the penalty levied by the Assessing Officer by observing as under : "8. I have carefully gone through the submission of the appellant, penalty order and the material available on record. Prior to 01/04/2003, income of all the local authorities was exempt u/s 10(20) of the Act. Agricultural produce market committee was also one of the local authorities till 31/03/2003. However, by Finance Act 2002, w.e.f. 01/04/2003, the APMC ceases to be a local authority. Hon'ble SC in the case of APMC, Narela, Delhi vs. CIT has held that APMCs' are not local authorities for tax exemption and are liable to pay tax. As per the amended sec. 10(20) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. I, therefore, confirm the penalty levied by AO u/s. 271B for A.Ys. 2004-05." 5.1 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 6. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by the Ld. Counsel for the assessee. There is no dispute to the fact that the assessee APMC was a local authority till A.Y. 2002-03 and its income was exempt u/s.10(20) of the I.T. Act. It may be noted that prior to Finance Act, 2002, the Income Tax Act, 1961 did not contain the definition of the word "local authority". That word came to be defined f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the penalty u/s.272A(2)(c). The relevant observation of the Hon'ble High Court read as under : "5. In view of the law laid down by the Supreme Court, it is clear that there is a rule that ignorance of law is no excuse but there is no presumption that everyone knows the law. 6. In the Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26) which was a matter under Orissa Sales-tax Act, their Lordships of the Supreme Court observed as follows : "Under the Act penalty may be imposed for failure to register as a dealer : s. 9(1) r/w. S. 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied date although the assessee maintains books of accounts and such books of accounts are duly audited by the auditors appointed by the cooperative department. We accordingly set-aside the order of the CIT(A) and direct the Assessing Officer to cancel the penalty levied u/s.271B of the I.T. Act, 1961. The grounds raised by the assessee are accordingly allowed. ITA No.1799/PN/2012 (A.Y. 2005-06): 7. After hearing both the sides, we find the grounds raised by the assessee are identical to the grounds of appeal in ITA No.1798/PN/2012 for A.Y. 2004-05. We have already decided the issue and the penalty levied by the AO and upheld by the CIT(A) has been cancelled. Following the same ratio, the penalty levied u/s.271B is cancelled. 8. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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