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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 ..... 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. - SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER For the Appellant : Shri. V. Srinivasan, Advocate an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,900 2013-14 1,67,500 2014-15 1,27,700 4. Aggrieved by the orders imposing penalty under section 271FA of the Act, assessee filed appeals before the First Appellate Authority (FAA). Assessee had filed a common written submissions for the Assessment Years 2006-07 to 2014-15. The contentions raised before the FAA are as under: The JDIT (I CI) does not have jurisdiction to pass the impugned orders under section 271FA of the Act. The orders imposing penalty under section 271FA of the Act is barred by limitation. It was contended by the assessee that only after 01.04.2015 in view of the specific amendment under Rule 114E of the Rules, the assessee was liable to furnish the AIR and hence not liable for penalty under section 271FA of the Act. It was further contended that no specific notice was issued under section 285BA(5) of the Act. Lastly, it was contended that there was a reasonable cause as mandated under section 271B of the Act for not imposing penalty under section 271FA of the Act. 5. The contentions raised by the assessee before the FAA were rejected and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Without prejudice to the above, the learned CIT[A] failed to appreciate that order imposing penalty u/s, 271FA passed by the learned JDIT (I CI) is bad in law and barred by limitation in as much as the said penalty proceedings have been initiated after an expiry of 12 years from the end of the assessment year and therefore, the proceedings cannot be considered as having been initiated within reasonable time under the facts and in the circumstances of the appellant s case. 6. Without prejudice to the above, the learned CIT[A] failed to appreciate that the penalty notice issued and the penalty order passed under section 271FA of the Act is bad in law in absence of issue of specific notice under section 285BA(5) of the Act directing the appellant to file the Annual Information Return within a period of sixty days from the date of service of the notice on the facts and circumstances of the case. 7. Without prejudice to the above, the penalty levied is excessive and - quires to be reduced substantially. 8. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Benches of the Tribunal in the case of Mandya District Co-operative Bank Ltd., (supra) has held as under : 9. We heard rival contentions and perused the record. We notice that the original provisions of Rule 114E of Income tax Rules did not include co-operative bank and it was inserted only in the amended provisions of Rule 114E, which came into effect from 1.4.2016. Accordingly, in our view, 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. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned penalty levied u/s 271FA of the Act for the year under consideration. 10. Similar view has been taken by the Bangalore Benches of the Tribunal in the cases of Nehrunagar Co-operative Bank Ltd., Vs. DIT (I CI), Bangalore in ITA Nos.965 to 967 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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) of sub-section (1) of section 10 shall apply to the Chairman of the State Bank of India or to a 267[Managing Director] of any subsidiary bank in so far as the said clause precludes him from being a Director of, or holding an office in, any institution approved by the Reserve Bank; 253[(b) nothing contained in sub-clause (iii) of clause (b) of sub-section (1) of section 20 shall apply to any bank referred to in sub-section (1), insofar as the said sub-clause (iii) of clause (b) precludes that bank from entering into any commitment for granting any loan or advance to or on behalf of a company (not being a government company) in which not less than forty per cent of the paid-up capital is held (whether singly or taken together) by the Central Government or the Reserve Bank or a corporation owned by that bank; and (c) nothing contained in section 46 or in section 47A shall apply to- (i) an officer of the Central Government or the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 that the amendment to Rule 114E of IT Rules has been effective from 1.4.2016 and, further the Assessing Officer has levied penalty for the F.Y. 2005-06 in the year 2017 and there was no provision under Rule 114E to include co-operative banks. We found the submissions of the learned Authorized Representative are realistic considering small activity of the Bank and limited staff which cannot be overlooked. Accordingly considering the principles of natural justice and the facts. we found there is a reasonable cause in not submitting the information as the assessee was under Bona Fide belief. Accordingly we set aside the order of C17 (Appeals) and direct the Assessing Officer to delete the penalty and allow the grounds of appeal of the assessee. In the result, the assessee appeal is allowed. 7. Similarly, for the Asst. Years 2007-08 to 2015-16, the issues are similar and identical, the decision taken in ITA No.1332/Bang/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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