Suco Souharda Sahakari Bank Ltd Vs Joint Director of Income Tax (ITAT Bangalore)
ITAT Bangalore held that co-operative bank is liable to furnish AIR only after 01.04.2016 in view of amendment under Rule 114E of Income Tax Rules, 1962. Accordingly, imposition of penalty u/s 271FA prior to 01.04.2016 is unsustainable.
Facts- The assessee is a society registered under the Karnataka Souhardha Sahakari Act, 1997. The objects of the assessee society are to carry on the business of banking by accepting deposits and lending money to the members 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 u/s. 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 u/s. 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.
Conclusion- In the case of Shri Chatrapati Shivaji Maharaj Sahakari Bank Niyamitha Vs. DIT held that the sole matrix of the disputed issue as envisaged by the learned Authorized Representative on the levy of penalty under Section 271FA of the Act on the co-operative bank for non-filing information of transactions in the Annual Information Return (AIR),under the provisions of Section 285BA(2) of the Act r.w Rule114E of I T Rules 1962. We found as per Rule 114E of I T Rules 1962, the co-operative bank was not included prior to amendment effective from 1.4.2016.
Held 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 facts of the instant case, 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 of the Act, for the Assessment Years 2006-07 to 2014-15. It is ordered accordingly.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These appeals at the instance of the assessee are directed against nine orders of CIT(A), all dated 27.02.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2006-07 to 2014-15.
2. Common issues are raised in these appeals and they pertain to the same assessee, hence, they were heard together and are being disposed off by this consolidated order.
3. Brief facts of the case are as follows:
The assessee is a society registered under the Karnataka Souhardha Sahakari Act, 1997. The objects of the assessee society are to carry on the business of banking by accepting deposits and lending money to the members 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:
