Appeal (Appellate Tribunal)

The assessee, a credit cooperative society dealing only with its members, contravened the provisions of s 269SS and s 269T. The AO levied a penalty under s 271E and same was confirmed by the CIT(A). Even before the service of the CIT’s order, the AO immediately attached the Bank Accounts of the assessee under s 226(3). The assessee has filed a stay application before the Tribunal and had also prayed that the cost should be awarded under s 254(2B) for the harassment caused to the assessee on account of the recovery proceedings.

The issue is whether the revenue can be directed to pay cost to the assessee on account of unnecessary harassment caused due to recovery proceedings.

 

The AO’s order of attaching the bank account of the assessee under s 226(3) even before the service of the CIT(A)’s order was wrong in view of the following reasons:

• (i) The CBDT’s letter dated 25 March 2004 advising that penalties under s 271D and 271E for violation of the provisions of s 269SS and s 269T should not be indiscriminately imposed.
• (ii) The CCIT’s direction conveying therein to stay the demand arising out of penalties imposed under s 271D and 271E in the cases of cooperative credit societies.

• (iii) In UOI v Raja Mohammed Amir Mohammed AIR 2005 SC 4383 the Supreme Court has shown concern over dangerous attitude developing amongst Executive resulting in institutional damage.
• (iv) The Bombay High Court in the case of KEC International Ltd 251 ITR 158 (Bom) held that generally coercive measures may not be adopted during the period provided by the statute to go in appeal.

The assessee has been unnecessarily subjected to the harassment caused by the actions of the authorities below which were not warranted under the facts and circumstances of the present case. It is thus a fit case for invoking the provisions of s 254(2B) to impose a cost on the revenue to be paid to the assessee to compensate the harassment caused by the officers of the revenue. Thus, the revenue is directed to pay cost of Rs. 5000 to the assessee.

Cost –– Revenue directed to pay cost to the assessee on account of unnecessary harassment caused due to recovery proceedings — as held by PuneTrib in Shramjivi Nagari Sahakari Pat Sanstha v Addl. CIT — In favour of: The Assessee ; ITA No. 477/PN/2010 : Assessment Year: 2006–2007

Decided on: 8 June 2011