TMI Blog2014 (9) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... nalties should not be imposed indiscriminately and without considering the scheme of Section 273B - Such a widespread belief, by itself, can be viewed as a reasonable cause for assessee's bonafide belief – thus, the AO is directed to delete the penalties of the assessee – Decided in favour of assessee. - ITA No. 1349/PN/2014 & S.A. No.81/PN/2014 & ITA No. 1348/PN/2014 & SA No.80/PN/2014 - - - Dated:- 20-8-2014 - Shri Shailendra Kumar Yadav And Shri R. K. Panda,JJ. For the Petitioner : Shri M.K. Kulkarni For the Respondent : Shri B.C. Malakar ORDER Per R. K. Panda, AM : This appeal filed by the assessee is directed against the order dated 17-02-2014 of the CIT(A), Kolhapur confirming levy of penalty of ₹ 13,52,000/- u/s.271D of the I.T. Act. 2. Facts of the case, in brief, are that the assessee is Cooperative Credit Society covered by the provisions of section 80P(2)(a)(i) of the I.T. Act. It filed its return of income for the A.Y. 2010-11 on 31-03-2011 declaring NIL income after claiming deduction of ₹ 12,07,772/- under Chapter VIA of the I.T. Act. During the course of assessment proceedings the Assessing Officer noted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk and therefore, as per provisions of section 269SS the provisions of said section will not apply. It has cited that as per clause (ccv) of section 56 of part V of Banking Regulation Act, 1949 Primary Co-operative Sank means a Co-operative Society other than Primary Agricultural Credit Society, the primary objective or principle business of which is the transaction of banking business. The appellant claims that it is a Co-operative Society having principle business of accepting of deposits from members and extending credit facility to them which is a banking business. However, I find that accepting of deposit and providing of credit facility to members cannot be stated to be a banking business. These activities are just a part of numerous activities of a bank. Secondly, facilities of a bank are open to general public whereas a Credit Co-operative Society accepts deposit and extends credit facilities to members only. That is why whereas Cooperative Society has been defined under section 2(19) of the Income tax Act, a Co-operative Bank has been defined in Banking Regulation Act, 1949 and the two definitions are quite distinct. 7. The appellant has taken second contention that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such penalty levied by the Addl.CIT/Joint CIT has been deleted by the CIT(A). He further made a statement at the bar that the Revenue has not challenged the order of the CIT(A) in any of the cases by filing appeal before the Tribunal. Referring to the decision of the Visakhapatnam (Third Member) Bench of the Tribunal in the case of ACIT Vs. Vinman Finance and Leasing Ltd. reported in 120 TTJ 462 (Visakha) (TM) he submitted that the Tribunal, after considering the decision of the Hon ble Supreme Court in the case of Assistant Director of Inspector (Investigation) Vs. Kum. A.B.Shanti reported in 255 ITR 258 (SC) has deleted the penalty levied u/s.271E of the I.T. Act. While deleting such penalty, the Tribunal held that the assessee s plea that payers belonging to rural areas having no banking facility as also ignorance of law constituted reasonable cause for violation of section 269T and therefore, penalty u/s.271E was not attracted. Relying on the following decisions he submitted that the Tribunal has deleted the penalty levied u/s.271D of the I.T. Act under identical circumstances : 1. Chiplun Taluka Nagari Pat Sanstha Ltd. Others Vs. ACIT, Ratnagiri Circle, Ratnagiri ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008 28. Vishal Purandar Nagari Sahakari Pat Sanstha - ITA No.1290/PN/2008 order dated 22/12/2008 5.1 Referring to the above decisions he submitted that under identical facts and circumstances the penalty levied u/s.271D of the I.T. Act has been deleted by the Tribunal and in certain cases the Hon ble High Court has dismissed the appeal filed by the Revenue. 6. The Ld. Departmental Representative on the other hand heavily relied on the order of the Addl.CIT and the CIT(A). He submitted that since the assessee has violated the provisions of section 269SS/269T, therefore, the penalty levied by the Addl.CIT and upheld by the CIT(A) be upheld and the grounds raised by the assessee should be dismissed. 7. After hearing both the sides, we find an identical issue had come up before the Tribunal in the case of Ratnagiri Jilha Gramsevak Sahakari Pat Sanstha Maryadit vide ITA No. 1348/PN/2014. Vide order of even date, we have decided the appeal and the penalty so levied by the Addl.CIT u/s.271D and upheld by the CIT(A) has been directed to be deleted. The relevant observation of the Tribunal reads as under : 7. We have considered the rival arguments made by both the sides. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld officers that penalties under section 271D and 271E for violations of the provisions of Section 269SS and 269T, respectively, should not be indiscriminately imposed and the provisions of Section 273B should be kept in view before imposing penalties . Learned counsel submits that the business of the credit cooperative society, though admittedly distinct from that of a bank, is somewhat akin to the cooperative banks as, for all practical purposes, the business consists of accepting deposits from members and giving advances to the members. It was thus quite possible for these societies to bonafide believe that concessions available to the banking institutions would indeed be available to these institutions. It is further submitted that these credit cooperative societies are run and managed by elected representatives who are not necessarily highly qualified or business people. Even the professionals working for these institutions have bonafide believed that the provisions of Section 269SS are not applicable, as evident from the tax audit reports, and, therefore, it is futile to expect that the management of these credit cooperative societies will necessarily be well equipped with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no excuse is spelt and subsequent judicial explanation making exceptions to the extent everybody is not supposed to know the law' were dealing with cases of individuals or body of individuals . He further adds that reference to any case law index would show a number of penalties levied under section 271 D and 271 E have been confirmed for not showing reasonable that if ignorance of law is accepted, it will be putting a premium on persons knowing the law and render penal provisions otiose and should be avoided . Learned Departmental Representative has painstakingly taken us through a number of judicial precedents dealing with the matters relating to penalties. On the strength of, inter alia, these submissions, he urges us to confirm the order of the authorities below and decline to interfere in the matter. 5. We have heard the rival contentions at considerable length. We have also perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 6. The assessee, as we have noted earlier, is a credit cooperative society, - 'pat sansthan', as it is known in the vernacular language. These pat sansthans are qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viduals alone - and not juridical persons. This issue is now well settled by the Hon'ble Supreme Court in the case of Motilal Padmapat Sugar Mills (supra) wherein Their Lordships have observed that ...it must be remembered that there is no presumption that everyone is presumed to know the law. It is often said that everyone is presumed to know the law, but that is not a correct statement; there is no such maxim known to law , and interestingly these observations were made in the context of an artificial juridical person, i.e. a company. Referring to these observations of the Hon'ble Supreme Court, a co ordinate bench of this Tribunal, in the case of Sudershan Auto and General Finance Vs CIT ( 60 ITD 177), observed as follows: The ignorance of law may or may not constitute a valid excuse for justifying with a provision of the statute. It will depend upon the nature of default. If it is merely technical or venial breach, no penalty would be impossible because the levy of penalty would necessarily implies existence of some guilty intention on the part of the defaulter or the offender. In order to determine the existence or absence of guilty intention on the part of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Vishal Purandar Nagari Sah. pat Sanstha Maryadit (supra) and uphold the grievance of the assessees directing the Assessing Officer to delete the impugned penalties in respect of all the assessees before us. The assessees get the relief accordingly. 6. The view so taken by us in earlier cases have been confirmed by the Hon'ble jurisdictional High Court vide judgment dated 18-3-2009 in the case of CIT Vs Bandhkam Khate Sevakanchi Sahakari Patsanstha Maryadit wherein Their Lordships have held that after position of law is brought to the notice of the assessee the assessee has started taking money by cheque, in such a situation Tribunal s cancelling penalty u/s.271D and 271E does not call for any inference. In the present cases assessees have given affidavits to that effect. Keeping this in view also the penalties indeed deserve to be deleted . 7.1 Similar view has been taken by the Tribunal in various other decisions filed in the paper book by the Ld. Counsel for the assessee. We find when in one of the cases the Revenue filed an appeal before the Hon ble High Court, the High Court in the case of CIT Vs. Bandhkam Khate Sevakanchi Sahakari Pat Sanstha vide ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
