TMI Blog2004 (3) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... which were in violation of provisions of section 269T of the Act. It was further noticed that the assessee had repaid deposits to the tune of Rs. 74,08,545 during the previous year relevant to the assessment year under consideration. Therefore, the Assessing Officer, i.e., the ITO, Wd. 3(5), Sangli referred the matter to the JCIT, Sangli Range, Sangli, for initiating penalty proceedings under section 271E of the Act against the assessee. The JCIT issued a show-cause notice under section 274 read with section 271E of the Act to the assessee on 7-2-2002. In response to the above notice, it was submitted on behalf of the assessee that the society caters to the need of rural classes, i.e., agricultural, small businessmen, having no taxable income. It was further submitted that the assessee-society has repaid these deposits to Members only, provisions of section 269T could not be invoked, which are applicable only when such deposits were repaid to 'any other persons'. It was also stated that the assessee-society was functioning like a Bank. The Assessing Officer did not find any merit in the above explanation of the assessee and, consequently, he levied a penalty of Rs. 74,08,545 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of search. 4. After considering the above submissions of the assessee, the ld. CIT(A) held that provisions of section 269T are applicable to the facts of the present case. He further held that even general transactions cannot be taken out of the ambit of this section. He further noted that the JCIT has pointed out in his order a number of deposits in cash accepted from persons who were not regular Members and even nominal Members of the society. He further held that levying of penalty by the Officer is discretionary, if reasonable cause within the meaning of section 273B of the Act can be advanced by the assessee. According to him, in the present case no such satisfactory explanation was advanced either before the Assessing Officer or before him. He, therefore, confirmed the penalty levied by the JCIT. 5. Before us, Shri M.K. Kulkarni, the ld. Counsel for the assessee, reiterated the submissions made before the authorities below. He further submitted that in similar set of facts in the case of Sangli Traders Co-op. Credit Society Ltd. for assessment year 1995-96 the ld. predecessor of the present CIT(A) deleted the penalty for violation of provisions of section 269SS/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has failed to show reasonable cause and, therefore, penalty levied by the JCIT and confirmed by the CIT(A) may not be disturbed. 7. We have given our anxious thoughts to the submissions of the either counsel for the parties and have also carefully perused the orders of the authorities below. The decisions cited by the representatives of the parties were also duly considered. At the very outset, we may point out here that recently this Bench of the Tribunal, in similar set of facts of the case and circumstances in case of Youth Development Co-op. Credit Society Ltd., cancelled the penalty under section 271E amounting to Rs. 1,67,80,179 by observing as under: "As such, if the facts of the present case are examined in the context of misconception of law pleaded by the assessee as reasonable cause, we find that the assessee-society had entertained bona fide belief that the deposits repaid by it to its members were not covered by the provisions of section 269T and this bona fide belief coupled with the fact that the deposits were genuine and were also accepted and repaid in the regular course of business, in our opinion, constitute a reasonable cause for its failure in complying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee-bank that the officer of the assessee-bank, who had made repayments to the depositors, was not well conversant with the provisions of the Income-tax Act. Furthermore, there was no finding by the lower authorities that the transactions were not genuine or the transactions were benami. There was no finding that the assessee-bank intended to defraud the Income-tax Department when the repayments were made. The Tribunal held as under: "The staff of the assessee-bank was working in the area where their exposure to the banking and other laws, like income-tax was very limited. The assessee-bank had no training college of its own as in the case of other Nationalized Banks. In the above background, the plea of the assessee cannot be rejected that the relevant time, the payment passing officer in bank was new and had no knowledge about the income-tax law, particularly, the provisions of section 269T, read with section 271E. However, the departmental authorities have also not rejected this contention of the assessee. On this count, it can be held that due to ignorance of law, the concerned officer was under the bona fide belief that repayments exceeding Rs. 20,000 can be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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