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2015 (12) TMI 1544 - ITAT AMRITSAR

2015 (12) TMI 1544 - ITAT AMRITSAR - TMI - Penalty u/s 271E - repayment of fixed deposits of various depositors at various branches of the bank - Held that:- 271E confer discretion on authorities to levy or not to levy penalty and such discretion needs to be exercised with wisdom and in a fare and just manner. Even if the relevant provisions of law prescribe the levy of penalty, it does not mean that penalty must necessarily be imposed in every case falling within the provisions of section 269T. .....

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& the violation has not been repeated. In Asst. Year 2008-09, the violation was by Bulbul Nowgam, L.D. Hospital & Islamia College Branches & in Asst. Year 2007-08, the violation was by Lal Mandi Branch whereas in Asst. Year 2005-06, the violation was by Lal Bazar Branch. We further find that learned CIT(A) himself in Asst. Year 2006-07 has deleted the penalty imposed by Assessing Officer under similar facts circumstances. We further find that no mens rea is involved as the violation is not inten .....

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K. Sharda (DR.) ORDER PER T.S.KAPOOR (A.M): These are three appeals filed by the assessee against the separate order of learned CIT(A), Jammu, all dated 06.12. 2013. In these appeals common issue is involved and they were heard together and therefore, for the sake of convenience a common and consolidated order is being passed. The common issue involved in these appeals is the confirmation of penalty imposed by the Assessing officer under section 271E of the Act for violation of provisions of sec .....

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epayment in excess of ₹ 20,000/- to various persons has imposed the penalty. Before the Assessing Officer, the assessee had submitted as under: Penalty order for Assessment Year 2007-08 The Branch Manager while making the repayment in cash which no doubt is in contravention to Sec. 269T of the Income Tax Act 1961 has considered the genuine hardship of the depositors which is a reasonable cause within the meaning of sec. 273B of the Income Tax Act,1961. It has to be considered pragmatically .....

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herwise genuine. The purpose of Sec. 269T is to tackle bogus transactions and not such bank transactions which are absolutely sacrosanct and not within the ambit of tax evasion. The fact that for some persons the repayment of deposits is still preferred in cash as a more reliable mode of settlement is a business reality and needs to be recognized by your goodself under the circumstances. Penalty order for Assessment Year 2008-09. It is undisputed fact that the assessee bank repaid in cash the de .....

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n record. Though reply was not filed in time, yet it is being considered. In his reply, the Ld. Counsel has argued that the repayment was made to persons who were not maintaining bank accounts and were in urgent need of money. The reasons given are for medical expenses, marriage expenses or some urgency. He also argued that the Branch Manager of the bank made the repayment in cash when these persons insisted on receiving the repayment in cash. He has admitted that there is contravention of provi .....

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e photocopies of account opening forms of these depositors to evident that they were elderly persons are enclosed for referenced & record. The Branch Manager while making the repayment in cash which is in contravention to Sec.269T of the Income Tax Act,1961 has considered the genuine hardship of the depositors which is a reasonable cause within the meaning of sec. 273B of the Income tax Act,1961.It has been in number of case laws that the expression reasonable cause has to be considered prag .....

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are otherwise genuine as is apparent from the account opening forms of all these depositors. The purpose ofSec.269T is to tackle bogus transactions and not such bank transactions which are absolutely sacrosanct and not within the ambit of tax evasion. The fact that for such elderly persons the repayments of deposits is still preferred in cash as a more reliable mode of settlement is a business reality and needs to be recognized by your goodself under the circumstances. It deserves to be apprecia .....

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he leaned CIT(A), who also confirmed the action of the Assessing Officer by holding similar findings. For the sake of convenience the findings of learned CIT(A) as contained in his order for Asst. Year 2007-08 are reproduced below. Sec.271E deals with penalties imposable for failure to comply with the provisions of sec.269T of the Act whereas sec.273B of the Act provides that no penalty is imposable for any failure referred to in the said provisions, if the assessee proves that there was a reaso .....

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in contravention of provisions of sec.269T cannot be made merely because a depositor does not have a bank account or expressed his/her inability to open the account.Sec.269T of the Income Tax Act, 1961 clearly provides that no banking company [defined in sec 269SS explanation (i)] shall repay loan or deposit made with it otherwise than through account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if the amount of loan or deposit togethe .....

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ted that the assessee is a banking company and is in the business of accepting fixed deposits from various depositors. He submitted that admittedly the assessee had repaid certain fixed deposits in cash but the repayments were made under peculiar circumstances such as few of depositors had no Bank Account, and few of them were elderly people and few of them required cash for medical purposes etc. and therefore, the only alternative available to Branch Manager for repayment of such deposits was t .....

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peal. In this respect, he invited our attention to paper book page 1 to 4 where a copy of order of learned CIT(A) for Asst. Year 2006-07 was placed. The learned AR further invited our attention to page 5 to 12 where under similar facts and circumstances the Amritsar Bench of the Tribunal had deleted the penalty u/s 269T in the case of Faridkot Bathindha Kshetriya Gramin Bank Vs. JCIT (2003) 81 TTJ (Asr) 705. The leaned AR also invited our attention to case laws of CIT vs. Saini Medical Store 277 .....

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horities below and submitted that admittedly assessee had violated the provisions of section 269T and therefore, Assessing Officer had rightly imposed the penalty and learned CIT(A) had rightly confirmed the same. 7. We have heard the rival parties and have gone through the material placed on record. We find that there is no dispute that assessee had made repayments of fixed deposits in violation of provisions of section 269T and there is also no dispute that in Asst. Year 2007-08 repayments wer .....

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T(A) has confirmed the penalty holding that request letters by depositors were unverified and uncertified and therefore cannot be treated as piece of evidence. He further held that repayments in cash for medical expenses/marriage expenses were not a reasonable cause. It is an undisputed fact that the repayments represented genuine transactions and no claim of bogus transactions has been made by Revenue Authorities. The purpose of introduction of these sections in the legislature were to curb bla .....

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n if penalties are prescribed the higher authorities will be justified in refusing to impose penalty when there is a technical breach of provisions of the Act. The Hon ble ITAT, Amritsar Bench in the case of the Faridkot Bathindha Kshetriya Gramin Bank vs. JCIT (2003) 81TTJ(ASR)705, under similar facts and circumstances has held as under. During the course of penalty proceedings, the assessee filed the affidavits and produced evidence regarding identity of the depositors. It is noticed that the .....

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yana High Court in the case of CIT vs. Saini Medical Store 277 ITR 420 (P&H) has held as under: A combined reading of the provisions of ss. 271E and 273B makes it clear that if the assessee shows "reasonable cause" for the failure to comply with any provision referred thereto, the penalty for its violation shall not be imposable on the assessee. In the present case, the CIT(A) while deleting the penalty had accepted the explanation of the assessee that breach of the provisions of t .....

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