TMI Blog2017 (3) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... what is the correct legal position or at least the revenue's stand on that issue, there is no question of his having bonafide but incorrect belief about the legal position. That is a different situation and we are not at all concerned with such a situation in the present case. This decision cannot have any precedence value in such a situation. In view of the totality of the facts and explanation offered, we are of the considered view that the assessee has been able to show reasonable cause for inadvertent violation of provisions of section 269SS of the Act. Accordingly, the impugned order is set aside and the appeal of the assessee is allowed. - ITA No. 496/PUN/2015 - - - Dated:- 8-3-2017 - Shri Anil Chaturvedi, AM And Shri Vikas Awasthy, JM Assessee by : Shri Pramod Shingte Revenue by : Shri Sanjeev Ghei ORDER Per Vikas Awasthy, JM This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-6, Pune dated 02-01-2015 confirming the levy of penalty u/s. 271D of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The brief facts of the case as emanating from record are: The assessee is a Co-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey of its members. This is the first year of default, the assessee is now strictly complying with the provisions of section 269SS and 269T of the Act. The ld. AR in support of his submissions placed reliance on the decision of Pune Bench of the Tribunal in the case of Gurukrupa Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit Vs. Addl. Commissioner of Income Tax in ITA No. 1349/PN/2014 for assessment year 2010-11 decided on 20-08-2014. 3.1 The ld. AR further submitted that the CBDT vide its letter No. 415/6/2000-IT (Inv. I) dated 25th March, 2004 had directed the officers of Income Tax Department that penalty u/s. 271D and 271E for violation of the provisions of section 269SS and 269T, respectively should not be indiscriminately imposed. The ld. AR to buttress his submissions placed reliance on the decision of Pune Bench of the Tribunal in the case of Shramjivi Nagari Sahakari Pat Sanstha Maryadit Vs. Addl. Commissioner of Income Tax in ITA No. 477/PN/2010 decided on 08-06-2011. 3.2 The ld. AR finally submitted that the assessee had offered valid explanation for accepting cash deposits from its members. Thus, in view of the provisions of section 273B no penalty should have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is an admitted fact that the assessee Pat Sanstha has accepted deposits exceeding ₹ 20,000/- in cash in contravention of the provisions of section 269SS for which penalty of ₹ 10,95,000/- has been levied by the Addl.CIT which has been upheld by the CIT(A). It is the contention of the Ld. Counsel for the assessee that such contravention of law was under bonafide belief and after the same was brought to its notice the assessee Pat Sanstha has stopped accepting any deposit or repayment of the same by cash. We find an identical issue had come up before the Tribunal in a group of cases namely Chiplun Taluka Nagari Pat Sanstha Ltd. and others vide ITA Nos. 666 to 671/PN/2009 and ITA No.710/PN/2009 order dated 30-06-2009. We find the Tribunal cancelled the penalty so levied u/s.271D of the I.T. Act by observing as under : 4. Similar issue came up for consideration before a co-ordinate Bench of this Tribunal in the case of Vishal Purandar Nagari Sahakari Pat Sanstha Maryadit in I.T.A. No. 1290/PN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable, 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 legal knowledge. In any event, as pointed out by the learned counsel, Chairman of the assessee society has given an affidavit to the effect that until it was so pointed out by the Assessing Officer, he was not aware about the applicability of, inter alia, Section 269SS on the assessee cooperative society. Learned counsel also invites our attention to several decisions passed by the coordinate benches which, relying upon the Hon'ble Supreme Court decision in the case of Motilal Padmapat Sugar Mills Ltd Vs State of Uttar Pradesh (118 ITR 326), upheld the ignorance of law as a reasonable cause for non compliance with the provisions of Section 269SS. Learned counsel thus urges us to delete the penalty on the ground that the assessee was not aware about the legal requirements under section 269 SS and thus he was of the bonafide belief that there is no violation of law in accepting cash deposits and making cash payments. Learned counsel submits that this bonafide belief, on the facts of the case, is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 quite a common phenomenon in this part of the country and they render services, which are somewhat close to the services usually rendered by the cooperative banks, in the sense they accept deposits from the members and give loans to the members. These institutions usually work at the level of talukas and moffusil towns. There is no doubt that these are not banks and are not permitted to carry out the banking business, but it is also true that there is a fair degree of similarity in the services rendered by these credit cooperative societies and cooperative banks. In these circumstances, the bonafides of assessee's belief for being entitled to the same treatment as banking institutions cannot be rejected outright . This is surely an incorrect view, but when an authority is examining an explanation in the context of a penalty proceedings, all that the authority has to see is whether or not such an explanation stands the preponderance of probabilities, and whether there are any inconsistencies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee, one will have to consider all the surrounding facts and circumstances. Whether by committing default of non compliance with a statutory provision of law, an assessee has derived benefit, gain or advantage, whether by such a default or non compliance the assessee has defrauded the Revenue or caused any loss to the revenue ? These are some of the factors which will have to seriously considered before considering the fact as to whether ignorance of law on the part of the assessee or his consultant can constitute valid excuse or reasonable cause for the purpose of Section 273B...... 9. We are in respectful agreement with the views so stated by the co ordinate bench. Viewed in this perspective and bearing in mind entirety of the case, as also the fact that the Assessing Officer has in some of the cases accepted the same explanation in the other years, we are of the considered view that the explanation of the assessee deserves to be accepted. It was a widespread, even if er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.156 of 2009 order dated 18-03-2009 has dismissed the appeal filed by the Revenue by observing as under : PC : In respect of the similar cooperative society, we have dismissed the appeal and we have taken a note that after the position of Law was brought to their notice, they have started accepting the money by cheque. Considering the above, there is no merit in this appeal which is accordingly dismissed . 7.2 The submission of the assessee before the Addl.CIT that it has stopped accepting or repaying the deposits in cash after the law was brought to its notice could not be controverted by the Ld. Departmental Representative. In view of the consistent decision of the Tribunal in various cases where penalty levied u/s.271D has been directed to be deleted and further considering the fact that the CIT(A) himself in various identical cases has deleted the penalty levied u/s.271D for which the Revenue has not filed any appeal before the Tribunal, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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