TMI Blog2021 (2) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... w.s. 271D of the Act. Admittedly, it was first mistake committed by the assessee in the year under consideration as evident from the affidavit filed by it. Further, the Revenue in the assessment framed under section 143(3) of the Act for the assessment year 2008-09 has not pointed out to the assessee for the contravention of the provisions of section 269SS of the Act. All these contentions of the assessee have not been controverted by the authorities below. Accordingly, we can draw an inference that the assessee has accepted the cash as deposits exceeding ₹ 20,000/- under the bona-fide belief. Bona-fide belief of the assessee that the transactions were exempted from the requirements of Sec.269SS of the Act and, there being no material to show that the transactions have been carried out with any intention to avoid or evade taxes, in our opinion, the assessee has been successful in showing that there was a reasonable cause for his failure to comply with the provisions of Sec.269SS of the Act. Accordingly, the order of the learned CIT(A) is set aside and the AO is directed to delete the penalty imposed under Sec. 271D - Decided in favour of assessee. - ITA No. 946/PUN/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs which is available to a co-operative society and not to the co-operative bank. Thus, the assessee was aware that its activities are not at par with the bank. Accordingly, it cannot be said that the assessee has accepted cash as deposits exceeding ₹ 20,000/- under the bona-fide belief. Similarly, the assessee itself has admitted that the AO in the assessment proceedings for the assessment year 2009-10 has not pointed out that the assessee was contravening the provisions of section 269SS of the Act. As such the assessee was the habitual defaulter for the provisions of section 269SS of the Act. In view of the above, the AO disregarded the contention of the assessee and held guilty for contravening the provisions of section 269SS of the Act. Thus, the AO levied the penalty for an amount of ₹ 67,52,200/- under the provisions of section 271D of the Act. 8. Aggrieved with the order of AO, the assessee preferred an appeal to the learned CIT(A). 9. The assessee before the learned CIT(A) reiterated its contention as made before the AO during the assessment proceedings. However, the learned CIT(A) confirmed the order of the AO by observing as under: 6 . It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 07.10.2020 which are placed on record. 14. The learned DR further also made a written submission vide letter dated 28.01.2021. The relevant extract of the submission is reproduced as under: 5. In connection with the aforesaid submission, the attention of the Hon'ble Bench is drawn to the decision of the Hon'ble Bombay High Court in ITA No. 156 of 2009 dated 18.03.2009 in the case of Mis. Bandhkam Khate Sevakanchi Sahakari Patsnstha Maryadit which is at Page 25 of the paper book filed by the assessee. The order of the Hon 'ble Bombay High Court reads as under :- 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. 6. In the light of the aforesaid order of the Hon'ble Bombay High Court dated 18.03.2009, the law was clearly laid down in FY 2008-2009 that the acceptance of cash deposits by Cooperative societies from members was prohibited under section 269SS of the Income Tax Act, 1961. Hence the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 269SS of the Act. The assessee did not dispute the applicability of the provisions of section 269AA but contended that the mistake was committed under the bona-fide belief and thus, sought the immunity under the provisions of section 273B of the Act. 17. The provisions of section 273B of the Act prescribes that penalty shall not be imposable for any failure referred to in Sec.271D of the Act, if the assessee proves that there was reasonable cause for such failure. Therefore, in the instant case, what is required to be examined is as to whether the assessee had a reasonable cause for its failure to comply with the provisions of Sec. 269SS r.w.s. 271D of the Act. Admittedly, it was first mistake committed by the assessee in the year under consideration as evident from the affidavit filed by it. Further, the Revenue in the assessment framed under section 143(3) of the Act for the assessment year 2008-09 has not pointed out to the assessee for the contravention of the provisions of section 269SS of the Act. All these contentions of the assessee have not been controverted by the authorities below. Accordingly, we can draw an inference that the assessee has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cites CBDT circular dated 25th March 2004 which is takes note of the fact that, in the cases of credit cooperative societies, the penalties under section 271D and 271E of the Income Tax Act are being imposed in a large number of cases without appreciating the genuine difficulties faced by them in complying with these provisions and advises the field 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 8 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 ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no application in the context of juridical persons like body incorporate . It is his contention that the assessee before us is a cooperative society which is managed by duly elected members with the help of professional executives, and, therefore, plea of ignorance of law s not available at all . It is also contended that the maxim ignorance of law 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 he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is a state of mind. All that can be done in such as situation is to explain the circumstances and factors leading to such a belief, and, in our considered view, 8. The other aspect of the matter is whether or not ignorance of law can be an acceptable explanation, and whether such an explanation can be acceptable for individuals or groups of individuals 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation in the present case. This decision cannot have any precedence value in such a situation. 11. With the aforesaid caveat, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned penalty. The assessee gets the relief accordingly. 5. We see no reason to deviate from the view already taken by the coordinate Bench in 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 11 assessees have given affidavits to that effect. Keeping this in v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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