9911796707
TMI Blog2022 (7) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be covered under the proviso to Section 269SS and Section 269ST of the Income Tax Act, 1961? III. Whether in the facts of the case the Hon'ble ITAT was correct in finding that action u/s. 68 was a prerequisite to levying penalty for contravention u/s. 269SS and 269ST of the Income Tax Act, 1961?" 4. The assessee is a registered Co-operative Credit Society and it has been carrying on activities which are, in many ways, similar to the banking activities by opening different types of accounts similar to saving bank account for its members where amount can be withdrawn immediately on demand. There was no acceptance of either loan or deposit by the assessee as the control and ownership of the amount remain with the person whose credit money remains in his account as member of the society. The assessee was a society functioning in the village of farmers or ill-literate persons as an alternative to bank. The income of the assessee is also exempt under section 80P of the Act,1961 being income from co-operative societies. 5. The assessee filed return of income declaring total income of Rs. Nil on 15.10.2010. The assessment was completed on 01.03.2003 under section 143(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not obliged to question the source of deposit made toy it's members. Also, the member can keep the deposit for a period which' is according to their convenience. The amount has sometimes to be repaid by the assessee to its member immediately on demand. These features distinguish the case of the assessee from other ordinary assessees. Therefore, the provisions of s, 27ID/27IE ore to be viewed in the background of these aspects. Further, the assessee is subject to periodical inspects and audits by various statutory authorities, the deposits received by the assessee, which was carrying on the activities of Proving credits, were not in the nature-of taking of any loans or deposits for the purpose of funding its project as a source of investment, rather, it was in the business of accepting deposits that in view of the nature of such business, the scrutiny deposits could not be the same as in the case of assessee making entries of deposits on account of loan etc to be used for its owt investment The authority vested with the power to Impose penalty has a discretionary power not to levy the penalty. It is also noted that there is no addition on account of these impugned deposits in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessce society. In view of the transactions which took Place between the assessee and its members, the strict provisions of the s. 2695S/269Tmay not de applicable, and is a Very plausible opinion of the provision. In view of the above the appellant was in all probability functioning under bona fide. In this regard, reliance 18 placed on the fallowing judgments: 1) Dillu Cine Enterprises (P) Limited V/s Additional Of (2002) SOITD 2) Citizen Co-operative Society Limited V/s Additional OT (2010) 41 DTR 0305. 8.3 One has to keep in view the intent of the legislature behind enacting s. 269SS/269T, where it is clear that the loan or deposit brought in by the assessee was not to explain its unaccounted cash and a plausible opinion that members of the assessee society are not covered by the expression any other person' occurring in s. 2A9SS. The transaction can also be attributed to various exigencies of business carried on by the assessee and thus constitutes a 'reasonable cause as contemplated by s, 2738., Reliance Is placed on: following; case low: I) CIT V4 Maa Khodiyar Constructions (2014 J 365 ITR 474 (Guj). 2) CIT V/s Sahara India Mutual Benefit Company Limited (2013) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue challenged the aforesaid order of CIT (Appeals) before the Tribunal contending inter alia that in view of the clear provisions of sections 269SS and 269T of the Act, 1961, there is no distinction between the bona fide belief and mala fide belief of the assessee to accept or deposit or loan in cash of Rs. 20,000/- or more. It was contended that the genuineness of the transaction is not to be seen for breach of the provisions of sections 269SS and 269T of the Act,1961 and therefore, the penalty would be attracted for breach of the said provisions as provided under sections 271D and 271E of the Act, 1961. 9. It was further pointed out before the Tribunal that the penalty has been levied as the assessee had submitted that the amount accepted by the assessee in cash was a loan/deposit amount and assessee could not prove the reasonable cause for accepting and repaying the same from/to its members otherwise than by an account payee cheque or account payee or bank draft. 10. It was contended that the assessee-Mandali is situated at Surali which is not a village but a town having banking facilities and therefore, the reasons given by the CIT(Appeals) that the assessee functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repaid the loan or deposit in cash as is done by the cooperative bank and therefore, provisions of sections 269SS and 269T of the Act, 1961 are not applicable in the facts of the present case and consequently, penalty u/s. 271D and 271E of the Act cannot be levied. 15. The Tribunal therefore dismissed the appeal filed by the Revenue confirming the order passed by the CIT(Appeals) in view of the above findings of facts arrived at by the Tribunal. 16. We have considered the order passed by the CIT (Appeals) as well as the Tribunal vis-a-vis the penalty order passed by the Assessing Officer. The CIT(Appeals) and the Tribunal have rightly held that there is no intention/mens rea on the part of the assessee-Co-operative society to accept the cash deposit from its members in their accounts maintained by it similar to savings account maintained by the banks in view of the provision of section 273B of the Act, 1961 which reads as under : "Section - 273B : Penalty not to be imposed in certain cases Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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