TaxTMI 
TaxTMI 
2011 (5) TMI 356
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....sessing Officer from the audit report filed with the return of income, the assessee had repaid deposits in cash exceeding Rs. 20,000 to various depositors totalling to Rs. 23,29,081. According to him, the said repayment of deposits was made by the assessee in contravention of the provisions of section 269T and accordingly a notice was issued by him requiring the assessee to show cause as to why penalty under section 271E should not be imposed. In reply, the following submissions were made on behalf of the assessee vide letter dated 5-3-2009 : "Co-operative credit societies are registered under the Maharashtra Cooperative Societies Act, 1960. The Credit Societies are like banking institutions. They can accept savings, daily recurring as wel....
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...., therefore, held that the repayment of deposits in cash exceeding Rs. 20,000 to various depositors totalling to Rs. 23,29,081 was made by the assessee in contravention of the provisions of section 269T and penalty equal to the amount of deposits so repaid in cash was imposed by him under section 271E. 3. The penalty imposed by the Assessing Officer under section 271E was challenged by the assessee in an appeal filed before the learned CIT(Appeals). During the course of appellate proceedings before the learned CIT(Appeals), a registration certificate issued by the Assistant Registrar, Cooperative Society, Mumbai was produced by the assessee stating that it was classified as a cooperative bank as per section 12(1) of the Maharashtra Coopera....
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....ereof placed at page No. 6 to point out that the assessee society was classified as a cooperative bank as per section 12(1) of the Maharashtra Cooperative Society Act, 1960. He contended that the case of the assessee thus was covered by the second proviso to section 269T and the requirements of the said section were not applicable in its case. He then invited our attention to the details of repayment of deposits made in cash in the sums exceeding Rs. 20,000 placed at page Nos. 3 and 4 of his paper book to point out that the amounts repaid were initially deposited in the saving bank account of the depositors maintained with the assessee society and the depositors thereafter had withdrawn the amounts so deposited from their bank accounts. He ....
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....T which reads as under : "269T. No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if - (a) The amount of the loan or deposit together with the interest, if any, payable thereon, or (b) The aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on t....
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....r DD for some bona fide reason, the authority vested with the power to impose the penalty has a discretion not to levy the penalty. The said decision of Hon'ble Apex Court in the case of Kum. A.B. Shanti (supra) thus makes it quite clear that the provisions of sections 269T and 271E are to be read with the provisions of section 273B and an authority vested with the power to impose penalty has to use its discretion to impose or not to impose the same after taking into consideration the reasonable cause put forth by the assessee for his failure to comply with the requirements of section 269T coupled with the genuineness and bona fide of the transactions in order to avoid any undue hardship to the assessee arising out of the provisions of sect....
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....hat the said belief was a bona fide belief. Secondly, all the deposits in question in the present case were repaid by the assessee society to its own members and considering that there is a complete mutuality between the society and its members, the society was of the belief that the said depositors which were its own members could not be considered as "any other person" which connotes a different or a distinct person to attract the provisions of section 269T. A useful reference in this regard can be made to the decision of Hyderabad Bench of ITAT in the case of Dillu Cine Enterprises (P.) Ltd. v. Addl. CIT [2002] 80 ITD 484 wherein the contention of the assessee in the context of section 269SS that the words "any other person" did not deno....