TaxTMI 
TaxTMI 
2012 (12) TMI 894
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....the penalties levied on the assessee as follows:- ITA Nos. Assessment years Penalty under Section 271D Penalty under Section 271E 846 & 849/2011 1993-94 98,23,600/- 33,13,132/- 851/2011 1992-93 62,10,800/- -- 850/2011 1999-2000 -- 5,16,33,730/- 848/2011 1996-97 52,65,00,000/- -- 876/2011 2000-2001 -- 8,76,42,197 2. The assessee is a public limited company engaged in the business of mobilisation of deposits from its members. It is registered as a mutual benefit company under Section 620A of the Companies Act, 1956. It can accept deposits only from its shareholders/members and nobody else. 3. Section 269SS of the Income Tax Act, 1961 ("Act" for short) says that any person who accepts a loan or depos....
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....ld not be imposed under Sections 271D and 271E. The summary of the reply is as below:- (a) The assessee, being a mutual benefit company under the Companies Act, can accept the loans or deposits only from its shareholders or members who are known and identifiable. The deposits are thus genuine. It amounts to the company taking deposits from itself. (b) The deposits are mobilized under various saving schemes collected through more than 600 branches of the agents spread across the country. They are located in remote areas where the savings and the contributions to the schemes are small. The field workers motivate the members/shareholders to effect savings and deposit them with the assessee. The procedural formalities are more or ....
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.... as well as the equivalent amount of penalty on the same deposits was not warranted and amounted to double jeopardy. 5. The above submissions were considered by the Additional CIT in detail. He was not prepared to look upon the assessee as an entity exempt from the provisions of the Act. According to him the only question was whether there was reasonable cause for the violation and the question of genuineness of the deposits was not material. He further noted that though the correspondence produced showed that some of the public sector banks had refused to open bank accounts, it was difficult to ascertain whether the refusal was oral or was in writing and, therefore, this point could not be considered in favour of the assessee. The Addl. C....
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....ncial Corpn. Ltd., a group company, dated 17.9.2010 in ITA Nos.3222 to 3225/Del./2009 relating to the assessment years 1993-94, 1999-2000, 2000-01 and 2001-02 and following the view taken therein, confirmed the orders of the CIT(Appeals) cancelling the penalties. After noticing the aforesaid order of the Tribunal, the Tribunal in the impugned order, insofar as the penalties under Section 271D are concerned, held as follows: "5. We have heard rival submissions and have gone through the entire material available on record. Learned DR contends that ITAT in respect of above years while upholding the deletion of penalty u/s 271-D, has not considered the aspect of each transactions while ascertaining reasonable cause. In our view it is not so in....
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...."5.1 Coming to penalty u/s 271-E, though the penalty is technically different, as mentioned above, but the ingredients of reasonable cause remain by and large the same. The assessee's business will have a small fraction of cash payments of deposits where banking facilities are inadequate and other factors as indicated exist. Some depositors insisted for cash repayments of their deposits which were collected on daily, weekly or monthly earn over basis in our view it will not be possible for the assessee to deny the same and invite bad publicity among its depositors which would have serious repercussions for business. It has not been pointed out to us that the volume of such cash repayment of deposits is alarming or disproportionate." 10. It....
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.... assessee itself is to collect and repay deposits, there can be no violation of the provisions of Section 269SS and Section 269T. We are however, unable to accept the contention. This is not the only reason given by the Tribunal for approving the orders of the CIT(Appeals) cancelling the penalties. It is only one of the many circumstances and facts taken into consideration by the Tribunal in accepting the assessee's explanation that there existed reasonable cause within the meaning of Section 273B. The Tribunal has in substance relied on its earlier order in the case of M/s Sahara India Financial Corporation Ltd., (a group company) (supra). This aspect of the matter has been considered by us in our judgment today passed in the appeals filed....