TaxTMI 
TaxTMI 
2014 (9) TMI 606
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.... more otherwise than by account payee cheques or account payee bank drafts in contravention of the provisions of section 269SS/269T. He, therefore, referred the matter to the Addl.CIT having jurisdiction over the Range. The Addl.CIT issued show cause notice to the assessee u/s.271D of the I.T. Act directing the assessee to reply as to why penalty u/s.271D of the I.T. Act should not be imposed for accepting deposits from various persons exceeding an amount of Rs. 20,000/- or more otherwise than by account payee cheque or account payee bank drafts in contravention of the provisions of section 269SS/269T. 2.1 It was explained by the assessee that as per registration certificate the assessee is a Cooperative Credit Society whose main business is that of accepting of deposits from members and extending credit facilities to them. However, the certificate itself says that according to section 12(1) of Maharashtra State Cooperative Societies Act, 1960 and Rule 10(1) of the Maharashtra State Cooperative Societies Act, 1961 the Pat Sanstha is classified as Cooperative Bank and further classified as other bank. It was explained that due to a bonafide belief that the assessee is a primary coo....
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....ty under section 27ID should not be imposed in this regard, The appellant has relied on various case laws such as decision of the ITAT Pune Bench "B" in ITA No. 66/PN/2009, 667/PN/2009, 669/PN/2009 and others. These decisions related to assessment year 2003-04 and confirming the view taken by the ITAT in earlier case the honourable jurisdictional High Court held that since after the position of law is brought to the notice of the assessee, the assessee has started taking money by cheque, in such a situation the tribunals cancelling penalty under sections 271D and 271E does not call any interference. Thus, the above decision was given as there was change in law very recently and it was understandable that the appellant has committed violation of section 269SS just due to ignorance. However, the case of the appellant here is in respect of assessment year 2010-11 and after several years the appellant cannot be given the benefit of ignorance of law. In view of the above discussion, the ground taken by the appellant cannot be entertained and the same are rejected and the penalty imposed by the assessing officer is confirmed". 4. Aggrieved with such order of the CIT(A) the assessee is i....
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....ITA No.809/PN/2007 3. Vasantdada Nagari Sahakari Pat Sanstha Ltd. Vs. JCIT, Range-1, Sangli - ITA No.241 and 242/PN/2008 order dated 22-04-2008 4. Shri Hanuman Nagari Sahakari Pat Sanstha Ltd. Vs. The ACIT, Sangli - ITA No.79 & 80/PN/2003 5. Bandhkam Khate Sevakanchi Sahakari Pat Sanstha Maryadit, Ratnagiri Vs. ACIT, Ratnagiri Circle, Ratnagiri - ITA Nos. 1562 and 1564/PN/2007 6. Shri More Bharatkumar Bhausaheb Vs. ACIT, Satara Range, Satara - ITA No. 1070/PN/2005 7. ACIT Vs. Vasant H Narvekar, Panvel and Vasant H Narvekar Vs. ACIT, Panvel - ITA No. 1615/PN/05 and 51/PN/07 8. ITO Vs. Annasaheb Nale Nagari Sah. Pat Sanstha Ltd. - ITA No. 507/PN/2008 order dated 30/05/2008 9. ITO Vs. Phaltan Traders Nagari Sah. Pat Sanstha Ltd. - ITA No. 505/ PN/2008 order dated 30-04-2008 10. ITO Vs. Shrimant Malojiraje Grahataran Sah. Pat Sanstha Ltd. - ITA No. 506/PN/2008 11. Solapur Mahanagar Palika Varishta Shreni Sevak Sah. Pat Sanstha Vs. Jt. CIT, R-l, Solapur - ITA No. 1511/PN/07 order dated 22/1/2009 12. ITO, Ward 3 Satara Vs. Yashodeep Gramin Bigar Sheti Sahakari Pat Sanstha & Ors. - ITA No. 473 & 515 to 518/PN/08 order dated 23-05-2008 13. The OMEC Engineers V/s CIT [2007] - 294....
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..... 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/2008 wherein vide its order dated22-12-2008 this Bench of the Tribunal had upheld the grievance of the assessee by observing and concluding as under: 4. The basic thrust of assessee's submissions before us is that the assessee was, until pointed out by the Assessing Officer in the assessment proceedings, was of the bonafide opinion that the provisions of Section....
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.... 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 reasonable cause for the purposes of section 273 B. Learned counsel has also addressed us on some other peripheral legal issues, but, for the time being, we see no need to deal with the same. Learned Departmental Representative, on the other hand, objects to this submission mainly on the ground that there is no material on record to evidence the assessee's claim of bo....
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....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 or fallacies in such an explanation which demonstrate that the explanation is a make believe story. 7. The question whether or not the legal position adopted by the assessee is correct or not cannot be the only basis on which penalty matters are decided, or else there is no need for any hearing once the lapse on the part of the assessee is established, nor can section 273 B have any r....
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....r 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 erroneous, belief that the provisions of Section 269 SS do not apply to the credit cooperative societies, and it is also evident from the fact that even the CBDT has taken notice of imposition of resultant penalties in large number of cases, and issued a circular highlighting that these penalties should not be imposed indiscriminately and without considering the scheme of Section 273 B. Such a widespread bel....