TaxTMI 
TaxTMI 
2015 (12) TMI 1544
X X X X Extracts X X X X
X X X X Extracts X X X X
....in various parts in India. The Assessing Officer had imposed penalty u/s 271E for making repayment of fixed deposits of various depositors at various branches of the bank. The Assessing Officer in the penalty orders after noting down the instances of repayment in excess of Rs. 20,000/- to various persons has imposed the penalty. Before the Assessing Officer, the assessee had submitted as under: Penalty order for Assessment Year 2007-08 "The Branch Manager while making the repayment in cash which no doubt is in contravention to Sec. 269T of the Income Tax Act 1961 has considered the genuine hardship of the depositors which is a reasonable cause within the meaning of sec. 273B of the Income Tax Act,1961. It has to be considered pragmatically and where the transaction is an open transaction done to meet the exigencies of business, it can be said to be have constituted "reasonable cause' and as such the penalty cannot be imposed. Needless to state that penalty proceedings under Sec..271E of the Income Tax Act, 1961 are not mandatory. The repayment of deposits in cash to the 8 persons is merely due to the fact that such depositor was not having any bank account and repaym....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s which is a reasonable cause within the meaning of sec. 273B of the Income tax Act,1961.It has been in number of case laws that the expression "reasonable cause " has to be considered pragmatically and where the transaction is an open transaction done to meet the exigencies of business, it can be said to have constituted 1 reasonable cause' and as such the penalty cannot be imposed. Needless to state that penalty proceedings under Sec.271E of the Income Tax Act, 1961 are not mandatory. The repayments of deposits to elderly persons are merely on the fact that such depositors were not having any bank account and repayment in cash was the only mode available. These transactions are otherwise genuine as is apparent from the account opening forms of all these depositors. The purpose ofSec.269T is to tackle bogus transactions and not such bank transactions which are absolutely sacrosanct and not within the ambit of tax evasion. The fact that for such elderly persons the repayments of deposits is still preferred in cash as a more reliable mode of settlement is a business reality and needs to be recognized by your goodself under the circumstances. It deserves to be appreci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y been imposed by the AO." 4 Aggrieved the assessee is in appeal before us. 5. The learned AR, at the outset submitted that the assessee is a banking company and is in the business of accepting fixed deposits from various depositors. He submitted that admittedly the assessee had repaid certain fixed deposits in cash but the repayments were made under peculiar circumstances such as few of depositors had no Bank Account, and few of them were elderly people and few of them required cash for medical purposes etc. and therefore, the only alternative available to Branch Manager for repayment of such deposits was to pay them in cash. He further submitted that Branch Manager of various branches of bank on the basis of genuine hardships faced by depositors had allowed repayment of deposits in cash and therefore, there was a reasonable cause for violating the provisions of section 269 T. He further submitted that in Asst. year 2006-07 also similar penalties were imposed by Assessing Officer which the learned CIT(A) had deleted vide his order dated 07.10.2011 and against which the revenue has not filed any appeal. In this respect, he invited our attention to paper book page 1 to 4 where....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere to curb black money and benami transactions. The purpose of legislature was never to impose penalty in case of genuine transactions. The penal provisions of section 271E confer discretion on authorities to levy or not to levy penalty and such discretion needs to be exercised with wisdom and in a fare and just manner. Even if the relevant provisions of law prescribe the levy of penalty, it does not mean that penalty must necessarily be imposed in every case falling within the provisions of section 269T. Even if penalties are prescribed the higher authorities will be justified in refusing to impose penalty when there is a technical breach of provisions of the Act. The Hon'ble ITAT, Amritsar Bench in the case of the Faridkot Bathindha Kshetriya Gramin Bank vs. JCIT (2003) 81TTJ(ASR)705, under similar facts and circumstances has held as under. "During the course of penalty proceedings, the assessee filed the affidavits and produced evidence regarding identity of the depositors. It is noticed that the Department has not impeached the transaction as non-genuine. At the same time, it is also not he case of Department that the depositors were benami. In that view of the mat....