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TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 1310
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....ng the provisions of section 269SS of the Act. Aggrieved by the order levying penalty, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) rejected the contentions of the assessee and confirmed the levy of penalty. Now, the assessee is in second appeal before the Tribunal assailing the levy of penalty. 3. Shri Pramod Shingte appearing on behalf of the assessee submitted that the assessee Co-operative credit society is a non-profit organization and was established for the purpose of upliftment of economic status of people having low income. If any excess income is generated by the assessee society the same is utilized for the welfare of its members. During the scrutiny assessment proceedings, the Assessing Officer has thoroughly scrutinized the details of all deposits and loans and no suspicious deposits or any transaction was found. The notice for levy of penalty u/s. 274 r.w.s. 271D of the Act was received by the assessee on 18-03-2013. It was explain before the lower authorities that the assessee credit society is formed by different persons who are basically agriculturalists and small traders in rural areas hav....
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.... that the penalty has been levied u/s. 271D in respect of deposits accepted from traders where the amount involved is more than Rs. 1 lakh. In genuine cases where the amount has been accepted from farmers and women no penalty has been levied. A further perusal of the list would reveal that penalty has been levied where deposits have been accepted in cash from persons having PAN number and are engaged in business or service. The ld. DR prayed for upholding the order of Commissioner of Income Tax (Appeals) and dismissing the appeal of the assessee. 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. Penalty u/s. 271D has been levied on the assessee for violating the provisions of section 269SS of the Act. The assessee is a Co-operative credit society and has accepted cash deposits from its members exceeding Rs. 20,000/- in single transaction. It has been contended that the assessee has accepted cash deposits from its members exceeding Rs. 20,000/- due to ignorance of the provisions of section 269SS. The period relevant to assessment year under appeal is first year of default. In the subsequent assessment y....
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....ot point out any non-compliance with the provisions of Section 269SS even though there is a specific disclosure requirement in respect of the same. Our attention is also invited to the fact that this violation of section 269 SS took place in the cases of a very large number of credit cooperative society which, by itself, would show that there was a widespread, even if erroneous, belief that the provisions of Section 269SS did not apply to the credit cooperative societies. Learned counsel then cites CBDT circular dated 25th March 2004 which is takes note of the fact that, in the cases of credit cooperative societies, " the penalties under section 271D and 271E of the Income Tax Act are being imposed in a large number of cases without appreciating the genuine difficulties faced by them in complying with these provisions" and advises the field officers that "penalties under section 271D and 271E for violations of the provisions of Section 269SS and 269T, respectively, should not be indiscriminately imposed" and "the provisions of Section 273B should be kept in view before imposing penalties". Learned counsel submits that the business of the credit cooperative society, though admittedl....
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....s contention that post Dharmendra Textile decision by the Hon'ble Supreme Court, which holds penalty under section 271(1)(c) to be a civil liability, the concept of bonafide belief, which can at best be a reasonable cause for non compliance, is redundant in the context of penalties under the Income Tax Act, 1961. By way of a written note, he further submits that "ignorance of law and absence of men's rea is a defence only in respect of individuals and group of individuals, and it has no application in the context of juridical persons like body incorporate". It is his contention that the assessee before us is a cooperative society which is "managed by duly elected members with the help of professional executives, and, therefore, plea of ignorance of law s not available at all". It is also contended that "the maxim ignorance of law is no excuse is spelt and subsequent judicial explanation making exceptions to the extent everybody is not supposed to know the law' were dealing with cases of individuals or body of individuals". He further adds that "reference to any case law index would show a number of penalties levied under section 271 D and 271 E have been confirmed for n....
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.... can demonstrate that there was reasonable cause for having committed that lapse. The facts relating to the factors leading to a lapse can only be known to the persons committing that lapse are best in the knowledge of person committing the lapse, and, therefore, the onus on him to elaborate the same. However, it is inherently impossible for anyone to substantiate, with cogent evidence and material - as being insisted by the learned Departmental Representative, something like a bonafide, which is a state of mind. All that can be done in such as situation is to explain the circumstances and factors leading to such a belief, and, in our considered view, 8. The other aspect of the matter is whether or not ignorance of law can be an acceptable explanation, and whether such an explanation can be acceptable for individuals or groups of individuals alone - and not juridical persons. This issue is now well settled by the Hon'ble Supreme Court in the case of Motilal Padmapat Sugar Mills (supra) wherein Their Lordships have observed that " ...it must be remembered that there is no presumption that everyone is presumed to know the law. It is often said that everyone is presumed to know....
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....ase where even after the assessee after having come ' to know of the correct legal position due to income tax department's action against him continues to follow the same practice. Once the assessee comes to know as to what is the correct legal position or at least the revenue's stand on that issue, there is no question of his having bonafide but incorrect belief about the legal position. That is a different situation and we are not at all concerned with such a situation in the present case. , This decision cannot have any precedence value in such a situation. 11. With the aforesaid caveat, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned penalty. The assessee gets the relief accordingly. 5. We see no reason to deviate from the view already taken by the coordinate Bench in the case of Vishal Purandar Nagari Sah. pat Sanstha Maryadit (supra) and uphold the grievance of the assessees directing the Assessing Officer to delete the impugned penalties in respect of all the assessees before us. The assessees get the relief accordingly. 6. The view so taken by us in earlier cases have been confirmed by the Hon'ble juri....