TaxTMI 
TaxTMI 
2020 (4) TMI 737
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....on of the Ld. CIT(A) that these credit societies functions as an alternative to the bank and, therefore, the activities of these Societies are covered by the proviso to Section 269SS of the I.T. Act is not perverse as this proviso specifically covered banking companies, Post Office Saving Bank or Co-op. Banks, and all these entities are specifically defined in Explanation to Section 269SS of the Act and assessee-society is not covered by these definitions? 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the Ld.CIT(A)-I Surat may be set-aside and that of the Assessing Officer's order may be restored." 3. Brief facts of the case are that the assessee a Co-operative Society, filed its Return of Income on 15.10.2010 by declaring income at Rs.Nil for the year under consideration. The assessment u/s.143(3) was finalized on 01.03.2013 determining total income at Rs. 5,13,290/-. Since assessee had accepted and repaid deposits of Rs. 20,000/- or more otherwise than by account payee cheque or bank drafts. Therefore, penalty proceedings were....
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...., the appellant society has been carrying on the activities which are in many ways similar to the banking activities. It opens different types of accounts including accounts similar to savings bank account for its members, where amounts can be withdrawn immediately on demand. It is observed that the intention of the legislature in enacting the provisions of Section 269SS and 269T of the Act; were envisaged to apply to the loan/deposit accepted by a person for his own purposes and not keeping in mind case like that of appellant's where control and ownership remains with the person to whose credit money stand as a member of the Society. Also the member can keep the deposit for a period which is according to their convenience. The amount has sometimes to be repaid by the assessee to its member immediately on demand. These features distinguish the case of the assessee from other ordinary assessees. Therefore, the provisions of Section 271D/271E are to be viewed in the background of these aspects. The authority vested with power to impose penalty has a discretionary power not to levy the penalty. It is also noted that no addition on account of these impugned deposits i....
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....liable to pay' and the provisions of Section 273B providing that no penalty would be leviable if the person concerned proves that there is reasonable cause for the said failure clearly indicates that these provisions given a discretion to the authority to impose the penalty or not to impose the penalty. Such discretion has to be exercised in a just and fair manner having regard to the entire facts and materials existing on record. Ordinarily, a plea as to ignorance of law cannot support the breach of a statutory provisions of law or on account of bona fide belief, coupled with the fact that transactions in question are genuine and bonafide, transactions were undertaken during the regular course of its business will not result in levy of penalty u/s 271D and 271E. 4. The decision of the Ld. CIT(A) in deleting the penalty is not acceptable for the following reasons :- (i) First of all, the Ld. CIT (A) has deleted the penalty u/s 271D & 271E by accepting the submission of the assessee that it had accepted and repaid deposit or loan above Rs. 20,000/- or more otherwise than by an account payee cheque or account payee bank draft on bona fide belief that the provisi....
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....1 The Society is professionally managed and the books of accounts of the Society are regularly audited u/s 44AB of the Income Tax Act by a qualified Chartered Accountant. Therefore, the case of the assessee society cannot be compared with any illiterate individual when deciding whether there was a reasonable cause in not complying with the provisions of Section 269SS. (iv) The argument that it had an bonafide belief that it can accept and repay loan or deposit in cash as is done by the Co-Op. Banks and provisions of Section 269SS are not applicable in its case is not acceptable because it is not believable that a Society managed by professionals and in existence for last 40 years does not understand the differences in laws, rules and regulations governing a Cooperative Society and a Cooperative Bank. The Co-Op. Banks, besides being governed by the State Cooperative Laws are also regulated by the Reserve bank of India as per the Banking Regulation Act, 1949. The Cooperative banks are required to obtain a license from the Reserve Bank of India, under the provisions of Section 22 of the Banking Regulation Act, 1949, and maintenance of Cash Reserve Ratio and Statutory Liquidit....
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....to apply to the loan / deposit accepted by a person for his own purposes and not keeping in mind cases like that of appellant's where the control' and ownership remains with the person to whose credit money stand as a member of the Society, The assesses like present is hot Obliged to question the source of deposit made toy it's members. Also, the member can keep the deposit for a period which' is according to their convenience. The amount has sometimes to be repaid by the assessee to its member immediately on demand. These features distinguish the case of the assessee from other ordinary assessees. Therefore, the provisions of s, 271D/271E ore to be viewed in the background of these aspects. Further, the assessee is subject to periodical inspects and audits by various statutory authorities. the deposits received by the assessee, which was carrying on the activities of proving credits, were not in the nature-of taking of any loans or deposits for the purpose of funding its project as a source of investment; rather, it was in the business of accepting deposits; that in view of the nature of such business, the scrutiny of the deposits could not be the same as ....
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....7, dt. 6th Sept., 1984 [1984 43 CTR (TLT) 3]. The term 'any other person' in the context of introduction of s. 269SS appears to mean persons who are not very intimately or very closely connected with the assessee. In the present case the assessee accepted the deposits and repaid the same to the members; according to the bye-laws of the assessee society. In view of the transactions which took place between the assess(c)(c) and its members, the strict provisions of the s. 2695S/269T may not be applicable, and is a very plausible opinion of the provision. In view of the above the appellant was in all probability functioning under bona fide belief. In this regard, reliance is placed on the fallowing judgments: 1) Dillu Cine Enterprises (P) Limited V/s Additional Of (2002) SO ITD 2) Citizen Co-operative Society Limited V/s Additional OT (2010). 41 DTR 0305. 8.3 One has to keep in view the intent of the legislature behind enacting s. 269SS/269T, where it is clear that the loan or deposit brought in by the assessee was not to explain its unaccounted cash and a plausible opinion that members of the assessee society are not covered by the expressi....
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....1D and 271E of the IT Act for the asst. yRs. 2010-11. 8.6 The appellant has also challenged (ground 2 in both the appeals) the working of the quantum of penalty saying the amounts considered were including amounts received in earlier years and transferred in books in the year with no fresh deposits and repayments. As the basis of imposition itself is decided against the revenue, the grounds in both appeals have become redundant." 8. We have heard both the Counsels and perused the material placed on record and judgments cited as well as orders passed by the Revenue Authorities. After having appreciated the facts of the present case and also after having gone through the documents placed on the record, we are also of the view that assessee has accepted and repaid deposit of loans above Rs. 20,000/- otherwise then by the account payee cheque or account payee draft on a bonafide belief that provisions of section 269SS and 269T are not applicable in its case. The ld.AO had also accepted that deposits made by the assessee are genuine and the breach of provisions of section 269SS and 269T was occurred due to bonafide belief. Even no addition was made on account of these impugn....