TaxTMI 
TaxTMI 
2021 (2) TMI 845
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....7,52,000/- only. On question by the AO the assessee vide letter dated 06.04.2015 submitted that it was under the bona-fide belief that its activities are banking activities and the provisions of Section 269SS do not apply to the bank. It was also pointed out by the assessee that on realizing its fault, it has immediately stopped accepting the deposits in cash. 4. The assessee also contended that its managing committee does not possess the necessary qualification as well as the knowledge of the provisions of the Income Tax Act. Thus, it has committed a mistake under the bonafide belief. 5. The assessee, likewise, also pointed out that there was the scrutiny assessment for the assessment year 2009-10 but there was no such mistake pointed out by the AO during the assessment proceedings. This was also the reason for gaining the bona-fide belief that the assessee was outside the purview of the provisions 269SS of the Act. 6. The assessee further contended that the ITAT in various cases involving identical facts and circumstances have deleted the penalty imposed under section 271D of the Act. The assessee in support of its contention placed its reliance on various orders. Thus, ....
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....led a paper book running from pages 1 to 47 and submitted that the assessee has accepted the deposits in cash exceeding Rs. 20,000/- in contravention to the provisions of section 269SS of the Act under the bona-fide belief. As such, the assessee was under the impression that its activities are banking activities and therefore, the provisions of section 269SS of the Act are not applicable to it. The learned AR also contended that on realizing the mistake for accepting the deposits in cash, the assessee immediately has passed the resolution dated 22.04.2015 for not accepting the deposits in cash which is placed on pages 29 to 38 of the paper book. It was also pointed out that the resolution was passed prior to the date of penalty order i.e. dated 27.04.2015. 12. The learned AR also furnished the affidavit of Shri Govind Gopal Barne, the Chairman of the Society wherein it was contended that the mistake was committed by the assessee first time under the bona-fide belief. Accordingly, the assessee sought the immunity from the penalty under the provisions of section 273B of the Act. The learned AR in support of his contention, filed various orders of the Tribunal's, Hon'ble Courts whi....
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....t I loan through journal entries. Applying the said rational, there is no reasonable cause for any cooperative society to accepts deposits in cash after the decision of the Hon'ble Bombay High Court dated 18.03.2009 in ITA No. 156 of 2009 in the case of Mis. Bandhkam Khate Sevakanchi Sahakari Patsnstha Maryadit. Hence the acceptance of deposits in cash by the assessee Mis. Bapujibuwa Nagari Sahakari Pat Sanstha Maryadit during the previous year relevant to the A. Y. 2012-2013 is a clear violation of the. provisions of section 269SS of the Income Tax Act, 1961 and the levy of penalty u/s 271D is perfectly justified and there is no reasonable cause as made out by the assessee." 15. The learned AR in her rejoinder submitted that the ratio laid down by the Hon'ble Court cited by the learned DR are distinguishable from the facts of the present case. 16. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the dispute revolves around the provisions of Sec. 269SS of the Act. The provisions of section prohibit an assessee to accept from any other person any loan or deposit exceeding Rs. 20,000/- or more otherw....
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....ari 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 269 SS do not apply on the credit cooperative societies. He invites our attention to the fact that even the tax auditor, who is a qualified professional, did not 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 l....
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....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 bonafide belief. He vehemently submits that a bland statement about bonafide belief cannot suffice; it must be backed by some material and evidence. It is also his 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....
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.... 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 relevance in such a situation. It is important to bear in mind that section 273 B comes into play when the assessee has committed a lapse but the assessee 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,....
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....n 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 belief, by itself, can be viewed as a reasonable cause for assessee's bonafide belief. 10. Having said that, we may also add that it is not a case 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 kno....