TaxTMI 
TaxTMI 
2025 (5) TMI 1174
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....-2016. 2. Briefly, the facts of the case are that the appellant is a cooperative society duly incorporated under the provisions of the Kerala Co-operative Societies Act, 1956. It is also classified as a primary agricultural credit society. The appellant filed return of income for the assessment year 2015-2016. Against the said return of income, the assessment was completed by the Joint Commissioner of Income Tax, Range-2, Kozhikode ("the AO") vide order dated 20th December, 2017 passed u/s. 143(3) of the Income-tax Act, 1961 ("the Act"). During the course of assessment proceedings, the AO noticed that the appellant-society had accepted deposits from the members in cash in violation of the provisions of sec.269SS of the Act and also repai....
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....e Court in the case of ACIT (Inv.) v. Kum.A.B.Shanti (2002) 255 ITR 258. However, the learned NFAC after referring to the judgment of the Hon'ble Madras High Court in the case of Vasan Healthcare Private Limited 103 taxman 26 (Mad.) and other judgments of High Courts held that in the absence of any reasonable cause for accepting the deposits or loans in cash, the levy of penalty is justified u/s. 271D of the Act. 5. Being aggrieved by the order of NFAC confirming the levy of penalty, the appellant is in appeal before us. It is contended that the levy of penalty u/s. 271D is arbitrary, inasmuch as, the appellant is into the banking business and no penalty can be levied in view of the decision of the Hon'ble Supreme Court in the case of Ku....
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.... the RBI. He further submits that the transactions of acceptance of deposits or loans in cash from members of a co-operative society comes within the purview of provisions of sec.269SS of the Act, drawing support from the 3rd proviso inserted to sec.269SS of the Act. The learned CITDR placing reliance on the judgment of the Hon'ble Kerala High Court in the case of NSS Karayogam (2020) 271 Taxman 193 (Kerala) submits that the genuineness of the transaction are bonafide cannot be considered as reasonable cause as provided u/s. 273 of the Act to avoid penal consequence of penalty u/s. 271D of the Act. 7. We heard the rival submissions and perused the material available on record. The issue that arises for our consideration is whether the AO....
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....may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; 8. The provisions of sec.271D of the Act provides for levy of penalty for contravention of provisions of sec.269SS of the Act. The provisions of sec.273B of the Act provides that where there is a reasonable cause for violation of the provisions of sec.269SS, no penalty shall be levied. There is no dispute about the factum of receipt of loans or deposits by the appellant-society from its members in cash and the appellant-society is a primary agricultural co-operative credit society, which does not fall under the category of any banking company or a co-operative bank, nor it falls under any of the exempted categories enumerated under the first provis....
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....its accepted by primary agricultural cooperative credit society. Therefore, the legislative intention is very clear that to make the provisions of sec.269SS is applicable to a primary agricultural co-operative credit society. 10. It is the contention of the appellant that it was under the bonafide belief that the provisions of sec.269SS have no application. It is not demonstrated before us as to how it has entertained such a bonafide belief. The term "bonafide belief" has not been defined under the provisions of Income-tax Act, 1961, but the provisions sub-section (22) of sec.3 of General Clauses Act, 1897 defines the term "bonafide belief" has not been defined under the provisions of the Income-tax Act, 1961 but the provisions of sub-se....
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....es not constitute a reasonable cause as contemplated u/s. 271D of the Act for non-levy of penalty u/s. 271D of the Act. The relevant portion of the judgment reads as under:- "6. We take note of the fact that, in Listin Stephen's case (supra), after referring to a catena of decisions like CIT v. P.K. Shamsudin 2011 (1) KLT online 1211, K.V.George (supra), Assistant Director of Inspection (Investigation) v. Kumari A.B.Santhi [2002 (2) KLT Online 1007 (SC)], NSS Karayogam v. CIT 2014 (2) KLT Online 1208 and Grihalakshmi Vision v. Addl. CIT 2015 (4) KLT SN 88 and CIT Thrissur v. Al Ameen Educational Trust 2018 (1) KLT Online 3133 held that the 'reasonable cause' contemplated under section 273B should be a reasonable cause a....