TaxTMI 
TaxTMI 
2025 (9) TMI 697
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....ii) Without considering the grounds taken & submissions made by the assessee. (iii) Without appreciating that section 269SS is not attracted to the deposits received from its members, who are agriculturists. (iv) Without considering the submissions and the principles laid down in the relied upon cases. (v) Without considering the intent of Circular of the CBDT dated, 25-03-2004 which has directed not to levy the penalty u/ s 271D/271E indiscriminately against the co-operative societies and keep the provisions of section 273B in view which mandates that the penalty should not be levied if there is a reasonable cause. 2.2. In the light of the above, the learned CIT(A) erred in sustaining the penalty of Rs. 85,06,510/- levied u/s 271D of the Act. 3. The grounds are taken without prejudice to one another and the Appellant craves leave to add or delete or modify or revise any ground at the time of hearing before the Hon'ble Tribunal. For these and other grounds that may be urged at the time of hearing, it is prayed that the Hon'ble Tribunal may be pleased to allow the appeal in the interest of the equity and justice." 2. T....
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....ee had properly explained the facts but in spite of that the AO had confirmed the levy of penalty for the reason that the assessee had not produced any cogent material or evidence to show that there is any business exigency on the part of the assessee to accept the loans / deposits in cash. 5. The Ld.AR further submitted that the violation mentioned in section 269SS would not be attracted in the present case since the assessee received the deposits from the members and whose identity is verifiable and also contended that the deposits are not made from any other person not connected with the assessee. The Ld.AR further submitted that even though the assessee had relied on the order of the Hon'ble Hyderabad Tribunal, both the authorities had not discussed anything about the same which is also on the very same set of facts found in the present case. The Ld.AR also produced the copy of the reply filed by the assessee along with the acknowledgement and the acknowledgement for filing the return of income, statement of income, consolidated balance sheet as on 31/03/2017, consolidated profit and loss account for the year ended 31/03/2017, receipts and payments account for the year e....
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....ers or street venders . Most of them are alien to languages and culture of India . Their life and movement is limited to the settlement area. 03. Details of deposit and depositors The details of loan accepted during the financial year relevant to the assessment year is as under: Membership no. Name of the depositor (Their PAN/Aadhar) Address Amount Occupation 2850 Thendup Tharvay PAN:ALOPT4813B Tattihalli Mundgo d-581411 (Kar) 5,00,000 Farmer 3162 Lobsang Thutop PAN;ASVPT3734H --- do --- 9,00,000 Farmer 2902 Tenzin Kunga PAN:CFAPK4721H --- do --- 10,00,000 Farmer 1683 Dhondup Dorjee PAN:BGXPD9452M --- do --- 6,06,510 Farmer 2753 Namgyal Aadhar No. 551868819051 --- do --- 10,00,000 Farmer 593 Tashi Dhondup PAN:CIRPD2644E --- do --- 10,00,000 Farmer 2845 Tenzin Wangpo PAN:ACPPW78 31G --- do --- 9,00,000 Farmer 2006 Tenzin Yangphel --- do --- 6,00,000 Farmer 2004 Tenzin Palmo --- do --- 10,00,000 Farmer 4034 Chemi Dolma --- do -- 10,00,000 Farmer Total 85,06,510 04 Brief reasons t....
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....to audit by the Auditors of Tibetain Government in Exile . 06. Legal position of applicability of Section 269SS to Co- operative societies. We respectfully submit that in Citizen Co-operative Society Ltd. v. Addl. CIT (2010) 41 DTR 305 (Hyd.)(Trib.)' it was held that 'Money received by assessee co-operative society from its member/director and their relatives by way of deposits and loans given to them as part of its banking activities cannot be considered as "loan" or "deposit" so as to attract section 269SS or 269T, as the assessee is working on the concept of mutuality and its directors or members are not covered by the expression "any other person" occurring in section 269SS, more so when the assessing officer has accepted the genuineness of such deposits and the assessee was under bonafide belief the provisions of section 269SS and 269T are not applicable. (A.Ys. 2006-07 and 2007-08) Citizen Co- operative Society Ltd. v. Addl. CIT (2010) 41 DTR 305 (Hyd.)(Trib.)' 07. Adverse financial implication on the society : If the penalty of Rs. 83,06,510 (85,06,510 - 20000x10) is levied on the society, the society would go into liquidation as the share ....
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....such circumstances, the members would feel free to transact with the assessee society since the assessee society is also headed by a Tibetian. 9. On considering the above said facts, we are of the opinion that the assessee society is not on par with the other societies and its members. Because of the necessity, the members would deposit their earning in their account maintained in the society and get interest from that. It is not the case of the AO that the assessee had received deposits from third parties who are all not connected with the society but the AO himself had accepted the fact that the deposits are made only by the members and also furnished the details of the members. Therefore in the present case, the amounts received in cash could not be treated as a violation to attract penalty u/s., 271D of the Act. 10. Further, we have also considered the intention for inserting section 269SS and the corresponding penalties which is as follows: " the CBDT has explained the object of introduction of_s. 269SS by the Finance Act, 1984, in its Circular No. 387, dt. 6th July, 1984, (1984) 43 CTR (St) 3 : (1985) 152ITR (St) 1 thus : 'Unaccounted cash found in....
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.... of income was there during the course of their activities. If the assessee had received the cash more than Rs. 20,000/- from any other persons, it can be treated as a violation and therefore penalty could be imposed u/s. 271D of the Act. The financial statements filed by the assessee would also exhibits that everything received by the assessee had been properly accounted for, audited by an independent auditor and also by the auditor appointed by the Registrar of Co-operative Societies. No authorities have found anything wrong in the books of accounts. In such circumstances, we are of the view that there is no violation committed by the assessee in order to impose penalty u/s. 271D of the Act. 12. Further, we also rely on the findings given by the Hon'ble Hyderabad Tribunal reported in 41 DTR 305 in the case of Citizen Co-operative Society Ltd. wherein it was held as follows: "17. In the present case, assessee is subject to rules laid down by cooperative society Act and the assessee has been carrying out banking operation which are under audit of various authorities and therefore the assessee could not be put at par with the other cases of other concerns since the a....
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....y on demand. These features distinguish the case of the assessee from other ordinary assessees. Therefore, the provisions of section 271D/271E to be viewed in the background of these aspects. Further, the assessee is subject to periodical inspects and audits by various statutory authorities and in case of any default assessee is liable for having penalty besides cancellation of its licence. This is not the case with other assessees. Further, the assessee has to maintain confidentiality in respect of the information collected by it from its customers, such information is not to be divulged to outsiders. There is no such obligation with other assessee. In spite of this, the assessee has furnished the information as available with it. Now if the address of the customers of the assessee found to be incomplete, this cannot form the basis for levying the penalty. There is no finding by the lower authorities that the assessee violated any guidelines issued by the Regulatory authorities. Usually, the bank was not required to go for detailed verification of addresses, whereabouts of its customers. There is no absolute obligation to assessee to make enquiries about the proposed cust....
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....stablishment of deliberate and intentional violation of the provisions by the assessee, that too, in order to hide any income or to evade any payment of tax. Usually penalty will not be imposed unless the party concerned has acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation and that penalty will also not be imposed merely because it is lawful to do so. The imposition of penalty for failure to perform statutory obligation is only a discretionary power of the authority exercising judicial functions on consideration of all the relevant circumstances. If the assessee acted on genuine belief that penal provisions have no application to deposits and it applied only to other kind of assessees, then penalty could not be levied. As such, in present case, there exists reasonable cause in accepting the deposits in cash and paying by cash. Assessee may therefore be exonerated from the levy of penalty. The other contention of the assessee counsel is that the words 'any other person' in section 269SS or 269T does not denote the director of the assessee or members of the assessee society, when read w....
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.... that each member should contribute to the common fund that or that each member should participate in the surplus or get back from the surplus precisely what he has paid. What is required is that the members as a clause must be able to participate in the surplus. It is immaterial whether the surplus is paid back to the members in cash or is put to reserve with the society for his development and for providing better amenities to the member. In view of the transaction took place between the assessee and its member, the strict provisions of the section 269SS/269T cannot be applied. 17.1 Further, the Legislature was intending to curb the tax evasion in a 'search situation' and referred to confirmatory letters produced in such situations to counter 'cash found'. A statute is an edict of the legislature and the conventional way of interpreting or constituting a statute is to seek the intention of its maker. A statute is to be constitute according to the intent of them who make it. The legislature in a modern state is actuated with some policy to curb some evils or to some public benefits. A bare mechanical interpretation of the words without the application of a....