2019 (5) TMI 942 - AT - Income Tax

Rectification u/s 254 - revision OR rectification - Penalty u/s 271D imposed on the ground that a major chunk of the fixed deposits are received in cash, in violation of provisions of Section 269SS - CIT (A) ITAT confirmed the levy of penalty - HELD THAT - The assessee seeks to review the order of the Tribunal for which the Tribunal has no power. On an earlier occasion, the Tribunal while passing the order, had considered the entire facts of the case and decided the issue against the assessee. AR wants to re-argue the case. In our humble opinion, there is no provision under section 254(2) of the Act so as to allow the assessee to re-argue the case. In our opinion, the decision of the Tribunal has not to be scrutinized sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record has not been noticed by the Tribunal in its judgment. In our opinion, the Tribunal has considered all the relevant materials and has not taken into account any irrelevant material in basing its conclusion. It is not necessary for the Tribunal to state in its judgment specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of the facts, as if that were a magic formula; if the judgment of the Tribunal shows that it has, infact, done so, there is no reason to interfere with the decision of the Tribunal. Further, in the case of Citizen Co-operative Society Limited vs. Addl. CIT 2010 (2) TMI 708 - ITAT HYDERABAD it was a Co-operative Bank which received money from the Members/Directors in the course of banking activities which cannot be considered as loan or deposits so as to attract the provisions of section 269SS or 269T of the Act. Miscellaneous Petition filed by the assessee is dismissed.

Summary

Issues:
1. Recall of Tribunal order sought by the assessee regarding penalty imposed under Section 271D for receiving fixed deposits in cash.
2. Applicability of principle of mutuality to the income of a Co-operative Society.
3. Interpretation of Section 269SS in relation to the penalty imposed.
4. Consideration of legal precedents and judgments in determining the penalty under Section 269SS.
5. Review of Tribunal's decision under Section 254(2) of the Income Tax Act.

Analysis:
1. The assessee, a Co-operative Society of employees, filed a petition seeking to recall the Tribunal's order imposing a penalty under Section 271D for receiving fixed deposits in cash. The assessee argued that the principle of mutuality applied as the amounts were accepted from and lent only to the members who were employees of the company. The assessment was completed initially accepting the return filed, but later, a penalty was imposed for violating Section 269SS by receiving fixed deposits in cash.

2. The assessee contended that the income of the society from interest on loans given to members was deductible under Section 80P. Citing legal precedents, including the Supreme Court judgment in Asst. Director vs. Kum. A.B.Shanthi, the assessee argued that the objective of Section 269SS was to prevent false explanations for unaccounted money. The assessee provided details of the deposits received, issued receipts, and explained the reasons for accepting cash, emphasizing the genuineness of the transactions and the identity of the depositors.

3. The Tribunal rejected the petition, stating that there was no provision to review its order under Section 254(2) of the Act. It emphasized that the Tribunal had already considered all relevant materials and had not based its decision on irrelevant factors. The Tribunal distinguished the case from Citizen Co-operative Society Limited vs. Addl. CIT, noting that the nature of funds received by the Co-operative Society in that case differed from the present situation, where the penalty was imposed under Section 269SS.

4. Ultimately, the Tribunal dismissed the Miscellaneous Petition, upholding its previous decision to impose the penalty under Section 269SS for receiving fixed deposits in cash. The Tribunal found no infirmity in its order and emphasized that the Co-operative Society's circumstances did not align with the exceptions outlined in legal precedents. The decision was pronounced on May 13, 2019, in open court.

This comprehensive analysis covers the issues raised in the judgment, including the application of legal principles, interpretation of relevant sections, and the Tribunal's decision regarding the penalty imposed on the Co-operative Society.