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TMI Blog2012 (9) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to open bank accounts for various reasons and so on and so forth - As the violation of Section 269SS ranged from just 1.1% to 6.14% for the years under appeal which was very low considering the total amounts of deposits collected. As no penalty proceedings were initiated for the intervening assessment years namely 1994-95 to 1998-99 and for the assessment years subsequent to the assessment year 2001-02.Thus it was not correct to state that the Tribunal based its decision on the only ground that Section 269SS cannot be applied to the assessee whose business itself was the collection of deposits - in favour of assessee. - ITA 637/2011, 638/2011, 640/2011, 646/2011 - - - Dated:- 20-9-2012 - MR. S. RAVINDRA BHAT MR. R.V. EASWAR JJ. Appellant: Mr. Kamal Sawhney, Sr. Standing Counsel. Respondent: Mr. Percy J. Pardiwala, Sr. Adv. with Mr. Satyen Sethi, Mr. Arta Trana Panda, Advocates. R.V. EASWAR, J.: These are four appeals filed by the Revenue under Section 260A of the Income Tax Act, 1961 ("Act", for short). They are directed against the common order passed by the Income Tax Appellate Tribunal, New Delhi Bench-G ON 17.09.2010 in ITA No.3222-3225/Del/2009 confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person is prohibited from taking a loan or deposit in cash if it exceeds the amount of Rs.20,000/-. In case of violation of this provision, Section 271D empowers the Assessing Officer to impose a penalty equivalent to the amount collected as loan or deposit in cash. However, Section 273B provides for reasonable cause to be proved by an assessee against whom action for penalty is taken. If reasonable cause is established, no penalty is attracted. In the background of these provisions the Assessing Officer referred the matter to the Additional Commissioner of Income Tax, Central Range, Lucknow to deal with the penalty proceedings as contemplated by Section 271D. 3. Before the Additional Commissioner of Income Tax the assessee submitted a detailed reply in an attempt to show the existence of reasonable cause for collection of deposits in cash. The gist of the reply is this: - (a) The assessee basically runs different savings schemes of recurring nature such as daily deposits scheme, monthly deposit scheme, etc. The aim of such schemes is to tap savings from rural areas which are not served by banks, despite the existence of huge potential. The assessee has, therefore, registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act is mandatory. However as far as mobilization of deposit in the rural sector without proper banking facilities is concerned it is really difficult to give the benefit of reasonable causes to the assessee in the absence of a case by case study and particularly in absence of exact details of the Bank branches at various places in the relevant financial year. Therefore though the contention of the assessee in this respect has some reasonable grounds yet cannot be accepted because of the reason mentioned above. 4. The Additional CIT thereafter examined the assessee's explanation that the public sector banks were refusing to open accounts in the name of the agents on the ground that the agents were affecting their banking activities. In paragraph 4.4 of his order he actually acknowledged that this explanation of the assessee was supported by documentary evidence; nevertheless since such documentary evidence was not available in every case, he refused to accept the same as one of the factors constituting reasonable cause. He observed as under: - 4.4 The next argument of the assessee is really strange incredible though copies of documentary proof in some of the (sic) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years are in substance the same. Since we have taken ITA No.637/2011 relating to the assessment year 2000-01 as the lead case, we would refer to the order of the CIT (Appeals) for this year. The CIT (Appeals) cancelled the penalty imposed under Section 271D after considering the detailed written submissions filed by the assessee and the response thereto by the Assessing Officer. The gist of the reasons is as under: - (a) The assessee had engaged the services of its agent M/s. Sahara India for mobilising the deposits. M/s. Sahara India operated through 1311 branches, the breakup of which is as under: - (i) Branches in Metros 57 (ii) Branches in Capitals and Union Territories 88 (iii) Branches at the District Level 335 (iv) Branches below the District Level 831 Total 1311 Thus, the majority of the branches are located in rural areas which lack adequate banking facilities. Here the people are also mainly engaged in agriculture and petty trade and the banking habit is not prevalent among them. (b) It is a fact that there were some instances where banks refused to open accounts in the name of the agents of the assessee citing competition, excessive work load or la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable cause, such as lack of adequate banking facilities in the rural areas, the lack of banking habit prevailing amongst the depositors, etc. The Additional CIT was also not justified in brushing aside the copies of the correspondence showing that some of the banks had refused to open accounts in the names of the agents on the ground that the agents are affecting the activities of the banks in their area. (d) The assessee has furnished the details of the location of the branches of the agent firm. These were predominantly in the rural areas where the agents had to face the problem of illiteracy or lack of banking habit. It would be very difficult for the assessee to convince the depositors to first open bank accounts from which the deposits could be made by issue of cheques. One has to take a practical view of the matter. Many depositors may not have had acceptable or valid documentary evidence to show their identity, address proof, etc. Moreover, it is also a well-known fact that there is marked reluctance in the rural areas to use the banking facilities for fear of cumbersome procedure. The depositors are served by agents of the assessee at all times of the day and they serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which cannot give rise to any substantial question of law: - (i) CIT v. Parma Nand, (2004) 266 ITR 255 (ii) CIT v. Itochu Corporation, (2004) 268 ITR 172. 12. The limited inquiry which the High Court can embark upon is only whether the finding as to the existence of reasonable cause is perverse or is such that no person, properly instructed on facts and law would arrive at. Applying this test to the present case we are afraid that the criticism of the Tribunal's order levelled by the Revenue is ill-founded. We have already summarised the findings of the CIT (Appeals) which were based on facts which constitute reasonable cause. These findings have been affirmed by the Tribunal. When two appellate authorities have arrived at concurrent findings of facts as to the existence of reasonable cause in a penalty matter, this Court would be reluctant to interfere with them unless there are materials to show that the findings are perverse. 13. The standing counsel for the Revenue is not correct in his contention that the basis of the decision of the Tribunal is untenable. The Tribunal has not rested its decision on the only circumstance that it is the business of the assessee to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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