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TMI Blog2022 (7) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Tribunal on the basis of the facts and material on record have come to the conclusion that the assessee-Co-operative Society on bona fide belief coupled with the nature of transaction in question being genuine and bona fide undertaken during the regular course of business would not result in levy of penalty u/s 271D and E, there is no legal infirmity in the impugned orders of the CIT (Appeals) and the Tribunal requiring any interference by this Court. - HONOURABLE MR. JUSTICE N.V.ANJARIA And HONOURABLE MR. JUSTICE BHARGAV D. KARIA MR NIKUNT RAVAL FOR MRS KALPANAK RAVAL(1046) FOR THE APPELLANT (S) NO. 1 ORDER ( PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA ) 1. Learned advocate Mr. Nikunt Raval has tendered draft amendment. The same is allowed in terms of the draft. To be carried out forthwith. 2. By this appeal under section 260A of the Income Tax Act, 1961 [for short the Act,1961 ], the Revenue has challenged the order dated 12.02.2022 passed by the Income Tax Appellate Tribunal, Surat [ Tribunal for short] in Tax Appeal No. 612/Ahd/2016 for A.Y. 2010-11. 3. Following questions of law are proposed as substantial questions of law : I. Whether in the facts of the case the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty orders, the submissions of the appellant, the case law on the issues covered and the facts of the case. It is observed that the appellant is a Registered Society and has been functioning as co-operative credit society for its members and in the process, the appellant society has been carrying on the activities which are in many ways similar to the bank activities. It opens different types of accounts including accounts similar to savings bank account for its members, where amounts can be withdrawn immediately on demand. The appellant is subject to rules laid down by Cooperative Societies Act and the assesses has been carrying out operations with its members In nature of taking money a5 deposits and providing money on credit to those members who need ft. Its nature of activity is such and there is no doubt that its acceptance of money is not linked to a situation where it may need to explain with mala fide attentions possession of cash/ money. It is observed that the intention of the legislature in enacting the provisions of sec. 269SS and 269 T of the Act; were envisaged to apply to the loan / deposit accepted by a person for his own purposes and not keeping in mind cases like t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his, but even the Chartered Accountant who audited the books of account of the society was not showing these as being 1 contravention of the Act, in the relevant columns of the Audit reports for years. 8.2 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 assessec's counsel is that the words any other person in 269SS and s. 269T do not denote the directors of the assessee or members of the assessee society, when read with the legislative iment as reproduced in Board Circular No. 387, dt. 6th Sept., 1934 (1984 43 CTR (TLT) 3}. The term any other person in the context of introduction of s. 269SS appears to mean persons who are not very intimately or very closely c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned proves that there is reasonable cause for the said failure clearly indicates that these provisions give a discretion to the authority to impose the penalty or not to impose the penalty. Such discretion has to be exercised in a just and fair manner having regard to the entire facts and materials existing on record. Ordinarily, a plea as to ignorance of law cannot support the breach of a statutory provision but the fact of such a technical break due to ignorance of the relevant provisions of law or on account of bona fide belief, coupled with the fact that transactions in question are genuine and bona fide, transaction were undertaken during the regular course of its business will not result in levy of penalty under ss. 27ID and 27IE. In view of the above discussion, the undersigned is inclined to delete the penalty levied under ss. 27ID and 27IE of the IT Act for the asst. yrs. 2010-11. 8.6. The appellant has also challenged (ground 2 in both the appeals) the working of the quantum of penalty saying the amounts considered were including amounts received in earlier years and transferred in books in the year with no fresh deposits and repayments. As the basis of imposition it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the account payee cheque or account payee draft on a bona fide belief that provisions of sections 269SS and 269T of the Act, 1961 are not applicable in its case. 14. The Tribunal also arrived at a finding of fact that the Assessing Officer also accepted deposits made by the assessee as genuine and the breach of sections 269SS and 269T occurred due to the bona fide belief of the assessee as the Assessing Officer has also not made any addition on account of the impugned deposits in the assessment order as the veracity of the creditors was not doubted. The Tribunal, therefore, arrived at the conclusion that if the veracity of deposit was doubted, then addition would have been made under section 68 of the Act, 1961 but there is an undisputed fact that the assessee-Credit Society functions in village. for farmers and illiterate persons as alternative to banks and if the deposits were taken/repaid only in cheques, than it may lose all relevance. The Tribunal also found that the Chartered Accountant, who audited the books of accounts, was not showing the amount accepted or repaid by the assessee-society in cash as being in contravention of section 269SS and 269T of the Act in relevant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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