The Seva vikas Co.op Bank Ltd,., Pune V. Jt. Comm. of Income-tax Office, Pune

ITA 1333/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9774 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Assessee Lawyers: N C LAHOTI
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1333/PN/2011 (ASSESSMENT YEAR: 2006-07) THE SEVA VIKAS CO-OP. BANK LTD., LAXMI MARKET PIMPRI, PUNE-411 017 PAN AAATT 1710 G .. APPELLANT VS. JT. CIT RANGE 10, PUNE RESPONDENT APPELLANT BY : SHRI N.C. LAHOTI RESPONDENT BY : MS. VINITA MENON DATE OF HEARING: 06-11-2012 DATE OF PRONOUNCEMENT: 20-11-2012 ORDER PER G.S. PANNU, A.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V PUNE DAT ED 15-09-2011 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 27-6-20 09 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 271E OF THE INCOME -TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT Y EAR 2006-07. 2. IN THIS APPEAL, THE SHORT POINT RELATES TO PENAL TY OF RS. 2,19,239/- IMPOSED ON THE ASSESSEE IN TERMS OF SEC. 271E OF THE ACT ON ITS FAILURE TO REPAY CERTAIN DEPOSITS IN THE MAN NER PRESCRIBED U/S 269T OF THE ACT. THE ASSESSEE IS A CO-OPERATIVE BAN K AND IT WAS NOTICED THAT IT HAD REPAID CERTAIN DEPOSITS TO THE CUSTOMERS OF AN AMOUNT EXCEEDING RS. 20,000/.- EACH IN CASH, WHICH WAS VIOLATIVE OF THE MODE OF REPAYMENT OF DEPOSITS PRESCRIBED IN SEC . 269T OF THE ACT. THE AGGREGATE OF SUCH DEPOSITS CAME TO RS. 2, 19,239/-. AS A RESULT OF THE AFORESAID VIOLATION, THE JT. CIT HELD THE ASSESSEE IS LIABLE FOR PENALTY U/S 271E OF THE ACT OF A SUM EQU IVALENT TO THE AMOUNT OF DEPOSITS SO REPAID. ACCORDINGLY, THE PEN ALTY OF RS. 2 ITA NO. 1333/PN/2011 THE SEVA VIKAS CO-OP. BANK LTD., A.Y. 2006-07 2,19,239/- HAS BEEN IMPOSED WHICH HAS SINCE BEEN CO NFIRMED BY THE CIT(A) IN APPEAL. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE-BANK HAS A HUGE DEPOSITOR BASE AND IT WAS ONLY IN FEW CASES THAT THE FIXED DEPOSITS/BANK ACCOUNTS WERE CL OSED AND AS PER THE REQUEST OF THE RESPECTIVE CUSTOMERS, THE AMOUNT S WERE REPAID IN CASH. IN THIS CONNECTION, IT WAS ALSO POINTED OUT THAT THE AMOUNTS ARE VERY SMALL AND THE RESPECTIVE CUSTOMERS WERE TH E PEOPLE FROM LOW INCOME STRATA WHO DID NOT HAVE ANY SAVINGS BANK ACCOUNTS IN BANK AND THEREFORE, THEY REQUESTED THE REPAYMENT OF DEPOSITS IN CASH AND THAT TOO FOR SOME URGENT NEEDS LIKE MEDICA L, ACCIDENT, MARRIAGE OR EDUCATION, ETC. CONSIDERING THE BUSINE SS EXPEDIENCY, THE ASSESSEE BANK REPAID THE DEPOSITS IN CASH AND T HEREFORE, IT WAS CONTENDED THAT THERE WAS REASONABLE CAUSE FOR NOT H AVING COMPLIED WITH THE MODE OF REPAYMENT PRESCRIBED U/S 269T OF T HE ACT. IN THIS CONNECTION, THE LEARNED COUNSEL POINTED OUT THAT BE FORE THE CIT(A), THE ASSESSEE HAD RAISED THE AFORESAID PLEA WHICH HA S BEEN WRONGLY DISMISSED. FURTHER, THE LEARNED COUNSEL FILED COPI ES OF THE REQUEST LETTERS FROM THE RESPECTIVE CUSTOMERS TO SUBMIT THA T THE EXPLANATION OF THE ASSESSEE IS BONAFIDE AND IT CONSTITUTED A RE ASONABLE CAUSE FOR NOT HAVING COMPLIED WITH THE PROVISIONS OF SEC. 269 T OF THE ACT. 4. ON THE OTHER HAND, THE LEARNED DR APPEARING FOR THE REVENUE SUBMITTED THAT EVEN IN THE EARLIER YEARS, THE ASSES SEE WAS FOUND DEFAULTING FOR COMPLIANCE WITH SEC. 269T AND THEREF ORE, IT CANNOT BE A CASE THAT THE ASSESSEE WAS UNAWARE OF THE RELEVAN T PROVISION. IT WAS THEREFORE, SUBMITTED THAT THE PENALTY IMPOSED B Y THE JT. CIT BE UPHELD. 3 ITA NO. 1333/PN/2011 THE SEVA VIKAS CO-OP. BANK LTD., A.Y. 2006-07 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 269T OF THE ACT PRESCRIBES THE MODE OF REPAYMENT OF CERTAIN LOANS OR DEPOSITS ACCEPTED BY A BANKING COMPANY OR A CO-OPER ATIVE BANK OR OTHER ENTITIES PRESCRIBED THEREIN. IN TERMS OF PRE SCRIPTION CONTAINED IN SECTION 269T NO PERSON SHALL REPAY ANY LOAN OR D EPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR BY AN ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAME OF THE PERSON WH O HAD MADE THE DEPOSITS, IN CASE, WHERE SUCH REPAYMENT IS RS. 20, 000/- OR MORE. IT IS FURTHER PROVIDED THAT WHERE THE REPAYMENT IS BY A BRANCH OF A BANKING COMPANY OR CO-OPERATIVE BANK SUCH REPAYMENT MAY ALSO BE MADE BY CREDITING THE AMOUNT OF SUCH LOAN OR DEPOSI T TO THE SAVINGS BANK ACCOUNT OR THE CURRENT ACCOUNT OF THE PERSON T O WHOM SUCH LOAN OR DEPOSIT HAS TO BE REPAID. IN THIS CASE, TH E PLEA OF THE REVENUE IS THAT THE ASSESSEE HAS REPAID THE DEPOSIT S AMOUNTING TO RS. 2,19,239/- TO TEN DIFFERENT CUSTOMERS IN CASH W HICH IS OTHER THAN THE MODE PRESCRIBED IN SEC. 269T OF THE ACT. THERE IS NO DISPUTE THAT THE REPAYMENTS ARE IN CONTRAVENTION OF SEC. 26 9T OF THE ACT, SO HOWEVER, THE CASE OF THE ASSESSEE IS THAT THERE WAS A REASONABLE CAUSE FOR THE FAILURE TO COMPLY WITH THE PROVISIONS OF SEC. 269T OF THE ACT. 6. SECTION 273B OF THE ACT PRESCRIBES THAT PENALTY U/S 271E OF THE ACT SHALL NOT BE IMPOSABLE FOR ANY FAILURE REFERRED TO IN SEC. 269T OF THE ACT, IF THE ASSESSEE PROVES THAT THERE WAS A RE ASONABLE CAUSE FOR THE SAID FAILURE. IN TERMS OF SEC. 273B OF THE ACT, THE CASE SET UP BY THE ASSESSEE IS THAT THE PERSONS TO WHOM THE IMP UGNED AMOUNTS HAVE BEEN REPAID BELONG TO LOW INCOME STRATA HAVING NO SAVING ACCOUNTS WITH THE BANK AND THEY CAME WITH A REQUEST TO REPAY THE DEPOSITS IN CASH FOR SOME URGENT NEEDS LIKE MEDICAL , ACCIDENT, MARRIAGE OR EDUCATION AND THAT IN SUCH EVENTUALITY IN ORDER TO HAVE GOOD CUSTOMER RELATIONS, THE ASSESSEE CHOSE TO REPA Y THE DEPOSITS 4 ITA NO. 1333/PN/2011 THE SEVA VIKAS CO-OP. BANK LTD., A.Y. 2006-07 IN CASH. IN SUPPORT, THE RELEVANT MATERIAL, VIZ. R EQUEST LETTERS OF THE DEPOSITORS HAVE BEEN PLACED ON RECORD. IN OUR CONS IDERED OPINION, THE EXPLANATION RENDERED BY THE ASSESSEE CANNOT BE BRUSHED ASIDE, INASMUCH AS, IT IS ONLY IN SMALL NUMBER OF CASES, T HE ASSESSEE REPAID THE DEPOSITS IN CASH. THE ASSESSEE HAD POIN TED OUT THAT IT IS A CO-OPERATIVE BANK HAVING DEPOSITS OF RS. 200 CROR ES FROM PUBLIC. IT IS ONLY IN CASES WHERE THE SMALL CUSTOMERS CAME WITH REQUEST FOR REPAYMENT OF DEPOSITS IN EMERGENCY SITUATIONS AND C ONSIDERING THAT SUCH PEOPLE DID NOT MAINTAIN ANY SAVING BANK ACCOUN T, THE ASSESSEE DEEMED IT FIT AND PROPER TO REPAY THE AMOUNT IN CA SH. PERTINENTLY, THERE IS NO DISPUTE WITH REGARD TO BONAFIDES OF THE EXPLANATION FURNISHED BY THE ASSESSEE. CONSIDERING THE ENTIRET Y OF THE CIRCUMSTANCES AND THE MATERIAL PUTFORTH BY THE ASSE SSEE, WE FIND THAT THERE WAS A REASONABLE CAUSE WITH THE ASSESSEE FOR NOT HAVING COMPLIED WITH THE MANNER OF REPAYMENT PRESCRIBED U/ S 269T OF THE ACT WITH RESPECT TO IMPUGNED DEPOSITS. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE JT. CIT TO DELET E THE PENALTY IMPOSED U/S 271E OF THE ACT AMOUNTING TO RS. 2,19,2 39/-. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . DECISION PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER 2012. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 20 TH NOVEMBER 2012 ANKAM COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT (A) V PUNE 4. THE CIT- V PUNE 5. THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T. A.T., PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T., PUNE 5 ITA NO. 1333/PN/2011 THE SEVA VIKAS CO-OP. BANK LTD., A.Y. 2006-07