The Mamurpur Co-operative Thrift and Credit Society Ltd., New Delhi V. Addl. CIT, Range- 38, New Delhi

ITA 1371/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6934 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 19-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Bonafide belief; Period of limitation; Question of law; Initiation of penalty proceedings; Reasonable cause; Competent authority; Assessment record; Time period of passing order; Ignorance of law; Set aside
• Section: 271(1)(c); 273B; 143(3); 80P; 271D; 271E; 274; 143(2); 13; 153; 22; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NOS.1370 & 1371/DEL./2019 ASSESSMENT YEAR: 2014-15 THE MAMURPUR CO- OPERATIVE THRIFT AND CREDIT SOCIETY LTD., 1529/1, MAMURPUR, NARELA, NEW DELHI VS. ADDL. CIT, RANGE-38, NEW DELHI PAN :AABAT6130B (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST TWO SEPARATE ORDERS, BOTH DATED 21/12/2018 PASSED BY TH E LEARNED CIT(APPEALS)-13, NEW DELHI [IN SHORT THE LEARNED C IT(A)] IN RELATION TO PENALTY LEVIED BY THE LEARNED ADDITIONA L COMMISSIONER OF INCOME TAX, RANGE 38, NEW DELHI UNDER SECTION 27 1D AND 271E OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT ) FOR VIOLATION OF PROVISION OF SECTION 269SS AND 269T RESPECTIVELY . APPELLANT BY SHRI C.S. AGARWAL, SR. ADV. SHRI R.P. MALL, ADV. RESPONDENT BY SHRI SARAS KUMAR, SR. DR DATE OF HEARING 21.08.2020 DATE OF PRONOUNCEMENT 10.09.2020 2 ITA NO. 1370 & 1371/DEL./2019 2. THE GROUNDS RAISED IN BOTH THE APPEALS ARE REPRODU CED AS UNDER: GROUNDS OF APPEAL RAISED IN ITA NO. 1370/DEL./2019 1. THE ORDER PASSED BY ID. CIT(APPEAL) AS WELL AS LD. AO ARE BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2 THAT THE LD. AO ERRED IN INVOKING PROVISIONS OF S ECTION 269SS OF THE INCOME TAX ACT. 3. THAT THE LD. CIT(A) ERRED IN SUSTAINING THE PENA LTY U/S 271D OF THE INCOME TAX ACT MADE BY THE LD. AO AMOUNTING RS. 36,45,841/-. 4. THAT THE LD. CIT(A) ERRED IN APPROVING THE PENA LTY ORDER U/S 271D OF THE ACT, WITHOUT APPRECIATING THE FACTS OF THE C ASE AND SUBMISSION MADE BEFORE HIM. 5. THAT THE LD. CIT(A) ERRED IN APPROVING THE PENA LTY ORDER U/S 271D OF THE ACT, WITHOUT APPRECIATING THE FACT THAT LD. AO WAS INCORRECT AND UNJUSTIFIED IN HOLDING THAT THERE WAS NO REASON ABLE CAUSE FOR NOT COMPLYING WITH THE PROVISION OF SECTION 269SS. 6. THAT THE LD. CIT(A)ERRED IN MAINTAINING THE PEN ALTY ORDER PASSED U/S 271D OF THE INCOME TAX ACT, WHEN THE SAID ORDER WAS TIME BARRED BY LIMITATION OF TIME. 7. THAT THE LD. CIT(A) AND LD. AO ALSO ERRED IN NOT FOLLOWING VARIOUS JUDGMENTS OF HIGH COURT AND ITAT. 8. THAT THE APPELLANT CARVES LEAVE TO ADD, ALTER, MODIFY OR DELETE ANY OF THE GROUND OF APPEAL. GROUNDS OF APPEAL RAISED IN ITA NO.1371/DEL./2019 1. THE APPELLANT IS THE CO-OPERATIVE SOCIETY REGISTERE D UNDER THE CO- OPERATIVE SOCIETIES ACT AND IS ENGAGED IN CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. 2. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS L ATER NOTICE U/S 143(2) WAS ISSUED WHICH WAS DULY COMPLIED FROM TIME TO TIME. 3. THE CASE OF THE APPELLANT WAS ASSESSED BY THE I D. AO BY PASSING ASSESSMENT ORDER U/S 143(3) OF THE ACT DATED 26.12. 2016 AMOUNTING RS. 1,03,830/- 4. THE ADDITIONAL COMMISSIONER OF INCOME-TAX ISSUED A SHOW CAUSE NOTICE DATED 22-09-2017 U/S 27IE OF THE ACT AND LEV IED PENALTY OF RS.2,06,82,566/- U/S.271E OF THE ACT FOR VIOLATION OF PROVISIONS OF SEC.269T. 5. AGGRIEVED BY THE ORDER OF THE LD.CIT (APPEALS) A ND LD. AO, THIS APPEAL HAS BEEN PREFERRED TO GET JUSTICE. 3 ITA NO. 1370 & 1371/DEL./2019 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE COOPERATIV E SOCIETY ACT AND ENGAGED IN CARRYING ON THE BUSINESS OF PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS. FOR THE YEAR UNDER CONSI DERATION, THE ASSESSEE FILED RETURN OF INCOME ON 01/11/2014 DECLA RING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80P O F THE ACT. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT. THE SCRUTINY ASSESSMENT UNDER SECTION 1 43(3) OF THE ACT WAS COMPLETED ON 26/12/2016 AT TOTAL INCOME OF 1,03,830/-IN THE STATUS OF ASSOCIATION OF PERSONS ( AOP). THEREAFTER, LEARNED ADDITIONAL COMMISSIONER OF INCO ME TAX LEVIED PENALTY OF 36,45,841/- VIDE ORDER DATED 28/11/2017 UNDER SECTION 271D OF THE ACT, FOR ACCEPTING CASH DEPOSIT S EXCEEDING 20,000 IN CONTRAVENTION TO THE PROVISIONS OF SECTIO N 269SS OF THE ACT. HE ALSO LEVIED PENALTY UNDER SECTION 271E IN O RDER DATED 28/11/2017 AMOUNTING TO 2,06,82,566/-FOR REPAYMENT OF LOANS AND DEPOSITS IN CASH EXCEEDING 20,000 IN CONTRAVENTION OF THE PROVISION OF SECTION 269T OF THE ACT. ON FURTHER AP PEALS BY THE ASSESSEE AGAINST THESE ORDERS, THE LEARNED CIT(A) U PHELD THE FINDING OF THE LEARNED ADDITIONAL CIT IN BOTH APPEA LS. AGGRIEVED, THE ASSESSEE IS BEFORE THE TRIBUNAL CHALLENGING THE CONFIRMATION OF THE PENALTIES BY THE LEARNED CIT(A). 4. BEFORE US, THE LEARNED SENIOR COUNSEL OF THE ASSES SEE FILED A CONSENT FOR WILLINGNESS TO ARGUE THE CASES THROUGH VIDEO CONFERENCING. IN HEARING DATED 10/08/2020, BOTH THE PARTIES AGREED TO ARGUE THE CASES THROUGH VIDEOCONFERENCING ON 17/08/2020. ACCORDINGLY, BOTH THE PARTIES HAVE BEEN HEARD FROM 4 ITA NO. 1370 & 1371/DEL./2019 17/08/2020 TO 19/08/2020. THE LEARNED COUNSEL OF TH E ASSESSEE FILED A PAPER-BOOK CONTAINING PAGES 1 TO 234, CASE LAW PAPER- BOOKS AND OTHER DOCUMENTS PHYSICALLY AS WELL AS ELE CTRONICALLY ON VARIOUS DATES. 5. THE LEARNED SENIOR COUNSEL OF THE ASSESSEE REFERRE D TO GROUND 1 OF THE APPEALS AND SUBMITTED THAT THE ORDE RS IMPOSING PENALTY UNDER SECTION 271D AND 271E OF THE ACT ARE NON-EST, BAD IN LAW AND WITHOUT JURISDICTION. HE , AT THE OUTSET , REFERRED TO THE ORDER OF THE ASSESSMENT DATED 26/12/2016 (PLACED O N PAGE 34 TO 39 OF THE PAPER BOOK) TO SHOW THAT THERE IS NO INIT IATION /SATISFACTION IN THE ORDER OF THE ASSESSMENT TO LEV Y PENALTY UNDER SECTION 271D/271E OF THE ACT AND AS SUCH IN ABSENCE OF ANY SATISFACTION FOR VIOLATION OF THE PROVISION OF THE 269SS AS WELL AS 269T HAVING BEEN RECORDED BY THE LEARNED ASSESSING OFFICER IN THE ORDER OF THE ASSESSMENT, THE PENALTIES LEVIED BY TH E LEARNED ADDITIONAL CIT ARE WITHOUT JURISDICTION . 6. THE LEARNED DR INTERRUPTED AND OBJECTED THAT THE G ROUND RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND NO SPECIFIC GROUND OF SATISFACTION TO BE REQUIRED BY THE ASSESSING OFF ICER FOR INITIATING PENALTY, HAS BEEN RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL IN APPEAL MEMO. HE FURTHER SUBMITTED THAT THIS ISSUE H AS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL, AND THUS, IT SHOULD HAVE BEEN RAISED BY WAY OF ADDITIONAL GROUND ONLY. THE LEARNED COUNSEL OF THE ASSESSEE REPELLED THE AVERMENT OF TH E LD. DR AND SUBMITTED THAT THOUGH NO SPECIFIC GROUND HAS BEEN R AISED IN THE MEMO OF THE APPEAL, YET THE ASSESSEE IS ENTITLED TO URGE AND ARGUE A GROUND BY RAISING THE SAME ORALLY. IN SUPPORT OF HIS CONTENTION 5 ITA NO. 1370 & 1371/DEL./2019 HE RELIED ON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VMT SPINNING COMPANY LIMITED RE PORTED IN 389 ITR 326. IN THE CASE OF VMT SPINNING COMPANY LI MITED (SUPRA) THE HONBLE HIGH COURT GONE THROUGH THE RUL E 11 AND 29 OF THE ITAT RULES AND HELD AS UNDER: IN OUR VIEW RULE 11 IN FACT SUPPORTS THE ASSESSEE AND NOT THE DEPARTMENT. RULE 11 INFACT CONFERS WIDE POWERS ON THE TRIBUNAL, ALTHOUGH IT REQUIRES A PARTY TO SEEK THE LEAVE OF THE TRIBUNAL. IT DOES NOT REQUIRE THE SAME TO BE IN WRITING. IT MERELY STATES THAT TH E APPELLANT SHALL NOT, EXCEPT BY LEAVE OF THE TRIBUNAL, URGE OR BE HE ARD IN SUPPORT OF ANY GROUND NOT SET FORTH IN THE MEMORANDUM OF APPEA L. IN A FIT CASE IT IS ALWAYS OPEN TO THE TRIBUNAL TO PERMIT AN APPE LLANT TO RAISE AN ADDITIONAL GROUND NOT SET FORTH IN THE MEMORANDUM O F APPEAL. THE SAFEGUARD IS IN THE PROVISO TO RULE 11 ITSELF. THE PROVISO STATES THAT THE TRIBUNAL SHALL NOT REST ITS DECISION ON ANY OTH ER GROUND UNLESS THE PARTY WHO MAY BE AFFECTED THEREBY HAS HAD A SUF FICIENT OPPORTUNITY OF BEING HEARD ON THAT GROUND. THUS EVE N IF IT IS A PURE QUESTION OF LAW, THE TRIBUNAL CANNOT CONSIDER AN AD DITIONAL GROUND WITHOUT AFFORDING THE OTHER SIDE AN OPPORTUNITY OF BEING HEARD. WE VENTURE TO STATE THAT EVEN IN THE ABSENCE OF THE PR OVISO IT WOULD BE INCUMBENT UPON THE TRIBUNAL TO AFFORD A PARTY AN OP PORTUNITY OF MEETING AN ADDITIONAL POINT RAISED BEFORE IT. MOREOVER, EVEN THOUGH RULE 11 REQUIRES AN APPELLANT TO SEEK THE LEAVE OF THE TRIBUNAL, IT DOES NOT CONFINE THE TRIB UNAL TO A CONSIDERATION OF THE GROUNDS SET FORTH IN THE MEMOR ANDUM OF APPEAL OR EVEN THE GROUNDS TAKEN BY THE LEAVE OF THE TRIBU NAL. IN OTHER WORDS THE TRIBUNAL CAN DECIDE THE APPEAL ON A GROUN D NEITHER TAKEN IN THE MEMORANDUM OF APPEAL NOR BY ITS LEAVE. THE O NLY REQUIREMENT IS THAT THE TRIBUNAL CANNOT REST ITS DECISION ON AN Y OTHER GROUND UNLESS THE PARTY WHO MAY BE AFFECTED HAS HAD SUFFIC IENT OPPORTUNITY OF BEING HEARD ON THAT GROUND. 7. IN VIEW OF THE ABOVE DECISION, THE ISSUE RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE BY WAY OF THE ORAL SUBMISSI ON WAS ADMITTED AND THE LEARNED DR WAS GIVEN SUFFICIENT OP PORTUNITY TO 6 ITA NO. 1370 & 1371/DEL./2019 RESPOND THE ISSUE RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE. BOTH THE PARTIES WERE HEARD AT LENGTH ON THIS ISSUE . 8. ON THE ISSUE OF RECORDING SATISFACTION BY THE ASSE SSING OFFICER FOR INITIATING PENALTY PROCEEDINGS, THE LEA RNED SENIOR COUNSEL HAS CITED NUMBER OF DECISIONS, BUT RELIED M AINLY ON DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. JAI LAXMI RICE MILS (379 ITR 521) AND THE DECISION OF T HE TRIBUNAL DELHI BENCH IN THE CASE OF NARSI IRON AND STEELS P LTD (ITA NO. 2866/DEL/2013). 9. IN THE CASE OF JAI LAXMI RICE MILLS (SUPRA), WHIL E FRAMING THE ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SEC. 269T OF THE ACT AND BECAUSE OF THIS THE ASSESSING OFFICER WAS SATISFIED THAT PENALTY PROCEEDINGS UNDER SEC. 271E OF THE ACT WERE TO BE I NITIATED. THE ORIGINAL ASSESSMENT ORDER WAS SET ASIDE BY THE LEAR NED CIT(A) FOR PASSING A FRESH ASSESSMENT ORDER DE NOVO. THE FACTU AL MATRIX AND THE QUESTION OF LAW INVOLVED HAS BEEN SUMMARISED BY THE HONBLE SUPREME COURT AS UNDER: AFTER REMAND, THE ASSESSING OFFICER PASSED A FRESH ASSESSMENT ORDER. IN THIS ASSESSMENT ORDER, HOWEVER, NO SATISF ACTION REGARDING INITIATION OF PENALTY PROCEEDINGS UNDER SEC. 271E O F THE ACT WAS RECORDED. IT SO HAPPENED THAT ON THE BASIS OF THE O RIGINAL ASSESSMENT ORDER DATED FEBRUARY 26, 1996, SHOW -CAU SE NOTICE WAS GIVEN TO THE ASSESSEE AND IT RESULTED IN PASSING TH E PENALTY ORDER DATED SEPTEMBER 23, 1996. THUS, THIS PENALTY ORDER WAS PASSED BEFORE THE APPEAL OF THE ASSESSEE AGAINST THE ORIGI NAL ASSESSMENT ORDER WAS HEARD AND ALLOWED THEREBY SETTING ASIDE T HE ASSESSMENT ORDER ITSELF. IT IS IN THIS BACKDROP, A QUESTION HA S ARISEN AS TO WHETHER THE PENALTY ORDER, WHICH WAS PASSED ON THE BASIS OF THE ORIGINAL ASSESSMENT ORDER AND WHEN THAT ASSESSMENT ORDER HAD BEEN SET ASIDE, COULD STILL SURVIVE. 7 ITA NO. 1370 & 1371/DEL./2019 THE TRIBUNAL AS WELL AS THE HIGH COURT HAS HELD THA T IT COULD NOT BE SO FOR THE SIMPLE REASON THAT WHEN THE ORIGINAL ASS ESSMENT ORDER ITSELF WAS SET ASIDE, THE SATISFACTION RECORDED THE REIN FOR THE PURPOSE OF INITIATION OF THE PENALTY PROCEEDING UNDER SEC. 271E WOULD ALSO NOT SURVIVE. THIS, ACCORDING TO US, IS THE CORRECT PROPOSITION OF LAW STATED BY THE HIGH COURT IN THE IMPUGNED ORDER. AS POINTED OUT ABOVE, INSOFAR AS, FRESH ASSESSMENT ORDER IS CONCERNED, THERE WAS NO SATISFACTION RECORDED REGAR DING PENALTY PROCEEDING UNDER SECTION 271E OF THE ACT, THOUGH IN THAT ORDER THE ASSESSING OFFICER WANTED PENALTY PROCEEDING TO BE I NITIATED UNDER SECTION 271(1)(C) OF THE ACT. THUS, INSOFAR AS PENA LTY UNDER SECTION 271E IS CONCERNED, IT WAS WITHOUT ANY SATISFACTION AND, THEREFORE, NO SUCH PENALTY COULD BE LEVIED. 10. IN THE CASE OF ACIT VS. NARSI IRON AND STEEL P LTD (SUPRA), THE TRIBUNAL OBSERVED THAT IN THE ORDER OF THE ASSE SSMENT, THERE WAS NO INITIATION/SATISFACTION, HOWEVER, SUBSEQUENT TO THE ORDER OF THE ASSESSMENT, BY WAY OF AN ORDER SHEET, SATISF ACTION HAD BEEN RECORDED AND PENALTY WAS INITIATED. THE TRIBUN AL, FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE C ASE OF JAI LAXMI MILLS (SUPRA) HELD THAT SUCH A COURSE IS NOT PERMISSIBLE. THE LEARNED COUNSEL SUBMITTED THAT IN THE INSTANT C ASE THERE WAS NOT EVEN A WHISPER IN THE ORDER OF THE ASSESSMENT R EGARDING ANY VIOLATION UNDER SECTION 269SS/269T OF THE ACT. THE LEARNED COUNSEL ALSO RELIED ON FOLLOWING DECISIONS: A) SHRI T. SHIJU VS. JCIT (ITA NO. 2829/CHNY/2018) (SE E PAGE 11-15 OF PB) B) SMT. S.B. PATIL VS. JCIT (ITA NO.1053 & 1054/BNG./2 014) FILES ON 01.07.2020 C) M/S. KS CHAWLA & SONS VS. JCIT FILED ON 01.07.2020 11. ON THE CONTRARY, THE LEARNED DR SUBMITTED THAT DUR ING ASSESSMENT PROCEEDING, THE ASSESSING OFFICER RAISED QUERY OF VIOLATION OF THE PROVISION OF SECTION 269SS AND THE ASSESSEE DULY RESPONDED. HE REFERRED TO SUBMISSION OF THE ASSESSE E DATED 8 ITA NO. 1370 & 1371/DEL./2019 13/12/2016 FILED BEFORE THE ASSESSING OFFICER. HE S UBMITTED A COPY OF SAID REPLY OF THE ASSESSEE DATED 13/12/2016 BEFORE US. ON PERUSAL OF THE SAID REPLY, IT IS FOUND THAT THE ASSESSEE FILED DETAIL OF LOAN/DEPOSITS TAKEN EXCEEDING 20,000 DURING THE YEAR AND SUBMITTED THAT PROVISIONS OF SECTION 269SS WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS IT WAS A COOPERATIVE BANK WITHIN THE MEANING OF PART V OF BANKING REGULATION A CT, 1949. 12. THE LEARNED DR FURTHER SUBMITTED THAT THE FACT OF RAISING QUERY DURING ASSESSMENT PROCEEDING OF ANY VIOLATION UNDER SECTION 269SS/269T OF THE ACT IS ALSO CLEAR FROM TH E SUBMISSION OF THE ASSESSEE FILED BEFORE THE LEARNED CIT(A). TH E LD. CIT(A) HAS SUMMARIZED SUBMISSION OF THE ASSESSEE ON PAGE 4 OF BOTH THE IMPUGNED ORDERS. IN THE SAID SUBMISSIONS, THE ASSES SEE SUBMITTED THAT WITH REFERENCE TO THE PROVISIONS OF SECTION 273B OF THE ACT, THE LEARNED ASSESSING OFFICER DID NOT CONS IDER TO IT NECESSARY TO REFER THE MATTER UNDER SECTION 271D OR 271E TO THE ADDITIONAL COMMISSIONER OF INCOME TAX. THUS, ACCORD ING TO THE LEARNED DR, IT IS AN ADMITTED FACT THAT THE ISSUE O F VIOLATION OF SECTION 269SS AND 269T WAS RAISED DURING ASSESSMENT PROCEEDING AND DULY REPLIED BY THE ASSESSEE BUT THE ASSESSEE WRONGLY PRESUMED THAT THE ASSESSING OFFICER ACCEPTE D THE EXPLANATION OF THE REASONABLE CAUSE OF THE FAILURE IN TERMS OF SECTION 273B OF THE ACT, AS NO SUCH INFORMATION OF ACCEPTING THE EXPLANATION OF THE ASSESSEE IN TERMS OF SECTION 273 B WAS INTIMATED TO THE ASSESSEE. 13. THIRDLY, THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) HIMSELF PERUSED THE ASSESSMENT RECORD WHEREIN THE A O REFERRED 9 ITA NO. 1370 & 1371/DEL./2019 FOR INITIATION OF ACTION UNDER SECTION 271D/271E IN THE RELEVANT ASSESSMENT YEAR. THE LEARNED COUNSEL OF THE ASSESSE E, HOWEVER, IN THE REJOINDER SUBMITTED THAT THIS FINDING OF THE LEARNED CIT(A), WAS WHOLLY MISCONCEIVED, UNSUPPORTED BY EVIDENCE AN D NO EVIDENCE ON RECORD. WHEREAS, IN SUPPORT OF THE CONT ENTION THAT THE ASSESSING OFFICER RECORDED SATISFACTION ON VIOL ATION OF THE PROVISIONS OF THE SECTION 269SS AND 269T OF THE ACT , THE LEARNED DR FILED A COPY OF THE LETTER DATED 26/12/2016 OF T HE ASSESSING OFFICER, ADDRESSED TO THE JOINT COMMISSIONER OF INC OME TAX, RANGE 38, NEW DELHI. THIS LETTER HAS BEEN ISSUED ON 26/12/2016 ALONG WITH THE ISSUE OF THE ASSESSMENT ORDER ON SAM E DATE. 14. THE LEARNED DR SUBMITTED THAT IN THE CASE, EXISTEN CE OF SATISFACTION IS EVIDENT FROM REFERENCE BY THE ASSES SING OFFICER VIDE LETTER DATED 26/12/2016 TO THE ADDL. CIT FOR CONSID ERING LEVY OF PENALTY. HE SUBMITTED THAT THERE WAS NO SPECIFIC RE QUIREMENT OF THE LAW THAT SATISFACTION ON THE VIOLATION OF THE S ECTION 269SS AND SECTION 269T ARE TO BE RECORDED ONLY IN THE ASSESSM ENT ORDER AND ACCORDING TO HIM, IT IS SUFFICIENT IF SAME IS RECOR DED DURING THE COURSE OF THE ASSESSMENT PROCEEDING. HE SUBMITTED T HAT IN THE CASE OF JAI LAXMI MILLS (SUPRA) THE MAIN ISSUE WAS WHEN THE ORIGINAL ASSESSMENT ORDER WAS SET ASIDE, CAN PENALT Y COULD BE LEVIED ON THE SATISFACTION RECORDED IN ORIGINAL ASS ESSMENT ORDER AS THERE WAS NO SATISFACTION WAS RECORDED IN THE FRESH ASSESSMENT PROCEEDINGS. ACCORDING TO HIM, IN THE SAID CASE, TH E SATISFACTION WAS NOT RECORDED BY THE ASSESSING OFFICER, WHO PASS ED THE FRESH ASSESSMENT ORDER AND ISSUE WAS NOT THAT THE SATISFA CTION WAS TO BE RECORDED ONLY IN THE ASSESSMENT ORDER. HE SUBMIT TED THAT IN 10 ITA NO. 1370 & 1371/DEL./2019 THE CASE OF NARSI IRON AND STEEL P LTD. (SUPRA), TH E SATISFACTION WAS RECORDED AFTER THE PASSING OF THE ASSESSMENT OR DER AND THEREFORE, THE SAID CASE IS DISTINGUISHABLE ON FACT S. 15. THE SECOND ISSUE WHICH WAS RAISED BY THE LEARNED SE NIOR COUNSEL IS THAT NO NOTICE UNDER SECTION 271D OR 271 E OF THE ACT HAS BEEN ISSUED BY THE ASSESSING OFFICER AND THE ON LY NOTICE WHICH WAS ISSUED WAS IN RESPECT OF 271(1)(C) OF THE ACT, WHICH IS A SPECIFIC NOTICE FOR AN ALLEGED DEFAULT. ACCORDING T O HIM, THERE WAS NO INITIATION OF THE PROCEEDING UNDER SECTION 271D OR 271E OF THE ACT BY THE AO. THE LEARNED COUNSEL SUBMITTED THAT F INDING OF THE LD. CIT(A) IN HIS ORDER AT PAGE 19 THAT THE AO WAS NOT AUTHORIZED TO INITIAL PENALTY PROCEEDING, IS MISCONCEIVED IN L AW AND CONTRARY TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS JAI LAXMI RICE MILLS (SUPRA). 16. THE LEARNED DR SUPPORTED THE FINDING OF THE LEARNE D CIT(A). HE ALSO REFERRED TO THE DECISION OF THE HONBLE MAD HYA PREDESH HIGH COURT IN THE CASE OF NITIN AGRAWAL VS JCIT REPO RTED IN 412 ITR 309, WHEREIN IT IS HELD THAT THE DCIT IS NOT CO MPETENT FOR INITIATION OF THE PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT. THE RELEVANT PARA PREFERRED BY HIM IS REPRODUC ED AS UNDER: 6. FROM THE PLEADINGS MADE IN THE WRIT PETITION, I T IS ALSO AN ADMITTED FACT THAT THE DEPUTY COMMISSIONER OF INCOM E TAX WAS NOT COMPETENT AUTHORITY IN INITIATION OF PENALTY PROCEE DING UNDER SECTION 271-D AND 271-E OF THE INCOME TAX ACT. THE FIRST NO TICE UNDER SECTION 271-D / 271-E READ WITH SECTION 274 OF THE INCOME TAX ACT HAVE BEEN ISSUED BY THE JOINT DIRECTOR OF COMMISSIO NER OF INCOME TAX ON 22.9.2017. THUS, THE PENALTY PROCEEDINGS UND ER SECTION 271- D AND 271-E HAVE BEEN INITIATED W.E.F. 22.9.2017. 7. SECTION 275(1) (C) OF THE INCOME TAX ACT, 1961 P ROVIDES THAT PENALTY CAN BE LEVIED ONLY BEFORE COMPLETION OF FIN ANCIAL YEAR IN 11 ITA NO. 1370 & 1371/DEL./2019 WHICH ASSESSMENT ORDER WAS PASSED OR SIX MONTHS FRO M THE END OF MONTH IN WHICH PENALTY PROCEEDING IS INITIATED, WHI CH EVER PERIOD EXPIRED LATER. THE STAND OF THE RESPONDENT IS THAT THE SHOW CAUSE NOTICE DATED 20.12.2016, ISSUED DURING THE ASSESSME NT PROCEEDINGS BY THE DEPUTY COMMISSIONER INCOME TAX, INDORE, CANN OT BE TERMED AS NOTICE UNDER SECTION 271-D / 271-E OF THE INCOME TAX ACT, IN REGARD TO INITIATION OF PENAL PROCEEDING UNDER THE AFORESAID PROVISION THEY DEPUTY COMMISSIONER HAS NO JURISDICTION UNDER THIS PROVISION. THE PENALTY UNDER THE AFORESAID IS INDEPENDENT FROM THE ASSESSMENT PROCEEDINGS AND BOTH PROCEEDINGS CANNOT BE MIXED UP. THE DEPUTY COMMISSIONER OF INCOME TAX, ON THE BASIS OF ASSESSMENT ORDER, IN THE CASE OF THE PETITIONER UND ER SECTION 153 A READ WITH SECTION 143(3) OF THE INCOME TAX ACT ON 2 0.12.2016, REFERRED THE CASE TO THE RESPONDENT FOR INITIATION OF PENALTY PROCEEDING UNDER SECTION 271-D AND 271-E OF THE ACT IN ASSESSMENT YEAR 2009-10 AND 2011, VIDE LETTER DATED 27.4.2017, ON RECEIVING THE INFORMATION FROM THE OFFICE BY THE DEPUTY COMMI SSIONER OF INCOME TAX, THE RESPONDENT ISSUED FIRST NOTICE UNDE R SECTION 271-D AND 271-E ON 22.9.2017 TO THE PETITIONER. HENCE, TH E PENALTY PROCEEDING HAS BEEN INITIATED W.E.F. 22.9.2017, WHI CH IS GETTING BARRED ON 31.3.2018. THE DEPUTY COMMISSIONER OF INC OME TAX IS NOT EMPOWERED TO PASS THE ORDER UNDER SECTION 271-D AND 271-E READ WITH SECTION 275 OF THE INCOME TAX ACT. 8. IT IS ONLY JOINT COMMISSIONER OF INCOME TAX WHO IS EMPOWERED TO INITIATE AS WELL AS IMPOSE THE PENALTY UNDER SECTIO N 271-D OR 271-E OF THE INCOME TAX ACT. THUS, THE LIMITATION PERIOD OF SIX MONTHS TO BE RECKONED FROM THE END OF MONTH OF INITIATION OF THE PENALTY PROCEEDING BY THE JOINT COMMISSIONER OF INCOME TAX AND NOT FROM THE DATE OF ASSESSMENT ORDER. 9. LEARNED SENIOR COUNSEL FOR THE PETITIONER HAS DR AWN OUR ATTENTION TO THE CONTENTS OF NOTICE DATED 20.12.2016, ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX DURING THE ASSESSMENT PR OCEEDINGS AND SECTION 274, 269-SS, 269-T, 271- D, 274-E AND 2 75 OF THE INCOME TAX ACT AND SUBMITTED THAT THE LIMITATION FO R INITIATION OF PENALTY PROCEEDING FOR IMPOSITION OF PENALTY UNDER SECTION 271D, 271E OF THE INCOME TAX ACT START FROM 20.12.2016 AN D UNDER SECTION 275(1) (C), THE LIMITATION OF SIX MONTHS START FROM 20.12.2016. THE SECOND NOTICE ISSUED ON 22.9.2017 IS BARRED BY TIME AND THE LEARNED JOINT COMMISSIONER OF INCOME TAX HAD NO JURISDICTIO N TO ISSUE THE SAME. TO SUPPORT THE AFORESAID, HE HAS PLACED RELIA NCE ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT CENTRAL - III V/S. NARAYANI& SONS (P) LTD. REPORTED AS (CALHC) (2 016) 289 CTR (CAL) 301 , DECISION OF THE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX -VI V/S. WORLDWIDE TOWNS HIP PROJECTS LTD., 2014 (269) CTR 444 (DELHI), IN THE CASE OF PC IT V/S. JKD CAPITAL & FIN LEASE LTD. (2015) 378ITR 640 (DEL) , COMMISSINOER OF 12 ITA NO. 1370 & 1371/DEL./2019 INCOME TAX (CENTRAL) - 2 V/S. MAHESH WOOD PRODUCTS PVT. LTD., (2017) 394 ITR 312 (DELHI) , THE DECISION OF THE AP EX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S. HISSARIA BR OTHERS, (2016) 386 ITR 719 (SC), AND THE DECISION OF DELHI HIGH CO URT IN THE CASE OF CIT V/S. JKD CAPITAL &FINLEASE LTD., (2015) 378 ITR 640 (DEL). 10. HE ALSO PLACED RELIANCE ON THE DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S . JITENDRA SINGH RATHORE, 2013 (352) ITR 327 (RAJ), GRIHALAKSHMI VIS ION V/S. THE ADDITIONAL COMMISSIONER OF INCOME TAX, 2015 379 UR 100 (KER), INCOME TAX OFFICER V/S. RAMKISHOREREWARAM TADA, 200 6 202 CTR (MP) 404 AND THE DECISION OF THE SUPREME COURT IN T HE CASE OF COMMISSIONER OF INCOME-TAX F PANCHKULA V/S. JAI LAXMI RICE MILLS AMBALA CITY, 2015 (64) TAXMANN.COM 75 (SC) AND SUBM ITTED THAT UNDER SECTION 275(1)(C), THE STARTING POINT WOULD B E 'INITIATION OF PENALTY PROCEEDINGS'. IN THE CASE OF CIT F CENTRAL - III V/S. NARAYANI& SONS (P) LTD (SUPRA) THE ASSESSMENT WAS COMPLETED O N 26.12.2006 UNDER SECTION 153A/143(3) OF THE INCOME TAX ACT. AF TER PASSING OF ASSESSMENT ORDER ON THE SAME DATE, IE, 26.12.2016 I TSELF, THE ASSESSING OFFICER ISSUED A NOTICE FOR IMPOSITION OF PENALTY UNDER SECTION 271(D)(1), OF THE INCOME TAX ACT. THE DIVIS ION BENCH OF CALCUTTA HIGH COURT RELIED ON THE JUDGMENT OF RAJAS THAN HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S. JITE NDRA SINGH RATHORE, (SUPRA) HAS HELD THAT THE ASSESSING OFFICE R ISSUED A NOTICE DATED 26.12.2006 ON ASSESSEE, FOR IMPOSITION OF PEN ALTY UNDER SECTION 271(D) AND THEREAFTER, HE REFERRED THE MATT ER TO THE ADDITIONAL COMMISSIONER FOR NECESSARY ACTION. THE A DDITIONAL COMMISSIONER ISSUED THE ASSESSEE A FRESH NOTICE DAT ED 26.7.2007 AND BY ORDER DATED 21.9.2007, THE LEARNED ADDITIONA L COMMISSIONER LEVIED PENALTY UNDER SECTION 271 (D) OF THE INCOME TAX ACT AND HELD THAT THE PERIOD OF LIMITATION COMMENCED ON 26.12.20 06, WHEN NOTICE UNDER SECTION 271(D) WAS ISSUED BY THE ASSESSING OF FICER AND, THEREFORE, THE ORDER PASSED ON 21.9.2007 WAS HIT BY LIMITATION. READING OF THESE JUDGMENTS SHOWS THAT THESE CASES W ERE DECIDED ON THE DOCUMENTS, WHICH WERE AVAILABLE BEFORE THE C OURT. IN ALL THOSE MATTERS, THE NOTICE WAS ISSUED BY THE ASSESSING OFF ICER ON THE DATE OF WHICH THE ASSESSING ORDER WAS PASSED OR AFTER PA SSING OF THE ASSESSMENT ORDER. IN THE PRESENT CASE, THE ASSESSIN G OFFICER ISSUED SHOW CAUSE TO THE PETITIONER UNDER SECTION 269- SS AND 269(2) OF THE INCOME TAX ACT TO EXAMINE VIDE SHOW CAUSE NOTICE DA TED 20.12.2016, IE., DURING THE PENDENCY OF THE ASSESSM ENT PROCEEDINGS TO EXAMINE THE VIOLATION OF THESE PROVISIONS OF THE INCOME TAX ACT. NO NOTICE UNDER SECTION 270-D OR 279-E READ WITH SECTI ON 279 OF THE INCOME TAX ACT WAS EVER ISSUED BY THE ASSESSING OFF ICER. THE PETITIONER WAS WRONGLY ATTEMPTED TO ESTABLISH THE S HOW CAUSE NOTICE DATED 20.12.2016 AS A LEGAL NOTICE UNDER SECTION 27 1-D / 271-E READ WITH SECTION 274 OF THE INCOME TAX ACT. 13 ITA NO. 1370 & 1371/DEL./2019 11. SECTION 271-D AND 271-E PROVIDE THAT LEVY OF PE NALTY IN CONTRAVENTION OF SECTION 269-SS AND 269-T, AS PER S UBSECTION) TO BOTH THESE SECTIONS IN PENALTY IMPOSITION UNDER SUB -SECTION (1) OF THESE PROVISIONS SHALL BE IMPOSED BY THE JOINT COMM ISSIONER OF INCOME TAX. FROM THE STATUTORY PROVISION, IT IS CLE AR THAT THE COMPETENT AUTHORITY TO LEVY THE PENALTY IS JOINT CO MMISSIONER, THEREFORE, ONLY THE JOINT COMMISSIONER CAN INITIATE PROCEEDING FOR LEVY OF PENALTY. 12. INSOFAR AS THE JUDGMENT OF THE APEX COURT IN D. M.MANASVI V/S. COMMISSIONER OF INCOME TAX, GUJARAT II, [1972] 86 I TR 557 IS CONCERNED, THAT WAS A CASE, WHERE PENALTY WAS LEVIE D UNDER SECTION 271(1)(C) AND AS IS EVIDENT FROM THE PROVISION ITSE LF, THE PROCEEDINGS UNDER THAT SECTION ARE TO BE INITIATED ON THE BASIS OF THE SATISFACTION OF THE OFFICERS MENTIONED THEREIN INCLUDING THE ASS ESSING OFFICER. UNLIKE THE PROVISIONS OF SECTION 271(1)(C), UNDER T HE PROVISIONS OF SECTION 271D AND E, THE EXCLUSIVE AUTHORITY IS CONF ERRED ON THE JOINT COMMISSIONER. THEREFORE, THE PRINCIPLES LAID DOWN I N THE JUDGMENT OF THE APEX COURT CANNOT BE CALLED IN AID TO IMPUGNED THE PRESENT ACTION. THEREFORE, THE FIRST CONTENTION RAISED BY T HE LEARNED COUNSEL FOR THE ASSESSEE DESERVES TO BE REJECTED AND WE DO SO. 13. CONSIDERING THE AFORESAID, WE ARE OF THE VIEW T HAT FIRST SHOW CAUSE NOTICE, WITHOUT INITIATING PROCEEDINGS FOR IM POSITION OF PENALTY UNDER SECTION 271-D (WAS ISSUED ON 22.9.2017). IT I S ALSO WELL SETTLED THAT A PENALTY UNDER THIS PROVISION IS INDE PENDENT UNDER ASSESSMENT. THE ACTION INVITING IMPOSITION OF PENAL TY IS GRANTING OF LOANS ABOVE THE PRESCRIBED LIMITATION OTHERWISE THE N THROUGH BANKING CHANNELS AND AS SUCH INFRINGEMENT OF SECTIO N 269-SS OF THE INCOME TAX ACT IS NOT RELATED TO THE INCOME THAT MA Y BE ASSESSED OR FINALLY ADJUDICATED. WE FIND NO FORCE ON THE CONTEN TION ADVANCED BY THE LEARNED SENIOR COUNSEL FOR THE PETITIONER. THE WRIT PETITION HAS NO MERIT AND IS, ACCORDINGLY, DISMISSED. NO COSTS. 17. THE LEARNED DR ALSO REFERRED TO THE DECISION OF TH E HONBLE KERELA HIGH COURT IN THE CASE OF GRIHLAKSHMI VISION VS ADDL CIT REPORTED IN 379 ITR 100 (KER), WHEREIN IT IS HE LD AS UNDER: 10. QUESTION TO BE CONSIDERED IS WHETHER PROCEEDIN GS FOR LEVY OF PENALTY, ARE INITIATED WITH THE PASSING OF THE ORDE R OF ASSESSMENT BY THE ASSESSING OFFICER OR WHETHER SUCH PROCEEDINGS H AVE COMMENCED WITH THE ISSUANCE OF THE NOTICE ISSUED BY THE JOINT COMMISSIONER. FROM STATUTORY PROVISION, IT IS CLEAR THAT THE COMP ETENT AUTHORITY TO LEVY PENALTY BEING THE JOINT COMMISSIONER. THEREFOR E, ONLY THE JOINT COMMISSIONER CAN INITIATE PROCEEDINGS FOR LEVY OF P ENALTY. SUCH 14 ITA NO. 1370 & 1371/DEL./2019 INITIATION OF PROCEEDINGS COULD NOT HAVE BEEN DONE BY THE ASSESSING OFFICER. THE STATEMENT IN THE ASSESSMENT ORDER THAT THE PROCEEDINGS UNDER SECTION 271D AND E ARE INITIATED IS INCONSEQU ENTIAL. ON THE OTHER HAND, IF THE ASSESSMENT ORDER IS TAKEN AS THE INITIATION OF PENALTY PROCEEDINGS, SUCH INITIATION IS BY AN AUTHO RITY WHO IS INCOMPETENT AND THE PROCEEDINGS THEREAFTER WOULD BE PROCEEDINGS WITHOUT JURISDICTION. IF THAT BE SO, THE INITIATION OF THE PENALTY PROCEEDINGS IS ONLY WITH THE ISSUANCE OF THE NOTICE ISSUED BY THE JOINT COMMISSIONER TO THE ASSESSEE TO WHICH HE HAS FILED HIS REPLY. 11. THE ONLY CASE OF THE ASSESSEE IS THAT IF THE PE RIOD OF LIMITATION PRESCRIBED IN SECTION 271(1)(C) IS RECKONED FROM TH E DATE OF THE ASSESSMENT ORDER DATED 6.11.2007, THE PENALTY ORDER PASSED BY THE JOINT COMMISSIONER ON 29.7.2008 IS BEYOND THE TIME PERMITTED IN THE ABOVE SECTION. AS WE HAVE ALREADY HELD, THE INI TIATION OF THE PENALTY PROCEEDINGS IS NOT BY THE ASSESSING OFFICER BUT BY THE JOINT COMMISSIONER AND IF THAT BE SO, THE ORDER LEVYING P ENALTY PASSED BY THE JOINT COMMISSIONER IS WITHIN THE TIME PRESCRIBE D IN SECTION 275(1)(C). 12. INSOFAR AS THE JUDGMENT OF THE APEX COURT IN D. M.MANASVI V. COMMISSIONER OF INCOME TAX, GUJARAT II [1972] 86 IT R 557 IS CONCERNED, THAT WAS A CASE WHERE PENALTY WAS LEVIED UNDER SECTION 271(1)(C) AND AS IS EVIDENT FROM THE PROVISION ITSE LF, THE PROCEEDINGS UNDER THAT SECTION ARE TO BE INITIATED ON THE BASIS OF THE SATISFACTION OF THE OFFICERS MENTIONED THEREIN INCLUDING THE ASS ESSING OFFICER. UNLIKE THE PROVISIONS OF SECTION 271(1)(C), UNDER T HE PROVISIONS OF SECTION 271D AND E, THE EXCLUSIVE AUTHORITY IS CONF ERRED ON THE JOINT COMMISSIONER. THEREFORE, THE PRINCIPLES LAID DOWN I N THE JUDGMENT OF THE APEX COURT CANNOT BE CALLED IN AID TO IMPUGN TH E CONCURRENT FINDINGS OF THE LOWER AUTHORITIES. THEREFORE, THE F IRST CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE DESE RVES TO BE REJECTED AND WE DO SO. 18. IN SUPPORT OF GROUND NO. 2 THE LEARNED COUNSEL SUB MITTED THAT PROVISION OF SECTION 269SS AND 269T ARE NOT AT TRACTED IN THE CASE OF THE ASSESSEE. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE NEITHER TAKES ANY LOAN NOR ACCEPTS ANY DEP OSITS, NOR IT HAS SO DONE EVEN DURING THE FINANCIAL YEAR CONCERNE D. HE SUBMITTED THAT ASSESSEE SOCIETY IS A COOPERATIVE SO CIETY AND ITS SOLE OBJECT IS TO PROMOTE THE ECONOMIC INTEREST OF ITS MEMBERS. HE SUBMITTED THAT DURING THE COURSE OF ITS ACTIVITIES, THE MEMBERS, 15 ITA NO. 1370 & 1371/DEL./2019 HOWEVER, IN ORDER TO EARN INTEREST, VOLUNTARILY DEP OSITS IN THE RUNNING ACCOUNTS, THEIR SURPLUS FUNDS, WHICH IS HIG HLY MEAGRE, WHICH SUMS ASSESSEE FURTHER INVEST ON WHICH EARNS I NTEREST. AT TIMES OF THE NEEDS, SUCH MEMBERS ALSO OVERDRAW FROM THEIR ACCOUNTS WHEN NEEDED ON WHICH SUCH MEMBERS SUFFER I NTEREST. THE CREDITS APPEARING IN THE MEMBERS ACCOUNT WAS NO T DEPOSITED WITHIN THE MEANING OF SECTION 269SS AS THERE EXISTE D NO RELATIONSHIP OF DEPOSITER AND DEPOSITORY IN LAW BUT THE AMOUNTS STANDING TO THE CREDIT OF THE MEMBERS REPRESENTS ME RE CREDIT BALANCES AND AS SUCH THE RELATIONSHIP BETWEEN THE A SSESSEE AND THE SOCIETY WAS THAT OF A CREDITOR AND DEBTOR. HE S UBMITTED THAT MERE FACT THAT THE ASSESSEE WAS A DEBTOR DOES NOT M EAN THAT IT HAS TAKEN LOAN OR ACCEPTED ANY DEPOSIT. THE LEARNED COUNSEL REFERRED TO 34 SHEETS OF RECEIPTS AND OUTGOING FR OM THE MEMBERS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 19. THE LEARNED COUNSEL FURTHER SUBMITTED THE BYE-LAWS OF THE SOCIETY I.E. BYE-LAW XI MERELY AUTHORIZES THE SOCIE TY TO ACCEPT COMPULSORY DEPOSITS OF RS.50/- PER MONTH (WHICH HA S NOW BEEN INCREASED TO RS.300/- PER MONTH). A COPY OF BYE-LAW S HAVE BEEN PLACED AT PAGES 1 -10 OF PAPER BOOK AND BYE-LAW XI IS AT PAGE 7 OF PAPER BOOK. THUS IN VIEW OF THE FACT, THERE IS NO P ROVISIONS IN THE BYE-LAWS OF THE SOCIETY, THE ALLEGATION THAT THE AS SESSEE HAS ACCEPTED ANY DEPOSITS IS UNTENABLE, SINCE IT IS THE BEYOND THE SCOPE OF ITS OBJECT. IT IS SUBMITTED THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. BAJPUR CO-OPERATIVE SUGAR FACTO RY LTD. REPORTED IN 172 ITR 321 HAVE HELD THAT, THE CREDITS APPEARING IN THE ACCOUNT OF ITS CUSTOMERS, CANNOT BE REGARDED AS DEPOSIT 16 ITA NO. 1370 & 1371/DEL./2019 WITHIN THE MEANING OF DEPOSIT, DESPITE THE FACT S UCH AMOUNTS WERE REFLECTED IN THE ACCOUNTS AS DEPOSITS. A COPY OF THE AFORESAID JUDGMENT IS PLACED AT PAGES 74 - 83 OF PAPER BOOK. IN THIS VERY JUDGMENT IT WAS HELD THAT IN THE ABSENCE OF ANY BYE -LAW, EMPOWERING THE SOCIETY TO RECEIVE DEPOSITS, THE AMO UNTS OF CREDITS IN THE ACCOUNT OF ITS CUSTOMERS CANNOT BE HELD TO B E A DEPOSIT. IT IS THUS SUBMITTED THE FINDINGS OF THE LEARNED ADDL. CIT IS WHOLLY ERRONEOUS IN LAW AND IS ALSO IN CONFLICT WITH ITS O WN STAND IN THE PRECEDING AND LATER ASSESSMENT YEAR. 20. IT IS FURTHER SUBMITTED THAT THE APPELLANT AT PARA 11.3 AT PAGE 12 OF ITS WRITTEN SUBMISSIONS HAD ALSO SUBMITT ED THAT CLAUSE (III) OF THE EXPLANATION TO SECTION 269T OF THE ACT SPECIFICALLY PROVIDES THAT LOAN OR DEPOSIT MEANS ANY LOAN OR D EPOSIT OF MONEY WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD. IN THE INSTANT CASE IT IS SUBMITTED, THERE IS A COMPLETE A BSENCE OF ANY SUCH STIPULATION OF THE DEPOSITS MADE BY THE MEMBER S AND THERE IS ALSO NO AGREEMENT IN THIS BEHALF BETWEEN THE AS SESSEE AND THE DEPOSITOR THAT THE AMOUNT IS REPAYABLE AFTER NOTICE OR IS REPAYABLE AFTER A PERIOD. ON THE CONTRARY THE MEMBE RS COULD WITHDRAW FROM THEIR CREDIT BALANCE OF THE SUMS DEPO SITED, WHENEVER SUCH MEMBERS DESIRES, UPON THE AVAILABILIT Y OF FUNDS WITH THE SOCIETY. IT IS THUS SUBMITTED THAT THE AMO UNTS DEPOSITED BY THE MEMBERS IN THEIR RUNNING ACCOUNT PER-SE IS N OT DEPOSIT WITHIN THE MEANING OF SECTION 269SS OF THE ACT SINC E THE DEFINITION OF THE DEPOSIT WILL HAVE SAME CHARACTER AS IS GIVEN IN SECTION 269T OF THE ACT. IT IS FURTHER SUBMITTED TH AT THE APPELLANT IN ITS WRITTEN SUBMISSION HAD ALSO RELIED ON THE JU DGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. ATUL EN GINEERING 17 ITA NO. 1370 & 1371/DEL./2019 UDYOG REPORTED IN 228 TAXMAN 295, WHEREIN IN PARA 1 3, THE HONBLE HIGH COURT HAD EXPLAINED THE LEGAL MEANING OF THE WORD DEPOSIT. 21. THE LEARNED COUNSEL THUS SUBMITS THAT THE FINDINGS OF ADDL. CIT AT PG. 2 OF HIS ORDER THAT THE ASSESSEE HAS CON TRAVENED THE PROVISIONS OF SECTION 269SS OF THE ACT BY ACCEPTING CASH DEPOSITS OF RS.306,45,841/- IS ERRONEOUS BOTH ON FACTS AND I N LAW AND IS BASED ON NO MATERIAL. IT IS SUBMITTED THAT THE LEAR NED AO ON THE CONTRARY HAS IMPLIEDLY HELD THAT THE ASSESSEE HAS N OT VIOLATED ANY SUCH PROVISION, SINCE HE HAS RECORDED NO SATISFACTI ON NOR HAD ISSUED EVEN ANY SHOW CAUSE NOTICE. IT IS SUBMITTED THAT ANY OR EVERY CREDIT IN AN ACCOUNT AUTOMATICALLY DOES NOT A TTAINS A CHARACTER OF ACCEPTANCE OF A DEPOSIT. NEEDLESS TO R E-EMPHASIS THAT, NEITHER IN ANY PRECEDING 10 YEARS NOR EVEN IN LATER YEARS ANY SUCH SUM HAS BEEN HELD BY THE AUTHORITIES TO BE ACC EPTANCE OF DEPOSITS, DESPITE THE FACT THAT SIMILARLY SUCH SUMS WERE BEING CREDITED IN THE ACCOUNTS OF DEPOSITORS IN THEIR RUN NING ACCOUNT. 22. LEARNED DR ON THE OTHER AND RELIED ON THE ORDER OF THE LOWER AUTHORITIES TO HOLD THAT AMOUNT IN QUESTION WERE DE POSIT/LOAN AND REPAYMENT OF LOAN/DEPOSIT. THE LEARNED DR RELIE D ON THE DECISION OF THE HONBLE KERELA HIGH COURT IN THE CA SE OF GRIHLAKSHMI VISION (SUPRA) WHEREIN THE MONEY RECEIVE D FROM THE PARTNERS/SISTER CONCERN WAS ALSO HELD IN THE NATURE OF THE LOAN OR DEPOSIT, AS UNDER: 15. THE THIRD CONTENTION THAT WAS RAISED BY THE AS SESSEE WAS THAT IF MONEY IS TAKEN FROM PARTNERS OR SISTER CONCERNS, IT COULD NOT BE TREATED AS LOANS OR DEPOSITS. IN SUPPORT OF THIS CO NTENTION, COUNSEL FOR THE ASSESSEE RELIED ON JUDGMENTS IN COMMISSIONER OF INCOME TAX V. T.PERUMAL (INDUL.) [2015] 370 ITR 313 (MAD) AND 18 ITA NO. 1370 & 1371/DEL./2019 COMMISSIONER OF INCOME TAX V. MUTHOOT FINANCIERS AN D ANOTHER [2015] 371 ITR 408 (DELHI). READING OF THESE JUDGMENTS SHOW THAT THESE CASES WERE DECIDED ON THE BASIS OF THE DOCUME NTS THAT WERE AVAILABLE BEFORE THE COURT. ON THE OTHER HAND, INSO FAR AS THESE CASES ARE CONCERNED, THOUGH IT IS THE ADMITTED CASE THAT AMOUNTS WERE RECEIVED FROM PARTNERS AND OTHER SISTER CONCERNS OF THE ASSESSEE AND WERE REPAID, THERE IS NO MATERIAL WHATSOEVER TO INFER THAT THESE RECEIPTS WERE ANYTHING OTHER THAN LOANS OR DEPOSITS . THERE IS NO LAW THAT EVERY RECEIPT FROM A PARTNER OR A SISTER CONCE RN CANNOT, IN ALL CIRCUMSTANCES, BE TREATED AS A LOAN OR DEPOSIT. ON THE OTHER HAND, THE NATURE OF THE RECEIPT WOULD DEPEND UPON THE AGR EEMENT BETWEEN THE PARTIES AND THE EVIDENCE THAT IS PRODUCED. AS W E HAVE ALREADY STATED, THERE IS NO MATERIAL WHATSOEVER TO ACCEPT T HE CASE OF THE ASSESSEE THAT THESE ARE LOAN OR DEPOSIT. IN SUCH CI RCUMSTANCES, THE FINDINGS OF THE ASSESSING OFFICER CONFIRMED BY THE APPELLATE COMMISSIONER AND THE TRIBUNAL THAT IT WAS A LOAN OR DEPOSIT THAT WAS RECEIVED BY THE ASSESSEE ALSO HAS TO BE UPHELD AND WE DO SO. 23. IN SUPPORT OF THE GROUND THAT SAID ORDER WAS BARRE D BY LIMITATION OF THE TIME, THE LEARNED SENIOR COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE RAJASTHAN HI GH COURT IN THE CASE OF CIT VS HISARIA BROS. REPORTED IN 291 ITR 244 . HE SUBMITTED THAT FROM THE FINDING IN PARA 30 OF THE J UDGMENT OF THE HONBLE HIGH COURT IS CLEAR ENOUGH WHICH ESTABLISHE S BEYOND DOUBT THAT THE PROCEEDING FOR LEVY OF PENALTY HAD TO BE INITIATED BEFORE THE COMPLETION OF THE ASSESSMENT AND HAD TO BE COMPLETED WITHIN THE TIME, PROVIDED UNDER SECTION 275(1)(C) O F THE ACT. HE SUBMITTED THAT IN THE INSTANT CASE THE ASSESSMENT H AS BEEN FRAMED ON 26/12/2016, WHEREAS THE PENALTY HAS BEEN IMPOSED BY THE ADDL. CIT ON 28/11/2017, WHEN HE HAD MERELY ISSUED NOTICE OF HEARING DATED 12/09/2017, WHICH IS NOT AM OUNTING TO INITIATION OF ANY PROCEEDINGS. AS PERIOD OF THE SIX -MONTH IS TO BE RECKONED FROM 26/12/2016, THE PERIOD OF THE LEVY OF PENALTY EXPIRED ON 30/06/2017. ACCORDING TO THE LEARNED COU NSEL, THE PENALTY COULD HAVE BEEN IMPOSED BEFORE THE END OF T HE FINANCIAL 19 ITA NO. 1370 & 1371/DEL./2019 YEAR I.E. 31/03/2017 OR 30/06/2017, WHICHEVER WAS L ATER AND NOT THEREAFTER. 24. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT PENALTY UNDER THE PROVISIONS OF SECTION 271D AND 271E IS IN DEPENDENT OF ASSESSMENT. HE SUBMITTED THAT ACTION INVITING LEVY OF PENALTY FOR ACCEPTING LOANS/DEPOSITS OR REPAYMENT THEREOF ABOV E THE PRESCRIBED LIMIT OTHERWISE THEN BANKING CHANNEL, IS NOT RELATED TO THE INCOME THAT WOULD BE FINALLY ADJUDICATED. HE SU BMITTED THAT HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF NI TIN AGRWAL (SUPRA) CONSIDERED THE DECISION OF THE HONBLE RAJA STHAN HIGH COURT IN THE CASE OF HISARA BROTHERS (SUPRA) AND T HE SLP FILED AGAINST THE SAME WHICH HAS BEEN DISMISSED BY THE HO NBLE APEX COURT AS REPORTED IN 386 ITR 719(SC), AND THEREAFTE R HELD THAT COMPETENT AUTHORITY TO LEVY THE PENALTY SECTION 271 D AND 271D IS THE JOINT/ADDITIONAL COMMISSIONER OF THE INCOME-TAX AND THUS LIMITATION EXPIRES AFTER EXPIRY OF SIX-MONTH FROM T HE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COU RSE OF WHICH ACTION FOR IMPOSITION OF THE PENALTY HAS BEEN INITI ATED ARE COMPLETED OR THE SIX-MONTH FROM THE END OF THE MONT H IN WHICH THE PENALTY INITIATED BY THE JOINT/ADDITIONAL COMMI SSIONER OF THE INCOME TAX, WHICHEVER PERIOD EXPIRES LATER. 25. THE LEARNED COUNSEL IN SUPPORT OF GROUND NO. 5 SUB MITTED THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT AM OUNTS DEPOSITED AND WITHDRAWN BY THE MEMBER WERE NOT IN CONTRAVENTION OF SECTION 269SS AND 269T OF THE ACT. HE SUBMITTED THAT REVENUE IN THE PRECEDING OR LATER YE ARS, HAD NEVER ALLEGED THAT THE AMOUNT CREDITED TO THE ACCOUNTS OF THE MEMBER 20 ITA NO. 1370 & 1371/DEL./2019 WAS A SUM ACCEPTED BY THE ASSESSEE AS DEPOSIT OR AN AMOUNT RECEIVED AS LOAN. THUS, THERE WAS A REASONABLE CAUS E WHEN THE ASSESSEE HELD IN VIEW THAT IT HAD NEITHER ACCEPTED THE DEPOSIT NOR HAD REPAID ANY LOAN. THE ASSESSEE HAS ALSO PLACED B EFORE US THE COMPLETE LEDGER ACCOUNT OF THE MEMBER IN THE PRECED ING AND LATER ASSESSMENT YEARS, WHEREIN SIMILAR AMOUNTS REFLECTED AS CREDITS IN CASH. IN FACT, EVEN THE STATUTORY AUDITOR (TAX AUDI TOR) HAD NEVER MADE ANY ADVERSE COMMENT IN THEIR REPORT AS THEY WE RE ALSO OF THE BELIEF THAT THE ASSESSEE HAD NOT ACCEPTED ANY D EPOSIT SO AS TO ATTRACT VIOLATION OF PROVISION OF SECTION 269SS/269 T OF THE ACT. 26. HE FURTHER SUBMITTED THAT IN THE INTEREST OF THE J USTICE NO PENALTY SHOULD BE LEVIED AS ASSESSEE WAS UNDER BONA FIDE BELIEF THAT IT HAS NOT ACCEPTED ANY DEPOSITS NOR HAS IT RE PAID ANY LOANS OR DEPOSIT IN VIOLATION OF THE STATUTORY PROVISIONS . 27. HE FURTHER SUBMITTED THAT IT IS WELL SETTLED PROPO SITION OF LAW THAT NO PENALTY IS LEVIABLE FOR A TECHNICAL OR VENI AL BREACH OF STATUTORY PROVISION UNLESS BY SUCH A BREACH ANY HID DEN AGENDA IS SOUGHT TO BE ACHIEVED. THE LEARNED COUNSEL REFERRED THE JUDGMENT OF APEX COURT IN THE CASE OF HINDUSTAN STEEL LTD. V S. STATE OF ORISSA, REPORTED IN 83 ITR 26. IN THE AFORESAID JUD GMENT THEIR LORDSHIPS AT PAGE 29 HAD OBSERVED AS UNDER: UNDER THE ACT PENALTY MAY BE IMPOSED FOR FAILURE T O REGISTER AS A DEALER : SECTION 9(1), READ WITH SECTION 25(1 )(A) OF THE ACT. BUT THE LIABILITY TO PAY PENALTY DOES NOT ARISE MERELY UPON PROOF OF DEFAULT IN REGISTERING AS A DEALER. AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI -CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS T HE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS 21 ITA NO. 1370 & 1371/DEL./2019 LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSI DERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY I S PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE J USTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BR EACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. THOSE IN CHARGE OF THE A FFAIRS OF THE COMPANY IN FAILING TO REGISTER THE COMPANY AS A DEA LER ACTED IN THE HONEST AND GENUINE BELIEF THAT THE COMPANY WAS NOT A DEALER. GRANTING THAT THEY ERRED, NO CASE FOR IMPOSING PENA LTY WAS MADE OUT. (EMPHASIS SUPPLIED) THE LEARNED COUNSEL SUBMITTED THAT, IN THIS CASE, T HERE BEING NO SUCH ALLEGATION, THE PENALTIES LEVIED BE DIRECTE D TO BE CANCELLED. 28. LASTLY IT IS RE-EMPHASIZED AND WITHOUT PREJUDICE T HAT THE ASSESSEE WAS LABOURING UNDER MISCONCEPTION OF LAW, AS IT WAS OF THE OPINION THAT THE AMOUNTS CREDITED IS NOT AN ACC EPTANCE OF A DEPOSIT OR WAS ANY RETURN OF LOAN OR DEPOSIT, WHEN AMOUNTS WERE WITHDRAWN BY THE MEMBERS. IT IS SUBMITTED THUS THER E BEING A REASONABLE CAUSE, NO PENALTY COULD HAVE BEEN LEVIED , AS IS PROVIDED U/S 273B OF THE ACT. FURTHER IT IS SUBMITT ED THAT IT IS WELL SETTLED RULE OF LAW THAT IGNORANCE OF LAW IS A N EXCUSE. IN FACT, THERE IS NO CONCEPT THAT IGNORANCE OF LAW IS NO EXC USE AS HAS BEEN HELD BY THE APEX COURT IN THE CASE OF MOTILAL PADAM PAT SUGAR MILLS CO. VS. STATE OF UTTAR PRADESH & OTHERS, 118 I TR 326 AT PG. 329 (SC). 29. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LEARNED CIT(A) TO SUPPORT THAT NO REASONABLE CAUSE UNDER SECTION 273B EXIST IN THE CASE OF THE ASSESSEE. 22 ITA NO. 1370 & 1371/DEL./2019 30. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON V ARIOUS ISSUES RAISED BEFORE US AND ALSO PERUSED THE RELEVA NT MATERIAL ON RECORD. FIRST OF ALL, WE WOULD LIKE TO ADJUDICATE O N THE GROUND NO. 5 RELATED TO WHETHER REASONABLE CAUSE FOR NOT COMPL YING WITH THE PROVISION OF SECTION 269SS OR 269T EXIST IN THE CAS E OF THE ASSESSEE. BEFORE THE LEARNED ADDITIONAL COMMISSIONE R OF INCOME- TAX, NO REPLY WAS FILED ON BEHALF OF THE ASSESSEE A ND HE HELD THAT THERE WAS NO REASONABLE BECAUSE FOR NOT COMPLYING W ITH THE PROVISIONS OF THE 269SS/269T. BEFORE THE LD. CIT(A) , THE ASSESSEE CONTENDED THAT THE SOCIETY IS SITUATED IN THE REMOT E AREA WHICH IS KNOWN AS NARELA VILLAGE AND MOST OF THE MEMBERS ARE ILLITERATE, NOT AWARE OF THE PROVISIONS OF THE LAW. IT WAS SUBM ITTED THAT ALLEGED LOAN OR DEPOSIT WAS BONAFIDE TRANSACTIONS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE LEA RNED CIT(A) HELD THAT THERE WAS NO REASONABLE CAUSE IN FAILURE TO COMPLY THE PROVISIONS OF THE SECTION 269SS/269T. THE RELEVANT FINDING IN THE IMPUGNED ORDER RELATING TO PENALTY UNDER SECTION 27 1D IS REPRODUCED AS UNDER: 4.9 THIS WAS WITH REFERENCE TO REASONABLE CAUSE UN DER SECTION 273B. IN THE REFERRED CASE THE FACTS WERE TOTALLY D IFFERENT SINCE IT PERTAINED TO CONSTRUCTION WORK FOR WHICH BANK OD LI MIT HAD ALREADY BEEN TAKEN TO THE FULL AND CASH TRANSACTION BECAME A GROUND FOR REASONABLE CAUSE. THE APPELLANT HAS ALSO MADE REFERENCE TO THE FOLLOW ING TWO CASES QUOTED BY THE AO: 1. THE ALLAHABAD HIGH COURT : MAHAK SINGH VS. COMMI SSIONER OF INCOME TAX 2. DELHI HIGH COURT: COMMISSIONER OF INCOME TAX VS. M/S SAMORA HOTELS P. LTD. 23 ITA NO. 1370 & 1371/DEL./2019 THE AO REFERRED TO THESE CASES ONLY TO BRING OUT IN STANCES WHERE SECTION 273B WAS APPLICABLE. THE APPELLANT DID NOT GET COVERED BY SUCH SITUATIONS SO AS TO GET THE PROTECTION OF THIS PROVISION. IN ONE OF THE GROUNDS OF APPEAL THE APPELLANT HAS R ELIED UPON THE RULING IN THE CASE OF FARRUKAHABAD INVESTMENT INDIA LIMITED. THE FACTS IN THIS CASE ARE ALSO DISTINGUISHABLE. IT IS A CASE OF A NON BANKING FINANCIAL COMPANY AS OPPOSED TO THE ASSESSE E WHO IS A COOPERATIVE SOCIETY. THERE WERE OTHER TECHNICAL ISS UES OF LIMITATION REINITIATION OF PROCEEDINGS ETC WHICH ARE NOT THERE IN THE PRESENT CASE. IN FACT THE HON'BLE COURT HAS CONCLUDED THAT 'WE AR E NOT GOING INTO THE MERITS OF THE OTHER SUBMISSIONS. REFERENCE MADE TO THE ABOVE CITATIONS BRINGS OUT TH AT THEY ARE DISTINGUISHABLE ON FACTS HENCE NOT APPLICABLE IN TH E CASE OF THE APPELLANT. 4.10 PERUSAL OF THE ASSESSMENT RECORD SHOWS THAT WH EN THE AO DURING ASSESSMENT PROCEEDINGS SPECIFICALLY ASKED FO R DETAILS PERTAINING TO TRANSACTIONS (LOANS/DEPOSITS) IN EXCE SS OF RS. 20,000/- THE APPELLANT STATED THAT PROVISIONS DO NOT APPLY A S IN THE CASE OF A COOPERATIVE BANK. THIS ARGUMENT HAS ALREADY BEEN DISCUSSED EARLIER. 4.11 FINALLY THE APPELLANT HAS ALSO SAID THAT THEY WERE UNDER THE BONAFIDE BELIEF THAT THEY DID NOT HAVE TO FOLLOW TH IS PROVISION. THIS ARGUMENT ALSO CARRIES NO WEIGHT. THE APPELLANT CLAI MS TO BE A SOCIETY ESTABLISHED IN THE YEAR 1989 WHICH WAS OVER 25 YEAR S OLD AT THE TIME OF FILING THE RETURN OF THE RELEVANT ASSESSMENT YEA R. THE SOCIETY HAS BEEN DEALING IN FINANCIAL, MONETARY AND BANKING MAT TERS, COMPLYING WITH VARIOUS RULES LAWS AND STATUTES, ALSO GUIDED A ND REPRESENTED BY LEGAL AND ACCOUNTING PROFESSIONALS AT VARIOUS FO RUMS. HENCE IGNORANCE OF LAW /RULES IS NO ALIBI FOR THE APPELLA NT ASSESSEE. 30.1 BEFORE US, THE LEARNED COUNSEL HAS SUBMITTED THAT T HE ASSESSEE IS IN EXISTENCE FOR LAST MANY YEARS AND FI LING RETURN OF INCOME BUT NO SUCH PENALTY HAS BEEN LEVIED IN THE C ASE OF THE ASSESSEE AND IT IS FOR THE FIRST TIME VIOLATION OF THE SECTION 269SS/269T HAS BEEN POINTED OUT IN THE CASE OF THE ASSESSEE. HE ALSO MENTIONED THAT EVEN THE TAX AUDITOR HAS NOT MA DE ANY REMARK IN THEIR TAX AUDIT REPORTS REGARDING VIOLATI ON OF SECTION 24 ITA NO. 1370 & 1371/DEL./2019 269SS OR 269T IN THE INSTANT YEAR OR IN THE EARLIER YEARS. IT IS CLAIMED BY THE LEARNED COUNSEL THAT IN VIEW OF THE PAST HISTORY OF THE CASE, THE ASSESSEE WAS UNDER BONAFIDE BELIEF TH AT ALLEGED LOAN OR DEPOSIT ACCEPTED OR REPAYMENT THEREOF WAS NOT IN VIOLATION OF SECTION 269SS OR 269T. IT HAS BEEN ALSO EMPHASIZED THAT THE SOCIETY IS OPERATING IN RURAL AREA AND DEPOSITORS A RE ILLITERATE PERSONS. IN OUR OPINION, BELIEF ON THE PART OF THE ASSESSEE IN VIEW OF THE PAST HISTORY OF THE CASE THAT DEPOSIT/REPAYM ENT BY ITS MEMBERS IN CASH IS BONAFIDE BELIEF. MOREOVER, THE L EARNED DR HAS NOT CONTROVERTED THE FACTUAL FINDING OF THE LEARNED COUNSEL OF THE ASSESSEE THAT IN SUBSEQUENT YEARS ALSO NO PENALTY H AS BEEN INITIATED/LEVIED IN THE CASE OF THE ASSESSEE UNDER SECTION 271D/271E. IN THE CASE OF CIT VS LOKHPAL FILM EXCHAN GE (CINEMA) (2008), 304 ITR 172, THE HONBLE HIGH COUR T HELD THAT THE ASSESSEE HAD ACTED BONAFIDELY AND ITS PLEA THAT INTER SE TRANSACTION BETWEEN THE PARTNERS AND THE FIRM WERE NOT GOVERNED BY THE PROVISION OF SECTION 269SS/269T, WAS A REASO NABLE EXPLANATION AND NO PENALTY COULD BE IMPOSED. IN VIE W OF THE ABOVE, WE ARE OF THE OPINION THAT CONSIDERING THE B ONAFIDE AND GENUINE TRANSACTION, REASONABLE CAUSE IN TERMS OF S ECTION 273B OF THE ACT, EXIST IN THE CASE OF THE ASSESSEE FOR NOT COMPLYING WITH THE PROVISION OF SECTION 269SS AND 269T AND, THEREF ORE, WE CANCEL THE PENALTY LEVIED IN TERMS OF SECTION 271D AND 271 E OF THE ACT. 30.2 SINCE WE HAVE ALREADY CANCELLED THE PENALTY, THE OT HER GROUNDS RAISED BY THE LEARNED COUNSEL OF THE ASSESS EE ARE RENDERED MERELY ACADEMIC AND WE ARE NOT ADJUDICATIN G UPON THE SAME. 25 ITA NO. 1370 & 1371/DEL./2019 31 IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2020. SD/- SD/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH SEPTEMBER, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI