M/S SNEH BUILDERS, Pune V. Dy. CIT,Cent. Cir.-2(2), Pune

ITA 456/PUN/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49753 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Principle of natural justice; Bonafide belief; Reasonable cause; Ignorance of law
• Section: 273B; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI D. KARUNAKARA RAO, AM I.T.A. NO. 520/PN/2008 : A.Y. 2004-05 DY. CIT CENT. CIR. 2(2) PUNE : APPELLANT VS. M/S. SNEH BUILDERS 1194/1 VRINDAVAN SOCIETY SHIVAJINAGAR PUNE-411 005 PAN AAQFS 9031 B : RESPONDENT I.T.A. NO. 456/PN/2008 : A.Y. 2004-05 M/S. SNEH BUILDERS 1194/1 VRINDAVAN SOCIETY SHIVAJINAGAR PUNE-411 005 PAN AAQFS 9031 B APPELLANT VS. DY. CIT CENT. CIR. 2(2) PUNE RESPONDENT DEPARTMENT BY : SHRI ABHAY DAMLE ASSESSEE BY: SHRI SUNIL PATHAK ORDER PER SHRI SHAILENDRA KUMAR YADAV, JM BOTH THESE CROSS APPEALS ARISING OUT OF SAME ORDER OF THE CIT(A)II PUNE DATED 4-1-2008 FOR A.Y. 2004-05. SO T HESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 2 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION. A SEARCH U/S 132 OF THE ACT WAS CARR IED OUT IN THE CASE OF THE ASSESSEE GROUP ON 18-10-2003 IN WHI CH THE PARTNERS AND ASSOCIATE CONCERNS OF THE ASSESSEE GRO UP WERE ALSO COVERED WHEN DOCUMENTS RELATING TO THE FINANCIAL TR ANSACTIONS MANY OF WHICH WERE IN CASH WERE FOUND AND SEIZED. PRIOR TO THAT SEARCHES WERE ALSO CONDUCTED ON 29-7-2003 IN T HE CASE OF SHRI B.H. SHAH AND OTHERS. 3. THE ASSESSING OFFICER NOTED IN PARA 9.6 OF HIS ORD ER THAT DURING THE COURSE OF SEARCH ON SHRI B.H. SHAH ON 29 -7-2003, SEVERAL BLANK CHEQUES WITH AMOUNTS AND DATES MENTIO NED ON THEM BELONGING TO THE ASSESSEE AND ITS GROUP CONCER NS WERE FOUND AGGREGATING TO RS. 1,01,00,000/-. THESE CHEQ UES WERE CLAIMED TO BE HANDED OVER TO SHRI B.H. SHAH FOR THE AMOUNTS BORROWED BY VARIOUS PERSONS INCLUDING BY SUCH ASSES SES AND WERE DUE FOR REPAYMENT OR RENEWAL ON THE DATES MENT IONED THEREIN. 4. IT WAS FOUND VIOLATION OF PROVISIONS OF SEC. 269 SS. ACCORDINGLY PENALTY WAS LEVIED U/S. 271D. ACCORDI NG TO A.O., THE ASSESSEE HAS NOT BEEN ABLE TO RELATE THESE BLAN K CHEQUES WITH THE LOANS TAKEN BY THEM FROM SHRI B.H. SHAH OR HIS ASSOCIATED CONCERNS AS PER THE REGULAR BOOKS OF ACC OUNTS. THE CHEQUES OF RS.95.5 LAKHS MENTION DIFFERENT DATE WE RE FOUND ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 3 FROM SHRI. B.M.SHAH THE STAND OF THE ASSESSEE WAS T HAT THESE CHEQUES WERE GIVEN AS SECURITY FOR THE ACCOUNTED LO AN TRANSACTIONS WHICH WAS REJECTED BY THE ASSESSING OF FICER. THE CHEQUES AMOUNTING TO RS. 95,50,000/- COULD ONLY BE REPRESENTING THE UNACCOUNTED CASH LOANS TAKEN FROM SHRI B.H. SHAH, BY THE ASSESSEE FIRM, IN VIOLATION OF SECTION 269SS OF THE ACT. SHRI B.H. SHAH ADMITTED THAT THE SEIZED BLANK CHEQUES WERE ACTUALLY SECURITY FOR THE CASH LOAN ADVANCED B Y HIM. IT WAS ALSO STATED BY HIM THAT THESE CHEQUES ARE RETUR NED TO THE BORROWERS AFTER THE REPAYMENT OF LOAN, AND NEW CHEQ UES ARE TAKEN, IF THE LOANS ARE RENEWED FOR ANOTHER MONTH B Y THE BORROWERS, AFTER PAYING THE INTEREST ON THE BORROWE D AMOUNT @ 2.50% P.M. THE INTEREST FOR SUCH CASH LOANS WERE R ECEIVED IN CASH ONLY. WE ARE CONFINED TO THE CHEQUES AMOUNTIN G TO RS.95,50,000 FOUND FROM SAID B.M. SHAH. IT WAS O NLY AFTER THE SEARCH ON SHRI B.H. SHAH AND THE ASSESSEES GROUP T HAT SUCH VIOLATION CAME TO THE KNOWLEDGE OF THE ASSESSING OF FICER. 5. ACCORDING TO THE A.O. THESE TRANSACTIONS COULD N OT BE SAID TO BE INNOCENT TRANSACTIONS AND THE ASSESSEE COULD NOT MAKE OUT THE CASE TO JUSTIFY THE SAME. THUS, THE ASSESS EE WAS LIABLE TO PENALTY U/S 271D OF ACT. AS STATED ABOVE, DURIN G THE COURSE OF SEARCH OF SHRI B.H. SHAH, SOME POST DATED CHEQUE S OF THE ASSESSEE FIRM TOTALING TO RS. 95,50,000/- WERE FOUN D. THE A.O. HAS PRESUMED THAT THE ASSESSEE COMPANY MIGHT HAVE B ORROWED ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 4 AMOUNT IN CASH TO THE EXTENT OF RS. 95,50,000/- AND HAS LEVIED PENALTY TO THAT EXTENT AND THE PENALTY OF RS.3,50,0 00/- WAS ALSO LEVIED BECAUSE LOAN WERE OBTAINED THROUGH BEARER C HEQUES. HENCE, IN ALL, PENALTY OF RS. 99,00,000/- IS LEVIED BY THE ASSESSING OFFICER. THE MATTER WAS CARRIED IN APPEA L BEFORE THE CIT(A) WHEREIN PENALTY OF 95,50,000/- WAS DELETED W HILE PENALTY OF RS.3,50,000/- WAS ENHANCED TO RS.23,50,000/- ON ACCOUNT OF FACTUAL MISTAKES COMMITTED AT ASSESSMENT LEVEL. THIS FACTUAL MISTAKE HAS NOT BEEN DISPUTED BUT THE PENAL TY INCLUDING ENHANCEMENT OF PENALTY HAS BEEN OPPOSED BEFORE US O N MERIT. 6. BEFORE US REVENUE HAS OPPOSED THE DELETION OF PENA LTY OF RS.95,50,000/-LEVIED U/S 271D OF THE ACT AND SUPPOR TED THE ORDER OF A.O ON THE ISSUE. LD. DR HEAVILY RELIED ON THE DECISIONS OF A.O. ON THE ISSUE AS STATED ABOVE. FURTHER THE LEARNED DR SUBMITTED THAT DURING THE COURSE OF STATEMENT U/S 1 32(4) SHRI B.H. SHAH ADMITTED THAT THE SEIZED BLANK CHEQUES WE RE ACTUALLY SECURITY FOR THE CASH LOAN ADVANCED BY HIM, SO PENA LTY LEVIED BY A.O. SHOULD BE UPHELD. ON THE OTHER HAND, THE ASSES SEE SUBMITTED THAT THE ASSESSING OFFICER HAS PRESUMED THAT THE ASSESSEE FIRM MIGHT HAVE BORROWED AMOUNT IN CASH TO THE EXTENT OF RS. 95,50,000/- AND HAS LEVIED PENALTY TO THAT EXTENT. THE PENALTY LEVIED HAS BEEN LEVIED PURELY ON PRESUM PTION WITHOUT ANY CONCRETE EVIDENCE WITH THE ASSESSING OF FICER THAT THE ASSESSEE IN FACT HAS BORROWED THIS AMOUNT IN CA SH FROM ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 5 SHRI B.H. SHAH. IT WAS SUBMITTED THAT THAT THE ASSE SSING OFFICER HAS RELIED UPON THE STATEMENT OF SHRI B.H. SHAH. A CCORDING TO THE ASSESSING OFFICER, SHRI SHAH HAS STATED THAT TH E CHEQUES FOUND WITH HIM WERE IN LIEU OF THE AMOUNTS GIVEN IN CASH TO THE VARIOUS PERSONS. IT WAS SUBMITTED THAT THE ASSESS ING OFFICER IS NOT JUSTIFIED ON PLACING RELIANCE ON THE SAID STATE MENT WITHOUT CONFRONTING THE SAID GENERAL STATEMENT TO THE ASSES SEE. ASSESSEE SHOULD HAVE BEEN GIVEN DUE OPPORTUNITY IN CLUDING TO CROSS EXAMINATION OF SAID SHRI B.H. SHAH WHOSE GENE RAL STATEMENT HAS BEEN MADE BASIS OF PENALTY IN QUESTI ON. IT IS SETTLED LAW THAT THE DEPARTMENT HAS POWER TO COLLEC T ANY EVIDENCE FROM ANY SOURCE BUT IT IS EQUALLY THE DUTY OF THE ASSESSING OFFICER TO PUT IT TO THE ASSESSEE BEFORE MAKING IT THE BASIS OF HIS ASSESSMENT. IT IS VIOLATION OF PRINCI PLES OF NATURAL JUSTICE. CIT(A) IS JUSTIFIED TO DELETE THE SAME WHI CH SHOULD BE UPHELD. 7. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD WE FIND THAT CERTAIN CHEQUES WERE CLAIMED TO HAVE BEEN ISSUED AS SECURITY FOR THE ENTIRE SNEH GROUP. IN T HE STATEMENT OF SHRI MAHENDRA YEOLE RECORDED U/S 131 ON 11-1-200 3 IT WAS CONFIRMED BY HIM THAT THE CHEQUES FOUND AND SEIZED FROM THE PREMISES OF SHRI B.H. SHAH WERE ISSUED FROM DIFFERE NT FIRMS AND MONEY WAS BORROWED FOR BUSINESS PURPOSES AND THAT S UCH CHEQUES WERE TAKEN BACK ON RENEWAL OF THE LOAN TRAN SACTIONS. ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 6 SOME OF THOSE CHEQUES WERE USED FOR MAKING PAYMENTS WHILE OTHERS WERE CANCELLED. IT WAS GENERAL STATEMENT WI TH REGARDS TO TRANSACTION WITH SNEH GROUP BUT IT IS NOT IN PARTIC ULAR WITH REGARDS TO ASSESSEE I.E. SNEH BUILDERS. THERE IS N OTHING ON RECORD TO SUGGEST THAT THE COPY OF THE STATEMENT BY SHRI B.H. SHAH WAS GIVEN TO ASSESSEE AT ANY POINT OF TIME. TH ERE IS ALSO NOTHING ON RECORD THAT ASSESSEE WAS OFFERED ANY OPP ORTUNITY TO CROSS EXAMINE SAID B.H. SHAH WITH REGARD TO AMOUNT IN QUESTION. THE ACTION OF THE ASSESSING OFFICER IN IM POSING THE PENALTY U/S 271D ON THE PRESUMPTION THAT AGAINST TH E SECURITY OF THESE CHEQUES OF RS. 95,50,000/- THE ASSESSEE MU ST HAVE TAKEN EQUIVALENT AMOUNT OF CASH IS NOT BORNE FROM THE RECORDS. THERE IS NO CONCRETE EVIDENCE TO FACT THAT SUCH AMO UNT WAS IN FACT RECEIVED IN CASH BY THE ASSESSEE EXCEPT THE ST ATEMENT OF SHRI B.H. SHAH. GENERAL STATEMENT OF THIRD PERSON C ANNOT BE VALID BASIS FOR TAKING ACTION AGAINST THE ASSESSEE. AS THE PENALTY HAS BEEN IMPOSED ONLY ON THE BASIS THAT AGA INST THE SECURITY OF CHEQUES EQUIVALENT AMOUNT OF CASH MIGHT HAVE BEEN TAKEN CASH LOANS IS NOT JUSTIFIED. UNDER THE FACTS AND CIRCUMSTANCES PENALTY OF RS. 95,50,000/- WAS RIGHTL Y DELETED BY THE CIT(A). WE UPHOLD THE SAME. 8. NEXT ISSUE IS WITH REGARDS TO ENHANCEMENT OF TH E PENALTY FROM RS. 3,50,000/- TO RS. 23,50,000/-. THIS ENHANC ED PENALTY HAS BEEN OPPOSED BY ASSESSEE ON MERIT ALONE. ACCOR DING TO THE ASSESSEE, THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS. ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 7 3,50,000/- ON THE GROUND THAT THE ASSESSEE HAD TAKE N LOANS BY WAY OF BEARER CHEQUE WHICH IS VIOLATION OF PROVISIO NS OF SECTION 269SS OF THE ACT WHICH WAS ENHANCED BY CIT(A) TO RS . 23,50,000/- U/S 271D OF THE ACT. THE ASSESSEE CLAIM ED THAT HE WAS UNDER THE BONAFIDE IMPRESSION THAT ACCEPTANCE O F LOANS BY CHEQUES IS ENOUGH FOR COMPLIANCE OF THE PROVISIONS OF SECTION 269SS. THE ACCEPTANCE OF LOANS IN CASH/BEARER CHEQU ES WAS DUE TO THE FACT THAT IT WAS NOT AWARE OF THE CORREC T LEGAL PROVISIONS. THE IGNORANCE OF LAW CAN BE A REASONA BLE CAUSE AS HELD BY BOMBAY HIGH COURT IN THE CASE OF CIT VS. SC HELL INTERNATIONAL (2005) 278 ITR 630 (BOM). THE ASSESS EE SUBMITTED THAT IN THIS BACKGROUND, THE PENALTY IS N OT JUSTIFIED SAME BE DELETED. ON THE OTHER HAND LD. DR HEAVILY RELIED ON THE DECISION OF CIT(A) ON THE ISSUE OF ENHANCEMENT OF PENALTY UNDER THE PROVISIONS OF SECTION 271D OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. 9. WE FIND THAT THE ASSESSING OFFICER HAS IMPOSED P ENALTY OF RS. 3,50,000/- ON ACCOUNT OF TRANSACTIONS CARRIED O UT BY THE ASSESSEE THROUGH BEARER CHEQUES IN VIOLATION OF PRO VISIONS OF SECTION 269SS OF THE ACT. WHICH WAS ENHANCED TO RS. 23,50,000/- U/S 271D OF THE ACT. THIS ENHANCED FIG URE IS NOT IN DISPUTE. DISPUTE IS ON MERIT ALONE AS FAR AS PEN ALTY U/S 271D OF THE ACT IS CONCERNED. AS STATED ABOVE INITIALLY THE PENALTY WAS IMPOSED AT RS. 3,50,000/- FOR VIOLATION OF PROV ISIONS OF ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 8 SECTION 269SS OF THE ACT. HOWEVER, IT WAS POINTED OUT DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THE VIOLAT ION OF PROVISIONS OF SECTION 269SS OF THE ACT WAS FOR AMOU NT OF RS. 23,50,000/-. IT WAS ADMITTED BY THE ASSESSEE TH AT THERE WAS A MISTAKE IN COMPUTING FIGURE AT RS. 23,50,000/- ON THIS ACCOUNT. IN FACT THE BEARER CHEQUES WERE RECEIVED F ROM SHRI B.H. SHAH AND HIS ASSOCIATE CONCERN M/S. PRABHA TRA DERS FOR RS. 23,50,000/-. AS STATED ABOVE, THIS FIGURE HAS N OT BEEN DISPUTED BY BOTH THE PARTIES BUT DISPUTE IS ON MERI T ALONE. 10. THE STAND OF THE ASSESSEE IS THAT SUCH A PRACTI CE OF TAKING LOANS THROUGH BEARER CHEQUES IS BEING FOLLOWED FROM YEAR TO YEAR BUT SAME NEVER POINTED OUT BY THE AUDITORS. I T WAS FURTHER STATED THAT SHRI B.H. SHAH HAS ACKNOWLEDGED THE LOA N AND THEREFORE, THE TRANSACTIONS WERE GENUINE. THE ASSE SSEE ALSO PLEADED THAT HE WAS IGNORANT THAT RECEIPT OF BEARER CHEQUES VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT . TRANSACTIONS WERE DURING ROUTINE COURSE OF BUSINESS AND THE GENU INENESS OF THE TRANSACTIONS WAS NOT IN DOUBT. SO, PENALTY IN Q UESTION IS NOT JUSTIFIED. ON THE OTHER HAND, LEARNED DR SUPPOR TED THE ORDER OF CIT(A) AND STRONGLY CONTENDED THAT IGNORAN CE OF LAW IS NO EXCUSE. SO PENALTY IN QUESTION BE UPHELD. 11. AFTER HEARING SUBMISSIONS OF BOTH THE PARTIES A ND PERUSING THE MATERIAL ON RECORD, WE FIND THAT HONBLE BOMBAY HIGH COURT ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 9 IN THE CASE OF CIT VS. SCHELL INTERNATIONAL (2005) 278 ITR 630 (BOM) HAS HELD THAT THE ASSESSEE WAS NOT AWARE THAT UNDER THE PROVISIONS OF THE INCOME-TAX ACT, HE WAS REQUIRED T O SUBMIT THE STATEMENTS WITHIN 30 DAYS FROM THE EXPIRY OF THE RE LEVANT ASSESSMENT YEAR. AS SOON AS HE GOT THE SHOW CAUSE N OTICE, HE SUBMITTED THE STATEMENTS. THE EXPLANATION APPEARED TO BE REASONABLE AND THE HONBLE HIGH COURT UPHELD THE OR DER OF THE TRIBUNAL WHEREBY THE ORDER OF THE PENALTY LEVIED U/ S 272A(2) AND 285B OF THE ACT WAS QUASHED. 12. WE ALSO FIND THAT HONBLE SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS CO. LTD. VS. STATE OF UTTAR PRADESH (1979) 118 ITR 326 (SC) HAS OBSERVED AS UND ER: MOREOVER, IT MUST BE REMEMBERED THAT THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS OFTEN SAID THAT EVERY ONE IS PRESUMED TO KNOW THE LAW, BU T THAT IS NOT A CORRECT STATEMENT : THERE IS NO SUCH MAXIM KNOWN TO THE LAW. OVER A HUNDRED AND THIRTY YEARS AGO, MA ULA J. POINTED OUT IN MARTINDALE V. FALKNER (1846) 2 CB 70 6 : THERE IS NO PRESUMPTION IN THIS COUNTRY THAT EVERY PERSON KNOWS THE LAW : IT WOULD BE CONTRARY TO COMMON SENS E AND REASON IF IT WERE SO SCRUTTON L.J. ALSO ONCE SAI D : IT IS IMPOSSIBLE TO KNOW ALL THE STATUTORY LAW, AND NOT V ERY POSSIBLE TO KNOW ALL THE COMMON LAW; BUT IT WAS LOR D ATKIN WHO, AS IN SO MANY OTHER SPHERES, PUT THE POI NT IN ITS PROPER CONTEXT WHEN HE SAID IN EVANS V. BARTLAM (1937) AC 473 (HL). THE FACT IS THAT THERE IS NO AND NEV ER HAS BEEN A PRESUMPTION THAT EVERY ONE KNOWS THE LAW. TH ERE IS THE RULE THAT IGNORANCE OF THE LAW DOES NOT EXCUSE, A MAXIM OF VERY DIFFERENT SCOPE AND APPLICATION 13. WE ALSO FIND THAT IN THE CASE OF ACIT VS. CHAND RAKANT KASHINATH KELE (HUF) THE PUNE BENCH OF THE TRIBUNAL HAS DECIDED SIMILAR ISSUE BY OBSERVING AS UNDER: ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 10 ON HEARING THE SUBMISSIONS OF BOTH THE SIDES IN TH E LIGHT OF THE FACTUAL MATRIX OF THE CASE AND THE PRECEDENT S CITED, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS A REAS ONABLE CAUSE, DUE TO WHICH, THE ASSESSEE WAS COMPELLED TO ACCEPT THE LOAN THROUGH BEARER CHEQUE. SOME OF THE FINDIN GS ON FACTS SUCH AS AVAILABILITY OF A MEAGER AMOUNT OF A FEW HUNDRED RUPEES AS OUTSTANDING BALANCE IN THE BANK ACCOUNT OF THE ASSESSEE, DEFINITELY ESTABLISH THE F INANCIAL CONSTRAINS OF THE ASSESSEE. ANOTHER UNCONTROVERTED FACTUAL FINDING THAT THE ASSESSEE HAD ALREADY ISSUE D CHEQUES FAVOURING AFORE MENTIONED THREE PARTIES HAD TO BE HONOURED AND TO FULFILL ITS COMMITMENT, THE FUNDS W ERE URGENTLY REQUIRED, THEREFORE, A BEARER CHEQUE WAS ACCEPTED, ALSO LEADS TO A CONCLUSION THAT THE ASSES SEE HAS PROVED THAT THERE WAS A REASONABLE CAUSE FOR THE SA ID FAILURE, IF ANY, HENCE ENTITLED FOR RELIEF AS PRESC RIBED U/S 273B OF THE ACT. NOW BEFORE US A DECISION OF HONBL E MADHYA PRADESH HIGH COURT HAS ALSO BEEN CITED IN TH E CASE OF CIT VS. MAKHIJA CONSTRUCTION CO. 257 ITR PA GE 8, WHEREIN IT WAS HELD THAT FOR A MINOR DEVIATION ON T HE PART OF THE ASSESSEE, AS OTHERWISE THE TRANSACTION APPEA RED TO BE GENUINE, PROPER AND BONAFIDE, THE PENALTY NEED N OT TO BE IMPOSED IN VIOLATION OF SECTION 269SS OF I.T. AC T. TAKING A SHELTER OF THIS DECISION WE HEREBY HOLD TH AT LEARNED CIT(A) HAS RIGHTLY RELIED UPON SEVERAL OTHE R DECISIONS AS CITED IN THE IMPUGNED APPELLATE ORDER, HENCE WE HEREBY CONFIRM HIS FINDINGS. THIS GROUND OF THE REVENUE HAS NO FORCE, HENCE DISMISSED. THUS, APPEAL WAS DECIDED IN FAVOUR OF ASSESSEE IN C ASE OF CHANDRAKANT K. KELE (HUF) (SUPRA). SIMILARLY, IN THE CASE OF SHIROLI BUDRUK KRISHAK SE VA SANGH IN I.T.A. NO. 1101/PN/2010 : A.Y. 2006-07, DATED 16-1 2-2010 IT WAS HELD AS UNDER: CONSIDERING THE ABOVE SUBMISSIONS, THERE IS NO DOUB T THAT IGNORANCE OF LAW CAN ALWAYS BE TREATED A REASONABLE CAUSE TO JUSTIFY THE NON-ATTRACTION OF PENAL PROVISIONS U /S 271D OF THE ACT BUT THE LEGISLATURE KEEPING IN MIND POSS IBILITY OF IT HAS GIVEN DISCRETION TO THE DEPARTMENT U/S 273B OF THE ACT, NOT TO LEVY U/S 271D OF THE ACT. THUS, FOR AVA ILING THE BENEFIT U/S 273B OF THE ACT, THE ASSESSEE IS REQUIR ED TO ESTABLISH THAT THERE WAS REASONABLE CAUSE FOR ITS F AILURE IN COMPLYING WITH THE PROVISIONS OF SECTION 269T OF TH E ACT. ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 11 IN THE PRESENT CASE, WE DO NOT FIND REASON TO DOUBT THE ABOVE SAID REASONABLE CAUSE FURNISHED BY THE ASSESS EE BEFORE THE LOWER AUTHORITIES THAT IT BEING A CREDIT CO- OPERATIVE SOCIETY DEALING ONLY WITH ITS MEMBERS, WA S UNDER IMPRESSION THAT THE PROVISIONS OF SEC. 269SS AND 26 9T OF THE ACT WERE INAPPLICABLE TO IT. THIS EXPLANATION FINDS STRENGTH FROM THIS VERY FACT THAT NEITHER THE STATU TORY AUDITORS NOR THE TAX AUDITORS OF THE ASSESSEE SOCIE TY APPRAISED IT ABOUT THE CORRECT LEGAL PROVISIONS IN THIS REGARD, AS SUBMITTED BY THE LEARNED AR. IN THE CAS E OF CIT VS. EETAHI AGENCIES (SUPRA) THERE WAS FAILURE TO CO MPLY WITH THE PROVISIONS OF SECTION 269T OF THE ACT AND PENALTY U/S 271E WAS LEVIED. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD COMMITTED VIOLATION OF SECTION 269T UN DER A GENUINE BELIEF THAT SEC. 269T HAD NO APPLICATION TO DEPOSITS AND THAT IT ONLY APPLIED TO LOANS. THE DE PARTMENT PREFERRED APPEAL AGAINST SAID ORDER OF THE TRIBUNAL BEFORE THE HONBLE HIGH COURT WHEREIN, THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD THAT THE PENALTY WAS RIGHTLY DELETED BY THE TRIBUNAL. AGAIN IN THE CASE OF CIT VS. JAYABHAWANI GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA LTD. (SUPRA) THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO UPHOLD THE DECISION OF THE TRIBUNAL ACCEPTING REASONABLE CAUSE U/S 273B IN CASE OF VIOL ATION OF THE PROVISIONS OF SEC. 269SS OF THE ACT. THE DEP ARTMENT HAD PREFERRED SLP BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGMENT OF THE HONBLE BOMBAY HIGH COU RT WHICH HAS BEEN DISMISSED BY THE HONBLE SUPREME COU RT REPORTED IN (2010) 322 ITR 12 (STATUTE). RESPECTFUL LY FOLLOWING DECISIONS OF THE HONBLE COURTS, WE ARE O F THE VIEW THAT THERE WAS REASONABLE CAUSE WITH THE ASSES SEE IN NURTURING A BONAFIDE BELIEF THAT THE PROVISIONS OF SEC. 269T WERE NOT APPLICABLE IN ITS CASE. WE, THEREFORE, UP HOLD THE ORDER OF THE CIT(A) IN DELETING THE PENALTY OF RS. 2,01,031/- LEVIED U/S 271D OF THE ACT. THE GROUNDS RAISED ARE ACCORDINGLY DISMISSED. 14. IN VIEW OF ABOVE LEGAL AND FACTUAL DISCUSSIONS PENALTY IN QUESTION IS DELETED BECAUSE, THE ASSESSEE WAS UNDER BONAFIDE IMPRESSION THAT TRANSACTION BY WAY OF BEARER CHEQUE IS NOT VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT . MOREOVER, THIS GENUINE TRANSACTION RECORDED IN THE BOOKS OF A CCOUNT OF THE ASSESSEE. THIS POINT HAS NOT BEEN RAISED EVEN BY T HE AUDITORS ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 12 AS THE SAME WAS DONE IN THE NORMAL COURSE OF ASSESS EES BUSINESS SINCE LONG. BEFORE PARTING THIS DECISION, IT IS PERTINENT TO MENTION THAT WE ARE AWARE OF THE FACT THAT IN GE NERAL, IGNORANCE OF LAW IS NO EXCUSE BUT UNDER CERTAIN CIR CUMSTANCES IT MAY BE SO. IN THE PRESENT CASE, IGNORANCE OF LAW MAY BE DEFENSE, BUT ONE SHOULD BE CAUTIOUS WHILE APPLYING THIS PROPOSITION. IT SHOULD BE RARELY USED AS SPECIFIC CIRCUMSTANCE. IT IS SETTLED LAW THAT EACH CASE IS DECIDED IN THE FACTS AND CIRCUMSTANCES. IT IS ALSO MADE CLEAR THAT CASE LAW S RELIED ON BY BOTH THE PARTIES HAVE BEEN TAKEN INTO ACCOUNT, THOU GH SAME HAVE NOT BEEN SPECIFICALLY MENTIONED. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED WHILE APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH MAY 2011. SD/- SD/- (D. KARUNAKARA RAO ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE,DATED THE 20 TH MAY 2011 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT- II NASIK (4) CIT(A)- II NASIK (5) THE D.R. ITAT PUNE BENCH A , PUNE TRUE COPY BY ORDER, ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE ITA NO. 520 AND 456/PN/08 SNEH BUILDERS A.Y. 2004-05 , 13