Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 6967 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-03-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2010-2011
Appeal Filed On
20-04-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! ' # , $% &' #' , ' # '( BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWAS THY, JM '%. / ITA NO. 496/PUN/2015 * +* / ASSESSMENT YEAR : 2010-11 BHARAT AGARWAL NAGARI SAHAKARI PATSANSTHA MARYADIT, VASANTDADA SANKUL, LONAVALA, PUNE 410401 PAN : AAAAL1845P ....... / APPELLANT /VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE 8, PUNE / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 23-02-2017 / DATE OF PRONOUNCEMENT : 08-03-2017 , / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-6, PUNE DATED 02-01 -2015 CONFIRMING THE LEVY OF PENALTY U/S. 271D OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NO. 496/PUN/2015, A.Y. 2010-11 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD ARE: THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY. THE ASSESSEE ACCEPTS DEPOSITS FROM ITS MEMBERS AND PROVIDES LOANS TO THE MEMBERS. THE ASSESSEE SOCIETY IS ALSO CLAIMING THE BENEFIT OF DEDUCTION U/S. 80P OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE SOCIETY HAD ACCEPTED DEPO SITS IN CASH OVER AND ABOVE ` 20,000/- FROM VARIOUS PERSONS. THE ASSESSING OFFICER VIDE ORDER DATED 16-08-2013 LEVIED PENALTY OF ` 21,50,000/- U/S. 271D OF THE ACT FOR VIOLATING THE PROVISIONS OF SECTION 269SS OF THE ACT. AGGRIEVED BY THE ORDER LEVYING PENALTY, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTEN TIONS OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY. NOW, THE ASSE SSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE LEVY OF PENALTY. 3. SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED THAT THE ASSESSEE CO-OPERATIVE CREDIT SOCIETY IS A NON-PROFIT ORGANIZATION AND WAS ESTABLISHED FOR THE PURPOSE OF UPLIFTM ENT OF ECONOMIC STATUS OF PEOPLE HAVING LOW INCOME. IF ANY EXCES S INCOME IS GENERATED BY THE ASSESSEE SOCIETY THE SAME IS UTILIZED FO R THE WELFARE OF ITS MEMBERS. DURING THE SCRUTINY ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS THOROUGHLY SCRUTINIZED THE DETAILS OF ALL DEPOSITS AND LOANS AND NO SUSPICIOUS DEPOSITS OR ANY TRANSACTION WAS FOUND. THE NOTICE FOR LEVY OF PENALTY U/S. 274 R.W.S. 271D OF TH E ACT WAS RECEIVED BY THE ASSESSEE ON 18-03-2013. IT WAS EXPLAIN BEFORE THE LOWER AUTHORITIES THAT THE ASSESSEE CREDIT SOCIETY IS FORM ED BY DIFFERENT PERSONS WHO ARE BASICALLY AGRICULTURALISTS AND SMALL TRADER S IN RURAL AREAS HAVING INCOME BELOW TAXABLE LIMITS. MANY MEMBERS OF TH E SOCIETY 3 ITA NO. 496/PUN/2015, A.Y. 2010-11 ARE NOT EVEN HAVING BANK ACCOUNTS. THE ASSESSEE ACCE PTED DEPOSITS IN CASH FROM ITS MEMBERS AND REPAID THE AMOUNT IN CASH FOR THE SAKE OF CONVENIENCE OF ITS MEMBERS. THERE IS NO INTENTION TO CON TRAVENE THE PROVISIONS OF SECTION 269SS OF THE ACT. IF THERE IS ANY VIO LATION OF ANY PROVISIONS OF THE ACT IT IS UNINTENTIONAL AND DUE TO IGNORAN CE OF PROVISIONS OF THE ACT. THERE IS TOTAL IDENTITY BETWEEN THE ASSESSEE SOCIETY AND ITS MEMBERS. THE ASSESSEE SOCIETY DOES NOT ACCEPT DEPOSITS FROM NON-MEMBERS. THE PROVISIONS OF SECTION 269SS WERE IN TRODUCED IN THE ACT TO CURB THE FLOW OF UNACCOUNTED MONEY. THE ASSESSEE IS NOT SHELTERING UNACCOUNTED MONEY OF ITS MEMBERS. THIS IS THE FIRST YEAR OF DEFAULT, THE ASSESSEE IS NOW STRICTLY COMPLYING WITH THE P ROVISIONS OF SECTION 269SS AND 269T OF THE ACT. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF PUNE BENCH O F THE TRIBUNAL IN THE CASE OF GURUKRUPA GRAMIN BIGAR SHETI SAHAK ARI PAT SANSTHA MARYADIT VS. ADDL. COMMISSIONER OF INCOME TAX IN IT A NO. 1349/PN/2014 FOR ASSESSMENT YEAR 2010-11 DECIDED ON 20-08 -2014. 3.1 THE LD. AR FURTHER SUBMITTED THAT THE CBDT VIDE ITS LET TER NO. 415/6/2000-IT (INV. I) DATED 25 TH MARCH, 2004 HAD DIRECTED THE OFFICERS OF INCOME TAX DEPARTMENT THAT PENALTY U/S. 271D AND 27 1E FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS AND 269T, RESP ECTIVELY SHOULD NOT BE INDISCRIMINATELY IMPOSED. THE LD. AR TO BUTTR ESS HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF PUNE BENCH O F THE TRIBUNAL IN THE CASE OF SHRAMJIVI NAGARI SAHAKARI PAT SANSTHA MARYA DIT VS. ADDL. COMMISSIONER OF INCOME TAX IN ITA NO. 477/PN/2010 DECIDED ON 08-06-2011. 3.2 THE LD. AR FINALLY SUBMITTED THAT THE ASSESSEE HAD OFFER ED VALID EXPLANATION FOR ACCEPTING CASH DEPOSITS FROM ITS MEMBERS. THUS, IN 4 ITA NO. 496/PUN/2015, A.Y. 2010-11 VIEW OF THE PROVISIONS OF SECTION 273B NO PENALTY SHOULD HA VE BEEN LEVIED BY THE AUTHORITIES BELOW. THE LD. AR PRAYED FOR SE TTING ASIDE THE IMPUGNED ORDER AND DELETING THE PENALTY LEVIED U/S. 271D OF THE ACT. 4. ON THE OTHER HAND SHRI SANJEEV GHEI REPRESENTING TH E DEPARTMENT VEHEMENTLY SUPPORTED THE ORDER OF COMMISS IONER OF INCOME TAX (APPEALS) IN CONFIRMING THE LEVY OF PENALTY. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS ACCEPTED CASH DEPOSIT S FROM VARIOUS PERSONS. THE LD. DR REFERRING TO THE LIST OF PERSONS ANNEX ED TO THE ORDER LEVYING PENALTY SUBMITTED, THAT THE PENALTY HAS BEE N LEVIED U/S. 271D IN RESPECT OF DEPOSITS ACCEPTED FROM TRADERS WHERE THE AMOUNT INVOLVED IS MORE THAN ` 1 LAKH. IN GENUINE CASES WHERE THE AMOUNT HAS BEEN ACCEPTED FROM FARMERS AND WOMEN NO PENALTY HAS BE EN LEVIED. A FURTHER PERUSAL OF THE LIST WOULD REVEAL THAT PENALTY HAS B EEN LEVIED WHERE DEPOSITS HAVE BEEN ACCEPTED IN CASH FROM PERSONS HAVING PAN NUMBER AND ARE ENGAGED IN BUSINESS OR SERVICE. THE LD. D R PRAYED FOR UPHOLDING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. PENALTY U/S. 271D HAS BEEN LEVIED ON THE ASSESSEE FOR VI OLATING THE PROVISIONS OF SECTION 269SS OF THE ACT. THE ASSESSEE IS A CO-OPERATIVE CREDIT SOCIETY AND HAS ACCEPTED CASH DEPOSITS FROM ITS M EMBERS EXCEEDING ` 20,000/- IN SINGLE TRANSACTION. IT HAS BEEN CONTENDED TH AT THE ASSESSEE HAS ACCEPTED CASH DEPOSITS FROM ITS MEMBE RS EXCEEDING ` 20,000/- DUE TO IGNORANCE OF THE PROVISIONS OF SECTION 269 SS. THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL IS FIRST YEAR OF DEFAULT. 5 ITA NO. 496/PUN/2015, A.Y. 2010-11 IN THE SUBSEQUENT ASSESSMENT YEARS THE ASSESSEE IS S TRICTLY ACCEPTING DEPOSITS IN COMPLIANCE OF THE PROVISIONS OF SECTION 269SS OF THE ACT. 6. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF GURUKRUPA GRAMIN BIGAR SHETI SAHAKARI PAT SANSTHA MARYA DIT VS. ADDL. COMMISSIONER OF INCOME TAX (SUPRA) UNDER SIMILAR CIRCUMS TANCES DELETED THE PENALTY LEVIED U/S. 271D BY OBSERVING AS UNDER : 7. AFTER HEARING BOTH THE SIDES, WE FIND AN IDENTI CAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF RATNAGIRI JILHA GRAMSEVAK SAHAKARI PAT SANSTHA MARYADIT VIDE ITA NO. 1348/PN/2014. VID E ORDER OF EVEN DATE, WE HAVE DECIDED THE APPEAL AND THE PENALTY SO LEVIED BY THE ADDL.CIT U/S.271D AND UPHELD BY THE CIT(A) HAS BEEN DIRECTED TO BE DELETED. THE RELEVANT OBSERVATION OF THE TRIBUNAL R EADS AS UNDER : 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. IT IS AN ADMITTED FACT THAT THE ASSESSEE PAT SANSTHA HAS ACCEPTED DEPOSITS EXCEEDING RS.20,000/- IN CASH IN CONTRAVENTION OF T HE PROVISIONS OF SECTION 269SS FOR WHICH PENALTY OF RS.10,95,000/- H AS BEEN LEVIED BY THE ADDL.CIT WHICH HAS BEEN UPHELD BY THE CIT(A). I T IS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT SUCH CONTRAVE NTION OF LAW WAS UNDER BONAFIDE BELIEF AND AFTER THE SAME WAS BROUGH T TO ITS NOTICE THE ASSESSEE PAT SANSTHA HAS STOPPED ACCEPTING ANY DEPO SIT OR REPAYMENT OF THE SAME BY CASH. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN A GROUP OF CASES NAMELY CHIPLUN TALUKA NAGARI PAT SANSTHA LTD. AND OTHERS VIDE ITA NOS. 666 TO 671/PN/2009 AN D ITA NO.710/PN/2009 ORDER DATED 30-06-2009. WE FIND THE TRIBUNAL CANCELLED THE PENALTY SO LEVIED U/S.271D OF THE I.T . ACT BY OBSERVING AS UNDER : 4. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VISHAL PURANDAR NAGARI SAHAKARI PAT SANSTHA MARYADIT IN I.T.A. NO. 1290/PN/2008 WHEREIN VIDE ITS ORDER DATED22-12-2008 THIS BENCH OF THE TRIBUNAL HAD UPHE LD THE GRIEVANCE OF THE ASSESSEE BY OBSERVING AND CONCLUDING AS UNDER: 4. THE BASIC THRUST OF ASSESSEE'S SUBMISSIONS BEFOR E US IS THAT THE ASSESSEE WAS, UNTIL POINTED OUT BY THE ASSESSING OF FICER IN THE ASSESSMENT PROCEEDINGS, WAS OF THE BONAFIDE OPINION THAT THE PROVISIONS OF SECTION 269 SS DO NOT APPLY ON THE CREDIT COOPER ATIVE SOCIETIES. HE INVITES OUR ATTENTION TO THE FACT THAT EVEN THE TAX AUDITOR, WHO IS A QUALIFIED PROFESSIONAL, DID NOT POINT OUT ANY NON-C OMPLIANCE WITH THE PROVISIONS OF SECTION 269SS EVEN THOUGH THERE IS A SPECIFIC DISCLOSURE 6 ITA NO. 496/PUN/2015, A.Y. 2010-11 REQUIREMENT IN RESPECT OF THE SAME. OUR ATTENTION I S ALSO INVITED TO THE FACT THAT THIS VIOLATION OF SECTION 269 SS TOOK PLA CE IN THE CASES OF A VERY LARGE NUMBER OF CREDIT COOPERATIVE SOCIETY WHICH, B Y ITSELF, WOULD SHOW THAT THERE WAS A WIDESPREAD, EVEN IF ERRONEOUS, BEL IEF THAT THE PROVISIONS OF SECTION 269SS DID NOT APPLY TO THE CREDIT COOPER ATIVE SOCIETIES. LEARNED COUNSEL THEN CITES CBDT CIRCULAR DATED 25TH MARCH 2004 WHICH IS TAKES NOTE OF THE FACT THAT, IN THE CASES OF CRE DIT COOPERATIVE SOCIETIES, ' THE PENALTIES UNDER SECTION 271D AND 271E OF THE IN COME TAX ACT ARE BEING IMPOSED IN A LARGE NUMBER OF CASES WITHOUT AP PRECIATING THE GENUINE DIFFICULTIES FACED BY THEM IN COMPLYING WIT H THESE PROVISIONS' AND ADVISES THE FIELD OFFICERS THAT 'PENALTIES UNDE R SECTION 271D AND 271E FOR VIOLATIONS OF THE PROVISIONS OF SECTION 26 9SS AND 269T, RESPECTIVELY, SHOULD NOT BE INDISCRIMINATELY IMPOSE D' AND 'THE PROVISIONS OF SECTION 273B SHOULD BE KEPT IN VIEW BEFORE IMPOS ING PENALTIES'. LEARNED COUNSEL SUBMITS THAT THE BUSINESS OF THE CR EDIT COOPERATIVE SOCIETY, THOUGH ADMITTEDLY DISTINCT FROM THAT OF A BANK, IS SOMEWHAT AKIN TO THE COOPERATIVE BANKS AS, FOR ALL PRACTICAL PURPOSES, THE BUSINESS CONSISTS OF ACCEPTING DEPOSITS FROM MEMBERS AND GIV ING ADVANCES TO THE MEMBERS. IT WAS THUS QUITE POSSIBLE FOR THESE SOCIE TIES TO BONAFIDE BELIEVE THAT CONCESSIONS AVAILABLE TO THE BANKING I NSTITUTIONS WOULD INDEED BE AVAILABLE TO THESE INSTITUTIONS. IT IS FU RTHER SUBMITTED THAT THESE CREDIT COOPERATIVE SOCIETIES ARE RUN AND MANA GED BY ELECTED REPRESENTATIVES WHO ARE NOT NECESSARILY HIGHLY QUAL IFIED OR BUSINESS PEOPLE. EVEN THE PROFESSIONALS WORKING FOR THESE IN STITUTIONS HAVE BONAFIDE BELIEVED THAT THE PROVISIONS OF SECTION 26 9SS ARE NOT APPLICABLE, AS EVIDENT FROM THE TAX AUDIT REPORTS, AND, THEREFORE, IT IS FUTILE TO EXPECT THAT THE MANAGEMENT OF THESE CREDI T COOPERATIVE SOCIETIES WILL NECESSARILY BE WELL EQUIPPED WITH LEGAL KNOWLE DGE. IN ANY EVENT, AS POINTED OUT BY THE LEARNED COUNSEL, CHAIRMAN OF THE ASSESSEE SOCIETY HAS GIVEN AN AFFIDAVIT TO THE EFFECT THAT UNTIL IT WAS SO POINTED OUT BY THE ASSESSING OFFICER, HE WAS NOT AWARE ABOUT THE APPLI CABILITY OF, INTER ALIA, SECTION 269SS ON THE ASSESSEE COOPERATIVE SOCIETY. LEARNED COUNSEL ALSO INVITES OUR ATTENTION TO SEVERAL DECISIONS PASSED B Y THE COORDINATE BENCHES WHICH, RELYING UPON THE HON'BLE SUPREME COU RT DECISION IN THE CASE OF MOTILAL PADMAPAT SUGAR MILLS LTD VS STATE O F UTTAR PRADESH (118 ITR 326), UPHELD THE IGNORANCE OF LAW AS A REASONAB LE CAUSE FOR NON COMPLIANCE WITH THE PROVISIONS OF SECTION 269SS. LE ARNED COUNSEL THUS URGES US TO DELETE THE PENALTY ON THE GROUND THAT T HE ASSESSEE WAS NOT AWARE ABOUT THE LEGAL REQUIREMENTS UNDER SECTION 26 9 SS AND THUS HE WAS OF THE BONAFIDE BELIEF THAT THERE IS NO VIOLATI ON OF LAW IN ACCEPTING CASH DEPOSITS AND MAKING CASH PAYMENTS. LEARNED COU NSEL SUBMITS THAT THIS BONAFIDE BELIEF, ON THE FACTS OF THE CASE, IS A REASONABLE CAUSE FOR THE PURPOSES OF SECTION 273 B. LEARNED COUNSEL HAS ALSO ADDRESSED US ON SOME OTHER PERIPHERAL LEGAL ISSUES, BUT, FOR THE TIME BEING, WE SEE NO NEED TO DEAL WITH THE SAME. LEARNED DEPARTMENTAL RE PRESENTATIVE, ON THE OTHER HAND, OBJECTS TO THIS SUBMISSION MAINLY O N THE GROUND THAT 7 ITA NO. 496/PUN/2015, A.Y. 2010-11 THERE IS NO MATERIAL ON RECORD TO EVIDENCE THE ASSE SSEE'S CLAIM OF BONAFIDE BELIEF. HE VEHEMENTLY SUBMITS THAT A BLAND STATEMENT ABOUT BONAFIDE BELIEF CANNOT SUFFICE; IT MUST BE BACKED B Y SOME MATERIAL AND EVIDENCE. IT IS ALSO HIS CONTENTION THAT POST DHARM ENDRA TEXTILE DECISION BY THE HON'BLE SUPREME COURT, WHICH HOLDS PENALTY U NDER SECTION 271(1)(C) TO BE A CIVIL LIABILITY, THE CONCEPT OF B ONAFIDE BELIEF, WHICH CAN AT BEST BE A REASONABLE CAUSE FOR NON COMPLIANCE, IS R EDUNDANT IN THE CONTEXT OF PENALTIES UNDER THE INCOME TAX ACT, 1961 . BY WAY OF A WRITTEN NOTE, HE FURTHER SUBMITS THAT 'IGNORANCE OF LAW AND ABSENCE OF MEN'S REA IS A DEFENCE ONLY IN RESPECT OF INDIVIDUALS AND GRO UP OF INDIVIDUALS, AND IT HAS NO APPLICATION IN THE CONTEXT OF JURIDICAL P ERSONS LIKE BODY INCORPORATE'. IT IS HIS CONTENTION THAT THE ASSESSE E BEFORE US IS A CO- OPERATIVE SOCIETY WHICH IS 'MANAGED BY DULY ELECTED MEMBERS WITH THE HELP OF PROFESSIONAL EXECUTIVES, AND, THEREFORE, PL EA OF IGNORANCE OF LAW S NOT AVAILABLE AT ALL'. IT IS ALSO CONTENDED THAT 'T HE MAXIM IGNORANCE OF LAW IS NO EXCUSE IS SPELT AND SUBSEQUENT JUDICIAL E XPLANATION MAKING EXCEPTIONS TO THE EXTENT EVERYBODY IS NOT SUPPOSED TO KNOW THE LAW' WERE DEALING WITH CASES OF INDIVIDUALS OR BODY OF I NDIVIDUALS'. HE FURTHER ADDS THAT 'REFERENCE TO ANY CASE LAW INDEX WOULD SH OW A NUMBER OF PENALTIES LEVIED UNDER SECTION 271 D AND 271 E HAVE BEEN CONFIRMED FOR NOT SHOWING REASONABLE THAT 'IF IGNORANCE OF LAW IS ACCEPTED, IT WILL BE PUTTING A PREMIUM ON PERSONS KNOWING THE LAW AND RE NDER PENAL PROVISIONS OTIOSE AND SHOULD BE AVOIDED. LEARNED DEPARTMENTAL REPRESENTATIVE HAS PAINSTAKING LY TAKEN US THROUGH A NUMBER OF JUDICIAL PRECEDENTS DEALING WIT H THE MATTERS RELATING TO PENALTIES. ON THE STRENGTH OF, INTER ALIA, THESE SUBMISSIONS, HE URGES US TO CONFIRM THE ORDER OF THE AUTHORITIES BELOW AN D DECLINE TO INTERFERE IN THE MATTER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AT CONSIDERA BLE LENGTH. WE HAVE ALSO PERUSED THE MATERIAL ON RECORD AND DULY CONSID ERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 6. THE ASSESSEE, AS WE HAVE NOTED EARLIER, IS A CRE DIT COOPERATIVE SOCIETY, - 'PAT SANSTHAN', AS IT IS KNOWN IN THE VERNACULAR LANGUAGE. THESE PAT SANSTHANS ARE QUITE A COMMON PHENOMENON IN THIS PAR T OF THE COUNTRY AND THEY RENDER SERVICES, WHICH ARE SOMEWHAT CLOSE TO THE SERVICES USUALLY RENDERED BY THE COOPERATIVE BANKS, IN THE S ENSE THEY ACCEPT DEPOSITS FROM THE MEMBERS AND GIVE LOANS TO THE MEM BERS. THESE INSTITUTIONS USUALLY WORK AT THE LEVEL OF TALUKAS A ND MOFFUSIL TOWNS. THERE IS NO DOUBT THAT THESE ARE NOT BANKS AND ARE NOT PERMITTED TO CARRY OUT THE BANKING BUSINESS, BUT IT IS ALSO TRUE THAT THERE IS A FAIR DEGREE OF SIMILARITY IN THE SERVICES RENDERED BY THESE CREDIT COOPERATIVE SOCIETIES AND COOPERATIVE BANKS. IN THESE CIRCUMSTANCES, THE BONAFIDES OF ASSESSEE'S BELIEF FOR BEING ENTITLED TO THE SAME TR EATMENT AS BANKING INSTITUTIONS CANNOT BE REJECTED OUTRIGHT . THIS IS SURELY AN INCORRECT VIEW, 8 ITA NO. 496/PUN/2015, A.Y. 2010-11 BUT WHEN AN AUTHORITY IS EXAMINING AN EXPLANATION I N THE CONTEXT OF A PENALTY PROCEEDINGS, ALL THAT THE AUTHORITY HAS TO SEE IS WHETHER OR NOT SUCH AN EXPLANATION STANDS THE PREPONDERANCE OF PRO BABILITIES, AND WHETHER THERE ARE ANY INCONSISTENCIES OR FALLACIES IN SUCH AN EXPLANATION WHICH DEMONSTRATE THAT THE EXPLANATION IS A MAKE BE LIEVE STORY. 7. THE QUESTION WHETHER OR NOT THE LEGAL POSITION A DOPTED BY THE ASSESSEE IS CORRECT OR NOT CANNOT BE THE ONLY BASIS ON WHICH PENALTY MATTERS ARE DECIDED, OR ELSE THERE IS NO NEED FOR A NY HEARING ONCE THE LAPSE ON THE PART OF THE ASSESSEE IS ESTABLISHED, N OR CAN SECTION 273 B HAVE ANY RELEVANCE IN SUCH A SITUATION. IT IS IMPOR TANT TO BEAR IN MIND THAT SECTION 273 B COMES INTO PLAY WHEN THE ASSESSE E HAS COMMITTED A LAPSE BUT THE ASSESSEE CAN DEMONSTRATE THAT THERE W AS REASONABLE CAUSE FOR HAVING COMMITTED THAT LAPSE. THE FACTS RE LATING TO THE FACTORS LEADING TO A LAPSE CAN ONLY BE KNOWN TO THE PERSONS COMMITTING THAT LAPSE ARE BEST IN THE KNOWLEDGE OF PERSON COMMITTIN G THE LAPSE, AND, THEREFORE, THE ONUS ON HIM TO ELABORATE THE SAME. H OWEVER, IT IS INHERENTLY IMPOSSIBLE FOR ANYONE TO SUBSTANTIATE, W ITH COGENT EVIDENCE AND MATERIAL AS BEING INSISTED BY THE LEARNED DEP ARTMENTAL REPRESENTATIVE, SOMETHING LIKE A BONAFIDE, WHICH IS A STATE OF MIND. ALL THAT CAN BE DONE IN SUCH AS SITUATION IS TO EXPLAIN THE CIRCUMSTANCES AND FACTORS LEADING TO SUCH A BELIEF, AND, IN OUR CONSI DERED VIEW, 8. THE OTHER ASPECT OF THE MATTER IS WHETHER OR NOT IGNORANCE OF LAW CAN BE AN ACCEPTABLE EXPLANATION, AND WHETHER SUCH AN E XPLANATION CAN BE ACCEPTABLE FOR INDIVIDUALS OR GROUPS OF INDIVIDUALS ALONE - AND NOT JURIDICAL PERSONS. THIS ISSUE IS NOW WELL SETTLED B Y THE HON'BLE SUPREME COURT IN THE CASE OF MOTILAL PADMAPAT SUGAR MILLS ( SUPRA) WHEREIN THEIR LORDSHIPS HAVE OBSERVED THAT ' ...IT MUST BE REMEMB ERED THAT THERE IS NO PRESUMPTION THAT EVERYONE IS PRESUMED TO KNOW THE L AW. IT IS OFTEN SAID THAT EVERYONE IS PRESUMED TO KNOW THE LAW, BUT THAT IS NOT A CORRECT STATEMENT; THERE IS NO SUCH MAXIM KNOWN TO LAW', AN D INTERESTINGLY THESE OBSERVATIONS WERE MADE IN THE CONTEXT OF AN A RTIFICIAL JURIDICAL PERSON, I.E. A COMPANY. REFERRING TO THESE OBSERVAT IONS OF THE HON'BLE SUPREME COURT, A CO ORDINATE BENCH OF THIS TRIBUNAL , IN THE CASE OF SUDERSHAN AUTO AND GENERAL FINANCE VS CIT ( 60 ITD 177), OBSERVED AS FOLLOWS: 'THE IGNORANCE OF LAW MAY OR MAY NOT CONSTITUTE A V ALID EXCUSE FOR JUSTIFYING WITH A PROVISION OF THE STATUTE. IT WILL DEPEND UPON THE NATURE OF DEFAULT. IF IT IS MERELY TECHNICAL OR VENIAL BREACH, NO PENALTY WOULD BE IMPOSSIBLE BECAUSE THE LEVY OF PEN ALTY WOULD NECESSARILY IMPLIES EXISTENCE OF SOME GUILTY INTENT ION ON THE PART OF THE DEFAULTER OR THE OFFENDER. IN ORDER TO DETER MINE THE EXISTENCE OR ABSENCE OF GUILTY INTENTION ON THE PAR T OF THE ASSESSEE, ONE WILL HAVE TO CONSIDER ALL THE SURROUN DING FACTS AND CIRCUMSTANCES. WHETHER BY COMMITTING DEFAULT OF NON COMPLIANCE 9 ITA NO. 496/PUN/2015, A.Y. 2010-11 WITH A STATUTORY PROVISION OF LAW, AN ASSESSEE HAS DERIVED BENEFIT, GAIN OR ADVANTAGE, WHETHER BY SUCH A DEFAU LT OR NON COMPLIANCE THE ASSESSEE HAS DEFRAUDED THE REVENUE O R CAUSED ANY LOSS TO THE REVENUE ? THESE ARE SOME OF THE FAC TORS WHICH WILL HAVE TO SERIOUSLY CONSIDERED BEFORE CONSIDERING THE FACT AS TO WHETHER IGNORANCE OF LAW ON THE PART OF THE ASSESSE E OR HIS CONSULTANT CAN CONSTITUTE VALID EXCUSE OR REASONABL E CAUSE FOR THE PURPOSE OF SECTION 273B......' 9. WE ARE IN RESPECTFUL AGREEMENT WITH THE VIEWS SO STATED BY THE CO ORDINATE BENCH. VIEWED IN THIS PERSPECTIVE AND BEAR ING IN MIND ENTIRETY OF THE CASE, AS ALSO THE FACT THAT THE ASSESSING OF FICER HAS IN SOME OF THE CASES ACCEPTED THE SAME EXPLANATION IN THE OTHER YE ARS, WE ARE OF THE CONSIDERED VIEW THAT THE EXPLANATION OF THE ASSESSE E DESERVES TO BE ACCEPTED. IT WAS A WIDESPREAD, EVEN IF ERRONEOUS, B ELIEF THAT THE PROVISIONS OF SECTION 269 SS DO NOT APPLY TO THE CR EDIT COOPERATIVE SOCIETIES, AND IT IS ALSO EVIDENT FROM THE FACT THA T EVEN THE CBDT HAS TAKEN NOTICE OF IMPOSITION OF RESULTANT PENALTIES I N LARGE NUMBER OF CASES, AND ISSUED A CIRCULAR HIGHLIGHTING THAT THESE PENAL TIES SHOULD NOT BE IMPOSED INDISCRIMINATELY AND WITHOUT CONSIDERING TH E SCHEME OF SECTION 273 B. SUCH A WIDESPREAD BELIEF, BY ITSELF, CAN BE VIEWED AS A REASONABLE CAUSE FOR ASSESSEE'S BONAFIDE BELIEF. 10. HAVING SAID THAT, WE MAY ALSO ADD THAT IT IS NO T A CASE WHERE EVEN AFTER THE ASSESSEE AFTER HAVING COME ' TO KNOW OF T HE CORRECT LEGAL POSITION DUE TO INCOME TAX DEPARTMENT'S ACTION AGAI NST HIM CONTINUES TO FOLLOW THE SAME PRACTICE. ONCE THE ASSESSEE COMES T O KNOW AS TO WHAT IS THE CORRECT LEGAL POSITION OR AT LEAST THE REVENUE' S STAND ON THAT ISSUE, THERE IS NO QUESTION OF HIS HAVING BONAFIDE BUT INC ORRECT BELIEF ABOUT THE LEGAL POSITION. THAT IS A DIFFERENT SITUATION AND W E ARE NOT AT ALL CONCERNED WITH SUCH A SITUATION IN THE PRESENT CASE . , THIS DECISION CANNOT HAVE ANY PRECEDENCE VALUE IN SUCH A SITUATIO N. 11. WITH THE AFORESAID CAVEAT, WE UPHOLD THE GRIEVA NCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPU GNED PENALTY. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 5. WE SEE NO REASON TO DEVIATE FROM THE VIEW ALREAD Y TAKEN BY THE CO- ORDINATE BENCH IN THE CASE OF VISHAL PURANDAR NAGAR I SAH. PAT SANSTHA MARYADIT (SUPRA) AND UPHOLD THE GRIEVANCE OF THE AS SESSEES DIRECTING THE ASSESSING OFFICER TO DELETE THE IMPUGNED PENALTIES IN RESPECT OF ALL THE ASSESSEES BEFORE US. THE ASSESSEES GET THE RELIEF A CCORDINGLY. 6. THE VIEW SO TAKEN BY US IN EARLIER CASES HAVE BE EN CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DAT ED 18-3-2009 IN THE CASE OF CIT VS BANDHKAM KHATE SEVAKANCHI SAHAKARI P ATSANSTHA MARYADIT WHEREIN THEIR LORDSHIPS HAVE HELD THAT AFT ER POSITION OF LAW IS 10 ITA NO. 496/PUN/2015, A.Y. 2010-11 BROUGHT TO THE NOTICE OF THE ASSESSEE THE ASSESSEE HAS STARTED TAKING MONEY BY CHEQUE, IN SUCH A SITUATION TRIBUNALS CAN CELLING PENALTY U/S.271D AND 271E DOES NOT CALL FOR ANY INFERENCE. IN THE PRESENT CASES ASSESSEES HAVE GIVEN AFFIDAVITS TO THAT EFFECT. KEE PING THIS IN VIEW ALSO THE PENALTIES INDEED DESERVE TO BE DELETED. 7.1 SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN VARIOUS OTHER DECISIONS FILED IN THE PAPER BOOK BY THE LD. COUNSE L FOR THE ASSESSEE. WE FIND WHEN IN ONE OF THE CASES THE REVENUE FILED AN APPEAL BEFORE THE HONBLE HIGH COURT, THE HIGH COURT IN THE CASE OF C IT VS. BANDHKAM KHATE SEVAKANCHI SAHAKARI PAT SANSTHA VIDE ITA NO.1 56 OF 2009 ORDER DATED 18-03-2009 HAS DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERVING AS UNDER : PC : IN RESPECT OF THE SIMILAR COOPERATIVE SOCIETY, WE H AVE DISMISSED THE APPEAL AND WE HAVE TAKEN A NOTE THAT AFTER THE POSI TION OF LAW WAS BROUGHT TO THEIR NOTICE, THEY HAVE STARTED ACCEPTIN G THE MONEY BY CHEQUE. CONSIDERING THE ABOVE, THERE IS NO MERIT IN THIS AP PEAL WHICH IS ACCORDINGLY DISMISSED. 7.2 THE SUBMISSION OF THE ASSESSEE BEFORE THE ADDL. CIT THAT IT HAS STOPPED ACCEPTING OR REPAYING THE DEPOSITS IN CASH AFTER THE LAW WAS BROUGHT TO ITS NOTICE COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. IN VIEW OF THE CONSISTENT DECISION OF THE TRIBUNAL IN VARIOUS CASES WHERE PENALTY LEVIED U/S.271D HAS BEE N DIRECTED TO BE DELETED AND FURTHER CONSIDERING THE FACT THAT THE C IT(A) HIMSELF IN VARIOUS IDENTICAL CASES HAS DELETED THE PENALTY LEVIED U/S. 271D FOR WHICH THE REVENUE HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNA L, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271D OF THE I.T. ACT. WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENA LTY SO LEVIED U/S.271D OF THE I.T .ACT. 7.1 RESPECTFULLY FOLLOWING OUR DECISION IN THE CASE CITED (SUPRA), WE SET- ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESS ING OFFICER TO CANCEL THE PENALTY. 7. OUR ATTENTION HAS ALSO BEEN DRAWN TO THE CBDT COMM UNICATION DATED 25-03-2014 REFERENCE OF WHICH HAS BEEN MADE IN TH E ORDER OF TRIBUNAL IN THE CASE OF SHRAMJIVI NAGARI SAHAKARI PAT SANSTHA MARY ADIT VS. ADDL. COMMISSIONER OF INCOME TAX (SUPRA). WE FIND THAT T HE CO- ORDINATE BENCH OF THE TRIBUNAL BY PLACING RELIANCE ON THE S AID CBDT 11 ITA NO. 496/PUN/2015, A.Y. 2010-11 COMMUNICATION HAS NOT ONLY DELETED PENALTY BUT HAS ALSO LEVIED COST ON THE DEPARTMENT FOR ATTACHING THE ACCOUNT OF ASSESSEE F OR CAUSING HARASSMENT TO THE ASSESSEE. 8. THUS, IN VIEW OF THE TOTALITY OF THE FACTS AND EXPLANATIO N OFFERED, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS BE EN ABLE TO SHOW REASONABLE CAUSE FOR INADVERTENT VIOLATION OF PROVISIONS OF S ECTION 269SS OF THE ACT. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 08 TH DAY OF MARCH, 2017. SD/- SD/- ( / ANIL CHATURVEDI) ( ! / VIKAS AWASTHY) ' ! / ACCOUNTANT MEMBER # ! / JUDICIAL MEMBER ' / PUNE; $% / DATED : 08 TH MARCH, 2017 RK , - ./& 0&+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. & & ' () / THE CIT(A)-6, PUNE 4. & & ' / THE CIT-5, PUNE 5. *+ ,- , & ,- , . ./ , ' / DR, ITAT, B BENCH, PUNE. 6. +01 23 / GUARD FILE. // // TRUE COPY// &'4 / BY ORDER, 5 %6 / ASSISTANT REGISTRAR, & ,- , ' / ITAT, PUNE
