Commissioner Of Income Tax-Ii, Jodhpur v. M/S Gachhipura Kray Vikray Shahkari Samiti Ltd.(D.b.income Tax Appeal

1 COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/SGACHHIPURA KRAY VIKRAY SHAHKARI SAMITI LTD.(D.B.INCOME TAX APPEAL NO.143/13) Dated:- 2.5.16. HON'BLE MR.JUSTICE SANGEET LODHAHON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.Sunil Bhandari, for the appellant. 1.This appeal is directed against order dated 16.1.13 ofIncome Tax Appellate Tribunal (ITAT), Jodhpur Bench, wherebythe appeal preferred by the Revenue against the order ofCommissioner of Income Tax (Appeals) [CIT(A)], Jodhpur dated14.5.12, for the assessment year 2005-06, cancelling thepenalty imposed by the Assessing Officer (AO), under Section271D and 271E of the Income Tax Act, 1961 (for short “theAct”), has been dismissed. 2.The relevant facts are that during the course ofassessment proceedings of the assessee, a cooperative society,engaged in trading of agriculture inputs and essentialcommodities, the AO noticed that the assessee has accepted thedeposits from its employee and members in cash, in violation ofprovisions of Section 269SS and 269T of the Act. Thetransactions were treated to be genuine by the AO, however, theexplanation furnished on behalf of the assessee that the societywas under bona fide belief that the amount received from its COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/S GACHHIPURA KRAY VIKRAY SHAHKARI SAMITI LTD.(D.B.INCOME TAX APPEAL NO.143/13) employee and members of the society do not constitute loan ordeposit, which is required to be accepted by account payeecheque or draft, was not found acceptable by the AO.Accordingly, the AO while holding the assessee guilty of violationof provisions of Section 269SS and 269T, vide order dated31.3.11, imposed the penalty upon the assessee ofRs.13,00,580/- each under Section 271D and 271E of the Act. 3. Aggrieved thereby, an appeal preferred by the assesseewas allowed by the CIT(A), observing that the AO has not givenany finding whatsoever for rejecting the reply of the assessee.The CIT (A) arrived at the finding that there exists a reasonablecause and therefore, there was no justification for levy of penaltyunder Section 271D and 271E. Accordingly, the appeal wasallowed by CIT (A) vide order dated 14.5.12. 4.Aggrieved by the appellate order, an appeal preferred bythe Revenue, stands dismissed by the ITAT, Jodhpur Bench.Hence, this appeal. 5.Learned counsel for the appellant contended that thedeposit accepted by the assessee from its employee andmembers, constitute loan and the assessee cannot escape theliability of penalty, stating that the deposit receipt was onlyamanat rashi. Learned counsel submitted that the refund of theamount does not dilute the default and thus, the ITAT was not COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/S GACHHIPURA KRAY VIKRAY SHAHKARI SAMITI LTD.(D.B.INCOME TAX APPEAL NO.143/13) 3 justified in confirming the order passed by the CIT(A). Learnedcounsel would submit that admittedly, the assessee has violatedthe provisions of Section 269SS and 269T and therefore, itcannot escape the liability of penalty under Section 271D and271E of the Act. 6.We have considered the submissions of the learned counselfor Revenue and perused the material on record. COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/S GACHHIPURA KRAY VIKRAY SHAHKARI SAMITI LTD.(D.B.INCOME TAX APPEAL NO.143/13) 3 justified in confirming the order passed by the CIT(A). Learnedcounsel would submit that admittedly, the assessee has violatedthe provisions of Section 269SS and 269T and therefore, itcannot escape the liability of penalty under Section 271D and271E of the Act. 6.We have considered the submissions of the learned counselfor Revenue and perused the material on record. 7.Indisputably, the assessee received certain sums from itsemployee and members in excess of the limit prescribed underSection 269SS in cash and the same were repaid otherwise thanby an account payee cheque or account payee bank draft, inviolation of the provisions of Section 269T of the Act. But then, itis to be noticed that the assessee, a cooperative societyconstituted by its members, is duly registered under the relevantState statute. All the members are agriculturists and havingincome from the agricultural activities. It has come on recordthat the members of the society mostly reside in village, whichdo not have any banking facility. The specific stand of theassessee before the AO was that amount was received from theemployee and members of the society on account of urgent needas amanat rashi and no loan deposit was received by the societyfrom any outsider. Precisely, the stand of the assessee was thatit was under bona fide belief that amanat rashi received from its members do not constitute loan or deposit, which is required tobe accepted by account payee cheque or draft. 8.It is to be noticed that the AO had not given any findingwhatsoever for rejecting the stand taken by the assessee,however, the CIT (A) and ITAT have concurrently found that theassessee, a cooperative society, working in remote area,ignorant about the relevant provisions, accepted the fundsreceived as amanat rashi under the bona fide belief that thesame do not constitute deposit or loan. The CIT (A) and ITAThave found the explanation furnished by the assessee in detail,as constituting reasonable cause in terms of provisions of Section273B of the Act and thus, the finding arrived at by the CIT (A),affirmed by the ITAT, after due consideration of all the relevantaspects of the matter regarding the reasonable cause for failureon the part of assessee in complying with the provisions ofSection 269SS and 269T, cannot be said to be capricious orperverse. In this view of the matter, no substantial question oflaw arises for consideration of this court in the present appeal. 9.In the result, the appeal fails, it is hereby dismissed. (KAILASH CHANDRA SHARMA),J. (SANGEET LODHA),J.