The Commissioner Of Income Tax-V v. Sharad Gramin Bigarsheti Sahakari Patsanstha Maryadit

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1954 OF 2011 The Commissioner of Income Tax-V.v. ..Appellant. Sharad Gramin Bigarsheti Sahakari Patsanstha Maryadit. ..Respondent. Mr.N.N.Singh for the Appellant.None for the Respondent. CORAM : J.P. DEVADHAR & M.S.SANKLECHA, JJ. DATE : 25[th] February, 2013. P.C. : In this appeal by the revenue following questions of law has been raised for our consideration. a)Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in deleting the penalty levied u/s. 271E for violation of the provisions of Section-269T of the Income Tax Act,1961? b)Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in not appreciating the fact that the assessee had no reasonable cause in repaying the deposits/loan in cash to customers except feigning ignorance about the provisions of law and that too in spite of the fact that the accounts of the assessee was audited by professional and qualified persons? 2)The respondent is a Co-operative Society engaged in lending monies to its members on interest and on earning on investments in deposits with banks. During the assessment year 2005-06 the Assessing officer found that the society had made repayment of deposits for amounts exceeding Rs.20,000/- in cash i.e. other than by account payee cheque/demand draft. Thus, the Assessing officer held that the same was in violation of Section-269T of the Income Tax Act, 1961 (“the Act”) and consequently imposed penalty under section 271E of the Act. In first appeal the CIT(A) upheld the order of the Assessing Officer. 3)In second appeal the Tribunal deleted the penalty. This was after holding that the payments made to depositors were genuine and the identify of the depositors was not doubted. The explanation offered by the respondent assessee that amounts have been paid in cash only to its members and they were under a bonafide belief that the provisions of Section 269T are not applicable to credit co-operative societies. Further neither the statutory auditors nor the tax auditors apprised the respondent society about the correct legal position and the mistake continued. On the aforesaid finding the Tribunal concluded that there was a bonafide belief on the part of the assessee in non compliance of Section 269T of the Act. Thus, penalty was deleted. 4)In these circumstances, the impugned order being based on finding of fact, we see no reason to entertain the proposed questions of law. 5) Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)