Penalty under Section 271D deleted in case mistake committed under bonafide belief
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Case Details: |
Bapujibuwa Nagari Sahakari Pat Sanstha Maryadit vs. JCIT |
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Appeal No.: |
ITA No. 946/PUN/2017 |
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Order pronounced by: |
ITAT Pune |
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Date of Order: |
17-02-2021 |
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In Favour of: |
Assessee |
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Assessment Year: |
2012-13 |
Source: www.itat.gov.in
Brief Facts:
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The assessee is a cooperative society engaged in the activity of providing credit facilities to members. The assessee in the year under consideration has accepted fixed deposits in cash from its members exceeding Rs. 20,000 which is prohibited under section 269SS of the Act. The assessee submitted that it was under the bona-fide belief that its activities are banking activities and the provisions of Section 269SS do not apply to the bank. It was also pointed out by the assessee that on realizing its fault, it has immediately stopped accepting the deposits in cash. |
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The assessee also contended that its managing committee does not possess the necessary qualification as well as the knowledge of the provisions of the Income Tax Act. Thus, it has committed a mistake under the bonafide belief. The assessee also pointed out that there was the scrutiny assessment for the assessment year 2009-10 but there was no such mistake pointed out by the A.O. during the assessment proceedings. This was also the reason for gaining the bonafide belief that the assessee was outside the purview of Section 269SS of the Act. |
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The assessee further contended that the ITAT in various cases involving identical facts and circumstances has deleted the penalty imposed under section 271D of the Act. The assessee in support of its contention placed its reliance on various orders. Thus, it was prayed by the assessee to drop the penalty proceedings initiated u/s 271D of the Act. |
Observations & Ruling of Tribunal:
- The provisions of Section 273B of the Act prescribes that penalty shall not be imposable for any failure referred to in Section 271D of the Act, if the assessee proves that there was a reasonable cause for such failure. Therefore, in the instant case, what is required to be examined is as to whether the assessee had a reasonable cause for its failure to comply with the provisions of Section 269SS r.w.s. 271D of the Act.
- Admittedly, it was the first mistake committed by the assessee in the year under consideration as evident from the affidavit filed by it. Further, the Revenue in the assessment framed u/s 143(3) of the Act for the assessment year 2009-10 has not pointed out to the assessee for the contravention of the provisions of section 269SS of the Act.
- All these contentions of the assessee have not been controverted by the authorities below. Accordingly, we can draw an inference that the assessee has accepted the cash as deposits exceeding Rs. 20,000/- under the bonafide belief. The Tribunal relied upon the ruling in the case of Ratnagiri Jilha Gramsevak vs. ACIT in ITA No. 1348/PN/2014.
- There being no material to show that the transactions have been carried out with any intention to avoid or evade taxes, in our opinion, the assessee has been successful in showing that there was a reasonable cause for his failure to comply with the provisions of Section 269SS of the Act.
- Accordingly, the A.O. is directed to delete the penalty imposed under Section 271D of the Act.
Read complete order: Bapujibuwa Nagari Sahakari Pat Sanstha Maryadit vs. JCIT
Disclaimer: The article is based upon the ruling of the Hon’ble ITAT Pune and is meant for informative purposes only. Readers are requested to act diligently and under consultation with a professional before applying the information contained in this article.
