C.I.T. II JODHPUR vs. M/S GACHHIPURA KRAY VIKRAY SAHKARI SAMIT

This appeal is directed against order dated 16.1.13 of Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, whereby

The relevant facts are that during the course of assessment proceedings of the assessee, a cooperative society, engaged in trading of agriculture inputs and essential commodities, the AO noticed that the assessee has accepted the deposits from its employee and members in cash, in violation of provisions of Section 269SS and 269T of the Act. The transactions were treated to be genuine by the AO, however, the explanation furnished on behalf of the assessee that the society was under bona fide belief that the amount received from its COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/S GACHHIPURA employee and members of the society do not constitute loan or deposit, which is required to be accepted by account payee cheque or draft, was not found acceptable by the AO. Accordingly, the AO while holding the assessee guilty of violation of provisions of Section 269SS and 269T, vide order dated 31.3.11, imposed the penalty upon the assessee of Rs.13,00,580/- each under Section 271D and 271E of the Act.

Aggrieved thereby, an appeal preferred by the assessee was allowed by the CIT(A), observing that the AO has not given any finding whatsoever for rejecting the reply of the assessee. The CIT (A) arrived at the finding that there exists a reasonable cause and therefore, there was no justification for levy of penalty under Section 271D and 271E. Accordingly, the appeal was allowed by CIT (A) vide order dated 14.5.12. 4. Aggrieved by the appellate order, an appeal preferred by the Revenue, stands dismissed by the ITAT, Jodhpur Bench. Hence, this appeal.

Learned counsel for the appellant contended that the deposit accepted by the assessee from its employee and members, constitute loan and the assessee cannot escape the liability of penalty, stating that the deposit receipt was only amanat rashi. Learned counsel submitted that the refund of the amount does not dilute the default and thus, the ITAT was not COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/S GACHHIPURA justified in confirming the order passed by the CIT(A). Learned counsel would submit that admittedly, the assessee has violated the provisions of Section 269SS and 269T and therefore, it cannot escape the liability of penalty under Section 271D and 271E of the Act.

We have considered the submissions of the learned counsel for Revenue and perused the material on record.

Indisputably, the assessee received certain sums from its employee and members in excess of the limit prescribed under Section 269SS in cash and the same were repaid otherwise than by an account payee cheque or account payee bank draft, in violation of the provisions of Section 269T of the Act. But then, it is to be noticed that the assessee, a cooperative society constituted by its members, is duly registered under the relevant State statute. All the members are agriculturists and having income from the agricultural activities. It has come on record that the members of the society mostly reside in village, which do not have any banking facility. The specific stand of the assessee before the AO was that amount was received from the employee and members of the society on account of urgent need as amanat rashi and no loan deposit was received by the society from any outsider. Precisely, the stand of the assessee was that it was under bona fide belief that amanat rashi received from its COMMISSIONER OF INCOME TAX-II, JODHPUR VS. M/S GACHHIPURA members do not constitute loan or deposit, which is required to be accepted by account payee cheque or draft.

It is to be noticed that the AO had not given any finding whatsoever for rejecting the stand taken by the assessee, however, the CIT (A) and ITAT have concurrently found that the assessee, a cooperative society, working in remote area, ignorant about the relevant provisions, accepted the funds received as amanat rashi under the bona fide belief that the same do not constitute deposit or loan. The CIT (A) and ITAT have found the explanation furnished by the assessee in detail, as constituting reasonable cause in terms of provisions of Section 273B of the Act and thus, the finding arrived at by the CIT (A), affirmed by the ITAT, after due consideration of all the relevant aspects of the matter regarding the reasonable cause for failure on the part of assessee in complying with the provisions of Section 269SS and 269T, cannot be said to be capricious or perverse. In this view of the matter, no substantial question of law arises for consideration of this court in the present appeal.

In the result, the appeal fails, it is hereby dismissed. (KAILASH CHANDRA SHARMA),J. (SANGEET LODHA),J. Aditya/