INCOME TAX ACT, 1961

Section 271D Section 271E

Penalty under section 271D and 271E - Leviability - Acceptance and repayment of cash deposits above Rs. 20,000 by co-operative society -

Assessee-co-operative society accepted and repaid deposits of Rs. 20,000 or more otherwise than by account payee cheque or bank drafts. Therefore, AO levied penalty under section 271D and 271E. Assessee submitted that it was underbona fide belief that sections 269SS and 269T were not applicable in its case. Held: AO accepted that deposits made by assessee were genuine and breach of sections 269SS and 269T was occurred due to bona fide belief. Even no addition was made on account of impugned deposits the returned of income and veracity of creditors was not doubted by revenue. In case, if veracity was doubted, then additions would have been made under section 68. It was an undisputed facts that credit societies function in villages/taluks, etc., for farmers or related persons, as an alternative to banks and if deposits were taken/repaid only in cheques, then it might loose all relevance. Even Chartered Accountant who audited books of accounts was not showing these as being in contravention of the Act in relevant columns of Audit Report. Thus, under bona fide belief assessee accepted and repaid loan or deposits in cash as was done by the Co-operative Banks, in cash and therefore, no penalty could be levied under section 271D and 271E.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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