INCOME TAX ACT, 1961

section 271D/271E

Penalty under section 271D/271E - Alleged violation of section 269SS/269T - Reasonable cause -

Assessee was a cooperative society registered under Cooperative Society Act and engaged in carrying on business of providing credit facilities to its members. AO levied penalty under section 271D, for accepting cash deposits exceeding Rs. 20,000 in contravention to section 269SS. He also levied penalty under section 271E for repayment of loans and deposits in cash exceeding Rs. 20,000 in contravention of section 269T. Assessee's case was that assessee was in existence for last many years and filing return of income but no such penalty had been levied in case of assessee and it was for the first time violation of section 269SS/269T was pointed out. Assessee also mentioned that even Tax Auditor had not made any remark in their Tax Audit Reports regarding violation of section 269SS or 269T in the instant year or in earlier years. Held: Belief on the part of assessee in view of past history of the case was bona fide belief. Also society was operating in rural area and depositors were illiterate persons. In subsequent years also no penalty was levied in the case of the assessee under section 271D/271E. Accordingly, reasonable cause in terms of section 273B, existed in case of assessee for not complying with sections 269SS and 269T and, therefore, penalty was levied in terms of sections 271D and 271E was deleted.

Supported by:CIT v. Lokhpal Film Exchange (Cinema) (2008) 304 ITR 172 (Raj) : 2008 TaxPub(DT) 0490 (Raj-HC).

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