DCIT Vs Umiya Co-operative Credit Society Ltd. (ITAT Ahmedabad)
Cash Loans & Repayments by Credit Society: No 271D/271E Penalty Where Transactions Are Genuine & Covered by Reasonable Cause – ITAT Ahmedabad
The Ahmedabad “C” Bench of the ITAT dismissed Revenue’s appeals and upheld deletion of penalties u/s 271D & 271E for AY 2016-17 in the case of DCIT vs. Shri Umiya Co-operative Credit Society Ltd. The assessee, a co-operative credit society (not a co-operative bank), had accepted and repaid amounts in cash from/to its members exceeding ₹20,000, leading to penalties of about ₹28.01 crore u/s 271D and ₹27.32 crore u/s 271E.
The Tribunal noted that all cash transactions were with members only, duly recorded in the books, routed through bank accounts, and found to be genuine. Reassessment proceedings initiated u/s 148A were dropped, and no addition was ultimately made on these transactions. Relying on Section 273B, the Tribunal held that the assessee had established reasonable cause, considering the nature of credit-society operations, bona fide belief, absence of tax-evasion intent, and the fact that members’ deposits are part of routine credit activities.
Crucially, the Tribunal followed the jurisdictional Gujarat High Court ruling in PCIT vs. Shree Madhi Surali Vibhag Nagarik Sahakari Dhiran Mandli Ltd.—affirmed by the Supreme Court—holding that penalties u/s 271D/271E are discretionary and not automatic where reasonable cause is proved. Consequently, the CIT(A)’s orders deleting penalties were affirmed and Revenue’s appeals were dismissed
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
