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Income Tax Appellate Tribunal, BANGALORE BENCHES “A”, BANGALORE
Before: Shri George George K, JM & Ms.Padmavathy S, AM
Appellant by : Sri.Chandra Shekhar, Advocate Respondent by : Sri.K.Sankar Ganesh, JCIT-DR Date of Pronouncement : 05.01.2023 Date of Hearing : 05.01.2023 O R D E R
Per George George K, JM :
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 12.11.2022. The order of the CIT(A) arises out of the order imposing penalty u/s 270A of the I.T.Act amounting to Rs.1,85,214. The relevant assessment year is 2018-2019.
The brief facts of the case are as follows: The assessee is a Co-operative Society engaged in the business of construction, lending and accepting deposits to the members of the assessee-society. For the assessment year 2018-2019, the return of income was filed on 03.10.2018 declaring `Nil’ income after claiming deduction u/s 80P of the I.T.Act. The assessee had received interest of Rs.3,09,697 from Rural Electrification Corporation Limited (RECL) in The Mangalore Co-operative Building Society Ltd.
respect of investment made. The Assessing Officer while completing the assessment u/s 143(3) of the I.T.Act on 05.04.2021, made addition of a sum of Rs.3,09,697 on the ground that the assessee was not entitled to deduction u/s 80P of the I.T.Act, since the receipt of income was not from the co-operative society. The A.O. issued show cause notice u/s 247 r.w.s. 270A of the I.T.Act on 05.04.2021, requiring the assessee to show cause as to why the order imposing penalty u/s 270A of the I.T.Act should not be made in its case. In response, the assessee filed submission vide letter dated 20.11.2021, wherein it has been stated that the assessee had not claimed deduction u/s 80P of the I.T.Act with respect of interest income received from RECL. Further, it was submitted that there is no underreporting or misreporting of any income. However, the contention raised by the assessee was rejected and penalty order u/s 270A of the I.T.Act was passed on 04.03.2022 imposing penalty of Rs.1,85,214 (being 200% of the amount of tax payable u/s 270A(8) of the I.T.Act).
Aggrieved, the assessee filed appeal before the first appellate authority. Before the first appellate authority, the assessee raised various contentions vide its letter dated 03.05.2022, which are extracted at para 3 of the impugned order of the CIT(A). However, the contention raised was rejected and the CIT(A) confirmed the penalty imposed u/s 270A of the I.T.Act. The CIT(A) was of the view that the assessee having not challenged the issue on merits in appeal,
The Mangalore Co-operative Building Society Ltd. the imposition of penalty u/s 270A of the I.T.Act is mandatory.
Aggrieved by the order of the CIT(A) confirming the penalty imposed u/s 270A of the I.T.Act, the assessee has filed the present appeal before the Tribunal. The learned Counsel for the assessee submitted that the assessee has not claimed any deduction u/s 80P(2)(d) of the I.T.Act with regard to interest income of Rs.3,09,697 received from RECL. Therefore, it was contended that the imposition of penalty u/s 270A of the I.T.Act is bad in law. As regards the addition on merits, the learned Counsel submitted that on noticing the mistake, the assessee has filed rectification application before the A.O. The learned Counsel furnished the computation of statement of income for the relevant assessment year.
The learned Departmental Representative supported the orders of the A.O. and the CIT(A).
We have heard rival submissions and perused the material on record. On perusal of the computation of statement of income filed along with the return, it is clear that the assessee has not claimed deduction u/s 80P(2)(d) of the I.T.Act with reference to the interest income received from RECL. For ready reference, the computation of statement of income reads as follows:-
The Mangalore Co-operative Building Society Ltd. The Mangalore Co-operative Building Society Ltd. The Mangalore Co-operative Building Society Ltd.
Since the assessee has not claimed deduction u/s 80P(2)(d) of the I.T.Act with reference to the interest income earned on investments with RECL, we find penalty u/s 270A of the I.T.Act cannot be imposed. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 05th day of January, 2023.