THE AYALI KALAN CO-OP AGRICULTURE MULTI,LUDHIANA vs. INCOME TAX OFFICER W III (3), LUDHIANA

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ITA 880/CHANDI/2016Status: DisposedITAT Chandigarh17 November 2020AY 2010-114 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee made a bonafide claim under a mistaken belief and there was no effort to conceal income or furnish inaccurate particulars. Therefore, the penalty was not leviable.

What were the facts?

The assessee, a Co-operative Agriculture Multipurpose Society, claimed deduction under Section 80P on interest earned from FDRs with commercial banks and on business income. The AO disallowed part of the deduction and initiated penalty proceedings.

What were the issues?

The primary issue was whether penalty under Section 271(1)(c) was leviable for a bonafide claim made under a mistaken belief regarding eligibility for deduction.

Which sections of the Income-tax Act were involved?

Section 80P,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH

Before: SH. SANJAY GARG

For Appellant: Shri Parveen Jindal, CA
For Respondent: Shri Ashok Kumar Khanna, Addl. CIT
Hearing: 26.11.2020Pronounced: 26.11.2020

आदेश/ORDER The present appeal has been preferred by the assessee against the order dated 27.05.2016 of the Commissioner of Income Tax (Appeals)-1, Ludhiana pertaining to 2010-2011 assessment year. 2. The assessee in this appeal has agitated the confirmation of penalty levied by the AO u/s 271(1)(c)of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

ITA-880/CHD/2016 A.Y. 2010-2011 Page 2 of 4

3.

The assessee admittedly is a Co-operative Agriculture Multipurpose Society. The assessee claimed deduction u/s 80P of the Act, however, the AO noticed that the assessee earned interest on FDR from the Co-operative Banks and also from other banks. The AO observed that the interest earned by the assessee from other Commercial Banks was not eligible for deduction u/s 80P(2)(d) of the Act. The AO, therefore, disallowed the deduction claimed in respect of the interest earned from FDR with other commercial banks, however, while making the addition he gave benefit of the expenditure relatable to such interest income and the disallowance/addition was restricted to 65% of the interest income from other banks. The AO also initiated penalty proceedings u/s 271(1)(c)of the Act and imposed the impugned penalty in respect of the aforesaid disallowance of deduction made by the AO in respect of interest income from other banks.

1.

The AO also levied penalty in respect of disallowance of deduction claimed by the assessee u/s 80(P) of the Act of Rs. 2,52,378/- claimed as business income of the assessee society.

The penalty so levied by the AO has been confirmed by the ld. CIT(A) vide impugned order.

4.

I have heard the rival contentions and have also gone through the record. The ld. counsel for the assessee inviting our attention to the assessment records submitted that the assessee

ITA-880/CHD/2016 A.Y. 2010-2011 Page 3 of 4 is a Co-operative Agriculture Multipurpose Society. That the assessee was eligible for deduction u/s 80P(2)(d) of the Act on the interest income earned from the deposit with the Co-operative Societies. However, due to bonafide mistake, the interest income from other commercial banks was also taken for deduction u/s 80P(2)(d) of the Act. That similarly, deduction of Rs. 2,52,378/- u/s 80(P) was claimed in respect of the amount earned from sale of cement, hardware, CFL and school fee etc. under bonafide belief that the assessee was eligible for claiming the deduction, the same being business income of the assessee. That all the facts relating to the aforesaid income was put on record and there was no effort to conceal any income.

5.

Considering the above submissions and after going through the record, I find that the assessee in this case has put a bonafide claim under a mistaken belief that the assessee was entitled to claim deduction on the aforesaid income. However, there was not effort by the assessee to conceal any income or to furnish any inaccurate particulars of income. Further, the assessee has also relied in this respect on the decision of the Tribunal dated 18.12.2012 in the case of ACIT Vs Punjab State Fed of Coop House Building Society Ltd. wherein in somewhat similar circumstances, Tribunal noticed in the case of other Co- operative Society that there seemed no intention to evade any ITA-880/CHD/2016 A.Y. 2010-2011 Page 4 of 4 tax, rather the deduction was claimed in a mistaken belief by the Co-operative Society.

6.

In view of the above, I do not consider it a fit case for levy of penalty u/s 271(1)(c)of the Act. The impugned penalty is ordered to be deleted. The appeal stands allowed.

7.

In the result, appeal of the assessee is allowed.

Order pronounced on 26th November,2020.

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