RENUKADEVI URBAN CO-OP CREDIT SOCIETY LTD,SAUNDATTI vs. INCOME TAX OFFICER, WARD - 1, BELAGAVI

INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI BENCH: DB (VIRTUAL) BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA 465/PAN/2025 निर्धारणवर्ा/Asst. Year:2017-18) Permanent Account Number: AAAAR0471P INCOME TAX OFFICER, RENUKADEVI URBAN CO- WARD - 1 OP CREDIT SOCIETY LTD F. K. COMMERCIAL ANNI AGASI ROAD, COMPLEX, OPP CIVIL SAUNDATTI, SAUNDATTI- HOSPITAL, DR. A B Vs. YELLAMMA-591126, ROAD KARNATAKA BELAGAVI-590001, KARNATAKA (अपीलधर्थीAppellant) (प्रत्यर्थीRespondent)

निर्धारितीद्वधिध/Assessee Shri Ashok Mudnur.AR (Virtual) represented by: िधजस्‍वद्वधिध/Revenue represented Smt. Rijula Uniyal, Sr. DR by: (Virtual)

सुिवधईकीतधिीख/Date of conclusion of hearing: 21-05-2026 घोषणधकीतधिीख/Date of pronouncement: 04-06-2026 ORDER PER PAVAN KUMAR GADALE, JUDICIAL MEMBER: The assessee has filed an appeal against the order of NFAC/ CIT(A) passed u/sec 270A and 250 of the Income Tax Act. The assessee has raised the grounds of appeal challenging the order of the CIT(A) sustaining the levy of penalty u/sec270A of the Act by the Assessing Officer. 2. The brief facts of the case are that, the assessee is a credit co- operative society engaged in providing credit facilities to its members. The assessee has filed the return of income for the assessment year 2017-18 on 27.10.2017 disclosing a total income of Rs.74,120/- after claiming deduction u/sec 80P of the Act of Rs.32,81,250/-. Subsequently, the case was select for scrutiny and in the course of assessment, the Assessing Officer (A.O) has issued notice u/sec 143(2) and u/sec142(1) of the Act and there was partial compliance by the assessee .Whereas the AO was not satisfied with the explanations and denied the claim of deduction u/sec80P of the Act and assessed the total income of Rs. 33,05,370/- and passed the order u/sec 143(3) of the Act vide order dated 11.12.2019. Subsequently, the AO has initiated penalty proceedings and issued notice u/sec 270A of the Act and the assessee was provided opportunities to explain the reasons for under reporting income and the assessee has filed the submissions .Whereas, the AO was not satisfied with explanations and levied penalty of Rs. 75,020/-vide order u/sec 270A of the Act dated 08.03.2025. 3. Aggrieved by the order, the assessee has filed the appeal before the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statement of facts, submissions of the assessee and findings of assessing officer but has sustained the levy of penalty by the AO and dismissed the appeal. Aggrieved by the CIT(A), assessee has filed the appeal before the Hon'ble Tribunal. 4. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the A.O in levying of penalty overlooking the facts and submissions. Further the Ld.AR mentioned that in the quantum appeal, against the denial of deduction u/sec 80P of the Act i.e on filling the appeal with the first appellate authority, the CIT(A) has granted the relief to the assesse and hence the penalty cannot be sustained. And the Ld.AR supported the submissions with the facts and placed the copy of the order giving effect (OGE) of CIT(A) order.Further the Ld.AR submitted that the notice issued for levy of penalty is invalid as the A.O has failed to mention the limb under which penalty is proposed. The Ld.AR substantiated the submissions with factual paper book and judicial decisions and prayed for allowing the appeal. Per Contra, the Ld. DR submitted that the CIT(A) has rightly confirmed the levy of penalty and the technicalities raised by the assessee are devoid of merits and supported the order of the CIT(A).

““Penalty for under-reporting and misreporting of income-Grant of immunity from penalty and prosecution-Voluntary computation of income filed to buy peace and avoid litigation-Failure to specify in penalty notice whether proceedings initiated for under-reporting or misreporting-Granted immunity. [S. 270AA(4), Art. 226]

The assessee’s application for grant of immunity from penalty under section 270A was rejected on the ground that the assessee did not fall within the scope and ambit of section 270AA. On a writ petition contending that the order having been passed beyond the period of one month from the end of the month in which the assessee had filed the application seeking immunity was barred by limitation in terms of section 270AA(4) of the Act. Allowing the petition the Court held that the order of the Assessing Officer denying the benefit of immunity from penalty on the ground that the penalty was initiated under section 270A for misreporting of income was not only erroneous but also arbitrary and bereft of any reason since in the penalty notice he had failed to specify the limb-under-reporting or misreporting of income, under which the penalty proceedings had been initiated and how the ingredients of sub-section (9) of section 270A were satisfied. In the absence of such particulars, the mere reference to the word “misreporting” in the assessment order to deny immunity from imposition of penalty and prosecution made the order manifestly arbitrary. The entire edifice of the assessment order passed by the Assessing Officer was actually voluntary computation of income filed by the assessee to buy peace and avoid litigation, which fact had been duly noted and accepted in the assessment order and consequently, there was no question of any misreporting. The action of the Assessing Officer was contrary to the legislative intent of section 270AA. Therefore, the order passed under section 270AA(4) rejecting the assessee’s application for immunity from penalty was set aside and the Assessing Officer was directed to grant immunity under section 270AA to the assessee. Court observed that the legislative intent of section 270AA of the Income-tax Act, 1961 is to encourage or incentivize a taxpayer to fast-track settlement of issues, recover tax demands, and reduce protracted litigation. (AY. 2018-19).”

Assistant Registrar, आयकरअिीिीयअतिकरण, / ITAT, Panaji.