HUBLI SARAKU SAGANIKEDARARA SAHAKARI PATTINA SANGHA NIYMITA,HUBLI vs. INCOME TAX OFFICER, WARD- 2(1), HUBLI, HUBLI

The brief facts of the case are that the assessee is a co-operative credit society and claimed the interest as eligible for deduction u/s. 80P(2)(a)(i) of the Act. The AO disallowed the said interest on the ground that the same is earned from the fixed deposits maintained at the banks. Thereafter the assessee filed an appeal before the Ld.CIT(A) who had partly allowed the appeal and confirmed the disallowance of interest received from the fixed deposits from banks. Thereafter the assessing officer proposed to impose penalty u/s. 271(1)(c) of the Act on the ground that the assessee had furnished inaccurate particulars. The assessee objected the same but the AO had confirmed the penalty and as against the said penalty order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) had dismissed the appeal on the ground that the assessee had not appeared before him.

As against the said order, the present appeal has been filed before this Tribunal.

At the time of hearing, the Ld.AR submitted that the reason for levying the penalty is not correct because, there was conflicting views given by the courts as well as the Tribunals and therefore the penalty could not be levied on the claim made by the assessee. The Ld.AR further submitted that the society had not received the hearing notices in its email and therefore they have not appeared before the Ld.CIT(A). On merits, the Ld.AR submitted that the interest claimed from the other co-operative societies and banks are highly debatable till the Hon’ble Supreme Court had decided the issue in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT reported in 431 ITR 1 and therefore the claim made by the assessee could not be treated as furnishing inaccurate particulars and therefore the penalty could not be levied u/s. 271(1)(c) of the Act.

The Ld.DR relied on the orders of the lower authorities.

The present appeal has been filed by the assessee against the ex-parte order passed by the Ld.CIT(A) and therefore the Ld.CIT(A) had no occasion to consider the issue on merits. Even though the submission made by the Ld.AR is an acceptable one, the merits of the issue could not be decided by us since the order of the Ld.CIT(A) is an ex-parte one and not on merits.

Considering the said facts and circumstances, we are inclined to set aside the order of the Ld.CIT(A) and remit this issue to the file of the Ld.CIT(A) for deciding the same on merits. We also direct the Ld.CIT(A) to consider the order of the Coordinate Bench of this Tribunal in assessee’s own case in ITA Nos. 1662 & 1663/Bang/2024 vide order dated 29/11/2024 for A.Ys. 2014-15 and 2015-16 wherein this Tribunal had considered the penalty issue which is more or less similar to the facts of the present case.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Respondent 3. CIT

DR, ITAT, Bangalore

Guard file

CIT(A)