THE KANGRA CENTRAL COOPERATIVE BANK LIMITED,DHARAMSHALA vs. DEPUTY COMMISSIONER OF INCOME TAX, PALAMPUR

Facts

The assessee, a cooperative bank, filed its return of income. The Assessing Officer (AO) made a disallowance for provision towards standard assets. Penalty proceedings were initiated under Section 271(1)(c) for concealment of income/furnishing inaccurate particulars. The CIT(A) confirmed the disallowance and penalty.

Held

The Tribunal held that the AO levied penalty merely on the basis of the confirmation of disallowance in quantum proceedings, without recording an independent finding. The Tribunal found that the assessee made adequate disclosure, and merely making a claim that is not sustainable in law does not amount to furnishing inaccurate particulars.

Key Issues

Whether penalty under Section 271(1)(c) can be levied solely based on disallowance in quantum proceedings without an independent finding? Whether making a claim not sustainable in law amounts to furnishing inaccurate particulars of income?