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Facts
For AY 2017-18, the assessment was completed u/s 144 against the assessee, a trust, who had not filed its return u/s 139(1). The Ld.AO disallowed expenses and rejected the Section 80P deduction, determining a profit of Rs. 44,94,201/-. Consequently, penalty proceedings u/s 270A were initiated, and a penalty of Rs. 6,92,800/- was levied for under-reporting of income.
Held
The Tribunal found that the assessee had claimed deduction u/s 80P and disclosed all material facts during the assessment. Relying on a coordinate bench's order, it was held that the assessee should be granted the benefit of Section 270A(6)(a) as the explanation offered was bona fide. Therefore, the penalty of Rs. 6,92,800/- levied under Section 270A was deleted.
Key Issues
Whether the penalty levied under Section 270A for under-reporting of income was justified, given that the assessee had claimed a deduction under Section 80P and disclosed all material facts during assessment, thus qualifying for immunity under Section 270A(6)(a) of the Income Tax Act.
Sections Cited
250, 144, 139(1), 80P, 270A, 270A(1), 270A(2), 270A(3), 270A(6), 270A(6)(a), 80P(2)(d), 80P(2)(a)(i)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHINBENCH “DB”, COCHIN
Per Shri Anikesh Banerjee (JM): The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi[for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for assessment year 2017-18, date of order 30/06/2025. The impugned order was emanated from the order of the Assessment Unit, Income-tax Department (for brevity, the “Ld.AO”) passed u/s. 144of the Act, date of order 12/12/2019.
Kanichukulangara Service Co-opeative Bank Limited 2. The brief facts of the case are that the assessment was completed u/s 144 of the Act. The assessee is a trust but during the impugned assessment year the assessee had not filed its return u/s. 139(1) of the Act. During the assessment proceeding the Ld.AO found that the assessee had claimed deduction u/s 80 P of the Act and the assessee had claimed loss amounting to Rs. 6,14,86,418/- in financial statement. The Ld.AO rejected the expense claimed by the assessee and rejected the deduction u/s 80P of the Act. Accordingly, the profit of the assessee was determine amounting to Rs.44,94,201/-. Finally the penalty proceeding u/s 270A was initiated against the assessee. The assessee complied the notice u/s 270A of the Act in penalty proceeding duly initiated by the Ld. AO. Finally, the Ld.AO levied the penalty amount to Rs. 6,92,800/- u/s. 270A that 100% of tax sought to avid. Being aggrieved the assessee filed the appeal before us.
Ld.AR filed a paper book containing pages 1-54 which is kept in record. The Ld.AR submitted that after the completion of assessment u/s 144 of the Act. The assessee filed the letter for immunity for proceeding u/s 270A of the Act. The said letter was duly annexed in APB page No.
The Ld.AR further submitted that only the certain expenses were disallowed by the Ld. AO in assessment proceeding. The Ld. AR argued for deletion of penalty U/s 270A of the Act.
Ld.AR respectfully relied on the order of coordinate Bench of ITAT Cochin in the case of Pannivizha Service Cooperative Bank Ltd. Vs. Assessing Officer in to 532/COCH/2025 dated 20.08.2025. The relevant para of the same order is reproduced has below. “17. We note that Section 270A(1) of the Act empowers the Assessing Officer to levy penalty for under-reporting of income. Section 270A(2) of the Act provides that a person shall be considered to have under-reported income in case of instances specified in sub-clause (a) to (g) of Section 270A(2) of the Act. Section 270A(3) to 270A(6) of the Act deal with the computation of amount Kanichukulangara Service Co-opeative Bank Limited of under-reported income. Section 270A(6)(a) of the Act, specifically excludes from the ambit of amount of under-reported income, the amount of income in respect of which the assessee offers explanation provided the concerned income tax authority is satisfied that the explanation so offered is bonafide and that the assessee has disclosed all the material facts to substantiate the explanation so offered. While adjudicating appeal for the Assessment Year 2011-2012, in identical factual matrix, we have accepted the explanation offered by the Assessee for making claim for deduction under Section 80P(2)(d) of the Act in respect of interest received from banks/treasuries as reasonable and bonafide. We have concluded that the Assessee had disclosed all material facts and had, thus, acted in a bonafide manner. Further, the Assessee was, in any case, entitled to claim deduction for the said interest income under Section 80P(2)(a)(i) of the Act as per the judgment of the Hon'ble Kerala High Court in the case of Sahyadri Co-op. Credit Society Ltd. (supra). Therefore, we hold that the Assessee should have been granted benefit of the provisions contained in Section 270A(6)(a) of the Act. Accordingly. we delete the penalty of INR.55,271 (Assessment Year 2018-2019) and INR.1,75,857 (Assessment year 2020-2021) levied upon the Assessee under Section 270A of the Act. In result, Ground raised
by the Assessee in appeal for the Assessment Year 2018-2019 and 2020-2021 is allowed.”
5. Ld.DR argued and stand in favour of the revenue authority.
6. We have heard the rival submissions and considered the document available on record. We filed that the assessee is a Cooperative Society and claimed the deduction u/s 80P of the Act. During the impugned assessment year the assessee had not filed the return u/s 139. Finally, the assessee participated in the assessment proceeding and submitted the documents before the Ld.AO. the Ld. AO rejected the expenses and re-computed the net profit of the assessee. We find that the assessee has submitted the application for immunity u/s 270A of the Act. In this respect we find that the assessee claimed deduction U/s 80P of the Act and disclosed all material fact before the Ld. AO during assessment. We note that the assessee should have been granted benefit of provision of section 270A(6)(a) of the Act by respectfully following order of coordinate bench in the case of Pannivizha Service Cooperative Bank Ltd. (Supra). Accordingly, the penalty amount of Rs. 6,92,800/- is deleted.