SHIVKRIPA SAHAKARI PATPEDHI LTD,MUMBAI vs. DCIT RG 29(3),

The assessee is a credit co-operative society. The assessee claimed deduction under Section 80P of the Act in respect of interest income received from banks and interest income received from Mutual Funds. The AO rejected the said claim. Penalty was levied by the AO on rejection of deduction under Section 80P of the Act in respect of the two items discussed above.

We heard the parties and perused record. We noticed that the learned CIT(A) has confirmed the penalty only for the reason that the assessee has failed to furnish any explanation with regard to the disallowance made by the AO.

The learned A.R. submitted that the AO had made identical disallowances in earlier years but he did not levy any penalty thereon. Further the learned AO placed reliance on the decision rendered by the Hon'ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. 229 CTR 209 in support of his decision to levy penalty. The learned A.R. submitted that the decision rendered by the Hon'ble Supreme Court in the above said case is not applicable to the facts of the present case. He submitted that the assessee was having proper reasons for claiming the deduction u/s 80P of the Act against the two incomes referred above. The learned A.R. submitted that the assessee was not properly guided in this matter and hence proper explanations were not given before the tax authorities. Accordingly he pleaded that the assessee may be provided with one more opportunity to present proper explanations before the tax authorities against levy of penalty under Section 271(1)(c) of the Act.

The learned D.R. strongly supported the order passed by the learned CIT(A).

Having heard the rival submission we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to offer explanations before the tax authorities against the levy of penalty under Section 271(1)(c) of the Act. Accordingly we set aside the order passed by the learned CIT(A) and restore all the issues to the file of the AO for examining it afresh.

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