M/S.PUNALUR SERVICE CO-OPERATIVE BANK LTD.,KOLLAM vs. INCOME TAX OFFICER, WARD 2 , KOLLAM

We come to the assessee’s appeal ITA.No.784/Coch/ 2023 along with it’s stay application SA.No.177/Coch/2023 therein for the former assessment year 2015-2016 challenging both the learned lower authorities action imposing sec.271(1)(c) penalty of Rs.10,24,792/- pertaining to it’s sec.80P deduction disallowance of rs.33,26,482/-. A perusal of the instant appeal file indicates that the same pertains to interest received from cooperative banks and similar other institutions as well as state treasury. The Assessing Officer had framed his sec.143(3) assessment on 15.12.2017 disallowing the assessee’s aforesaid deduction claim. The assessee preferred it’s quantum lower appeal before the CIT(A), who, in his order reversed the said disallowance.

We are informed during the course of hearing as per the assessee’s pleadings that in the meantime, hon’ble jurisdictional high court’s decision in case of Pr. CIT vs. Mavilayi Service Cooperative Bank Ltd., [2019] 414 ITR 67 (Ker.) came to be pronounced in department’s favour. This made the learned CIT(A) to invoke his sec.154 rectification & SA No.177/Coch/2023. M/s.Punalur SCB Limited. jurisdiction to recall his foregoing order allowing the assessee’s appeal. There is hardly any dispute between the parties that it is in consequence to the said rectification that the assessee has been held to have furnished it’s inaccurate particulars of income thereby inviting sec.271(1)(c) penalty under challenge.

We have given our thoughtful consideration to the vehement rival stands against and in support of the impugned penalty. There would be hardly any dispute between the parties qua the clinching fact that hon’ble apex court’s recent landmark decision in Mavilayi Service Cooperative Bank Ltd., vs. CIT [2021] 431 ITR 1 (SC) has already reversed the hon’ble jurisdictional high court’s decision forming the basis of the CIT(A)’s rectification withdrawing the relief granted to the taxpayer u/sec.80P of the Act. This is indeed apart from the fact that we find that case law CIT vs., Reliance Petro Products [2010] 322 ITR 158 (SC) would also apply herein as it is only an instance of a quantum disallowance simplicitor than that of furnishing of inaccurate particulars. We thus accept the assessee’s instant penalty appeal on both these counts. Ordered accordingly.