2023 (10) TMI 1424 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance of deduction u/s 80P(2)(d) - disallowance on account of interest income earned from State bank of India and interest earned - HELD THAT - Merely the assessee claimed expenditure which was not accepted to the revenue that itself would not attract penalty. The assessee requested to drop the penalty. The reply of assessee was not accepted by AO. AO held that the assessee willfully admitted to evade tax on the income to the extent by furnishing inaccurate particulars of income. On appeal before the ld. CIT(A), the action of AO was upheld. We find that in the computation of income attached with the return of income, the assessee furnished all the details. The deduction regarding interest earned from DGVCL and State Bank of India was not allowed as deduction u/s 80)(2)(d) of the Act, though before us the assessee claimed that no such claim was made by the assessee. Thus, we find that neither there was concealment of income nor furnishing inaccurate particulars of income rather it was the Assessing officer who has not accepted the claim of assessee. Thus, the ratio of decision of Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT is clearly applicable on the facts of the present case, wherein as held that mere filing incorrect claim which is not allowed by the AO, that by itself would not attract penalty under section 271(1)(c). Thus, we direct the AO to delete the entire penalty. Appeal of assessee is allowed.

Summary

Issues:
1. Condonation of delay in filing appeal before the Tribunal.
2. Merits of the case regarding disallowance under Section 80P(2)(d) of the Income Tax Act, 1961 and penalty imposed under Section 271(1)(c).

Condonation of Delay:
The appeal was filed against the penalty imposed under Section 271(1)(c) of the Act for the Assessment Year 2012-13. The delay of 155 days in filing the appeal was attributed to the lack of awareness about the order being passed. The authorized representative of the assessee, a Chartered Accountant, did not communicate the order to the assessee society promptly. The delay was deemed unintentional, supported by cases citing the absence of deliberate intent. The Tribunal, considering substantial justice, condoned the delay as there was no intentional default on the part of the assessee.

Merits of the Case - Disallowance under Section 80P(2)(d):
The Assessing Officer disallowed a deduction under Section 80P(2)(d) of Rs. 2,98,035, stating the assessee was not eligible for it. The disallowance was made based on a presumption that the assessee claimed interest income from specific sources. However, the assessee contended that no such claim was made, and the disallowance was unjust. The penalty was imposed on the disallowed amount, which the assessee argued against, citing the decision in CIT Vs. Reliance Petroproducts (P) Ltd. The Tribunal found that the assessee had not concealed income or furnished inaccurate particulars, and the disallowance was based on the assessing officer's rejection of the claim. Following the Supreme Court's ruling, the Tribunal directed the Assessing Officer to delete the penalty, thereby allowing the appeal of the assessee.

In conclusion, the Tribunal addressed the issues of delay in filing the appeal and the merits of the case regarding the disallowance under Section 80P(2)(d) comprehensively. The decision was made in favor of the assessee, highlighting the lack of deliberate intent in the delay and the unjust imposition of the penalty based on the disallowance. The Tribunal's judgment emphasized the principles of justice and the application of relevant legal precedents in reaching its decision.