2024 (1) TMI 554 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - deduction u/s. 80P as interest income owned by the assessee that their investment with bank is held not eligible for deduction - treatment for debatable issue - HELD THAT - It is pertinent to note that at the time of disallowing the deduction u/s. 80P(2)(a)(i) of the Act was decided by various courts in two different views across the country. The Jurisdictional High Court also given a finding which was against the assessee but the same was pending before the Hon ble Supreme Court at that juncture. Thus, the issue was debatable and the assessee has not furnished any inaccurate particulars of income but has simply claimed the deduction. Thus, the penalty itself u/s 271(1)(c) will not be attracted in the present case. Assesee appeal allowed.

Summary

Issues involved: Appeals against penalty orders u/s 271(1)(c) for alleged furnishing of inaccurate particulars of income and u/s 270A for underreporting of income due to misreporting of income.

ITA No. 889/Ahd/2023 (A.Y. 2014-15):
The assessee, a co-operative society, filed a return declaring total income at Rs. nil, claiming deduction u/s. 80P of Rs. 25,76,709. The Assessing Officer disallowed the deduction u/s. 80P based on differing court views, leading to a penalty of Rs. 5,54,622 u/s 271(1)(c). The CIT(A) dismissed the appeal, but the Tribunal found the issue debatable, thus allowing the appeal.

ITA No. 890/Ahd/2023 (A.Y. 2016-17):
The Assessing Officer imposed a penalty of Rs. 6,08,634 u/s 271(1)(c) for alleged inaccurate particulars of income. The Tribunal, considering a similar case precedent, held the issue debatable and allowed the appeal.

ITA No. 891/Ahd/2023 (A.Y. 2017-18):
Penalty u/s 270A was imposed for underreporting of income due to misreporting. The Tribunal found the deduction claimed u/s 80P to be debatable, thus not constituting misreporting, and allowed the appeal.

In conclusion, all three appeals filed by the assessee were allowed by the Tribunal on 10-01-2024.