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2017 (8) TMI 1248 - AT - Income TaxPenalty u/s 271(1)(c) - assessee furnishing NIL income by claiming deduction u/s 80P which is not allowable to it as per IT law - furnishing of inaccurate particulars of income - Held that:- The explanation offered by the assessee bank though not accepted finally but at the same time, has not been found devoid of any basis. It is not a case that the language of the amended statute was held so clear that the assessee was not eligible for claim of deduction on prima facie reading of the amended statute. The language involved in the statute involves interpretation and even the CBDT has admitted the same in its circular no. 6/2010 dated 20.09.2010 and has therefore, vide the said circular, has clarified that regional rural bank, such as the assessee in the present case, will not be eligible for deduction under section 80P from assessment year 2007-08. The assessee thus has some reasonable basis for claim of deduction u/s 80P of the Act even after the amendment by the Finance Act, 2006 and it has thus established its bonafide of such claim in its return of income. It is also a fact that the said explanation has not been finally accepted and disallowance of claim of deduction u/s 80P has been sustained by the Coordinate Bench and the assessee has not filed any further appeal, however the same cannot be a basis for levy of penalty which calls for strict interpretation as we have held above. Thus respectfully following the decision of the Hon’ble Supreme Court in case of Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] saying mere making of a claim which is not sustainable in law, by itself, does not amount to furnishing of inaccurate particulars of income, the fact that necessary disclosure has been made in the return of income in respect of claim of deduction under section 80P, the assessee has offered the necessary explanation and the basis in support of the said claim establishing its bonafide and the said explanation has not been found totally devoid of any basis, mere disallowance of claim of deduction u/s 80P of the Act cannot form the basis for levy of penalty for furnishing inaccurate particulars of income. We accordingly confirm the order of ld CIT(A) deleting the levy of penalty and the ground taken by the Revenue is hereby dismissed. - Decided in favour of assessee.
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