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District Co-Operative Bank Ltd. Versus DCITCircle-2, Dehradun

2016 (1) TMI 399 - ITAT DELHI

Penalty u/s 271(1) (c) - deduction u/s 80 denied - Held that:- The assessee attempted to correct the mistake by filing re- revised return. In the totality of circumstances of this case, the Appellate Authorities cannot be faulted in not finding it to be a case of making a willfully wrong claim by furnishing inaccurate particulars - Decided in favour of assessee. - ITA No. 3533/Del/2012 - Dated:- 21-10-2015 - Sh. A. T. Varkey, JM And Sh. Prashant Maharishi, AM For the Appellant : Dr. Rakesh Gupta .....

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x act of ₹ 3,36,68,582/-. The assessee company was eligible for deduction u/s 80 P up to AY 2006-07 but due to amendment wef 1-4-2007 subsection 4 was introduced u/s 80 P of the act which restricted the deduction only to Primary Agricultural Credit society and Primary cooperative Agricultural and Rural Development bank, therefore apparently assessee was not eligible for deduction u/s 80 P of the act for impugned assessment year. Hence, AO issued show cause notice on 3.11.2009 to the assess .....

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efore this year assessee was under impression about the availability of this deduction but on coming to know about the correct position of law it withdrew the deduction claimed. Therefore there was a bona fide error on part o the assessee for which penalty may not be levied. b. Penalty proceedings have been initiated validly as there is no finding or satisfaction has been recorded in order of section 143(3) that whether assessee furnished inaccurate particulars of income or concealed the income. .....

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bmitted that :- a. Due to amendment in the law assessee mistakenly forgot to apply that law where the deduction u/s 80 P w.e.f. AY 2007-08 was not available to the assessee. Therefore there was a bonafide error on part of the assessee. He submitted that letter dated 20/11/2009 and 15.12.2009 explains the position about the bona fide of the assessee. b. Assessee claimed deduction u/s 80 P (2) of the Act for AY 2007-08 and 2008-09. On coming to know the error that this deduction is not available t .....

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rther referred to the decision of Honourable Rajasthan High court in case of CIT Udaipur V Chiitorgarh Kendriya sahkari bank Limited ITA No 77/2013 dated 17/10/2013 where in for AY 2007- 08 on identical facts honorable high court has confirmed the deletion of penalty on claim withdrawn u/s 80 P of the act. 06. Ld DR vehemently contested that the penalty is rightly levied by AO and confirmed by CIT (A). He submitted that because the case of the assessee was selected in scrutiny the incorrect clai .....

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his case neither the assessee has concealed the particulars of income nor has furnished inaccurate particulars of income. This is simply a case of bonafide mistake which has occurred due to change of law applicable in this year. After giving our thoughtful consideration to the facts of this case vis-a-vis the legal position narrated above, we are of the considered opinion that when a wrong claim is made under some bonafide mistake, that cannot be a ground for imposition of penalty u/s 271(1)(c) .....

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on u/s 80 P withdrew same by filing revised return of income. In that case after issue of show cause notice and pursuing the reply of the assessee, AO himself dropped the penalty proceedings u/s 271 (1) (c) of the act vide his order dated 29.03.2011. In the office note in that order submitted before us it was categorically mentioned by the AO at serial no 3 that The explanation offered by the assessee is found to be bonafide and in view of the decision of honorable supreme court in civil appeal .....

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n one year explanation of assessee is found by AO bonafide and another year it is not. We also do not agree with contention of revenue that had this case not been selected for scrutiny, the wrong claim would not have been detected. We are aware that it is prerogative of revenue about which case to be scrutinized and assessee does not have any say in that. Therefore, this oft repeated argument of revenue deserves to be rejected. Further Honorable Rajasthan High court Jodhpur bench in CIT Udaipur .....

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n. The assessee is a Co-operative Bank and had been entitled to the deduction under Section 80P(2)of the Act before the year in question and had been allowed such deduction. It is no doubt true that in the original return for the year in question, the assessee claimed deduction of ₹ 50,000/- underSection 80P(2)(c)(ii)of the Act and in the revised return dated 13.12.2007, besides the above, the assessee also claimed deduction of ₹ 3,07,37,988/- under Section 80P(2)(d) of the Act. Howe .....

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ng and providing credit facilities. It was by virtue of insertion of Sub- section (4) by Finance Act, 2006 with effect from 01.04.2007 that the provisions of Section 80P were made inapplicable in relation to any Co-operative Bank other than the Primary Agriculture Credit Society or Primary Co-operative Agriculture and Rural Development Bank. Apparently, the claim for this deduction in the assessment year 2007-08 had been a matter ITA No.77/2013 of bona fide mistake and could not have been taken .....

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