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2016 (7) TMI 452 - ITAT CHANDIGARH

2016 (7) TMI 452 - ITAT CHANDIGARH - TMI - Levy of penalty under section 271(1)(c) - bogus claim of exemption of income under section 80P - Held that:- Since the assessee made bogus claim of exemption of income under section 80P of the Act in the return of income, therefore, assessee furnished inaccurate particulars of income so as to levy the penalty under section 271(1)(c) of the Act. - Decided against assessee. - ITA No. 259/CHD/2016 - Dated:- 5-7-2016 - Shri Bhavnesh Saini, Judicial Member F .....

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0P of the Act of the Act. The assessee has shown gross total income at ₹ 97,60,500/-. The assessee has filed its return declaring 'nil' income after claimed whole of the income as exempt income under section 80P of the Act. Further, the Assessing Officer noticed that the assessee earned interest on FDR from the Co-operative banks and also from other banks which are not covered by the provisions of Section 80P(2)(d) of the Act. The interest from banks other than cooperative banks am .....

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o the profit declared by assessee in its Profit & Loss Account i.e. ₹ 97,60,590/- and initiated the penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. 3. During the course of penalty proceedings, the Assessing Officer noticed that assessee had filed appeal before ld. CIT(Appeals)-I Ludhiana against the order under section 143(3) of the Act. The ld. CIT(Appeals) vide order dated 18.06.2012 partly allowed the appeal of the assessee wit .....

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The Assessing Officer vide separate order levied penalty under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income. 4. The assessee challenged the penalty order before ld. CIT(Appeals) and written submission of the assessee is reproduced in the appellate order in which the assessee briefly explained that ld. CIT(Appeals) has allowed relief partly on the interest which had direct nexus with the interest received. The assessee had not furnished any inaccurate particular .....

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4 are reproduced as under : "3.4 I have carefully considered the facts of the case, the basis of imposition of the penalty and the arguments of the AR during the course of the assessment as well as the appellate proceedings. The appellant is a primary cooperative agricultural society and has claimed its income as exempt u/s SOP declaring 'nil' income. The net profit arrived at by the appellant at ₹ 97,60,500/-includes interest on FDRs from Cooperative Banks as well as from oth .....

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est earned on FDR from the banks other than cooperative banks was disallowed by holding that they are not covered u/s 80P(2)(d) of the Act. Further, the assessee had income from sale of cement, hardware, CFL and from insurance aggregating ₹ 3,56,641/- which was disallowed as, it was not in accordance with the aims and objectives of the society which is eligible for deduction only for the work done for the welfare of its members. The exemption u/s 80P, disallowed aggregating ₹ 1,55,29 .....

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at part of the interest paid shall be deducted which has direct nexus to the FDRs on which receipt of interest has to be assessed whereas the appellant worked out its net profit after debiting the entire amount of interest paid to members and non-members. The interest paid having been already claimed in the P&L account, no further exemption was eligible out of interest earned from FDRs with banks other than Cooperative banks. As rightly held by the AO in the penalty order, it is clear that t .....

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80P(2)(d) but that it is eligible for deduction u/s 80P(2)(a)(i). However, the fact remains that the assessee has claimed the deduction u/s 80P(2)(d) and it is not eligible for the said exemption either u/s 80P(2)(d) or under 80P(a)(i). This issue has been decided in the appellant's case and is not debatable as the Ld. CIT(A) and Hon'ble ITAT have already held so for A.Y. 2007-08 in the appellant's case. However despite the same, the appellant consciously and deliberately has continu .....

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d was held to be arising out of the business carried by it for the purpose of sec 80P(2)(a)(i) and was held to be exempt whereas the facts are different in the appellant's case. Further, the appellant has placed reliance on the other of the Hon'ble Jurisdictional High Court in the case of CIT vs. Shahbad Cooperative Sugar Mills dated 12.10.2009 wherein the facts were different as the assessee was an agricultural society engaged in marketing of sugar by its members and the said claim was .....

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e FDRs with banks other than Cooperative banks which is to be assessed; the appellant continued with the practice to work out to its net profit after debiting the full amount, of interest on FDRs from banks not covered u/s 80P(2)(d) and therefore it was a consciously committed act of claiming a wrong deduction. The decision of the Hon'ble Supreme court in the case of CIT vs. Reliance Petro Products Pvt. Ltd.(2010) 322 ITR 158 relied upon is not applicable to the case of the assessee as it is .....

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IT vs. Pathankot Primary Cooperative Development Bank Ltd. (2012) ITA No.27 (P & H) wherein deletion of penalty was confirmed even though the quantum addition made by the AO had become final whereas in the instant case it is not merely because the quantum addition has become final but on account of the conscious and deliberate act on the part of the appellant in claiming the wrong deduction. Similarly the case of CIT vs. Ajaib Singh & Co.(2002) 253 ITR 630 (P&H), oh which the AR has .....

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ubstantiate and fails to prove that such explanation is bonafide then such amount is deemed to be the income in respect to which particulars have been concealed. Explanation 1 to sec 271(l)(c) can be invoked at any time even if it is not invoked by the AO. Under Explanation 1, a presumption arises that if any addition is made by the AO and is sustained by the appellant authority than it will represent the concealed income of the assessee and the onus will be on the assessee to rebut the presumpt .....

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the interest on FDRs from the banks other than commercial banks which does not have a direct-nexus with the interest earned. Further, the AO was also justified in holding that the income from sale of cement, hardware, CFL, insurance is not in accordance with the aims and objectives of the society and no deduction is allowable on the same and the appellant knowingly claimed deduction wrongly on the same. Therefore, it attracted penalty u/s 271(l)(c). In view of the said facts and circumstances, .....

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a request has been received through FAX from Shri O.P. Garg & Co. ( Chartered Accountant Shri Praveen Jindal) making a request for adjournment because the counsel Shri Manish K. Gupta conversant with the matter is still out of India. The request for adjournment is unnecessary and without substance. The request is made by Shri Praveen Jindal for adjournment who has appeared before ld. CIT(Appeals) and argued the appeal. Therefore, he himself is conversant with the matter and further his Power .....

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hat assessee made a bogus claim of deduction of interest and also made bogus claim of exemption under section 80P of the Act. He has relied upon decisions of Hon'ble Supreme Court in the cases of Union of India V Dharmendra Textile & Processors 306 ITR 277 and CIT V Atul Mohan Bindal 317 ITR 1 in which it was held that "Penalty is strictly a civil liability". He has also relied upon decision of Hon'ble Punjab & Haryana High Court in the case of New Bijli Foundry V CIT 1 .....

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th the orders of the authorities below. The facts as noted above are not in dispute. The assessee claimed entire income to be exempt under section 80P of the Income Tax Act because assessee declared 'nil' income. The Assessing Officer found that the income shown by assessee includes interest earned on FDR from Co- operative Bank as well as from other banks which are not covered by the provisions of Section 80P(2)(d) of the Act. Thus, the income of the assessee was not exempt under sectio .....

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