INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Allegation that assessee made incorrect claim of deduction under section 80P - Whether assessee furnished inaccurate particulars of income -

Assessee was a Regional Rural Bank carrying out banking activities and declared nil income in return after claiming deduction under section 80P. AO completed the assessment proceedings under section 143(3) after disallowing the deduction under section 80P. Disallowance was upheld by CIT(A). Assessee was issued show cause notice as to why penalty under section 271(1)(c) should not be initiated reply filed by assessee in response to show cause notice could not satisfy AO and he imposed penalty under section 271(1)(c) for furnishing of inaccurate particulars of income. Held: Similar issue of levy of penalty on disallowance of deduction under section 80P under identical facts had come up before the Coordinate Bench of Tribunal in assessee's own case for assessment year 2011-12, vide ITA No. 597/Ind/2015, dated 11-8-2017 and revenue's appeal was dismissed and the finding of CIT(A) deleting the penalty levied under section 271(1)(c) was confirmed by Tribunal holding that bona fide of assessee in claiming deduction under section 80P cannot be disputed and therefore, penalty imposed should be cancelled. Since appeal of the assessee on this issue which is pending before jurisdictional High Court wherein substantial question of law has been framed for assessment years 2007-08 and 2008-09. Till disposal of such appeal bona fide of assessee in claiming deduction under section 80P cannot be ruled out and hence penalty under section 271(1)(c) cannot be sustained and penalty deserves to be deleted.

Followed:Pr. CIT v. R.K. Gupta Contractors & Engineers Pvt. Ltd. [ITA No. 89/2016, ITA No. 90/2016 and ITA No. 93/2016, ITA No. 95/2016, dt. 11-1-2017].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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