Hubli Saraku Vs ITO (ITAT Bangalore)
ITAT Bangalore held that imposition of penalty under section 271(1)(c) of the Income Tax Act not justified where the issue is highly debatable because there is no question of levying penalty for furnishing inaccurate particulars of income.
Facts- Assessee is a credit cooperative society engaged in the business of providing credit facilities to its members for A.Y. 2014 – 15, filed its return of income after claiming deduction u/s. 80 P (2) (a) of the income tax act.
After scrutiny, the amount of Claim of deduction of Rs 16,81,635/- was disallowed. Interest of FDR was also not allowed as deduction u/s 80P(2)(a)(i) of the Act of Rs 194289/-. Thus, total income was assessed at Rs 18,75,920/-. CIT(A) partly allowed the appeal.
Thereafter, AO initiated penalty proceedings u/s. 271(1)(c) of the Income Tax Act and imposed penalty of Rs. 833,092/-. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that where the issue is highly debatable, there is no question of levying penalty for furnishing inaccurate particulars of such income. Identical issue is also decided by the coordinate bench in case of Siddapura Taluka Agricultural Produce Coop marketing society Ltd V ITO [ ITA No 1002/bang/2024 AY 2018-19 Dated 4-7-2024] deleting the penalty u/s 270 A of the Act. Accordingly, the orders of the learned lower authorities are reversed on that ground and the learned AO is directed to delete the penalty levied under section 271 (1) (c) of the act for Ay 201 4-15 of Rs 833092/-.
