Ferozepur Central Co Operative Bank Vs DCIT (ITAT Amritsar)
Section 271(1)(c): Genuine Expense Claimed in Wrong Year Cannot Invite Penalty—₹71.10 Lakh Deleted
A Timing Error, Not Inaccurate Particulars
The Amritsar ITAT has deleted a ₹71,10,000 penalty under Section 271(1)(c) imposed on a co-operative bank for claiming a genuine interest expenditure in the wrong assessment year.
The Tribunal found that the dispute concerned the year of deduction, rather than the genuineness or deductibility of the expenditure. The interest belonged to Assessment Year 2011-12 but had been claimed in Assessment Year 2012-13.
On these facts, the Tribunal treated the claim as a judgmental error and genuine mistake, holding that no case of furnishing inaccurate particulars of income had been established.
The decision also took account of the assessee’s voluntary correction after discovering the mistake and the fact that deduction had not been granted even in the year to which the expenditure belonged.
Interest of ₹2.30 Crore Disallowed as Prior-Period Expenditure
The assessee, a co-operative bank, filed its return on 30 September 2012, declaring a loss of ₹6,30,83,919 for Assessment Year 2012-13.
The expenditure claimed included ₹2,30,00,000 towards interest on borrowed funds.
During scrutiny, the Assessing Officer found that this interest did not pertain to the assessment year under consideration. He therefore disallowed the deduction.
