Co-operative Cane Development Union Limited vs. The Assistant Commissioner of Income Tax, Sitapur

Parties Involved

Facts Summary

The case was taken up for scrutiny through CASS and during the assessment proceedings, the ld. Assessing Officer observed that the assessee had earned interest amounting to Rs.10,11,998/- on FDRs / savings bank account and also interest on refund. He observed that the assessee had claimed a deduction under section 80P with regard to the interest on FDRs / savings bank account of Rs.10,11,998/- and not shown the interest on refunds received by him during the year amounting to Rs.1,57,302/-. The ld. Assessing Officer added back the interest claimed for deduction under section 80P of Rs.10,11,998/- on FDRs / savings bank accounts in view of the judgment of the Hon’ble Supreme Court in the case of Totgars Cooperative Sale Society Limited vs. ITO, 2010 322 ITR 283 (SC). He also added a sum of Rs.1,57,302/- received by the assessee as interest on income tax refund and which was purportedly not disclosed in the return of income and subsequently initiated penalty proceedings under section 271(1)(c) by way of issue of notice under section 274 r.w.s. 271(1)(c) dated 9.12.2016. Aggrieved by the levy of penalty, the assessee went in appeal before the ld. CIT(A), who, after observing that he had sustained the additions made by the ld. Assessing Officer in the quantum appeals also observed that had the case not being taken up for scrutiny, the claim under section 80P, which was otherwise not allowable, would have been allowed. Similarly, the concealment of interest of refund would not have…

Legal Issues

• 1. Whether the penalty notice issued u/s 274 of 1. T. Act dated 09.12.2016 initiating penalty proceedings u/s 271(1) of 1. T. Act was invalid as it did not specify the charge that whether the assessee has concealed the particulars of Income or furnished inaccurate particulars of his income?
• 2. Whether the penalty of Rs. 3,58,600/- imposed u/s 271(1)(c) of 1. T. Act was justified?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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