The Ayali Kalan Co-op Agriculture Multi, Ludhiana V. Income Tac Officer, Ludhiana

ITA 259/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9834 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 23-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Keywords: Earning of tax free income; Wrong claim
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO.259/CHD/2016 ASSESSMENT YEAR: 2009-10 THE AYALI KALAN CO-OP VS THE ITO AGRICULTURE MULTIPURPOSE WARD III(3), SOCIETY LTD., LUDHIANA. VPO-AYALI KALAN, DISTT. LUDHIANA. PAN: AAAAT3941Q (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI MANJIT SINGH,DR DATE OF HEARING : 04.07.2016 DATE OF PRONOUNCEMENT : 05.07.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I, LUDHIANA DATED 29.01.2016 FOR ASSESSMENT YEAR 2009-10, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCO ME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTICED THAT ASSESSEE IS A PRIMARY AGRICULTURAL SOC IETY 2 COVERED UNDER SECTION 80P OF THE ACT OF THE ACT. T HE ASSESSEE HAS SHOWN GROSS TOTAL INCOME AT RS.97,60,5 00/-. THE ASSESSEE HAS FILED ITS RETURN DECLARING NIL I NCOME AFTER CLAIMED WHOLE OF THE INCOME AS EXEMPT INCOME UNDER SECTION 80P OF THE ACT. FURTHER, THE ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE EARNED INTEREST O N FDR FROM THE CO-OPERATIVE BANKS AND ALSO FROM OTHER BAN KS WHICH ARE NOT COVERED BY THE PROVISIONS OF SECTION 80P(2)(D) OF THE ACT. THE INTEREST FROM BANKS OTHE R THAN COOPERATIVE BANKS AMOUNT WORKED OUT TO RS. 1,51,73,115/-. FURTHER THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD EARNED INCOME AT RS. 1,50,935/- FR OM THE SALE OF CEMENT, RS. 1,95,655/- FROM SALE OF HAR DWARE, RS. 8651/- FROM SALE OF CFL AND RS. 1,400/- FROM INSURANCE. THESE AMOUNTS WERE ALSO NOT ELIGIBLE FO R DEDUCTION UNDER SECTION 80P OF THE ACT. 2(I) THE ASSESSING OFFICER DISALLOWED THE AMOUNT OF RS. 1,55,29,765/- (I.E. RS. 1,51,73,115/- + RS. 3,56, 641/-) WHICH WAS RESTRICTED TO THE PROFIT DECLARED BY ASSE SSEE IN ITS PROFIT & LOSS ACCOUNT I.E. RS. 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 A PPEAL BEFORE LD. CIT(APPEALS)-I LUDHIANA AGAINST THE ORDE R UNDER SECTION 143(3) OF THE ACT. THE LD. CIT(APPEA LS) 3 VIDE ORDER DATED 18.06.2012 PARTLY ALLOWED THE APPE AL OF THE ASSESSEE WITH THE OBSERVATION THAT INTEREST TO THE EXTENT WHICH HAS DIRECT NEXUS WITH THE INTEREST REC EIVED SHOULD BE ALLOWED BY THE ASSESSING OFFICER. THE LD . CIT(APPEALS) RELIED UPON DECISION OF ITAT ON IDENTI CAL ISSUE INVOLVED IN THE CASE OF THE ASSESSEE FOR ASSE SSMENT YEAR 2007-08. THE ASSESSING OFFICER OBSERVED THAT AS PER THE DIRECTION OF THE ITAT, IT IS CLEAR THAT ONLY TH E INTEREST PAID SHALL BE DEDUCTED WHICH HAS DIRECT NEXUS WITH RESPECT TO THE FDRS ON WHICH RECEIPT OF INTEREST HA S TO BE ASSESSED. THE ASSESSING OFFICER VIDE SEPARATE ORDE R LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT F OR 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 ASSE SSEE 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 PARTICULARS OF INCOME AND WAS UNDER A BONAFIDE IMPRESSION/BELIEF THAT INTEREST INCOME FRO M DEPOSITS WITH THE BANKS OTHER THAN CO-OPERATIVE BAN KS, ALTHOUGH NOT COVERED UNDER SECTION 80P(2)(D) OF THE ACT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A) OF T HE ACT. THE ASSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPO RT OF THE CONTENTION THAT IT IS A DEBATABLE ISSUE. THE L D. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE 4 ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN PARAS 3.4 TO 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 AP PELLATE PROCEEDINGS. THE APPELLANT IS A PRIMARY COOPERATIVE AG RICULTURAL SOCIETY AND HAS CLAIMED ITS INCOME AS EXEMPT U/S SOP DECLARING 'NIL' INCOME. THE NET PROFIT ARRIVED AT BY THE APPELL ANT AT RS.97,60,500/-INCLUDES INTEREST ON FDRS FROM COOPERATIV E BANKS AS WELL AS FROM OTHER BANKS. THE INTEREST DERIVE D FROM INVESTMENTS IN FDRS PURCHASED FROM COOPERATIVE BANK S IS ALLOWABLE AS EXEMPTION U/S 80P(2)(D) R.W.S 8OP. HOWEVER, N O EXEMPTION IS AVAILABLE ON THE INTEREST DERIVED ON TH E FDRS PURCHASED FROM THE BANKS OTHER THAN COOPERATIVE BAN KS, NOT BEING COVERED U/S 80P(2)(D) OF THE ACT. THEREFORE, T HE EXEMPTION CLAIMED ON EARNING OF THE INTEREST ON FDR S EARNED FROM SUCH BANKS @ RS.1,51,73,115/- WAS ADDED TO THE I NCOME OF THE APPELLANT U/S 56 OF THE ACT. THUS, THE INTER 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 RS.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 RS.1,55,29,756/-, WAS RESTRICTED TO THE PROFIT DECLARE D BY THE ASSESSEE IN ITS P&L ACCOUNT I.E. RS.97,60,590/-. TH E LD. CIT(APPEALS) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE WIT H THE OBSERVATION THAT INTEREST TO THE EXTENT WHICH HAS DI RECT NEXUS WITH THE INTEREST RECEIVED SHOULD BE ALLOWED BY THE ASSESSING OFFICER, BY PLACING RELIANCE ON THE OTHER OF THE LD. C IT(APPEALS) FOR A.Y. 2007-08 IN THE APPELLANT'S OWN CASE WHICH H AD BEEN UPHELD BY THE HON'BLE ITAT. THUS, IT IS CLEAR THAT ONLY THAT PART OF THE INTEREST PAID SHALL BE DEDUCTED WHICH HAS DIRECT NEXUS TO THE 5 FDRS ON WHICH RECEIPT OF INTEREST HAS TO BE ASSESSE D 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 I NTEREST EARNED FROM FDRS WITH BANKS OTHER THAN COOPERATIVE BANKS. AS RIGHTLY HELD BY THE AO IN THE PENALTY ORDER, IT I S CLEAR THAT THE EXEMPTION CLAIMED BY THE ASSESSEE ON EARNING OF THE INTEREST ON FDRS WITH BANKS OTHER THAN COOPERATIVE B ANKS WAS ADDED AS TAXABLE INCOME AS THE SAID INCOME IS COVERED U/S 56 OF THE ACT AND THERE IS NO DEDUCTION ELIGIBLE FOR TH E SAME. ONLY THE BENEFIT OF DEDUCTION OF THE AMOUNT WHICH HAS DI RECT NEXUS IN RELATION TO INTEREST INCOME EARNED ON THE SAID FD RS IS TO BE GIVEN. THE APPELLANT HAS ITSELF STATED IN PARA 5 OF I TS SUBMISSION DATED 20.01.2016 THAT ITS INCOME IS NOT SPEC IFICALLY COVERED U/S 80P(2)(D) BUT THAT IT IS ELIGIBLE FOR D EDUCTION U/S 80P(2)(A)(I). HOWEVER, THE FACT REMAINS THAT THE ASS ESSEE HAS CLAIMED THE DEDUCTION U/S 80P(2)(D) AND IT IS NOT ELI GIBLE 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 I S NOT DEBATABLE AS THE LD. CIT(A) AND HON'BLE ITAT HAVE ALRE ADY HELD SO FOR A.Y. 2007-08 IN THE APPELLANT'S CASE. HOWEVER DES PITE THE SAME, THE APPELLANT CONSCIOUSLY AND DELIBERATELY HA S CONTINUED TO CLAIM THE SAID DEDUCTION. THE APPELLAN T HAS PLACED RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS KARNATAKA STATE COOP. APEX BANK ( 2001) 251 ITR 194. HOWEVER, THE SAID JUDGMENT IS ON THE ISSU E OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. MOREOVER, IN THE SAID CASE IT WAS HELD THAT THE ASSESSEE WAS REQUIRED TO PLACE A PART OF ITS FUNDS WITH THE STATE BANK OR THE RBI TO ENABLE IT TO CARRY ON ITS BANKING BUSINESS. THEREFORE, THE INCOME DERIVED FROM THE FUNDS SO PLACED 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 DIFFERE NT IN THE APPELLANT'S CASE. FURTHER, THE APPELLANT HAS PLACED RELIANCE ON THE OTHER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS DATED 12.10.2 009 6 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 REJECTED ON THE GROU ND THAT THE CLAIM WAS AVAILABLE ON THE MARKETING OF AGRICUL TURAL PRODUCED AND NOT ON MANUFACTURED ARTICLES. THEREFOR E, IT IS DISTINGUISHABLE ON FACTS. FURTHER, IN THE SAID CASE IT WAS HELD THAT THERE WAS NO CONSCIOUS BREACH OF LAW WHEREAS I N THE CASE UNDER CONSIDERATION AS ALREADY DISCUSSED EARLI ER, ALTHOUGH FOR A.Y. 2007-08 IT WAS ALREADY HELD BY TH E HON'BLE ITAT THAT ONLY THAT PART OF THE INTEREST SH ALL BE DEDUCTED WHICH HAS DIRECT NEXUS WITH THE INTEREST R ECEIVED ON THE 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 FU LL AMOUNT, OF INTEREST ON FDRS FROM BANKS NOT COVERED U/S 80P(2)( D) AND THEREFORE IT WAS A CONSCIOUSLY COMMITTED ACT OF CLAI MING A WRONG DEDUCTION. THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LT D.(2010) 322 ITR 158 RELIED UPON IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AS IT IS NOT THE CASE OF MERE MAKING OF A CLAIM WHI CH IS NOT SUSTAINABLE IN LAW BUT RATHER IS A CASE OF MAKING A W RONG CLAIM WILFULLY. THE AR HAS FURTHER RELIED ON THE CAS E OF CIT VS. SIDHARTHA ENTERPRISES (2010) 322 ITR 80 (P&H) WHICH IS AGAIN DISTINGUISHABLE ON FACTS AS IT WAS A CASE OF CLAIM OF SET-OFF OF CAPITAL LOSS AGAINST PROFITS OF BUSINESS WHICH WAS HE LD TO BE ON ACCOUNT OF NEGLIGENCE OR MISTAKE BUT NOT SO IN THE APPELLANT'S CASE. STILL FURTHER, THE APPELLANT HAS R ELIED ON THE CASE OF CIT VS. PATHANKOT PRIMARY COOPERATIVE DEVELO PMENT BANK LTD. (2012) ITA NO.27 (P & H) WHEREIN DELETION OF PENALTY WAS CONFIRMED EVEN THOUGH THE QUANTUM ADDIT ION MADE BY THE AO HAD BECOME FINAL WHEREAS IN THE INSTA NT CASE IT IS NOT MERELY BECAUSE THE QUANTUM ADDITION HAS B ECOME FINAL BUT ON ACCOUNT OF THE CONSCIOUS AND DELIBERATE A CT ON THE PART OF THE APPELLANT IN CLAIMING THE WRONG DEDUCTI ON. SIMILARLY THE CASE OF CIT VS. AJAIB SINGH & CO.(2002) 253 ITR 63 0 (P&H), OH WHICH THE AR HAS RELIED IS A CASE OF MERE DISALLOWAN CE OF EXPENSES PER SE WHEREAS THE FACTS OF THE INSTANT CAS E ARE 7 DIFFERENT AS DISCUSSED. EXPLANATION 1 TO SEC 271(L)( C) STATES THAT WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME, ADDITION IS MADE O N ACCOUNT OF FAILURE TO THE COMPUTATION OF THE TOTAL INCOME, ADDITION IS MADE ON ACCOUNT OF FAILURE TO OFFER AN EXPLANATION OR OFFER AN EXPLANATION WHICH IS FOUND TO BE FALSE OR OFFERING AN EXPLANATION WHICH THE ASSESSEE IS NOT ABLE TO SUBSTA NTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE THEN SUCH AMOUNT IS DEEMED TO BE THE INCOME IN RESPECT TO WHI CH PARTICULARS HAVE BEEN CONCEALED. EXPLANATION 1 TO S EC 271(L)(C) CAN BE INVOKED AT ANY TIME EVEN IF IT IS NOT INVOKE D BY THE AO. UNDER EXPLANATION 1, A PRESUMPTION ARISES THAT IF AN Y ADDITION IS MADE BY THE AO AND IS SUSTAINED BY THE APPELLANT AUTHORITY THAN IT WILL REPRESENT THE CONCEALED INCO ME OF THE ASSESSEE AND THE ONUS WILL BE ON THE ASSESSEE TO REB UT THE PRESUMPTION. THE APPELLANT IN THIS CASE HAS FAILED TO PROVE THAT ITS ACT OF CLAIMING THE SAID DEDUCTION WRONGLY WAS NOT DELIBERATE OR WILFUL. THE CONTENTION OF THE AR THAT THE PERCENTAGE OF DIRECT EXPENDITURE/ INTEREST WHICH HA S DIRECT NEXUS WITH THE INTEREST RECEIVED COMES TO 9.78% WHERE AS IN A.Y. 2010-11 THE AO ALLOWED DIRECT EXPENDITURE TO TH E EXTENT OF 65%, DOES NOT HELP THE APPELLANT'S CASE AS THE SAME IS A MATTER OF FACT AND THE DOES NOT ABSOLVE IT OF THE W RONG DEDUCTION CLAIMED ON THE REST OF THE INTEREST ON FD RS FROM THE BANKS OTHER THAN COMMERCIAL BANKS WHICH DOES NOT HA VE A DIRECT-NEXUS WITH THE INTEREST EARNED. FURTHER, THE A O WAS ALSO JUSTIFIED IN HOLDING THAT THE INCOME FROM SALE OF C EMENT, HARDWARE, CFL, INSURANCE IS NOT IN ACCORDANCE WITH TH E AIMS AND OBJECTIVES OF THE SOCIETY AND NO DEDUCTION IS AL LOWABLE ON THE SAME AND THE APPELLANT KNOWINGLY CLAIMED DEDUCTION WRONGLY ON THE SAME. THEREFORE, IT ATTRAC TED PENALTY U/S 271(L)(C). IN VIEW OF THE SAID FACTS AND CIRCUMSTANCES, THE PENALTY U/S 271(L)(C) IMPOSED IN T HIS CASE IS HELD TO BE JUSTIFIED. THESE GROUNDS OF APPEAL ARE D ISMISSED. 4. GROUNDS OF APPEAL NO.4 & 5:- THESE GROUNDS OF AP PEAL ARE GENERAL IN NATURE, REQUIRING NO SPECIFIC ADJUDIC ATION. 8 IN THE RESULT, THE APPEAL IS DISMISSED. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING OF THE APPEAL. ON THE LAST DATE OF HEAR ING FIXED ON 22.06.2016, APPEAL WAS ADJOURNED ON THE REQUEST OF THE ASSESSEE TO 04.07.2016. ON 04.07.2016, NONE APPEARED AND A REQUEST HAS BEEN RECEIVED THROUGH FA X FROM SHRI O.P. GARG & CO. ( CHARTERED ACCOUNTANT SH RI 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 ADJOURNM ENT WHO HAS APPEARED BEFORE LD. CIT(APPEALS) AND ARGUED THE APPEAL. THEREFORE, HE HIMSELF IS CONVERSANT WITH T HE MATTER AND FURTHER HIS POWER OF ATTORNEY DULY SIGNE D BY HIM IS ALSO AVAILABLE ON RECORD. THEREFORE, THERE IS NO REASON FOR SEEKING ADJOURNMENT IN THE MATTER. THE REQUEST FOR ADJOURNMENT WAS, THEREFORE, FOUND UNNECESSARY AND INCORRECT. THE SAME IS, THEREFORE, REJECTED. 6. I HAVE HEARD LD. DR AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. 7. THE LD. DR RELIED UPON ORDERS OF AUTHORITIES BEL OW AND SUBMITTED THAT THE ORDERS OF THE AUTHORITIES BE LOW CLEARLY REVEALED THAT ADDITIONS ON MERIT HAVE BEEN CONFIRMED. HE HAS SUBMITTED THAT ASSESSEE MADE A B OGUS 9 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 CASE S OF UNION OF INDIA V DHARMENDRA TEXTILE & PROCESSORS 30 6 ITR 277 AND CIT V ATUL MOHAN BINDAL 317 ITR 1 IN WH ICH 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 135 ITR 593 IN WHICH IT WAS HELD THAT FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS ARE RELEVANT IN PENALTY PROCEEDINGS. HE HAS ALSO RELIED UPON DECISION OF DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION PVT. LTD. 327 ITR 510 IN WHICH IT WAS HELD THAT INCORRECT CLAIM BY THE ASSESSEE ATTRACTS PENALTY. 8. AFTER CONSIDERING SUBMISSIONS OF THE LD. DR, FIN DINGS OF AUTHORITIES BELOW AND SUBMISSIONS MADE BY ASSESS EE BEFORE LD. CIT(APPEALS), I AM NOT INCLINED TO INTER FERE WITH THE ORDERS OF THE AUTHORITIES BELOW. THE FACTS AS NOTED ABOVE ARE NOT IN DISPUTE. THE ASSESSEE CLAIMED ENTI RE 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 AR E NOT COVERED BY THE PROVISIONS OF SECTION 80P(2)(D) OF T HE ACT. THUS, THE INCOME OF THE ASSESSEE WAS NOT EXEMPT UND ER SECTION 80P OF THE ACT. THE ASSESSEE, THEREFORE, MA DE A 10 BOGUS CLAIM OF EXEMPTION INCOME IN THE RETURN OF IN COME. FURTHER, IT WAS FOUND THAT ASSESSEE HAS EARNED INCO ME ON ACCOUNT OF SALE OF HARDWARE ETC. WHICH WAS NOT ACCO RDING TO THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY AND ITS INCOME ON SUCH ITEMS WAS ALSO NOT EXEMPT WHICH WAS ALSO WRONGLY CLAIMED AS EXEMPT INCOME. 9. THE LD. CIT(APPEALS) ON QUANTUM, REDUCED THE INCOME BY OBSERVING THAT INTEREST TO THE EXTENT WHI CH HAD DIRECT NEXUS WITH THE INTEREST RECEIVED, SHOULD BE ALLOWED BY FOLLOWING ORDER OF ITAT IN THE CASE OF THE ASSES SEE FOR PRECEDING ASSESSMENT YEAR 2007-08 WHEN PROCEEDINGS FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT WERE INI TIATED AND EXPLANATION OF THE ASSESSEE WAS CALLED FOR BEFO RE LEVY OF THE PENALTY, ASSESSEE DID NOT FILE ANY EXPLANATI ON BEFORE ASSESSING OFFICER DESPITE THE ASSESSING OFFI CER GAVE TWO OPPORTUNITIES TO THE ASSESSEE. THUS, THE ASSESSEE FAILED TO EXPLAIN ANYTHING BEFORE ASSESSIN G OFFICER AT THE PENALTY STAGE AND HAS NOT FILED ANY EXPLANATION BEFORE LEVY OF THE PENALTY. SINCE NO EXPLANATION IS FILED AT THE PENALTY STAGE, THEREFOR E, LEVY OF THE PENALTY WAS JUSTIFIED IN THE MATTER. I RELY UPON DECISIONS OF MADHYA PRADESH HIGH COURT IN THE CASES OF VIMAL GINNING & PRESSING FACTORY 279 ITR 100 AND RUKMANI BAI 276 ITR 650. THE ASSESSEE MERELY CLAIM ED BEFORE LD. CIT(APPEALS) THAT ASSESSEE BELIEVED THAT INTEREST INCOME IS ELIGIBLE FOR DEDUCTION UNDER SEC TION 80P OF THE ACT AND ISSUE IS DEBATABLE BUT THE ISSUE IN THE 11 CASE OF THE ASSESSEE HAS ALREADY BEEN DECIDED BY IT AT AGAINST THE ASSESSEE IN PRECEDING ASSESSMENT YEARS AS NOTED BY THE AUTHORITIES BELOW, THEREFORE, ISSUES D ID NOT REMAIN DEBATABLE IN FAVOUR OF THE ASSESSEE. THE FI NDINGS OF LD. CIT(APPEALS) AS REPRODUCED ABOVE, HAVE NOT B EEN REBUTTED IN ANY MANNER. IT IS WELL SETTLED LAW THA T FINDINGS IN THE ASSESSMENT ORDER ARE RELEVANT AND H AVE PROBATIVE VALUE. SINCE THE ASSESSEE MADE BOGUS CLA IM 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. THE DECISIONS C ITED BY LD. DR CLEARLY APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. I AM, THEREFORE, NOT INCLINED TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. I CONFIRM THE LEVY OF PENALTY AND DISMISS THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 5 TH JULY,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH