ACIT, Jaipur V. JAIPUR THAR GRAMIN BANK, Jaipur

ITA 801/JPR/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2029 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VRINDER MEHTA CIT DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Difference of opinion; Onus to prove
• Section: 14A; 27

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 801/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 THE ACIT, CIRCLE-2, JAIPUR CUKE VS. M/S JAIPUR THAR GRAMIN BANK, KISHAN BHAWAN, LAL KOTHI, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAJJ 0519 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 802/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 THE ACIT, CIRCLE-2, JAIPUR CUKE VS. M/S JAIPUR THAR GRAMIN BANK, KISHAN BHAWAN, LAL KOTHI, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAJJ 0519 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 803/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ACIT, CIRCLE-2, JAIPUR CUKE VS. M/S JAIPUR THAR GRAMIN BANK, KISHAN BHAWAN, LAL KOTHI, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAJJ 0519 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR, (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VRINDER MEHTA (CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.05.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 21/06/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 2 THE REVENUE HAS FILED THESE APPEALS AGAINST THE ORD ER OF LD. CIT(A)-1, JAIPUR OF EVEN DATE I.E, 05.08.2013 FOR AY 2007-08 , AY 2008-09 AND AY 2009-10 RESPECTIVELY. THESE APPEALS HAVING IDENTICA L FACTS, WERE TAKEN UP FOR HEARING TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF DISCUSSION, WITH THE CONSENT OF BOTH TH E PARTIES, THE FACTS OF AY 2007-08 HAS BEEN TAKEN UP AS THE LEAD CASE. THE GR OUND OF APPEAL TAKEN BY THE REVENUE IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALT Y OF RS. 4,20,00,000/- U/S 271(1)(C) IMPOSED BY THE AO AS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY CLAIMING DE DUCTION U/S 80P WHICH IS NOT ALLOWABLE TO IT AS PER IT LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COOPERATIVE BANK DOING BANKING BUSINESS AND IT HAS FILED ITS RETURN OF INCOME DECLARING NIL INCOME, BY CLAIMING DEDUCTION U/S 80P OF THE IT ACT , 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER AS KED THE ASSESSEE TO JUSTIFY ITS CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE AC T AND IN RESPONSE, THE ASSESSEE FILED ITS SUBMISSION WHICH HOWEVER DIDNT FIND FAVOUR WITH THE ASSESSING OFFICER AND HE DISALLOWED THE CLAIM OF DE DUCTION. THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALMENT AND FURNI SHING INACCURATE PARTICULARS OF INCOME WERE ALSO INITIATED SEPARATEL Y. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO ALLOWED THE CLAIM OF DEDUCTION U/S 80P T O THE ASSESSEE BANK. THE REVENUE TOOK THE MATTER BEFORE THE TRIBUNAL WHO REV ERSED THE ORDER OF LD CIT(A) AND SUSTAINED THE DISALLOWANCE OF DEDUCTION U/S 80P OF THE ACT. THE REVENUE THEREAFTER, ISSUED A FRESH SHOW-CAUSE NOTIC E TO THE ASSESSEE U/S 271(1)(C) OF THE ACT. THE EXPLANATION OFFERED BY T HE ASSESSEE WAS NOT FOUND SATISFACTORY BY THE AO AND HE THEREAFTER LEVIED PEN ALTY OF RS 4,20,00,000, BEING 100% OF TAX SOUGHT TO BE EVADED FOR FURNISHIN G INACCURATE PARTICULARS OF ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 3 INCOME. THE LD CIT(A) HAS DELETED THE SAID PENALTY AND AGAINST THE SAID ORDER, THE REVENUE IS PRESENTLY IN APPEAL BEFORE US . 4. BEFORE WE REFER TO THE CONTENTIONS OF BOTH THE P ARTIES, IT WOULD BE RELEVANT TO REFER TO THE FINDINGS OF THE LD. CIT(A) WHICH ARE UNDER CHALLENGE BEFORE US. THE SAME ARE REPRODUCED AS UNDER: 4. I HAVE CONSIDERED SUBMISSIONS OF THE APPELLANT AND HAVE ALSO GONE THROUGH THE PENALTY ORDER. THE PENALTY HAS BEEN LE VIED BY THE AO ON THE GROUND THAT AS PER SECTION 80P(4) THE DEDUCTION WAS ALLOWABLE TO THE BANK ONLY ON THE ACTIVITIES CARRIED OUT WITHIN A TALUKOR TEHSIL. THE APPELLANT BANK ON THE OTHER HAND WAS CARRYING O UT ITS ACTIVITIES THROUGH MANY BRANCHES, QUITE A FEW OF WHICH WERE LO CATED IN URBAN AREAS.THE DISALLOWANCE MADE BY THE AO HAS BEEN CONF IRMED BY HONBLE ITAT AS WELL. THE DISALLOWANCE OF THE CLAIM U/S 80P WAS TREATED BY THE AO AS FURNISHING OF INACCURATE PARTICULARS OF INCOM E AND ACCORDINGLY, PENALTY WAS LEVIED. THE AO HAS BASICALLY RELIED ON THE FACTS MENTIONED IN THE ASSESSMENT ORDER, OBSERVING THAT THE PLEAS O F THE ASSESSEE HAVE BEEN ELABORATELY DISCUSSED AND REBUTTED IN THE ASSE SSMENT ORDER. 4.1 IT IS NOTICED THAT THE APPELLANT IS A REGIONAL BANK ENGAGED IN THE BANKING BUSINESS IN THE STATUS OF A CO-OPERATIVE SO CIETY. IT HAD CLAIMED DEDUCTION U/S 80P. AT THE TIME OF ASSESSMENT PROCE EDINGSTHE BANK HAD FILED IT AUDITED AND PUBLISHED BALANCE SHEET ALONGW ITH ANNEXURE THEREOF, SHOWING THE INCOME OF THE BANK CLEARLY. O N FACTS OF THE CASE, THE DEDUCTION CLAIMED BY THE APPELLANT WAS DISALLOW ED AND THIS DISALLOWANCE HAS BEEN CONFIRMED BY THE HONBLE ITAT ALSO. THE ISSUE IS WHETHER THIS DISALLOWANCE AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ALSO . A PERUSAL OF THE COMPUTATION OF TOTAL INCOME FILED BY THE APPELLANT SHOWS THAT IT HAD CLAIMED DEDUCTION U/S 80P WHILE FILING THE RETURN. THIS CLAIM WAS DISALLOWED BY THE AO AND THE DISALLOWANCE WAS SUSTA INED IN THE APPEAL AS WELL. HOWEVER, MERELY MAKING A CLAIM WHICH IS N OT FOUND TO BE ADMISSIBLE DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ALTHOUGH IT HAS BEEN MENTIONED IN THE PENALTY ORDER THAT THE APPELLANT HAS FURNISHED INA CCURATE PARTICULARS OF INCOME, IT HAS NOT BEEN EXPLAINED AS TO HOW WHEN AL L THE NECESSARY ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 4 DETAILS WERE MADE AVAILABLE IN THE RETURN OF INCOME , THERE WAS A CASE OF FURNISHING OF WRONG PARTICULARS OF INCOME. THE AO HAS NOT BROUGHT OUT ANY FACT IN THE ORDER TO ESTABLISH THAT THE APPELLA NT HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR HAD CONCEAL ED PARTICULARS OF ITS INCOME. AS HELD BY THE APEX COURT IN THE CASE OF R ELIANCE PETRO PRODUCTS PVT. LTD. (322 ITR 158), MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PRESENT CASE DOES NOT APPEAR TO A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THE PENALTY, THEREFORE, APPEARS TO BE U NCALLED FOR AND IS, ACCORDINGLY, CANCELLED. 5. THE LD DR VEHEMENTLY ARGUED THE MATTER AND RELIED O N THE ORDER OF THE AO AND SUBMITTED THAT THE LD CIT(A) WAS NOT CORRECT IN DELETING THE PENALTY. HE SUBMITTED THAT THERE HAS BEEN CHANGE IN THE ELIG IBILITY CONDITION FOR DEDUCTION UNDER SECTION 80P OF THE ACT AND THE EXPL ANATION OFFERED BY THE ASSESSEE WAS RIGHTLY NOT FOUND ACCEPTABLE IN VIEW O F THE CHANGE IN THE ELIGIBILITY CONDITIONS AND THE FACT THAT THE SAME H AS BEEN CONFIRMED IN THE QUANTUM PROCEEDINGS BY THE HONBLE ITAT. HE ACCORD INGLY SUBMITTED THAT THE AO WAS RIGHT IN LEVYING PENALTY FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. 6. PER CONTRA, THE LD. AR HAS SUBMITTED THAT IN THE AP PEAL BEFORE THE CIT(A)-I, THE RESPONDENT HAD SUBMITTED THAT THE INI TIATION OF PENALTY AND LEVY THEREOF IS NOT AUTOMATIC, AND MERELY BECAUSE THE CL AIM OF THE RESPONDENT WAS REJECTED, IT DOES NOT ESTABLISH CONCEALMENT/FURNIS HING OF INACCURATE DETAILS ON THE PART OF THE RESPONDENT. THE CIT(A) AFTER CONSID ERING THE SUBMISSIONS OF THE RESPONDENT AND VARIOUS JUDICIAL PRONOUNCEMENTS, APPRECIATED THE RESPONDENTS PLEA AND DELETED THE PENALTY FOR THE S UBJECT ASSESSMENT YEAR. 7. IT WAS FURTHER SUBMITTED THAT THE RESPONDENT IS A P RIMARY CO-OPERATIVE, AGRICULTURE AND RURAL DEVELOPMENT BANK. THE AUDITED ACCOUNTS OF THE RESPONDENT WERE SUBMITTED ALONG WITH ITS RETURN OF INCOME. THE INCOME OF ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 5 THE RESPONDENT WAS ALREADY DISCLOSED IN THE RETURN, BUT THE CLAIM U/S 80P WAS DISALLOWED AND SUSTAINED BY THE TRIBUNAL. THE AO H AS IMPOSED PENALTY ONLY AND ONLY FOR THE DIFFERENCE OF OPINION AND DISALLOW ANCE OF CLAIM U/S 80P, WHICH IS BY NO MEANS, CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. 8. IT WAS FURTHER SUBMITTED THAT THE RESPONDENT BANK I S COVERED UNDER THE DEFINITION OF PRIMARY CO-OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK WHICH FALLS UNDER THE EXCLUSION MENTIONED IN PROVIS O (4), TO SEC. 80P INSERTED W.E.F. 1.4.2007. THE PROVISO (4) INSERTED AFTER SUB -SECTION 3 OF SEC. 80P BY THE FINANCE ACT, 2006, READS AS UNDER: (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVEL OPMENT BANK: EXPLANATION: FOR THE PURPOSE OF THIS SUB-SECTION, A COOPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949. B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEV ELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PR OVIDE LONG TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIV ITIES. 9. IT WAS FURTHER SUBMITTED THAT THE MAIN BUSINESS OF THE RESPONDENT IS AS UNDER: (A) GRANTING OF LOANS AND ADVANCES PARTICULARLY TO SMALL AND MARGINAL FARMERS AND AGRICULTURAL LABOURERS, WHETHER INDIVID UALLY OR IN GROUPS AND TO ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 6 CO-OPERATIVE SOCIETIES, INCLUDING AGRICULTURAL MARK ETING SOCIETIES, AGRICULTURAL PROCESSING SOCIETIES, COOPERATIVE FARMING SOCIETIES , PRIMARY AGRICULTURAL CREDIT SOCIETIES OR FARMERS SERVICE SOCIETIES FOR AGRICULT URAL PURPOSES OR AGRICULTURAL OPERATIONS OR FOR OTHER PURPOSES CONNECTED HEREWITH : (B) GRANTING OF LOANS AND ADVANCES PARTICULARLY TO ARTISANS, SMALL ENTREPRENEURS, AND PERSONS OF SMALL MEANS ENGAGED I N TRADE, COMMERCE OR INDUSTRY OR OTHER PRODUCTIVE ACTIVITIES WITHIN THE MODIFIED AREA IN RELATION TO THE REGIONAL RURAL BANK. 10. IT WAS SUBMITTED THAT THE LD. AO IN HIS ORDER, REJE CTED THE PLEA OF THE RESPONDENT ON THE GROUND THAT, THE WORD TALUK APP EARING IN THE PROVISO (4) TO SEC. 80P, COVERS ONLY A TEHSIL AND HENCE THE FAC T THAT THE BANK HAS BRANCHES IN DIFFERENT PLACES OF RAJASTHAN, RESTRAIN S IT FROM BEING A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BAN K AS DEFINED IN THE ACT, AND THUS HELD THE RESPONDENT NOT ELIGIBLE FOR DEDUC TION U/S 80P WHEREAS THE RESPONDENT PROFUSELY ARGUED THAT THE WORD TALUK M EANS A RAJPUTANA JAGIRDARI/RIYASAT WHICH WAS A STATE AT THAT TIME. 11. IT WAS FURTHER SUBMITTED THAT THE LD. ASSESSING OFF ICER HAS HELD THAT RETAIL TRADE, SELF EMPLOYED PERSONS, HOME LOANS TO PUBLIC AND CONSUMER LOANS ARE NOT COVERED BY THE TERMSAGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. THE RESPONDENT HUMBLY SUBMITS THAT THE ABOVE CONTEN TION OF THE AO IS ABSOLUTELY ERRONEOUS AS THESE LOANS ARE GIVEN TO VI LLAGERS AND PURELY USED FOR RURAL DEVELOPMENT ACTIVITIES. IN THE EXPLANATION ( B) ABOVE IT IS CLEARLY MENTIONED THAT THE RURAL DEVELOPMENT BANK MEANS, A BANK WHOSE MAJOR ACTIVITY RELATES TO PROVIDING OF LONG TERM CREDIT F OR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. THE RESPONDENT BANK SQUARE LY SATISFIES THE CONDITIONS LAID IN EXPLANATION (B) ABOVE AND THUS IS ENTITLED TO DEDUCTION U/S 80P. ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 7 12. IT WAS SUBMITTED THAT THOUGH THE ABOVE PLEA/EXPLANA TION WAS NOT APPRECIATED BY THE HONBLE ITAT AND THE RESPONDENT S CLAIM FOR DEDUCTION U/S 80P WAS DISALLOWED, HOWEVER THE SAME CANNOT BE THE BASIS FOR LEVY OF PENALTY U/S 271(1)(C) FOR CONCEALMENT AND FURNISHING OF INA CCURATE PARTICULARS OF INCOME. 13. IT WAS SUBMITTED THAT THE EXPRESSIONS HAS CONCEAL ED THE PARTICULARS OF INCOME AND HAS FURNISHED INACCURATE PARTICULAR OF INCOME HAVE NOT BEEN DEFINED EITHER IN SECTION 271(1)(C)OR ELSEWHERE IN THE ACT. THESE TWO CIRCUMSTANCES ARE NOT IDENTICAL IN DETAILS ALTHOUGH THEY MAY LEAVE THE SAME EFFECT NAMELY KEEPING OFF CERTAIN PORTION OF INCOME . THE FORMER IS DIRECT AND THE MATTER MAY BE INDIRECT IN ITS EXECUTION. THE W ORD CONCEAL IS DERIVED FROM THE LATIN WORD CONCOLARE WHICH IMPLIES TO H IDE. WEBSTER NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING TO HID E OR WITHDRAW FROM OBSERVATION; TO COVER OR KEPT FROM SIGHT; TO PREVE NT THE DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF CONCEALMENT IS THUS THE DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THER EOF FROM THE KNOWLEDGE OF INCOME TAX AUTHORITIES. EXPLANATION TO SECTION 271 (1)(C) STIPULATES THAT IN THE CASE OF DIFFERENCE BETWEEN THE RETURNED AND ASSESSE D INCOME THE BURDEN OF PROOF IS ON THE TAX PAYER TO SHOW THAT IT HAS NOT C ONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULAR OF INCOME . IT HAS BEEN CLARIFIED IN THE CASE OF MUSADDI LAL RAMBHAROSE 165 ITR(SC) THAT TO ESCAPE PENALTY, DIFFERENCE IN RETURNED INCOME AND ASSESSED INCOME S HOULD NOT ARISE DUE TO ANY GROSS OR WILFUL NEGLIGENCE OR ON ACCOUNT OF FRA UD. AS LONG AS ASSESSEE GIVES AN EXPLANATION AND GIVE ALL DOCUMENTS WITHOUT WITHHOLDING ANY INFORMATION, THE ASSESSEES EXPLANATION, UNLESS FAL SE, WILL DESERVE ACCEPTANCE FOR NON LEVY OF PENALTY WHETHER OTHERWISE ACCEPTABL E FOR ASSESSMENT OR NOT. IT IS NOT THAT EVERY ADDITION WARRANTS PENALTY. AN INCOME MAY BE INFERRED ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 8 FROM CIRCUMSTANCES, SO AS TO JUSTIFY THE ADDITION B UT WHERE THERE IS NO DECISIVE EVIDENCE THAT THE INFERRED INCOME WAS ACTU ALLY RECEIVED BY THE ASSESSEE, PENALTY CANNOT BE JUSTIFIED. 14. THE LD AR PLACED HEAVY RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE PETRO PRODUCTS 32 2 ITR 158 (SC). THE HONBLE SUPREME COURT HAS CATEGORICALLY HELD THAT M ERELY BECAUSE THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING O FFICER, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDE R S. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSE SSEE WILL INVITE PENALTY UNDER S. 271(1)(C. THAT IS CLEARLY NOT THE INTENDME NT OF THE LEGISLATURE. RELIANCE WAS FURTHER PLACED ON DECISION OF CIT VS. SURESH CHANDRA MITTAL (251 ITR 9 (SC), WHEREIN IT HAS BEEN HELD THAT , IT IS WELL SETTLED THAT UNDER S. 271(1)(C), INITIAL BURDEN LIES ON THE REVENUE TO ES TABLISH THAT ASSESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PA RTICULARS OF SUCH INCOME. THE BURDEN SHIFTS TO THE ASSESSEE ONLY IF HE FAILS TO OFFICER ANY EXPLANATION FOR THE UNDISCLOSED INCOME OR OFFERS EXPLANATION WHICH IS FOUND TO BE FALSE BY THE ASSESSING AUTHORITY. RELIANCE WAS FURTHER PLACED ON DECISION OF SHIVLAL TAK VS. CIT (251 ITR 373 (RAJ.) WHEREIN IT WAS HELD THAT WHILE THE EXPRESSI ON FAILURE TO RETURN THE TOTAL ASSESSED INCOME AS NOT ARISING ON ACCOUNT OF ANY FR AUD OR WILFUL NEGLIGENCE ON THE PART OF ASSESSEE DOES NOT FIND PLACE BUT CL . (B) R/W PROVISO (II) MAKES IT ABUNDANTLY CLEAR THAT WHERE DIFFERENCE IN THE A SSESSED INCOME AND RETURNED INCOME IS NOT ARISING ON ACCOUNT OF ANY GR OSS OR WILFUL NEGLIGENCE ON THE PART OF ASSESSEE, STILL NO PENALTY IS LEVIABLE. THE STATUTE HAS CLEARLY DRAWN DISTINCTION BETWEEN FURNISHING A DELIBERATE, FALSE EXPLANATION BY THE ASSESSEE ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 9 AND AN EXPLANATION, WHICH MAY NOT BE FALSE BUT IS N OT ACCEPTED BECAUSE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE IT. WHILE THE RE IS NO RELAXATION IN THE RIGOUR OF EXPLANATION IN RAISING PRESUMPTION AGAINS T THE ASSESSEE IN THE FORMER CASE, IN THE LATER CLASS OF CASES, THE STAT UTE ITSELF RELAXES ITS RIGOUR BY DIRECTING THAT WHEREIN RESPECT OF ANY AMOUNT, ADDED OR DISALLOWED AND ANY EXPLANATION IS OFFERED BY SUCH PERSON (ASSESSEE) WH ICH IS NOT ACCEPTED BECAUSE THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE SAME, BUT WHICH EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAS BEEN DISCLOSED BY H IM, THE EXPLANATION SHALL NOT APPLY. IN OTHER WORDS, THE CASES UNDER CL. (A) OF THE EXPLN. 1 ARE THOSE WHERE EXPLANATION FURNISHED BY THE ASSESSEE FALLS I N THE CATEGORY OF A FACT DISPROVED WHEREAS CASES WHERE AN EXPLANATION SO F URNISHED FALLS IN THE CATEGORY OF FACT NOT PROVED. THE EXPRESSIONS, PR OVED DISPROVED AND NOT PROVED HAVE WELL KNOWN, DISTINCT CONNOTATION IN LE GAL TERMINOLOGY, AS MAY BE APPARENT FROM THE PROVISIONS OF INDIA EVIDENCE ACT. AS PER INTERPRETATION CLAUSE, A FACT IS SAID TO BE DISPROVED WHEN AFTER CONSIDERING THE MATTER BEFORE IT, THE COURT EITHER BELIEVES THAT IT DOES N OT EXIST OR CONSIDERS ITS NON- EXISTENCE SO PROBABLE THAT A PRUDENT MAN OUGHT UNDE R THE CIRCUMSTANCES OF THE PARTICULAR CASE, TO ACT UPON THE SUPPOSITION TH AT IT DOES NOT EXIST. IN CONTRAST, A FACT IS SAID TO BE PROVED WHEN AFTER CONSIDERING THE MATTER BEFORE IT, THE COURT EITHER BELIEVES IT TO EXIST OR CONSID ERS ITS EXISTENCE SO PROBABLE THAT A PRUDENT MAN OUGHT UNDER THE CIRCUMSTANCES IN PARTICULAR CASE, TO ACT UPON THE SUPPOSITION THAT IT EXISTS. IN JUXTAPOSITI ON, THE EXPRESSION NOT PROVED DENOTES A FACT IS SAID TO BE NOT PROVED W HEN IT IS NEITHER PROVED NOR DISPROVED. IT WAS SO HELD IN CIT VS. TRADERS & TRA DERS, 242 ITR 367 (MAD.) 15. IT WAS FURTHER SUBMITTED THAT IN THE CASE OF TH E RESPONDENT THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INA CCURATE PARTICULARS AS THE AO HAS DISALLOWED THE CLAIM OF SEC. 80P MERELY ON D IFFERENCE OF OPINION AS ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 10 THE RESPONDENT COULD NOT SUBSTANTIATE ITS PLEA SATI SFACTORILY. BASED ON ABOVE SUBMISSIONS AND THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) THE RESPONDENT HUMBLY PRAYS THAT THE PENALTY HAS BEEN RIGHTLY DELE TED BY THE LD. CIT(A) AND THE SAID ORDER MAY KINDLY BE SUSTAINED. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION RELATES T O LEVY OF PENALTY U/S 271(1)(C) ON ACCOUNT OF DENIAL OF CLAIM OF DEDUCTIO N UNDER SECTION 80P OF THE ACT. THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF FUR NISHING INACCURATE PARTICULARS OF INCOME. SECTION 271(1)(C), BEING IN THE NATURE OF PENAL PROVISIONS REQUIRE A STRICT INTERPRETATION AND IT I S TO BE SEEN WHETHER THE INSTANT CASE FALLS WITHIN FOUR CORNERS OF THE SAID PROVISIO NS. IF THE ANSWER TO THE SAME IS IN AFFIRMATIVE, THE PENALTY WOULD BE LEVIABLE AN D OTHERWISE NOT. 17. THE HONBLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS (SUPRA) HAS LAID DOWN THE NECESSARY LEGAL PROPOSITION WHERE IN IT WAS HELD AS UNDER: WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE M ENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS . IN WEBSTERS DICTIONARY, THE WORD INACCURATE HAS BEEN DEFINED AS: NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUST; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTI CULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 11 ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF TH E ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITU RE INCURRED BY THE ASESSEE IN RELATION TO INCOME WHICH DOES NOT FORM P ART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT TH AT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOU NTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED TH AT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN I TEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITUR E MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES A TTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUN T TO CONCEALMENT OF PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE A SSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WEL L AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUN D TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RE TURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECT ION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESS ING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECT ION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 18. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS DULY FILED ITS RETURN OF INCOME CONTAINING ALL RELEVANT PARTIC ULARS OF ITS INCOME AND THE PARTICULARS OF CLAIM OF DEDUCTION U/S 80P HAS BEEN DULY DISCLOSED. THE LD CIT(A) HAS ALSO HELD THAT A PERUSAL OF THE COMPUTAT ION OF TOTAL INCOME FILED BY THE APPELLANT SHOWS THAT IT HAD CLAIMED DEDUCTION U /S 80P WHILE FILING THE RETURN. ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 12 19. THE NEXT ISSUE WHICH ARISE FOR CONSIDERATION IS WHE RE SUCH A CLAIM OF DEDUCTION WAS DISALLOWED BY THE AO AND SUCH DISALLO WANCE WAS FINALLY SUSTAINED BY THE TRIBUNAL, IN ABSENCE OF ANY FURTHE R APPEAL, WOULD THAT, BY ITSELF, RENDER THE MATTER LIABLE FOR PENALTY U/S 27 1(1)(C) OF THE ACT. THE HONBLE SUPREME COURT HAS HELD IN CASE OF RELIANCE PETROPRODUCTS AS NOTED ABOVE THAT MERE MAKING A CLAIM WHICH IS NOT FOUND S USTAINABLE IN LAW WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME. WE ACCORDINGLY CONFIRM THE FOLLOWING FINDINGS OF THE LD CIT(A) AS UNDER: A PERUSAL OF THE COMPUTATION OF TOTAL INCOME FILED BY THE APPELLANT SHOWS THAT IT HAD CLAIMED DEDUCTION U/S 80P WHILE FILING THE RETURN. THIS CLAIM WAS DISALLOWED BY THE AO AND THE DISALLOWANCE WAS SUSTA INED IN THE APPEAL AS WELL. HOWEVER, MERELY MAKING A CLAIM WHICH IS NOT FOUND TO BE ADMISSIBLE DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. ALTHOUGH IT HAS BEEN MENTIO NED IN THE PENALTY ORDER THAT THE APPELLANT HAS FURNISHED INACCURATE PARTIC ULARS OF INCOME, IT HAS NOT BEEN EXPLAINED AS TO HOW WHEN ALL THE NECESSARY DET AILS WERE MADE AVAILABLE IN THE RETURN OF INCOME, THERE WAS A CASE OF FURNIS HING OF WRONG PARTICULARS OF INCOME. THE AO HAS NOT BROUGHT OUT ANY FACT IN THE ORDER TO ESTABLISH THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR HAD CONCEALED PARTICULARS OF ITS INCOME. AS HELD BY TH E APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (322 ITR 158), ME RE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, DOES N OT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE PRESENT CASE DOES NOT APPEAR TO A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME. 20. ANOTHER CONTENTION RAISED BY THE LD CIT DR THAT THE ASSESSEE HAS NO BASIS FOR CLAIM FOR DEDUCTION U/S 80P AT FIRST PLAC E AS THERE WAS CHANGE IN LAW EFFECTIVE FROM AY 2007-08 AND HENCE, IT IS A CLEAR CASE FOR LEVY OF PENALTY U/S 271(1)(C). PER CONTRA, THE LD AR SUBMITTED THAT IT IS THE CASE OF THE ASSESSEE BANK THAT EVEN AFTER THE AMENDMENT BROUGHT IN BY TH E FINANCE ACT, 2006, THE ASSESSEE BANK CONTINUES TO REMAIN QUALIFIED FOR DED UCTION UNDER SECTION 80P AS IT IS COVERED UNDER THE DEFINITION OF PRIMARY CO -OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK AS DEFINE IN EXPLANATION (B) TO SUB-SECTION (4) TO ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 13 SECTION 80P OF THE ACT. IN ORDER TO ADDRESS THIS C ONTENTION, WE REFER TO THE AMENDMENT THAT HAS BEEN BROUGHT IN THE STATUTE AND THE EXPLANATION AND THE BASIS FURNISHED BY THE ASSESSEE FOR CLAIM OF DEDUCT ION U/S 80P OF THE ACT. 21. BY THE FINANCE ACT, 2006, SUB-SECTION (4) HAS BEEN INSERTED AFTER SUB- SECTION (3) TO SECTION 80P WHICH READS AS UNDER: (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVEL OPMENT BANK: EXPLANATION: FOR THE PURPOSE OF THIS SUB-SECTION, (A) A COOPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT, 1949. (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PR OVIDE LONG TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIV ITIES. 22. THE EXPLANATION AND THE BASIS FOR CLAIM OF DEDU CTION U/S 80P AS SUBMITTED BY THE ASSESSEE BANK AND AS NOTED BY THE COORDINATE BENCH IN ITA NO. 940/JP/2011 ORDER DATED 31.10.2011 IN THE CONTE XT OF QUANTUM PROCEEDINGS IS AS UNDER:- 2.3 IN RESPONSE TO QUERY RAISED BY THE AO, THE ASS ESSEE FILED THE FOLLOWING EXPLANATION BEFORE THE AO. 4. IN QUERY NO.5 YOUR HONOUR MENTIONED THE DEFINI TION OF EXPLANATION (B) TO SECTION 80P(4) IS CORRECT AND OU R BANK FULFILL BOTH THE CONDITIONS OF THIS EXPLANATION. YOUR HONOUR SAID TH AT OUR HEAD OFFICE LOCATED AT SARDAR PATEL MARG, JAIPUR WHICH IS CAPIT AL CITY OF RAJASTHAN IS ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 14 CORRECT, AS IT IS NECESSARY TO RUN AND FULFILL THE OBJECT CLAUSE OF THE BANK, THE HEAD OFFICE OF THE BANK IS LOCATED AT JAI PUR. IN RESPECT OF 10 URBAN BRANCHES, AND 24 SEMI URBAN BRANCHES, WE ALRE ADY SUBMIT IN POINT NO. 1 THAT ONLY THREE URBAN BRANCHES OF OUR B ANK LOCATED AT TEHSIL HEADQUARTERS WHICH COMES UNDER THE DEFINITION OF TA LUK AND MAINLY DOING AGRICULTURE AND RURAL BASED ADVANCES. IT IS NO DOUBT THAT OUR CLIENT BANK MADE 100% ADVAN CES FOR RURAL DEVELOPMENT BUT IT MADE MORE THAN 80% ADVANCES FOR RURAL DEVELOPMENT. WE ALSO CLEAR THAT ALL THE ADVANCES MA DE BY OUR BANK FOR LONG TERM FINANCE, NOT SHORT TERM, AS ALL THE ADVAN CES MADE BY THE BANK FOR RURAL DEVELOPMENT MORE THAN PERIOD OF 12 M ONTHS. THE OTHER ADVANCES I.E. 20% ADVANCES MADE BY THE BANK MAINLY TO ITS EMPLOYEES AND AGAINST FDR MADE BY THE BANK AND IT IS NECESSAR Y TO RUN THE BANK TO MAKE ADVANCES TO ITS EMPLOYEES AND AGAINST FDR M ADE BY US OUR CUSTOMERS WHO ARE AGRICULTURISTS AND RURAL PEOPLE. WE REPLIED IN OUR LETTER DATED 20-11-2009 THAT THE BANK MADE ADVANCES MAINLY TO DIRECT BENEFICIARY NOT ANY OTHER SOCIETY. IN THIS REPLY, WE HAD NOT ADMITTED ANY WAY THAT WE MADE ADVANCES TO NON-E NTITLED CATEGORIES. WE MADE ALL THE ADVANCES AS PER OUR OBJ ECT CLAUSE. YOUR HONOUR ALSO SAID THAT HOUSING LOAN, CONSUMPTIO N LOAN, CASH LOANS, LOAN AGAINST DEPOSIT, VEHICLE LOANS, STAFF HOUSING LOAN, NSC LOAN AND FESTIVAL ADVANCE TO STAFF DO NOT IN ANY WAY CONTRIB UTE TOWARDS RURAL DEVELOPMENT. AS HOUSING LOAN MADE BY OUR BANK IN TH E RURAL AREAS IS 53% OF TOTAL HOUSING LOAN, CASH LOANS 60.6% OF TOTA L CASH LOAN AND CONSUMPTION LOAN 47% OF TOTAL CONSUMPTION LOAN. OTH ER LOANS ARE PROVIDE MENTIONED IN THIS PARA ARE MAINLY TO EMPLOY EES OF THE BANK. IT IS THE DUTY OF THE EMPLOYER THAT HE PROVIDE FACILIT IES TO ITS EMPLOYEE AND ACCORDINGLY THE BANK MADE ADVANCES TO ITS EMPLOYEES . WE ONCE AGAIN ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 15 SUBMIT THAT THESE TYPES OF ADVANCES FORM A VERY SMA LL PART OF ADVANCE PORTFOLIO WHICH MAINLY CONSIST OF AGRICULTURE/ RURA L ADVANCES. WE AGAIN SAID THAT OUR MAIN OBJECT ARE TO PROVIDE A DVANCES FOR RURAL DEVELOPMENT AND IN RURAL AREAS SITUATED IN TALKUK F OR LONG TERM ADVANCE. 5. WE FURTHER REQUEST THAT WE HAVE CORRECTLY CLAIME D DEDUCTION U/S 80P OF THE INCOME TAX ACT, 1961 AS WE FULFIL BOTH T HE CONDITIONS OF EXPLANATION (B) TO SECTION 80P(4) OF THE INCOME TAX ACT, 1961 YOU ARE THEREFORE, REQUESTED KINDLY ALLOW THE DEDUC TION U/S 80P OF THE INCOME TAX ACT, 1961 AND OBLIGE. 23. WE NOW REFER TO THE FINDINGS OF THE LD CIT(A) I N THE QUANTUM PROCEEDINGS WHERE THE ABOVE SAID EXPLANATION OF THE ASSESSEE BANK HAS BEEN ACCEPTED AND THE CLAIM OF DEDUCTION U/S 80P WAS ALL OWED. THIS ACCEPTANCE OF THE EXPLANATION OF THE ASSESSEE BANK BY THE LD CIT( A) ATLEAST SHOWS THAT THE ASSESSEE HAS A BASIS FOR CLAIM OF DEDUCTION UNDER S ECTION 80P AND IT IS NOT A CASE THAT POST AMENDMENT, THE DEDUCTION U/S 80P IS PRIMA FACIE DISALLOWABLE ON READING OF THE AMENDED PROVISIONS AND WHICH IT H AS BEEN CLAIMING IN THE EARLIER YEARS AS WELL. THE RELEVANT FINDINGS OF LD CIT(A) IN HIS ORDER DATED 11.05.2010 ARE AS UNDER: THE APPELLANT IS A COOPERATIVE SOCIETY DOING BANKI NG BUSINESS AND HAS SHOWN INCOME OF RS. 188380400/- ON WHICH DEDUCTION U/S 80P HAS BEEN CLAIMED. THE MAN BUSINESS IS ACCEPTING THE DEP OSITS FROM THE PUBLIC, GOVT. AND CORPORATE BODIES AND OTHERS, AND MAKING ADVANCES TO ITS CUSTOMERS. IT WAS CLAIMED THAT THE APPELLANT IS COVERED BY EXPLANATION TO SUB SECTION (4) OF SECTION 80P INSER TED W.E.F. 1.4.2007. TO VERIFY THE CLAIM OF APPELLANT THE AO COLLECTED D ETAILS OF BRANCH WISE AND CATEGORY WISE ADVANCES, INCOME AND CATEGORIZATI ON OF BRANCHES INTO RURAL/URBAN AND SEMI URBAN. THE DETAILS OF BRA NCHES OPERATING AT ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 16 TALUK LEVEL WERE COLLECTED. REFERENCE WAS MADE U/S 144A TO THE ADDL. CIT. AFTER RECEIVING DIRECTIONS U/S 144A THE AO REJ ECTED THE CLAIM OF APPELLANT BY MAKING OBSERVATION THAT THE APPELLANT BANK DOES NOT FALL WITHIN THE SCOPE OF EXPLANATION (B) TO SECTION 80P( 4). THE AO HAS ALSO QUOTED BUDGET SPEECH OF HONBLE F.M. WHICH INDICATE S LEGISLATIVE INTENT. THE AO THOUGH REJECTED THE CLAIM OF DEDUCTION U/S 8 0P BUT ALLOWED ALTERNATE CLAIM OF DEDUCTION U/S 36(1) (VIIA) AND A LLOWED RS. 47163425/-. THE OTHER CLAIM OF DEDUCTION U/S 36(1)( V) WAS REJECTED. CONTENTION OF THE AR IS THAT THE APPELLANT BANK IS A REGIONAL RURAL BANK WHICH IS ESTABLISHED UNDER THE REGIONAL RURAL BANK ACT, 1976. THE REGIONAL RURAL BANKS ARE COVERED UNDER THE DEFINITI ON OF COOPERATIVE BANK. THAT WITH THE AMENDMENT THROUGH FINANCE ACT, 2006, COOPERATIVE BANK CAME UNDER TAX NET THOUGH PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANKS WERE EXCLUDED FROM PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, AS THE PRINCIPAL OBJECT OF THE APPELLANT IS TO GIVE ADVANCES FOR AGRICULTURE AND RURAL DEVELOPMENT ACTIVITIES. THE P ROVISIONS OF AMENDMENT SHALL NOT APPLY TO THE APPELLANT AS MAJOR AREA OF OPERATION IS ALSO CONFINED TO THE STATE OF RAJASTHAN ONLY. TH E MAJOR BRANCHES ARE SITUATED IN VILLAGES. THE APPELLANT BANK WAS STARTE D THROUGH RURAL REGIONAL BANK ACT, 1976 WHEREIN THE MAIN BUSINESS O F BANK UNDER THIS ACT HAS BEEN STATED AS UNDER: A) THE GRANTING OF LOANS AND ADVANCES, PARTICULARLY TO SMALL AND MARGINAL FARMERS AND AGRICULTURAL LABOURERS, WHETHE R INDIVIDUALLY OR IN GROUPS, AND TO COOPERATIVE SOCIETIES, INCLUDING AGR ICULTURAL MARKETING SOCIETIES, AGRICULTURAL PROCESSING SOCIETIES, COOPE RATIVE FARMING SOCIETIES, PRIMARY AGRICULTURAL CREDIT SOCIETIES OR FARMERS SERVICE SOCIETIES, FOR AGRICULTURAL PURPOSES OR AGRICULTURA L OPERATIONS OR FOR OTHER PURPOSES CONNECTED THEREWITH; B) THE GRANTING OF LOANS AND ADVANCES, PARTICULARLY TO ARTISANS, SMALL ENTREPRENEURS AND PERSONS OF SMALL MEANS ENGAGED IN TRADE, COMMERCE OR INDUSTRY OR OTHER PRODUCTIVE ACTIVITIES, WITHIN THE NOTIFIED AREA IN RELATION TO THE REGIONAL RURAL BANK. AS PER EXPLANATION (B), IT IS CLEAR THAT RURAL DEVE LOPMENT BANK MEANS WHOSE MAJOR ACTIVITY RELATES TO PROVIDING FOR LONG TERM CREDIT FOR AGRICULTURE AND RURAL DEVELOPMENT ACTIVITIES. ANNUA L REPORT OF THE BANK ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 17 GIVES CATEGORY WISE ADVANCES AND AREA OF OPERATION, LIST OF BRANCHES AS LIST OF BRANCH WISE ADVANCES WAS ALSO SUBMITTED TO THE AO. CONTENTION OF THE AR IS CONSIDERED. THE APPELLANT B ANK IS A CREATION OF REGIONAL RURAL BANK ACT, 1976 AND, THEREFORE, IT IS ESTABLISHED THAT IT IS A REGIONAL RURAL DEVELOPMENT BANK. THE OBJECTIVE OF THE REGIONAL RURAL BANK ACT IS GRANTING OF LOANS AND ADVANCES, P ARTICULARLY TO SMALL AND MARGINAL FARMERS AND AGRICULTURE LABOURERS FOR AGRICULTURE PURPOSES OR AGRICULTURE OPERATIONS OR FOR OTHER CONNECTED PU RPOSES. THE OTHER OBJECTIVE IS TO GRANT LOANS AND ADVANCES TO ARTISAN S, SMALL ENTREPRENEURS AND PERSONS OF SMALL MEANS ENGAGED IN TRADE, COMMERCE OR INDUSTRIES OR OTHER PRODUCTIVE ACTIVITIES WITHIN THE NOTIFIED AREA IN RELATION TO THE REGIONAL RURAL BANK. AS PER THE ANN UAL REPORT OF THE BANK THE NOTIFIED AREA IS JAIPUR, DAUSA, NAGAUR, JO DHPUR, JAISALMER AND BARMER DISTRICTS. THE BANK HAS 9 URBAN BRANCHES, 24 SEMI URBAN BRANCHES, 175 RURAL BRANCHES. THUS OUT OF TOTAL 209 BRANCHES 175 BRANCHES ARE IN RURAL AREA. AS ON 31.03.2007 THE LO ANS AND ADVANCES OUTSTANDING ARE RS. 5710245000/-. THIS INCLUDES CRO PS ADVANCES OF RS. 2710802000/-, AGRICULTURAL ADVANCES OF RS. 53895800 0/-, ARAT AGRICULTURE OF RS. 432398000/-. THUS, AGRICULTURE A DVANCES OF RS. 3682158000/- CONSTITUTES MORE THAN 60% OF THE TOTAL ADVANCES. FROM AREA WISE ADVANCES, ONE CAN SEE THAT THE RURAL ADVA NCES ARE OF RS. 40465737000/- AND SEMI URBAN ADVANCES ARE ONLY RS. 3470893000/-. THESE URBAN AREAS BASICALLY RURAL AREAS BUT SUBSEQU ENTLY COVERED UNDER THE MUNICIPAL LIMIT. THE URBAN AREAS ARE AMER, JAIS INGHPUR, KHER, BHAKROTA, HARMADA, JHOTWARA, SANGANER, SINWAR AND S IRSI WHICH ARE ALL OUTSKIRT AREAS OF JAIPUR. THE OTHER URBAN AREAS IS JODHPUR AND HEAD OFFICE IN JAIPUR. FROM THE ABOVE DETAILS, ONE CAN S EE THAT THE AREA OF OPERATION OF THE APPELLANT BANK IS PRIMARILY TALUK AND PRINCIPAL OBJECT/ACTIVITIES ARE TO PROVIDE CREDIT FOR AGRICUL TURE AND RURAL DEVELOPMENT ACTIVITIES. THE APPELLANT IS THUS A RUR AL DEVELOPMENT BANK PROVIDING CREDIT FOR AGRICULTURE AND RURAL DEVELOPM ENT ACTIVITIES. THE APPELLANTS CASE IS THUS COVERED BY EXPLANATION (B) AND, THEREFORE, THE AMENDMENT WILL NOT BE EFFECTIVE IN THE APPELLANT CA SE. THE APPELLANT IS A COOPERATIVE SOCIETY AND THE INCOME IS FROM BANKIN G ACTIVITIES. PROFIT AND LOSS ACCOUNT WAS PERUSED AND FROM THE BRANCH WI SE DETAILS, ONE CAN SEE THAT INTEREST ON LOANS EARNED BY THE APPELL ANT COMES TO RS. 523185433/- OUT OF TOTAL INCOME OF RS. 582832093/-. THE OTHER INCOMES ARE FROM DEPOSITS WITH THE BANK WHICH IS AL SO BANKING ACTIVITY, ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 18 EXCHANGE AND COMMISSION I.E. ALSO BANKING ACTIVITY. THE AO IS, THEREFORE, DIRECTED TO ALLOW EXEMPTION U/S 80P FOR THE INCOME EARNED OUT OF BANKING ACTIVITIES ONLY. THE GROUND OF APPEA L IS THUS DECIDED IN FAVOUR OF THE APPELLANT. 24. WE NOW REFER TO THE FINDINGS OF THE COORDINATE BENCH WHERE THE BENCH HAS AGAIN CONSIDERED THE ABOVE EXPLANATIONS OF THE ASSESSEE BANK AND THE FINDINGS OF THE LD CIT(A). THE RELEVANT FINDINGS O F THE COORDINATE BENCH ARE CONTAINED IN PARA 2.8 TO 2.12 WHICH ARE REPRODUCED BELOW: 2.8 WE HAVE HEARD BOTH THE PARTIES. THE ISSUE BEFO RE US IS AS TO WHETHER DEDUCTION U/S 80P IS AVAILABLE TO THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN VIEW OF INSERTION OF SECTION 80P(4 ). IT WILL BE USEFUL TO REPRODUCE SECTION 80P(4) OF THE ACT AS UNDER:- 4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. EXPLANATION.--FOR THE PURPOSES OF THIS SUB-SECTION, -- (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL C REDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949) ; (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFIN ED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TE RM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 2.9 THE CBDT ISSUED CIRCULAR NO. 319 DATED 11-01-19 82. THE CIRCULAR WHICH IS AVAILABLE AT 133 ITR 165 (ST.) IS REPRODUCED AS UNDER:- ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 19 A QUESTION HAS ARISEN WHETHER REGIONAL RURAL BANK S (TO WHICH THE PROVISIONS OF THE REGIONAL RURAL BANKS ACT, 1976, A PPLY) CAN BE TREATED AS CO-OPERATIVE SOCIETIES FOR THE PURPOSE OF SECTIO N 80P OF THE INCOME TAX ACT, 1961. 2. THERE IS A SPECIFIC PROVISION, NAMELY, SECTION 2 2 IN THAT ACT ,WHICH IS TO THE FOLLOWING EFFECT:- FOR THE PURPOSE OF THE INCOME TAX ACT, 1961, OR A NY OTHER ENACTMENT FOR THE TIME BEING IN FORCE RELATING TO ONLY TAX ON INCOME, PROFITS OR GAINS, A REGIONAL RURAL BANK, SHALL BE DEEMED TO BE A COOPERATIVE SOCIETY. 3. THEREFORE, THE PROVISIONS OF SECTION 80P OF INCO ME TAX ACT, 1961 WILL ALSO BE APPLICABLE IN RESPECT OF REGIONAL RURA L BANKS. IN THIS VIEW DEDUCTIONS ADMISSIBLE U/S 80P(2)(A)(I) HAVE TO BE A LLOWED IN MAKING INCOME TAX ASSESSMENTS OF THESE BANKS. 4. THIS MAY BE BROUGHT TO THE NOTICE OF ALL OFFICER S WORKING IN YOUR CHARGE. 2.10 BEFORE, WE PROCEED FURTHER, IT WILL BE USEFUL TO REPRODUCE CIRCULAR NO. 6/2010 DATED 20-09-2010. SECTION 80 OF THE INCOME TAX ACT, 1961 PROVIDES F OR A DEDUCTION FROM THE INCOME OF COOPERATIVE SOCIETIES REFERRED TO IN THAT SECTION. 2. AS REGIONAL RURAL BANKS (RRB) ARE BASICALLY CORP ORATE ENTITIES (AND NOT COOPERATIVE SOCIETIES), THEY WERE CONSIDER ED TO BE NOT ELIGIBLE FOR DEDUCTION U/S 80P WHEN THE SECTION WAS ORIGINAL LY INTRODUCED. HOWEVER, AS SECTION 22 OF THE REGIONAL RURAL BANK A CT PROVIDES THAT A RRB SHALL BE DEEMED TO BE COOPERATIVE SOCIETY FOR T HE PURPOSE OF INCOME TAX ACT, 1961 IN ORDER TO MAKE SUCH BANKS EL IGIBLE FOR DEDUCTION U/S 80P, CBDT CIRCULAR ISSUED A BENEFICIA L CIRCULAR NO. 319 ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 20 DATED 11-01-1982 WHICH STATED THAT FOR THE PURPOSE OF SECTION 80P, A REGIONAL RURAL BANK SHALL BE DEEMED TO BE A COOPERA TIVE SOCIETY. 3. SECTION 80P WAS AMENDED BY THE FINANCE ACT, 2006 W.E.F. 1-04- 2007 INTRODUCING SUB-SECTION (4), WHICH LAID DOWN S PECIFICALLY THAT THE PROVISIONS OF SECTION 80P WILL NOT APPLY TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRI MARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. ACCORDINGL Y DEDUCTION U/S 80P WAS NO MORE AVAILABLE TO ANY REGIONAL RURAL BAN K FROM ASSESSMENT YEAR 2997-08 ONWARDS. AN OM DATED 25-08-2006 ADDRESSED TO RBI WAS ISSUED BY THE BOARD CLARIFYING THAT REGIONAL RURAL BANKS WOULD NOT BE E LIGIBLE FOR DEDUCTION U/S 80P OF THE INCOME TAX ACT, 1961 FROM THE ASSESS MENT YEAR 2007- 08 ONWARDS 4. IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD T HAT DESPITE THE AMENDED PROVISIONS, SOME REGIONAL RURAL BANKS CONTI NUE TO CLAIM DEDUCTION U/S 80P ON THE GROUND THAT THEY ARE COOPE RATIVE SOCIETIES COVERED BY SECTION 80P(1) READ WITH BOARDS CIRCULAR NO. 319 DATED 11- 01-1092. 5. IT IS THEREFORE, REITERATED THAT REGIONAL RURAL BANKS ARE NOT ELIGIBLE FOR DEDUCTION U/S 80P OF THE INCOME TAX AC T, 1961 FROM THE ASSESSMENT YEAR 2007-08 ONWARDS. FURTHERMORE, THE C IRCULAR NO. 319 DATED 11-01-1982 DEEMING ANY REGIONAL RURAL BANK TO BE COOPERATIVE SOCIETY STANDS WITHDRAWN FOR APPLICATION WITH EFFEC T FROM ASSESSMENT YEAR 2007-08. THE FIELD OFFICERS MAY TAKE NOTE OF THIS POSITION A ND TAKE REMEDIAL ACTION, IF REQUIRED. ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 21 2.11 SECTION 22 OF THE REGIONAL RURAL BANKS ACT 197 6 IS REPRODUCED AS UNDER:- FOR THE PURPOSE OF THE INCOME TAX ACT, 1961 OR AN Y OTHER ENACTMENT FOR THE TIME BEING IN FORCE RELATING TO ANY TAX ON INCOME, PROFITS OR GAINS, A REGIONAL RURAL BANK SHALL BE DEEMED TO BE A COOPERATIVE SOCIETY. 2.12 HENCE, THE CBDT VIDE CIRCULAR NO. 319 CLARIFIE D THAT DEDUCTION U/S 80P(2)(A)(I) IS TO BE ALLOWED TO REGIONAL RURAL BAN K (RRB) BY CONSIDERING SUCH BANKS AS COOPERATIVE SOCIETIES. THE DEDUCTION U/S 80P(2)(A)(I) IS IN RESPECT OF PROFIT OR GAINS OR BUSINESS ATTRIBUTABLE TO THE BUSINESS OF THE BAKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. BY I NSERTION OF SECTION 80P(4), DEDUCTION IS PERMISSIBLE TO PRIMARY COOPERATIVE AGR ICULTURAL AND RURAL DEVELOPMENT BANKS. THE DEFINITION OF PRIMARY COOPER ATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK HAS BEEN DEFINED IN EXPLANAT ION (B) TO SECTION 80P(4) OF THE ACT. THE AREA OF OPERATION SHOULD BE CONFINED TO TALUK AND THE PRINCIPAL OBJECT IS TO PROVIDE ADVANCES FOR AGRICUL TURE AND RURAL DEVELOPMENT ACTIVITIES. THE WORD TALUQ IS NOT DEFINED IN THE INCOME TAX ACT. AS PER LAW LEXICON (1997 ADDITION), BY P RAMANATHA AIYAR, THE WORD TALUQ IS APPLIED TO THE SUB-DIVISION OF THE DISTRICT USED IN WESTERN SO UTH INDIA AS THE TALUQ IS IN UPPER INDIA. TALUQ IS ALSO DEFINED IN U.P. ACT, 199 9 IN WHICH THE WORD TALUQ MEANS ANY LOCAL AREA FOR WHICH A TALUQ LOCAL BOARD IS ESTABLISHED INCLUSIVE OF THE PORTION OF SUCH AREA, IF ANY, FOR THE TIME BEIN G WITHIN THE MUNICIPAL OR MILITARY CANTONMENT. IN THE INSTANT CASE, THE BANK IS CONFINED TO A TALUQ BUT IS ALSO OPERATING IN THE AREA COMPRISING OF A CORPORAT ION. WE DO AGREE THAT THE BENEFICIAL CIRCULAR IS OPERATIVE TILL THE DATE IT I S WITHDRAWN. EARLIER CIRCULAR HAS BEEN RECALLED BY CIRCULAR NO. 6/2010 DATED 20-09-2 010. THE TRIBUNAL WHILE DECIDING APPEAL IN THE CASE OF MODERN INSULATOR IND IA TW MAGAZINE VOLUME 46 HELD AS UNDER:- ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 22 WE ALSO AGREE WITH THE VIEW TAKEN BY THE LD CIT(A ) THAT THE TDS WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE ON ACCOUNT OF CIRCULAR NO. 786 DATED 7-2-2000. THE CIRCULAR NO. 7 OF 22 ND OCT. 09 CANNOT BE CONSIDERED RETROSPECTIVELY TO MAKE IT APPLICABLE FO R PAYMENT. BEFORE THAT DATE, THIS HAS BEEN CONSIDERED BY THE ITAT LUC KOW BENCH IN THE CASE OF DCIT VS SANJEEV GUPTA, 50 DTR 225. IN THAT CASE, THE BENEFICIAL CIRCULAR WAS WITHDRAWN IN RESPECT OF DEDUCTION OF TAX AT SOURCE AND IT WAS HELD THAT BENEFICIAL CIRCU LAR WILL APPLY TILL IT IS WITHDRAWN BY THE BOARD. THUS THE ASSESSEE WILL HAVE TO BE CONSIDERED AS CO- OPERATIVE SOCIETY BUT THE REQUIREMENT OF DEDUCTION U/S 80P(4) IN RESPECT OF PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPM ENT IS THAT THE PRINCIPAL OBJECT OF SUCH CONCERN IS TO PROVIDE LONG TERM CRED IT FOR AGRICULTURAL RURAL DEVELOPMENT ACTIVITIES AND THE OPERATION IS CONFINE D TO A TALUQ. THUS REQUIREMENT OF EXPLANATION (B) OF SECTION 80P(4) IS NOT SATISFIED. HENCE, WE HOLD THAT THE LD CIT(A) WAS NOT JUSTIFIED IN DIRECT ING THE AO TO ALLOW DEDUCTION U/S 80P (4) OF THE ACT. 25. IF WE EXAMINE CLOSELY THE DECISION OF THE COORDINAT E BENCH, IT REFERS TO CBDT CIRCULAR NO. 319 DATED 11.01.1982 WHICH CLARIF IED THAT DEDUCTION U/S 80P(2)(A)(I) IS TO BE ALLOWED TO REGIONAL RURAL BAN K (RRB) BY CONSIDERING SUCH BANKS AS COOPERATIVE SOCIETIES. IT FURTHER HEL D THAT THE SAID BENEFICIAL CIRCULAR IS OPERATIVE TILL THE DATE IT IS WITHDRAWN AND RECALLED BY SUBSEQUENT CIRCULAR NO. 6/2010 DATED 20-09-2010. AND THEREAFT ER, IT WAS HELD THAT IN THE INSTANT CASE, THE BANK IS CONFINED TO A TALUQ B UT IS ALSO OPERATING IN THE AREA COMPRISING OF A CORPORATION AND FINALLY, IT W AS HELD THAT THUS THE ASSESSEE WILL HAVE TO BE CONSIDERED AS CO-OPERATIVE SOCIETY BUT THE REQUIREMENT OF DEDUCTION U/S 80P(4) IN RESPECT OF P RIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT IS THAT THE PRIN CIPAL OBJECT OF SUCH CONCERN IS TO PROVIDE LONG TERM CREDIT FOR AGRICULT URAL RURAL DEVELOPMENT ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 23 ACTIVITIES AND THE OPERATION IS CONFINED TO A TALUQ . THUS REQUIREMENT OF EXPLANATION (B) OF SECTION 80P(4) IS NOT SATISFIED. 26. IT SHOWS THAT THE EXPLANATION OFFERED BY THE ASSESS EE BANK THOUGH NOT ACCEPTED FINALLY BUT AT THE SAME TIME, HAS NOT BEEN FOUND DEVOID OF ANY BASIS. IT IS NOT A CASE THAT THE LANGUAGE OF THE AMENDED S TATUTE WAS HELD SO CLEAR THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIM OF DED UCTION ON PRIMA FACIE READING OF THE AMENDED STATUTE. THE LANGUAGE INVOLV ED IN THE STATUTE INVOLVES INTERPRETATION AND EVEN THE CBDT HAS ADMITTED THE S AME IN ITS CIRCULAR NO. 6/2010 DATED 20.09.2010 AND HAS THEREFORE, VIDE THE SAID CIRCULAR, HAS CLARIFIED THAT REGIONAL RURAL BANK, SUCH AS THE ASS ESSEE IN THE PRESENT CASE, WILL NOT BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 P FROM ASSESSMENT YEAR 2007-08. THE ASSESSEE THUS HAS SOME REASONABLE BAS IS FOR CLAIM OF DEDUCTION U/S 80P OF THE ACT EVEN AFTER THE AMENDMENT BY THE FINANCE ACT, 2006 AND IT HAS THUS ESTABLISHED ITS BONAFIDE OF SUCH CLAIM IN ITS RETURN OF INCOME. IT IS ALSO A FACT THAT THE SAID EXPLANATION HAS NOT BEEN FINALLY ACCEPTED AND DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80P HAS BEEN SUSTAINED BY THE COORDINATE BENCH AND THE ASSESSEE HAS NOT FILED ANY FURTHER APPEAL, HOWEVER THE SAME CANNOT BE A BASIS FOR LEVY OF PENALTY WHIC H CALLS FOR STRICT INTERPRETATION AS WE HAVE HELD ABOVE. 27. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS (SUPRA), THE FACT THAT NECESSARY DISC LOSURE HAS BEEN MADE IN THE RETURN OF INCOME IN RESPECT OF CLAIM OF DEDUCTI ON UNDER SECTION 80P, THE ASSESSEE HAS OFFERED THE NECESSARY EXPLANATION AND THE BASIS IN SUPPORT OF THE SAID CLAIM ESTABLISHING ITS BONAFIDE AND THE SA ID EXPLANATION HAS NOT BEEN FOUND TOTALLY DEVOID OF ANY BASIS, MERE DISALLOWAN CE OF CLAIM OF DEDUCTION U/S 80P OF THE ACT CANNOT FORM THE BASIS FOR LEVY OF PE NALTY FOR FURNISHING ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 24 INACCURATE PARTICULARS OF INCOME. WE ACCORDINGLY C ONFIRM THE ORDER OF LD CIT(A) DELETING THE LEVY OF PENALTY AND THE GROUND TAKEN BY THE REVENUE IS HEREBY DISMISSED. ITA NO. 802/JP/13 & ITA NO. 803/JP/13 28. IN ITA NO. 802/JP/13 AND 803/JP/13 FOR AY 2008- 09 AND AY 2009-10, BOTH PARTIES AGREED THAT THE FACTS ARE PARI-MATERIA AND SIMILAR GROUND OF APPEALS HAVE BEEN RAISED BY THE REVENUE AGAINST DEL ETING OF PENALTY U/S 271(1)(C) IN RELATION TO DISALLOWANCE OF CLAIM OF D EDUCTION U/S 80P TO THE ASSESSEE BANK AS IN ITA NO. 801/JP/13 DECIDED SUPRA . IN VIEW OF THE SAME, OUR FINDINGS AND DIRECTION CONTAINED IN ITA NO. 801 /JP/13 SHALL APPLY MUTATIS- MUTANDIS TO THESE TWO APPEALS AS WELL. IN THE RESULT THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/06/2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 21/06/2017 SANTOSH* VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S JAIPUR THAR GRAMIN BANK, JAIPU R 3. VK;DJ VK;QDR@ CIT I, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-I, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR ITA NOS. 801 TO 803/JP/13 ACIT, CIRCLE-2, JAIPUR VS. JAIPUR THAR GRAMIN BAN K 25 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 801 TO 803/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.