THE RAMPUR PEOPLES CO.OP. CREDIT SOCIETY LTD.,KHEDA V. THE ITO, WARD-5, NADIAD

ITA 609/AHD/2025

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The case involves The Rampur Peoples Co. Op. Credit Society Ltd., which appealed against the penalty imposed for underreporting income by claiming an inadmissible deduction under section 80P of the Income Tax Act. The Assessing Officer had disallowed the deduction on interest income from bank deposits, which was confirmed by the CIT(Appeals). The Tribunal found that the legal position regarding the ineligibility of such deductions was well established and the society's claim was made without any reasonable basis, thus affirming the penalty.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848299 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Ahmedabad
• Assessment Year: 2017-2018
• Appeal Filed On: 24-03-2025
• Other Referred Cases: Union of India vs. Dharamendra Textile Processors, MAK Data (P.) Ltd. vs. CIT, Totgars Co-operative Sale Society Ltd. vs. ITO, State Bank of India Employees Co-op Credit & Supply Society Ltd. vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMESHWAR P MEENA
• Assessee Lawyers: M K PATEL
• Keywords: Reasonable cause; Co-operative Credit Society
• Section: 270AA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No.609/Ahd/2025 (Assessment Year: 2017-18) The Rampur Peoples Co. Op. Credit Society Ltd., Opp: Ramji Mandir, Rampur-387710 Vs. Income Tax Officer, Ward-5, Nadiad [PAN No.AAAAT4489K] (Appellant) .. (Respondent) Appellant by : Shri M K Patel, Adv. Respondent by: Shri Rameshwar P Meena, Sr. DR Date of Hearing 12.03.2026 Date of Pronouncement 25.03.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 29.01.2025 passed for A.Y. 2017-18. 2. The assessee has taken the following grounds of appeal: “1. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the levy of penalty of Rs.2,40,022/- u/s 270A of the Act. 2. That on facts, in law, and on evidence on record, it ought to have been held that there is no under reporting of income within the meaning of section 270A of the Act, an hence the entire penalty ought to have been deleted. 3. The appellant craves liberty to add, alter, amend any ground of appeal.” 3. The brief facts of the case are that the assessee is a co-operative credit society registered under the Gujarat Co-operative Societies Act and had filed its Printed from counselvise.com ITA No. 609/Ahd/2025 The Rampur Peoples Co. Op. Credit Society Ltd. vs. ITO Asst. Year –2017-18 - 2– return of income declaring ‘Nil’ income after claiming deduction under section 80P of the Income-tax Act, 1961 (“the Act”). The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer examined the claim of deduction under section 80P of the Act in respect of interest income earned on bank fixed deposits. The Assessing Officer held that such interest income is not eligible for deduction under section 80P of the Act and is taxable under the head “Income from other sources”. Accordingly, the entire interest income was brought to tax and the claim of deduction under section 80P of the Act was disallowed. Further, certain expenses claimed by the assessee were also disallowed. Penalty proceedings were initiated on account of furnishing inaccurate particulars of income. The penalty was levied in the hands of the assessee in view of the above observations. 4. Thereafter, in appellate proceedings, the Ld. CIT(Appeals) upheld the disallowance of deduction under section 80P of the Act on interest income from bank deposits and also confirmed the disallowance of certain expenses. Though partial relief was granted in respect of some expenses on a pro-rata basis, the core addition relating to deduction under section 80P was sustained by CIT(Appeals). In the penalty proceedings, the Ld. CIT(Appeals) examined the grounds raised by the assessee challenging the levy of penalty. The assessee contended that there was a reasonable cause for claiming 80P deduction, that the revised computation was filed during assessment proceedings, and that there was only marginal difference between assessed income and revised income. However, the Ld. CIT(Appeals) held that the withdrawal of the claim was not voluntary but was made only after detection by the Assessing Officer. the CIT(Appeals) further held that the claim of deduction under section 80P of the Act on bank interest was wholly untenable in law and without any basis. The Printed from counselvise.com ITA No. 609/Ahd/2025 The Rampur Peoples Co. Op. Credit Society Ltd. vs. ITO Asst. Year –2017-18 - 3– contention of the assessee regarding immunity under section 270AA was also rejected on the ground that the case involved misreporting of income. The Ld. CIT(Appeals) relied upon judicial precedents including the decision of the Hon’ble Supreme Court in Union of India vs. Dharamendra Textile Processors (306 ITR 277) and MAK Data (P.) Ltd. vs. CIT (38 taxmann.com 448) to hold that penalty is leviable even where income is surrendered after detection. Accordingly, the penalty levied by the Assessing Officer was confirmed. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 6. We have heard the rival submissions and perused the material available on record. It is an admitted position that the assessee had claimed deduction under section 80P of the Act on interest income earned from bank fixed deposits. The legal position on this issue is well settled against the assessee. The Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (322 ITR 283) has clearly held that interest income earned on surplus funds deposited with banks is taxable under the head “Income from other sources” and is not eligible for deduction under section 80P of the Act. The Hon’ble Gujarat High Court has also consistently taken a similar view in cases such as State Bank of India Employees Co-op Credit & Supply Society Ltd. vs. CIT and other decisions, wherein it has been held that interest earned from bank deposits is not eligible for deduction under section 80P(2)(a)(i) of the Act. 7. In the present case, the assessee has not been able to demonstrate any reasonable basis for making such a claim. The explanation offered by the assessee that revised computation was filed during assessment proceedings does not come to its rescue, as the same was done only after detection by the Printed from counselvise.com ITA No. 609/Ahd/2025 The Rampur Peoples Co. Op. Credit Society Ltd. vs. ITO Asst. Year –2017-18 - 4– Assessing Officer. The claim made by the assessee was clearly contrary to settled legal position and therefore amounts to furnishing inaccurate particulars of income. 8. It is also well settled by the Hon’ble Supreme Court in MAK Data (P.) Ltd. vs. CIT (supra) that surrender of income after detection does not absolve the assessee from penalty. Applying these principles to the facts of the present case, we find that the assessee had made a claim which was not only legally untenable but also lacked any bona fide basis. 9. Therefore, we find no infirmity in the order of the Ld. CIT(Appeals) in confirming the levy of penalty. The grounds raised by the assessee are devoid of merit and do not warrant any interference. 10. Accordingly, the appeal filed by the assessee is dismissed. This Order is pronounced in the Open Court on 25/03/2026 Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 25/03/2026 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "