Penalty under Section 271(1)(c) deleted for disallowed deduction under Section 80P(2)(d) on interest income

ITAT Surat allowed the assessee's appeal and directed deletion of penalty u/s 271(1)(c) imposed for disallowance of deduction u/s 80P(2)(d) on interest income from State Bank of India and DGVCL. The tribunal held that mere claiming of expenditure/deduction not accepted by revenue does not attract penalty. Following SC precedent in Reliance Petroproducts, the tribunal found no concealment of income or furnishing of inaccurate particulars, as assessee had disclosed all details in computation attached with return. AO's rejection of claim does not constitute willful tax evasion warranting penalty.

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Issues:
1. Condonation of delay in filing appeal before the Tribunal.
2. Merits of the case regarding disallowance under Section 80P(2)(d) of the Income Tax Act, 1961 and penalty imposed under Section 271(1)(c).

Condonation of Delay:
The appeal was filed against the penalty imposed under Section 271(1)(c) of the Act for the Assessment Year 2012-13. The delay of 155 days in filing the appeal was attributed to the lack of awareness about the order being passed. The authorized representative of the assessee, a Chartered Accountant, did not communicate the order to the assessee society promptly. The delay was deemed unintentional, supported by cases citing the absence of deliberate intent. The Tribunal, considering substantial justice, condoned the delay as there was no intentional default on the part of the assessee.

Merits of the Case - Disallowance under Section 80P(2)(d):
The Assessing Officer disallowed a deduction under Section 80P(2)(d) of Rs. 2,98,035, stating the assessee was not eligible for it. The disallowance was made based on a presumption that the assessee claimed interest income from specific sources. However, the assessee contended that no such claim was made, and the disallowance was unjust. The penalty was imposed on the disallowed amount, which the assessee argued against, citing the decision in CIT Vs. Reliance Petroproducts (P) Ltd. The Tribunal found that the assessee had not concealed income or furnished inaccurate particulars, and the disallowance was based on the assessing officer's rejection of the claim. Following the Supreme Court's ruling, the Tribunal directed the Assessing Officer to delete the penalty, thereby allowing the appeal of the assessee.

In conclusion, the Tribunal addressed the issues of delay in filing the appeal and the merits of the case regarding the disallowance under Section 80P(2)(d) comprehensively. The decision was made in favor of the assessee, highlighting the lack of deliberate intent in the delay and the unjust imposition of the penalty based on the disallowance. The Tribunal's judgment emphasized the principles of justice and the application of relevant legal precedents in reaching its decision.

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