2026 (8) TMI 556

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.... filed the return of income on 30/09/2018. The assessee had claimed the entire income as deduction u/s. 80P(2)(a)(i) of the Act. Subsequently, the case of the assessee was selected for limited scrutiny and after verifying the details, the AO had accepted the return of income filed by the assessee by passing an order u/s. 143(3) of the Act. Thereafter, the AO had issued a notice for rectification and in the rectification order also, the AO had accepted the return of income and allowed the deduction claimed by the assessee u/s. 80P(2)(a)(i) of the Act. Again the AO had initiated rectification proceedings u/s. 154 of the Act and denied the deduction claimed u/s. 80P(2)(a)(i) of the Act on the ground that the assessee had received interest from....

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....so accepted in the order passed u/s. 143(3) of the Act. The Ld.AR further submitted that in the subsequent rectification order dated 08/04/2021 also, the AO had accepted the deduction claimed by the assessee. The Ld.AR further submitted that subsequently by way of an another rectification order, the AO had reversed the deduction granted by him by relying on the judgments of the Hon'ble Supreme Court as well as the Hon'ble Jurisdictional High Court. The Ld.AR therefore submitted that whether the penalty levied u/s. 270A is in order particularly with reference to sub-clause (6) of section 270A of the Act. The Ld.AR also submitted that the show cause notice as well as the penalty order does not indicate under which clause of section 270A, the ....

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.... of a sudden, a show cause notice was issued proposing to deny the deduction since the interest income earned from the co-operative banks are not entitled for deduction either u/s. 80P(2)(a)(i) or 80P(2)(d) of the Act. In spite of the reply, the AO had made the order u/s. 154 of the Act reversing the deduction already granted by him. It is the case of the assessee that they have challenged the said order before the Ld.CIT(A). 11. In these circumstances, the AO had proposed to levy penalty u/s. 270A of the Act for underreporting of income. The above said facts would establishes that the assessee had claimed the deduction while filing the return of income u/s. 80P(2)(a)(i) of the Act which was also accepted by the AO. Subsequently, in the ....