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2015 (10) TMI 1078 - AT - Income TaxPenalty under section 271(1)(c) - undisclosed donation receipts - assessee is an educational and charitable trust enjoying registration under section 12AA - Held that - In the present case, the assessee has explained before the Assessing Officer that the amounts received by it are voluntary donation and certain details are not available. Therefore, the extent of details not available are worked out by the assessee and offered for taxation. We find that by explaining all the reasons, the assessee has discharged burden cast upon it. Thereafter, it is the duty of the Assessing Officer to disprove that the explanation given by the assessee is neither correct nor bonafide. Therefore, the ld. CIT(A) is not correct in upholding the penalty order passed by the Assessing Officer by following the decision of in the case of Mak Data P. Ltd. v. CIT 2013 (11) TMI 14 - SUPREME COURT without considering the explanation given by the assessee. We find that the assessee has failed to handle the donations received by them in appropriate manner. Therefore, the assessee offered the very same amount for taxation. Under these facts and circumstances of the case, we are of the opinion that the assessee has neither concealed the income nor furnished inaccurate particulars. In the case of CIT v. Balraj Sahani 1979 (2) TMI 61 - BOMBAY High Court held that the findings in quantum proceedings are not binding in penalty proceedings and the Tribunal, or consideration of unreliable state of evidence regarding concealment, was justified in deleting penalty. Therefore, the ld. CIT(A) was not justified in confirming the penalty order passed by the Assessing Officer. - Decided in favour of assessee.
Issues Involved:
1. Whether the appellant trust concealed income by not disclosing voluntary donations received in cash. 2. Whether the penalty under section 271(1)(c) of the Income Tax Act is applicable. Detailed Analysis: Issue 1: Concealment of Income by Not Disclosing Voluntary Donations The appellant, a charitable trust registered under section 12AA of the Income Tax Act, filed its return for the relevant assessment year declaring NIL income. A survey under section 133A revealed that the trust received voluntary donations amounting to Rs. 12,94,74,800 in cash, but only Rs. 4,73,20,000 was disclosed in the return, leaving Rs. 8,21,54,800 undisclosed. The trust argued that the discrepancy was due to direct cash expenditures from the donations, reducing the total to Rs. 3,86,48,000, which was later offered as anonymous donations under section 115BBC(3). Issue 2: Applicability of Penalty under Section 271(1)(c) The Assessing Officer (AO) initiated penalty proceedings under section 271(1)(c) for concealment of income. The AO concluded that the trust failed to disclose the income in the original return and only accepted the undisclosed amount during assessment proceedings. The CIT(A) upheld the penalty, citing the trust's duty to disclose all donations and referencing the Supreme Court decision in Mak Data (P) Ltd. v. CIT. Tribunal's Findings: 1. Voluntary Donations and Anonymous Donations: The Tribunal noted that the trust, being a charitable institution, claimed exemption under section 12AA. The trust's explanation that some donations lacked donor details and were thus offered as anonymous donations was accepted by the AO during the assessment. The Tribunal found no evidence that the trust's explanation was false or not bonafide. 2. Penalty Proceedings: The Tribunal emphasized that penalty under section 271(1)(c) requires proof of concealment or inaccurate particulars. The trust provided a detailed explanation, accepted by the AO, that the donations were voluntary and the discrepancy was due to incomplete donor details. The Tribunal held that the AO did not conduct further inquiry to disprove the trust's explanation or establish that the donations were not voluntary. 3. Judicial Precedents: The Tribunal referenced the Andhra Pradesh High Court decision in CIT v. Chennupati Tyre & Rubber Products, highlighting that penalty cannot be levied without disproving the assessee's explanation. It also cited the Gujarat High Court in National Textiles v. CIT, which requires material evidence to justify penalty for unexplained cash credits. 4. Conclusion: The Tribunal concluded that the trust neither concealed income nor furnished inaccurate particulars. The explanation provided by the trust was found to be bonafide, and the AO's failure to disprove it warranted the deletion of the penalty. The reliance on the Supreme Court decision in Mak Data was deemed inapplicable as the trust had provided a detailed explanation, unlike in Mak Data where no explanation was offered. Judgment: The Tribunal reversed the CIT(A)'s order and deleted the penalty levied by the AO under section 271(1)(c) of the Income Tax Act, allowing the appeal filed by the assessee. The order was pronounced on 24.7.2015.
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