2017 (5) TMI 1570 - AT - Income Tax

Penalty u/s.271(1)(c) - donations collected in boxes marked as donation towards corpus are not eligible for exemption u/s 11(1)(d) - Held that - The word particulars must mean the details supplied in the return which are not accurate not exact or correct not according to truth or erroneous. In the instant case there was no finding that any details supplied by the assessee in its return were found to 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). A mere making of the claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. See ITO- (E) 2 (2) MUMBAI VERSUS PRABODHAN PRAKASHAN MUMBAI 2017 (1) TMI 1094 - ITAT MUMBAI - decided in favour of assessee

Summary

Issues Involved:
1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
2. Determination of whether the assessee's activities were charitable or commercial.
3. Assessment of the assessee's claim for exemption under Section 11.
4. Restoring the order of the Assessing Officer versus the Commissioner of Income Tax (Appeals).

Issue-wise Detailed Analysis:

1. Deletion of Penalty under Section 271(1)(c):
The primary issue was whether the Commissioner of Income Tax (Appeals) [CIT(A)] erred in deleting the penalty of Rs. 98,66,626 imposed under Section 271(1)(c) of the Income Tax Act for alleged concealment of facts. The Tribunal referred to the judgment of the Hon'ble Supreme Court in Reliance Petroproducts (P.) Ltd., which clarified that for a penalty to be imposed under Section 271(1)(c), there must be concealment of income or furnishing of inaccurate particulars. The Tribunal found that there was no evidence of concealment or inaccurate particulars furnished by the assessee. Hence, the deletion of the penalty by the CIT(A) was upheld.

2. Charitable vs. Commercial Activity:
The second issue was whether the assessee was engaged in charitable activities or commercial/business activities. The Tribunal reviewed previous judgments, including the assessee’s own case for earlier assessment years (A.Y. 1989-90, 1992-93, 1995-96, 1996-97), where it was determined that the income from running a newspaper was not utilized for charitable purposes. The Tribunal also referred to the Supreme Court's decision in the case of Thanthi Trust, which held that business income must be used to achieve the charitable objects of the trust to qualify for exemption. The Tribunal concluded that the assessee's activities were not charitable, affirming the CIT(A)'s findings.

3. Claim for Exemption under Section 11:
The third issue revolved around the assessee's claim for exemption under Section 11, which was previously denied on the grounds that the assessee was not engaged in charitable activities. The Tribunal cited its earlier decisions, which consistently held that the assessee's activities did not qualify for exemption under Section 11. The Tribunal reiterated that merely claiming an exemption does not amount to furnishing inaccurate particulars if the claim is not accepted by the revenue authorities.

4. Restoring the Order of the Assessing Officer:
The revenue sought to restore the order of the Assessing Officer (AO), who had imposed penalties and made various disallowances, including non-payment of Provident Fund and ESIC contributions, non-deduction of TDS, and disallowance of prior period expenses. The Tribunal noted that the CIT(A) had already allowed certain expenses and confirmed others. The Tribunal emphasized that penalty proceedings are independent of assessment proceedings and must consider the entirety of circumstances. Given the CIT(A)'s reasoned order and the absence of concealment or inaccurate particulars, the Tribunal upheld the CIT(A)'s order and dismissed the revenue's appeal.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order, which deleted the penalty under Section 271(1)(c) and confirmed that the assessee's activities were not charitable, thereby denying the exemption under Section 11. The Tribunal's decision was based on previous judgments and the absence of evidence for concealment or inaccurate particulars by the assessee. The appeal was pronounced dismissed in the open court on 24th May 2017.