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2023 (9) TMI 752 - AT - Income TaxPenalty u/s. 271(1)(c) - deduction u/s 35 of the Act in respect of donation given to M/s. Herbicure Health Care Bio Herbal Research Foundation - HELD THAT - At the time when deduction was claimed by the assessee, the registration certificate granted to HHBRF u/s 35(1)(ii) of the Act was still in place during the impugned assessment year. Secondly, the return was filed by the assessee in response to notice under Section 147/148 of the Act on 04.04.2017 whereas the reasons recorded for reopening of assessment under Section 147 of the Act were provided to the assessee on 19.04.2017. Therefore, it cannot be presumed that the reasons for reopening of assessment were known to the assessee at the time when return was filed by the assessee in response to notice under Section 147 of the Act withdrawing the claim of deduction under Section 35(1)(ii) of the Act. We observe that the ITAT Ahmedabad in the case of S. G. Vat Care Pvt. Ltd. 2019 (1) TMI 1694 - ITAT AHMEDABAD has held that assessee is eligible for deduction under Section 35 of the Act in respect of donation given to M/s. Herbicure Health Care Bio Herbal Research Foundation since the donations were given by the assessee and at that point of time, the donee was identified as an eligible institute and fell within the statutory eligibility criteria. The ITAT further observed that the certificate for receiving donation was cancelled only on 05.09.2016 in respect of HHBFR and therefore, the claim of deduction could not be disallowed in the hands of the assessee for A.Y. 2014-15, when the registration for receiving donation was still in existence. In the case of CIT vs. Punjab Tyres 1986 (7) TMI 77 - MADHYA PRADESH HIGH COURT held that when an amount is surrendered to purchase peace, or for other similar reason, such surrender cannot amount to admission, constituting evidence of concealment in penalty proceedings. The High Court held that unless there is any evidence showing that assessee had consciously concealed particulars of his income, any admission made by him surrendering the said particular amount as his income would not by itself justify imposition of penalty. Accordingly, we are hereby directing deletion of levy of penalty u/s 271(1)(c) - Decided in favour of assessee.
Issues involved:
The appeal against the order passed by the Ld. Commissioner of Income Tax(Appeals) confirming the penalty u/s. 271(1)(c) of the Act for Assessment Year 2014-15. Details of the Judgment: 1. Delay in filing the appeal: The appeal was time-barred by 684 days due to misplaced documents by the accountant-cum-clerk. The delay was condoned after considering the reasons provided. 2. Initiation of penalty proceedings: The penalty proceedings were initiated against the assessee for filing a revised return after the issuance of notice under Section 148 of the Act. The Assessing Officer held that the assessee concealed income to evade tax, leading to the levy of a penalty of Rs. 3,15,000. 3. Arguments and Contentions: The assessee contended that the revised return was filed before the reasons for re-opening the assessment were provided. The claim of deduction under Section 35 of the Act was withdrawn to avoid litigation, as the donee institute was registered at the time of donation. 4. Observations and Decision: The ITAT observed that the registration of the institute was valid during the assessment year, and the reasons for re-opening were not known to the assessee when the return was filed. Citing judicial precedents, the ITAT concluded that the penalty was not justified and directed the deletion of the penalty under Section 271(1)(c) of the Act. 5. Judicial Precedents: The ITAT referred to various judgments supporting the deletion of penalties in cases where amounts were surrendered to avoid litigation or for peace. The decision was based on the lack of evidence showing conscious concealment of income. 6. Final Decision: The ITAT allowed the appeal of the assessee and directed the deletion of the penalty under Section 271(1)(c) of the Act. This Order was pronounced in Open Court on 13/09/2023.
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