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Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961. 2. Levy of penalty under section 273(2)(a) of the Income-tax Act, 1961. Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c): Facts and Background: The assessee, an HUF, initially filed a return declaring a net income of Rs. 4,28,190, claiming a deduction of Rs. 5,00,000 under section 35CCA for a donation to Ramakrishna Vivekananda Mission. Later, the assessee revised the return, withdrawing the deduction claim, stating that the donation did not reach the Mission. The Assessing Officer (AO) held that the assessee made a bogus claim to reduce tax liability, initiated penalty proceedings, and imposed a penalty at the maximum rate. Arguments by Assessee: - The assessee contended that the donation was genuine and made in good faith. - The assessee revised the return voluntarily before any detection by the department. - The assessee cited several case laws to support the argument that the revision was voluntary and bona fide. - The assessee argued that the penalty could not be imposed based on preponderance of probabilities. Arguments by Department: - The department argued that the revision was not voluntary but prompted by departmental searches and investigations. - The department maintained that the assessee conspired with others to make a false claim. - The department cited statements and documents to support their claim of conspiracy. Tribunal's Findings: - The Tribunal found that the assessee had a bona fide intention to make a genuine donation. - There was no evidence to suggest that the assessee was involved in the illegal diversion of donations. - The Tribunal noted that the department's suspicion was based on general prejudice rather than specific evidence against the assessee. - The Tribunal held that the revised return was filed voluntarily and before any detection of concealment by the department. - The Tribunal distinguished the case from Varun Enterprises, where the penalty was upheld based on preponderance of probabilities. Conclusion: The Tribunal concluded that the penalty under section 271(1)(c) was not exigible as the assessee's claim was bona fide, and the revised return was filed voluntarily. 2. Levy of Penalty under Section 273(2)(a): Facts and Background: The AO imposed a penalty under section 273(2)(a) for furnishing an estimate of advance tax that the assessee knew or had reason to believe was untrue. Arguments by Assessee: - The assessee argued that the penalty under section 273(2)(a) was consequential to the penalty under section 271(1)(c). - Since the penalty under section 271(1)(c) was not justified, the penalty under section 273(2)(a) should also be deleted. Arguments by Department: - The department did not dispute the assessee's contention that the penalty under section 273(2)(a) was consequential. Tribunal's Findings: - The Tribunal agreed with the assessee that the penalty under section 273(2)(a) was consequential to the penalty under section 271(1)(c). Conclusion: The Tribunal deleted the penalty under section 273(2)(a) as it was consequential to the penalty under section 271(1)(c). Final Judgment: Both appeals by the assessee were allowed, and the penalties under sections 271(1)(c) and 273(2)(a) were deleted.
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