2024 (5) TMI 298 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - concealment of income - assessee while filing the original return of income claimed an incorrect deduction u/s 80GGA in order to reduce his taxable income - it was only after an investigation was carried out by the Department which revealed that Navjeevan Charitable Trust to whom a donation was made by the assessee was involved in providing bogus accommodation entries the assessee offered to not claim deduction u/s 80GGA while filing its return in response to the notice issued u/s 148 - as per assessee much before the issuance of notice u/s 148 assessee had withdrawn its claim of deduction in respect of the donation made to Navjeevan Charitable Trust and paid the necessary taxes - HELD THAT - We find no basis in the findings of the lower authorities that it is only after the issuance of notice u/s 148 of the Act that a fresh return of income withdrawing the claim of deduction u/s 80GGA of the Act was filed and necessary taxes were paid. Accordingly there is also no basis in the findings of the lower authorities that if notice u/s 148 of the Act had not been issued the income would have escaped assessment in respect of deduction claimed u/s 80GGA of the Act. Since in the present case the assessee voluntarily offered the deduction claimed u/s 80GGA of the Act to income tax much before the initiation of proceeding u/s 147 of the Act which resulted in the impugned penalty we are of the considered view that there is no concealment of income on the part of the assessee justifying levy of penalty u/s 271(1)(c) of the Act. Hence we delete the penalty levied u/s 271(1)(c) - Decided in favour of assessee. Levy of penalty u/s 271(1)(c) - weighted deduction u/s 35(1)(ii) claimed - HELD THAT - As before the issuance of notice u/s 148 of the Act the assessee had withdrawn his claim of weighted deduction in respect of donations made to Rural Development Society and paid the necessary taxes along with interest on 25.03.2019. Thus we do not find any basis in the findings of the lower authorities that income chargeable to tax has escaped assessment and the assessee has concealed the income to reduce his tax liability. Accordingly we find no basis in the levy of penalty u/s 271(1)(c) of the Act and therefore the same is deleted. - Decided in favour of assessee.

Summary

Issues involved: The judgment involves challenges to the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment years 2014-15 and 2016-17, arising from impugned orders passed by the Commissioner of Income Tax (Appeals).

Issue 1: Assessment Year 2014-15

The assessee challenged the penalty under section 271(1)(c) of the Act, related to a donation made to Navjeevan Charitable Trust. The assessee voluntarily offered the sum claimed as deduction to tax before the notice u/s 148 of the Act was issued. The assessee withdrew the claim of deduction and paid the necessary taxes before the initiation of proceedings under section 147 of the Act. The Tribunal found no concealment of income and deleted the penalty, as the assessee had rectified the claim before the notice was issued.

Issue 2: Assessment Year 2016-17

Similarly, in this appeal, the dispute was against the penalty under section 271(1)(c) of the Act, related to a donation made to Rural Development Society. The assessee withdrew the claim of weighted deduction and paid the necessary taxes before the notice u/s 148 of the Act was issued. The Tribunal found no basis for the levy of penalty, as the assessee rectified the claim before the notice was issued, and deleted the penalty. The grounds raised by the assessee were allowed, and the appeal for the assessment year 2016-17 was allowed.

Conclusion:

In both appeals, the Tribunal allowed the challenges against the penalty under section 271(1)(c) of the Act for the assessment years 2014-15 and 2016-17. The Tribunal found that the assessee had rectified the claims and paid the necessary taxes before the initiation of proceedings, leading to the deletion of the penalties.