2018 (6) TMI 148 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - Exemption u/s. 11 denied as held that business of publishing newspaper itself cannot be said to be an object of general public utility entitled for exemption as a charitable institution - Held that - We notice that in some of the years it has been held that the assessee is entitled for Exemption u/s. 11 of the Act. The stand of the assessee was that the claim for exemption u/s. 11 of the Act was a bonafide claim. Further we notice that penalty was levied on similar circumstances in the Assessment Years 2007-08 2008-09 and 2010-11 and the Ld.CIT(A) deleted the penalty which was confirmed by the Tribunal The assessee had not concealed any income or furnished inaccurate particulars of income. The exemption u/s. 11 of the Act was denied to the assessee on a mere change of opinion. The issue of whether the assessee trust is entitled for exemption u/s. 11 of the Act is highly debatable. The claim made u/s. 11 of the Act was also appears to be bonafide claim and there is no concealment of income or furnishing inaccurate particulars - No penalty to be invoked - Decided in favour of assessee

Issues Involved:
1. Sustaining the penalty levied under section 271(1)(c) of the Income Tax Act.
2. Denial of exemption under section 11 of the Income Tax Act to the assessee.
3. Assessment of whether the activities of the assessee were charitable or commercial in nature.
4. Evaluation of whether the assessee concealed income or furnished inaccurate particulars of income.

Issue-wise Detailed Analysis:

1. Sustaining the penalty levied under section 271(1)(c) of the Income Tax Act:
The primary issue in these appeals was the penalty levied under section 271(1)(c) of the Act, which was sustained by the Commissioner of Income-tax (Appeals). The penalty was imposed because the exemption under section 11 was denied to the assessee. The Tribunal noted that the penalty was levied on similar grounds in the assessment years 2007-08, 2008-09, and 2010-11, but was deleted by the CIT(A) and confirmed by the Tribunal in earlier decisions. The Tribunal observed that the claim for exemption under section 11 was a bona fide claim and the issue was debatable. Therefore, it concluded that there was no concealment of income or furnishing of inaccurate particulars by the assessee.

2. Denial of exemption under section 11 of the Income Tax Act to the assessee:
The exemption under section 11 was denied on the grounds that the business of publishing newspapers could not be considered an object of general public utility entitled to exemption as a charitable institution. The Tribunal noted that in some years, the assessee was granted exemption under section 11, indicating that the issue was debatable. The Tribunal relied on the decision of the Hon'ble Supreme Court in the case of ACIT vs Thanthi Trust, which held that the claim of the assessee was debatable. The Tribunal also referred to the judgment of the Hon'ble Supreme Court in CIT vs. Reliance Petroproducts (P.) Ltd, which held that penalty cannot be levied merely because the AO and the assessee hold divergent views on the allowability of a claim for deduction.

3. Assessment of whether the activities of the assessee were charitable or commercial in nature:
The Tribunal examined whether the activities of the assessee, specifically the publication of newspapers, were charitable or commercial. The Tribunal referred to various judgments, including the Hon'ble Supreme Court's decision in Thanthi Trust, which clarified that the business of running a newspaper, if carried on in the course of actual accomplishment of the charitable objects of the trust, would not bar exemption under section 11. The Tribunal also noted that the issue of whether the surplus funds utilized for acquiring assets for business purposes would amount to application of income for charitable purposes was debatable and had been addressed in previous years' assessments.

4. Evaluation of whether the assessee concealed income or furnished inaccurate particulars of income:
The Tribunal evaluated whether the assessee had concealed income or furnished inaccurate particulars of income. It was observed that the assessee had not concealed any facts or figures and had made a bona fide claim for exemption under section 11. The Tribunal referenced the Hon'ble Supreme Court's judgment in Reliance Petroproducts (P.) Ltd, which stated that making an incorrect claim in law does not amount to furnishing inaccurate particulars of income. The Tribunal concluded that the assessee had not concealed any income or furnished inaccurate particulars, and the penalty under section 271(1)(c) was not justified.

Conclusion:
The Tribunal upheld the deletion of the penalty levied under section 271(1)(c) of the Act, stating that the assessee had not concealed any income or furnished inaccurate particulars. The exemption under section 11 was denied on a mere change of opinion, and the issue was highly debatable. The Tribunal allowed the appeals of the assessee and deleted the penalty levied under section 271(1)(c) of the Act. The order was pronounced in the open court on May 28, 2018.

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