2020 (1) TMI 605 - AT - Income Tax

Penalty u/s 271(1)(c) - exemption u/s.11 - Undisclosed donation - HELD THAT - Assessee has disclosed the entire receipt of donations. However the AO found that it is not a voluntary donation but anonymous donation. The fact that the assessee has disclosed the entire donation and claimed exemption U/s.11 of the Act is not in dispute. When the assessee has disclosed the entire receipt and the expenditure and claimed the same as exempted u/s.11 of the Act, merely because the assessee could not furnish the details of the persons from whom the donations was received, cannot be a reason for concluding that the assessee concealed any part of income or furnished inaccurate particulars. Making a statutory claim u/s.11 of the Act cannot be construed as furnishing inaccurate particulars. Also carefully gone through the judgment of the Apex Court in the case of CIT Vs. M/s. Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT . In the case before the Apex Court, the assessee claimed certain amount as expenditure, however the Assessing Officer disallowed the claim of the assessee and also levied penalty. The Apex Court found that when the assessee claims certain amount as expenditure, merely because the assessee could not furnish the entire details, it cannot be said that there was concealment of income or furnishing inaccurate particulars. In view of the judgment of the Apex Court in the case of Reliance Petro Products Pvt. Ltd., mere claim of exemption U/s.11 of the Act, in respect of the so called donations received by the assessee cannot be a reason for levy of penalty U/s.271(1)(c) - Decided in favour of assessee

Summary

Issues:
- Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals).
- Applicability of penalty under section 271AAA of the Act instead of section 271(1)(c) due to search conducted.
- Justification of penalty imposition based on undisclosed cash deposits and alleged concealment of income.

Analysis:
1. The appeal challenged the penalty imposed under section 271(1)(c) by the Commissioner of Income Tax (Appeals) for the assessment year 2010-11. The assessee contended that the deposited amounts were tuition fees and out-patient collections from a medical college run by the trust, not anonymous donations. The assessee maintained that the deposits were exempt under section 11 of the Act, hence no concealment or inaccurate particulars were involved. The argument was that failure to satisfy the Assessing Officer's queries did not imply concealment of income.

2. The appellant argued that if any penalty was applicable, it should be under section 271AAA due to a search conducted on the premises. However, the Departmental Representative contended that incriminating materials were found during the search, indicating significant cash deposits without proper documentation. The Assessing Officer viewed these deposits as anonymous donations, leading to the penalty under section 271(1)(c) for alleged income concealment.

3. The Tribunal reviewed the submissions and evidence, noting the lack of proper accounting records for the substantial cash deposits. Despite the Assessing Officer's view of anonymous donations, the Tribunal referenced previous cases to support the assessee's claim of tuition fees and medical collections. Citing relevant judgments, including the Apex Court's decision in CIT Vs. M/s. Reliance Petro Products Pvt. Ltd., the Tribunal found that the mere inability to provide detailed donor information did not amount to concealment or inaccurate reporting.

4. Ultimately, the Tribunal set aside the lower authorities' decisions, ruling in favor of the appellant and deleting the penalty imposed under section 271(1)(c). The judgment emphasized that statutory claims under section 11 of the Act should not be misconstrued as providing inaccurate particulars. The appeal was allowed, and the penalty was revoked, concluding the legal proceedings on 2nd January 2020 in Chennai.