RAJIV GANPAT RACKVI (HUF),VASAI vs. ITO WD 4(3), MUMBAI

In this appeal, the solitary grievance of the assessee is against the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act for having furnished inaccurate particulars of income.

Explaining the circumstances in which the penalty has been levied, the learned representative for the assessee pointed out that when assessee filed the original return on 26.07.2010, the total income declared was Rs.8,29,191/-. In the said return, assessee had claimed deduction u/s 35(1)(ii) of the Act with respect to an amount of Rs.6,40,000/- donated to one, Bhartiya Sanskriti Darshan Trust. The assessee explained that the deduction was claimed to the extent of 125% u/s 35(1)(ii) of the Act for Rs.8,00,000/-. Realising its mistake, since assessee was not having business income, a revised return was filed whereby the claim was scaled down to Rs.6,40,000/-, and that too, u/s 80G of the Act. The learned representative explained that this revision was carried out by filing a revised return on 05.05.2011 and the resultant tax was also paid. The learned representative explained that in the assessment proceedings the said deduction was disallowed by noticing that it was paid on 30.03.2010 and the cheque was ultimately cleared in the subsequent year. The learned representative explained that in the quantum proceedings assessee did not agitate the matter and that, so far as the next year is concerned, assessee filed a revised return and claimed such deduction u/s 80GGA of the Act, which has since been allowed by the Department also.

In this background, the learned representative explained that there was no furnishing of inaccurate particulars of income so as to invite the penal provisions u/s 271(1)(c) of the Act. Our attention has also been invited to page 74 of the Paper Book wherein is placed a copy of the receipt issued by Bhartiya Sanskriti Darshan Trust, the Donee, which is dated 30.03.2010.

On the other hand, the ld. DR appearing for the Revenue contended that the claim made by the assessee in the return @ 125% instead of 100% by wrongly relying on Sec. 35(1)(ii) of the Act does render the assessee liable for penalty u/s 271(1)(c) of the Act.

We have carefully considered the rival submissions. Factually speaking, it is quite evident that so far as the bona fide of the donation made by the assessee of Rs.6,40,000/- is concerned, the same has not been disputed. In fact, such donation has been allowed as a deduction in terms of Sec. 80GGA in the subsequent year. Be that as it may, merely because the claim was made under a wrong section, but which was otherwise bona fide, assessee cannot be subjected to penalty u/s 271(1)(c) of the Act. Therefore, in our view, it is not a case where assessee can be faulted for levy of penalty u/s 271(1)(c) of the Act qua the claim made on account of donation paid to Bhartiya Sanskriti Darshan Trust of Rs.6,40,000/-. We, therefore, set-aside the order of CIT(A) and direct the Assessing Officer to delete the penalty of Rs.2,56,220/- levied u/s 271(1)(c) of the Act.

In the result, appeal of the assessee is allowed.