ANNAI VELANKANNI EDUCATIONAL AND SOCIAL SOCIETY,CUDDALORE vs. DCIT (EXEMPTIONS), CHENNAI

PDF · subscribers
ITA 1278/CHNY/2024Status: DisposedITAT Chennai03 June 2024AY 2018-19Bench: HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL (Accountant Member)3 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the denial of application of corpus donation did not result in taxable income for the assessee. Therefore, no case of under-reporting of income was made out.

What were the facts?

The assessee, a registered trust, donated corpus donation to another trust, which the AO treated as application of income. The AO denied this claim and imposed a penalty for alleged under-reporting of income.

What were the issues?

Whether denial of corpus donation as application of income leads to under-reporting of income and attracts penalty under Section 270A.

Which sections of the Income-tax Act were involved?

Section 270A,Section 11,Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee arises out of an order passed by Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 15-03-2024 in the matter of penalty levied by Ld. Assessing Officer [AO] of Rs.41.40 Lacs u/s 270A of the Act allegedly for under-reporting of income vide order dated 26- 02-2022. The Ld. AR assailed the invocation of provisions of Sec.270(9) and submitted that no case of under-reporting could be made out against the assessee considering the assessment framed by Ld. AO. The Ld. Sr. DR, on the other hand, justified impugned penalty. The assessee is a registered trust u/s 12AA and eligible for exemption u/s 11 /12. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.

2.

Facts leading to impugned penalty are that during assessment proceedings, it transpired that the assessee donated corpus donation of Rs.67 Lacs to another trust which was treated as application of income for charitable purposes. The Ld. AO, invoking Explanation-2 to Sec.11 (1), denied the said claim. Consequently, Ld. AO proceeded to impose impugned penalty on the allegation that there was under-reporting of income. In the absence of any cogent reply forthcoming from assessee, Ld. AO imposed penalty of Rs.41.40 Lacs.

3.

During appellate proceedings, the assessee, inter-alia, submitted that denial of application of corpus donation do not give rise to any taxable income in the hands of the assessee and therefore, no penalty could be levied. However, Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us.

4.

From computations as made by Ld. AO in the assessment order, it could be seen that on gross receipts of Rs.755.38 Lacs, the assessee has claimed application of Rs.741.66 Lacs which include impugned donation of Rs.67 Lacs. Accordingly, the application of income was restricted to Rs.674.66 Lacs. The assessee set-apart 15% of surplus for utilization in future period. The same was claimed to be Rs.113.30 Lacs. In view of disallowance of Rs.67 Lacs, this set apart amount has been restricted to the extent of Rs.80.72 Lacs. Thus, ultimately no taxable income has accrued in the hands of the assessee and therefore, no case of under-reporting of income could be made against the assessee. Accordingly, we delete the impugned penalty and allow the appeal of the assessee.

5.

The appeal stand allowed. The connected stay application has been rendered infructuous. Order pronounced on 3rd June, 2024 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) �ाियक सद" /JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated :03-06-2024 DS आदेशकीHितिलिपअ'ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु=/CIT Chennai. 4. िवभागीय�ितिनिध/DR 5. गाडBफाईल/GF

More judgments on Section 270A

All 4,156 judgments and leading authorities on Section 270A →

Recent GST High Court judgments

Search GST case law →