By TIOL News Service

ALLAHABAD, SEPT 28, 2017: THE ISSUE BEFORE THE COURT IS - Whether an Assessee trust can be penalised for surrendering cash donations subsequent to the survey, but fully and correctly in the return filed u/s 139. NO is the verdict.

Facts of the case:

The Assessee trust submitted its return for the concerned A.Y and on the basis of aforesaid survey, surrendered a sum of Rs.1,00,00,000/- alleged to have received in cash by way of donations which was utilized for the renovation and repair of the buildings. The AO in view of the above surrender, passed an assessment order and directed for initiation of penalty proceedings u/s 271(1)(c). In pursuance of the above, a penalty of Rs.33,66,000/- was imposed u/s 271(1)(c) holding that disclosure of cash donation was under compulsion and as such the assessee was guilty of not only furnishing inaccurate particulars but of non-disclosure of full and complete particulars for the purposes of assessment.

High Court held that,

++ the question that arises in present appeal, is as to whether the Tribunal is justified in deleting the penalty made u/s 271(1)(c) despite the fact that the assessee has surrendered and disclosed the sum of Rs.1,00,00,000/- under compulsion on the basis of the survey rather voluntarily of its own violation and as such was ex facie guilty of non-disclosure of full particulars and furnishing inaccurate particulars. The submission is that the surrender/disclosure of Rs.1,00,00,000/- by the assessee in the relevant year was not voluntarily but under compulsion and had the survey not taken place there would have been escapement of income to the above extent. Section 271(1)(c) proposes to impose penalty only on two conditions, first if the assessee has failed to disclose true and complete particulars relevant for the assessment and second if he has furnished inaccurate particulars;

++ in the case at hand, the survey was conducted on Aug 10, 2006 and the return was filed on Oct 31, 2007 u/s 139 within time. In the return, the assessee declared the income of Rs.1,00,00,000/- which it had received by way of donation and had paid tax on it. Since the aforesaid income was disclosed, it cannot be a case of non-disclosure of any income. Accordingly, we hold that the Tribunal is justified in law on the facts and circumstances of the case in deleting the penalty made u/s 271(1)(c) even though the disclosure of Rs.1,00,00,000/- was made by the assessee subsequent to the survey but fully and correctly in the return filed u/s 139 of the Act.

(See 2017-TIOL-2036-HC-ALL-IT)