Adivasi Unnati Seva Mandal vs. ACIT, Exemption Circle, Aurangabad

Parties Involved

Facts Summary

The assessee, a trust, filed its return of income on 07.03.2018 declaring nil income. The Assessing Officer completed the assessment on 27.12.2019 treating an amount of Rs.51,14,500/- as donation received from anonymous donors. After deducting an amount of Rs.6,39,312/- being 5% of the total donation or Rs.1 lakh, whichever is higher, the Assessing Officer brought to tax an amount of Rs.44,75,190/- as anonymous donation for taxation u/s 115BBC of the Act. The assessee could not discharge the burden of proof to establish the identity and genuineness of the donors. The assessee has not maintained the records indicating name, details addresses, identity proofs etc, as essential requirements of provisions of section 115BBC. The assessee voluntarily offered 35% of the donations received as anonymous donation and agreed for addition. The Assessing Officer initiated penalty proceedings u/s 270A of the Act and levied penalty of Rs.27,65,666/- u/s 270A(9)(d) of the Act for misreporting of income. The CIT(A) / NFAC confirmed the penalty levied by the Assessing Officer. The assessee is in appeal before the Tribunal by raising the following grounds: 1) The Lower Authorities have erred a levying the penalty under section 270A of IT Act sum of Rs.27,65,666 being 200% of Income tax sum of Rs.13,82,883 for alleged default of misreporting of income in consequence to under reporting of income without appreciating the facts and the explanation offered during the course of assessments proceeding…

Legal Issues

• 1. Whether the Lower Authorities have erred in levying the penalty under section 270A of IT Act sum of Rs.27,65,666 being 200% of Income tax sum of Rs.13,82,883 for alleged default of misreporting of income in consequence to under reporting of income without appreciating the facts and the explanation offered during the course of assessments proceedings.
• 2. Whether the Lower Authorities have erred in levying the penalty of Rs.27,65,666 under section 270A(9)(d) of IT Act, which is for recording of any false entry in the books of accounts, without appreciating the fact that donations were received from identifiable persons however due to smallness of amount appellant has agreed to estimate 35% of total donations as anonymous which Learned Assessing Officer estimated at 40%, and charged the special rate of tax @30% under section 115BBC, in view of section 270A(6), the said amount is not includable in under reported income and therefore no misreporting of income arises.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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