Exim Trac Vs ACIT (ITAT Mumbai)
The appeal before the Tribunal concerned the levy of penalty under Section 270A of the Income Tax Act, 1961 for Assessment Year 2019–20. The penalty, amounting to 200% of the tax sought to be evaded, was imposed on account of alleged under-reporting of income in consequence of misreporting.
The assessee, a partnership firm engaged in export of general merchandise, had filed its return declaring total income of ₹50,05,950. In the return, it claimed a deduction of ₹1,00,000 under Section 80GGC for a donation purportedly made to a political party.
Subsequently, based on a search conducted on the political party, information was received by the department indicating that the party was involved in providing bogus donation entries. The investigation revealed a systematic accommodation entry mechanism where donation amounts were returned in cash after deducting commission.
Pursuant to this information, proceedings under Section 148A were initiated. During these proceedings, despite being confronted with evidence including a sworn statement admitting bogus entries, the assessee initially maintained that the donation was genuine. However, after issuance of notice under Section 148, the assessee withdrew the deduction in the return filed in response and paid the corresponding tax and interest. The reassessment was completed accepting the revised income.
