Shree Gunatit Jyot Mahila Trust Vs ITO (ITAT Ahmedabad)
In the case of Shree Gunatit Jyot Mahila Trust Vs ITO, the ITAT Ahmedabad ruled in favor of the trust, canceling the penalty imposed under Section 271(1)(c) of the Income Tax Act. The trust, registered under the Bombay Public Trust Act and Section 12A of the Income Tax Act, had claimed a deduction for building construction expenses under Section 11(1) while filing its return for the assessment year 2016-17. The Assessing Officer (AO) initially rejected the claim, considering the expenditure as coming from corpus donations, and subsequently imposed a penalty of ₹78.31 lakh for furnishing inaccurate particulars of income. Upon appeal, the ITAT observed that the trust’s error in claiming the deduction was bona fide and did not result in any evasion of income. The trust had sufficient other expenses to cover the deduction, leading to no change in its total taxable income. As a result, the ITAT ruled that the penalty provisions were not applicable in this case and ordered the cancellation of the penalty, thereby allowing the appeal in favor of the trust. This decision emphasizes the importance of distinguishing between intentional tax evasion and genuine errors in tax filings. Also Read: HC lay down principles for levying penalty u/s 271(1)(c) and How to Tackle the Notice Issued u/s 271(1)(c)
