Bhavesh Rameshbhai Patel Vs Asst. Unit Income Tax Department (ITAT Ahmedabad)
Political Donation Withdrawn, But 200% Penalty Cannot Follow Automatically
₹1.87 Lakh Misreporting Penalty Deleted
The Ahmedabad Tribunal has deleted a ₹1,87,200 penalty under Section 270A imposed after the assessee withdrew a ₹3 lakh deduction under Section 80GGC in the return filed in response to a reopening notice.
The Tribunal held that the penalty for under-reporting in consequence of misreporting was unsustainable, following its earlier decision in Hiro Mulchand Tanwani v. ITO.
The ruling reinforces the distinction between an inadmissible deduction and misreporting of income. Withdrawal or disallowance of a claim does not, by itself, establish the circumstances necessary for the higher penalty.
Donation Claim Triggered Reopening
Information flagged under the Board’s High-Risk Management Strategy indicated that the assessee had donated ₹3 lakh to Rashtriya Samajawadi Party (Secular) during FY 2018-19 and claimed deduction under Section 80GGC.
The assessment was reopened, and a notice under Section 148 was issued.
In response, the assessee filed a return withdrawing the ₹3 lakh deduction. The Assessing Officer completed reassessment on 11 August 2023, determining total income in accordance with that return.
Thus, the assessee did not pursue the deduction in the reassessment return. The dispute before the Tribunal concerned the penalty subsequently imposed, rather than allowance of the donation deduction.
