ITO Vs Parag Chandulal Parikh (ITAT Ahmedabad)
Section 270A: “Misreporting” Needs a Specific Charge, Not Just a Withdrawn Donation – ₹37,440 Penalty Deletion Upheld
The Ahmedabad Tribunal has upheld deletion of a ₹37,440 penalty under Section 270A imposed after the assessee withdrew a ₹90,000 political-donation deduction under Section 80GGC in his reassessment return.
The Tribunal found that the Assessing Officer had neither explained how the assessee had misreported income nor identified the specific sub-clause of Section 270A(9) attracting the penalty.
Following earlier coordinate Bench decisions, it held that withdrawal or disallowance of a deduction cannot automatically establish under-reporting in consequence of misreporting. The Revenue’s appeal was dismissed.
Political Donation Led to Reassessment
The assessee originally filed his return for AY 2019-20 declaring total income of ₹7,75,230, after claiming a deduction of ₹90,000 for a donation to Rashtriya Samajwadi Party (Secular).
Following search proceedings concerning political parties and charitable organisations, information circulated within the Department alleged that certain unrecognised political parties were being used to provide accommodation entries through bogus donations.
The alleged mechanism involved receiving donations through banking channels and returning the money to donors after deducting commission.
Since the assessee had claimed a deduction for a donation to one of the parties concerned, the Assessing Officer initiated reassessment and issued a notice under Section 148.
