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ITAT deletes ₹2.31 lakh penalty on political donation deduction
The ITAT Ahmedabad cancelled a ₹2.31 lakh penalty on a political donation deduction, ruling that a disallowed claim does not automatically amount to misreporting under Section 270A. The order cites Delhi High Court precedent requiring specific grounds for misreporting penalties.
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The Income Tax Appellate Tribunal in Ahmedabad has thrown out a ₹2.31 lakh penalty against a taxpayer who claimed a ₹3.71 lakh deduction for a political donation under Section 80GGC of the Income-tax Act. The tribunal ruled that simply disallowing a deduction does not count as under-reporting or misreporting of income, especially when the tax department failed to specify which limb of the penalty provision it was invoking.
The case involves Niket Maheshbhai Shah for assessment year 2019-20. Shah claimed a deduction for a donation made through a bank account to the Manav Adhikar National Party. He had a certificate from the party to back the claim.
The assessment was reopened under Section 147 after a search involving the political party and statements from its officials. The Assessing Officer disallowed Shah's Section 80GGC claim. Shah did not contest the disallowance. He paid the resulting tax demand and applied for immunity under Section 270AA, which the officer rejected on grounds that the income was misreported.
The officer then slapped a penalty of ₹2,31,504 under Section 270A at 200% of the tax, branding the case as under-reporting from misreporting. The National Faceless Appeal Centre upheld that penalty.