2008 (10) TMI 260 - AT - Income Tax

Tribunal cancels penalty for claiming exemption without approval, citing genuine belief and submitted evidence

The Tribunal allowed the appeal, canceling the penalty imposed under s. 271(1)(c) for claiming exemption under s. 10(23G) without the necessary approval ... Concealment Issues involved: Appeal against penalty u/s 271(1)(c) for claiming exemption under s. 10(23G) without proper approval.Summary:The appeal was filed against the penalty imposed for claiming exemption under s. 10(23G) without the necessary approval from the Central Government. The AO held that the assessee, an infrastructure capital company, must be approved by the Central Government to claim the exemption. The penalty was levied under s. 271(1)(c) for concealment of income. The CIT(A) upheld the penalty as the approval was still pending. The assessee argued that they believed in obtaining approval based on correspondence with the infrastructure company. Various documents were submitted to support the claim, showing the company's efforts to obtain approval. The Tribunal found that the assessee had a bona fide belief in claiming the exemption and had substantiated their claim. As the explanation provided was not false, the penalty under s. 271(1)(c) was canceled, citing relevant case laws.In conclusion, the Tribunal allowed the appeal, canceling the penalty imposed under s. 271(1)(c) for claiming exemption under s. 10(23G) without the necessary approval.