Penalty for bogus donation claim under section 270A upheld; later withdrawal after detection was not treated as voluntary correction.

Penalty under section 270A was examined in the context of a deduction claimed for a non-genuine donation. The Tribunal noted that section 270A provides a separate regime for under-reporting and misreporting, and that misrepresentation or suppression of facts falls within section 270A(9)(a). The assessee's later withdrawal of the deduction in the reassessment return was not treated as a voluntary correction because it came only after the Department had gathered material showing a bogus donation arrangement. The notice was also held not vague, as the charge of under-reporting arising from misreporting had been specifically identified. The penalty was upheld and the challenge to the notice was rejected.

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Issues: Whether the penalty under section 270A of the Income-tax Act, 1961 was justified on the ground that the assessee had claimed a deduction on a non-genuine donation and later withdrew the claim only after detection, and whether the notice under section 270A was vague for not specifying the applicable limb of misreporting.

Analysis: Section 270A creates a separate regime for under-reporting and misreporting of income, and clause (a) of sub-section (9) covers misrepresentation or suppression of facts. The assessee had initially claimed deduction for a donation later found, on investigation, to be part of a bogus donation arrangement, and did not accept the ineligibility at the stage of proceedings under section 148A. The subsequent withdrawal of the claim in the reassessment return was therefore not treated as a voluntary correction, but as a post-detection act after the Department had obtained material evidence. The notice was not considered vague because the charge of under-reporting in consequence of misreporting under section 270A(9)(a) had been specifically identified.

Conclusion: The penalty under section 270A was upheld and the objection to the notice was rejected.

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