TaxTMI 
TaxTMI 
2018 (9) TMI 2174
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....agitated the levy of penalty / confirmation of penalty u/s 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act'). ITA No. 157/Chd/2015 for assessment year 2007-08 is taken as a lead case for narration of facts. ITA No. 157/Chd/2015 for AY 2007-08 3. The assessee is a society created by the Punjab Government. The assessee applied for registration u/s 12AA of the Act to the Commissioner of Income Tax as charitable trust / society on 18.12.2006. The Commissioner of income Tax-II issued a letter dated 22.6.2007 to the assessee stating therein as under:- "Subject : Application for registration u/s 12A(a)of the Income-tax Act, 1961 - Regarding Please refer to your application for registration u/s 12A(a) of Inc....
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....as granted registration u/s 12A of the Act only w.e.f. assessment year 2009-10. He, therefore, denied the claim of exemption to the assessee and made the addition in respect of interest income earned by the assessee on the grants received from the government. He further noticed that the assessee had not shown the receipt of interest income in its profit and loss account rather the same had directly been reflected in the balance sheet to avoid the tax liability. He further noted that the assessee society claimed expenditure of Rs. 7,29,721/- in the income and expenditure account and that the major portion of this expenditure was on account 400th year Martyrdom Day (c). That the government had already provided huge grant in aid for such purpo....
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....r application i.e. the surpluses, if any, and the further interest earned/ accrued on such grants / surplus was liable to be remitted back to the government, hence, the assessee did not show the same as its income. The Ld. Counsel for the assessee has further submitted that since assessee was under bonafide belief that its application for registration u/s 12A will be accepted and the registration will be granted from the date of application i.e. 18.12.2006 covering the year under consideration, hence, there was no act of furnishing of inaccurate particulars of income or concealment of income on the part of the assessee. 6. The Ld. DR, on the other hand, has relied on the findings of the lower authorities and has vehemently submitted that....
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....ee was liable to remit the amount of interest to the government and it was shown as liability, hence, the same was not shown as receipt in the income and expenditure account. Similar plea has also been taken regarding interest expenditure earned by the assessee. In view of the above, it is not a case of furnishing of inaccurate particulars of income or concealment of income on the part of the assessee warranting penalty u/s 271(1)(c) of the Act. The impugned penalty levied by the lower authorities is, therefore, ordered to be deleted. ITA Nos. 158/Chd/2015 (A.Y. 2008-09) 9. Since the facts and issue involved in this appeal are identical, hence, the levy of penalty agitated in this appeal is ordered to be deleted. ITA Nos. 159 Chd/2....