Income tax
The orders were passed in a set of appeals for assessment year 2019-20 and against penalties imposed under Section 270A of the Income-tax Act, 1961. Following notices issued under Section 148, the taxpayers revised the returns in response and withdrew the deduction claims. Tax demands raised under Section 156 were also paid.
Ahmedabad: Income Tax Appellate Tribunal (ITAT), Ahmedabad, has removed penalties imposed on taxpayers who had claimed deductions for political donations but later withdrew the claims during reassessment, holding that such withdrawal or disallowance does not by itself amount to “misreporting” of income. Chartered accountant Sulabh Padshah said the orders provided relief to taxpayers in several recent matters. “When a donation is disclosed and a deduction is claimed transparently in the return, a later withdrawal or disallowance cannot be labelled ‘misreporting’ by default,” he said.
The cases come amid increased enforcement in matters concerning alleged bogus political donations, including FIRs against certain registered unrecognised political parties and persons allegedly linked to them. The taxpayers’ assessments had been reopened after information flagged through the tax department’s risk management system indicated that they had made political donations and claimed deductions under Section 80GGC. The reassessments were subsequently completed by accepting the income declared in the revised returns.