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2024 (3) TMI 880 - ITAT MUMBAIPenalty u/s. 271(1)(c) - deduction u/s. 80GGC denied - second round of appeal - first round the disallowance made by the AO has been deleted by the ld. CIT (A) - quantum proceedings matter has been decided against assessee - assessee submitted invoices “Rashtravadi” which showed that money was paid for giving some advertisement in the news letter and cheque was drawn in the name of the editor - AO held that same is not allowable for deduction u/s. 80GGC which clearly states that deduction should be made to a political party registered u/s. 29A of The Representation of Peoples Act, 1951 or an electoral trust and newsletter “Rashtravadi” is neither a trust. HELD THAT:- Though the deduction is not allowable for the reasons given by the ld. AO however, for the purpose of charging assessee for furnishing of inaccurate particulars of income, what has to be seen is, whether at the time of making the claim for deduction, there was any bonafide belief and explanation for making such a claim in the return of income. From the records, it appears that the claim was made on the basis of auditor”s note who had given the detailed reasoning for making such a claim that it is allowable u/s. 80GGC. CIT (A) in the first round too has held to be a bonafide claim of deduction. Though in the quantum proceedings finally the matter has been decided against assessee, but that alone is not sufficient for the penalty proceedings u/s 271(1)(c). For the purpose of penalty proceedings one has to see, whether assessee has furnished any inaccurate particulars by making a false claim or it is a claim which has not been found to be admissible by the ld. AO. Here the claim was made on the basis of an opinion of the auditor who has given his opinion which too has been found to be acceptable by the ld. CIT (A). Though such an order has been set aside subsequently and AO has made the disallowance after verification, but it cannot be held that the claim at the time of filing of return of income based on opinion of an auditor was not bonafide. Accordingly, following principles laid down in the case of Reliance Petro Products Ltd. [2010 (3) TMI 80 - SUPREME COURT] it cannot be held that the claim of deduction by the assessee tantamount to furnishing of inaccurate particulars of income. Accordingly, the penalty levied by the ld. AO and confirmed by the ld. CIT (A) is deleted.Appeal of the assessee is allowed.
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