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2.10 In regard to the penalty levied and confirmed on account of the disallowance of donation, it was the submission that the assessee had paid an amount of Rs.15,494/-. Out of the said amount Rs.10,000/- was paid towards Gujarat Earthquake Relief Fund through the Hindustan Benevolent I.T.A. No. 4120 /Del/2009 Trust, an amount of Rs.500 was given to Delhi Fire Services and an amount of Rs.4,995/- to various others. It was the submission that the A.O. had disallowed the claim of deduction on the ground that the amount paid through M/s. Hindustan Benevolent Trust was not eligible for 100% deduction as it was not set up by a State Government and consequently the provisions of Section 80G(2)(iii)(ga) did not apply. It was the further submission that in regard to the other donations totaling to Rs.5,494/- receipt could not be produced and the same had been disallowed. It was the submission that on the disallowance of claim of expenditure more so payment of donations no penalty was exigible. He further relied upon the decision of Mumbai Bench of ITAT in the case of VIP Industries to support his submissions that when all the necessary particulars are declared by the assessee in its return, it cannot be said that the assessee has concealed its income or furnished inaccurate particulars in respect of the claim of deduction which stands repelled by the authorities. The finding of ITAT Mumbai A bench in the case of ACIT Vs. VIP Industries Ltd., reported in 122 TTJ 289 is also extracted here for better appreciation:

i) Donations - Rs.10,494/-

It is noticed that in the return filed, the assessee had claimed donation of Rs.15,494/- and the A.O. had disallowed donation to the extent of Rs.10,494/-. The donations were of 3 categories. 1st one being to Hindustan Benevolent Trust for an amount of Rs.10,000/- which have been claimed as 100% exemption: Hindustan Benevolent Trust was found to not fall within the provisions of Section 80G(2)(iii)(ga) and consequently the A.O. had allowed only 50% of the same. 2nd donation was in regard to the Delhi Fire Services for an amount of Rs.500/- and the 3rd to various other for an amount of Rs.4,995/-. The assessee was unable to produce the receipt in respect of the donation given to Delhi Fire I.T.A. No. 4120 /Del/2009 Services and various others and consequently these two amounts had also been disallowed. Thus a total disallowance of Rs.10,495/- ought to have been made but had been made of Rs.10,494/-. The assessee has not contested this addition. In the reply to the show cause notice, which was found at page 2- 8 of the Paper Book, the assessee has not made any submission. The assessee in the course of hearing before us has only submitted that it was only because the donation to Hindustan Benevolent Trust was not eligible for 80G(2)(iii)(ga) the addition had been made. The fact shows otherwise. The disallowance on this count was only Rs.5,000/- and the balance of Rs.5,494/- was on account of the fact that the assessee could not produce any evidence to show the claim of donation. Even in the penalty proceedings the assessee has not given any explanation nor produced any evidence in respect of this disallowance of donation. The assessee has also not been able to show his bona fide for making the claim that the donation to Hindustan Benevolent Trust was eligible for 100% exemption i.e. whether the receipt claimed the trust to be eligible for 80G(2)(iii)(ga). In these circumstances, the assessee having failed to I.T.A. No. 4120 /Del/2009 offer an explanation, in regard to the disallowance, the penalty u/s 271(1)(c) on this disallowance is liable to be upheld and we do so.