Tribunal directs reassessment on donation deduction issue due to natural justice violation

The Tribunal allowed the appeal of the assessee for statistical purposes, directing the Assessing Officer to reconsider the disallowed donation deduction issue. The Tribunal highlighted the violation of natural justice principles due to the failure to provide the appellant with a copy of the recipient-society's letter denying the receipt of funds. It emphasized the importance of giving the appellant an opportunity to respond and examine the discrepancy between the denial of having an Axis Bank account by the recipient-society and the evidence of funds transfer to their account.

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Issues:
Assessment of donation to a charitable institution disallowed by the Assessing Officer based on a letter received from the recipient-society denying the receipt of funds and stating that they have no account in Axis Bank.

Analysis:
The appellant, represented by Shri F.C. Jain, CA, donated Rs. 20,00,000 to a charitable institution named "Society For Welfare Of The Handicapped Persons" at Durgapur, transferred via RTGS mode through Indian Bank. However, the Assessing Officer disallowed the claim based on a letter from the recipient-society denying the receipt of funds and stating they have no Axis Bank account. The appellant obtained the bank statement showing the transaction, indicating funds were transferred to the recipient-society's account. The appellant argued that the donation to an approved charitable institution should be eligible for deduction.

On the contrary, Shri Murali Mohan, the Ld. Departmental Representative, stated that the recipient-society clarified that they had no Axis Bank account and it was opened fraudulently. The matter was under investigation by the police and RBI. The Ld. representative argued that even if the letter was not furnished to the appellant, it wouldn't affect the assessment proceedings.

The Tribunal noted that the Assessing Officer incorporated the recipient-society's letters in the assessment order without providing a copy to the appellant. The Tribunal observed that the failure to furnish the letter violated principles of natural justice. As the recipient-society claimed to have no Axis Bank account but funds were transferred from there, the matter needed further examination. The Tribunal directed the Assessing Officer to provide a copy of the letter to the appellant and reconsider the issue after giving a reasonable opportunity to respond, without commenting on the merit of the addition made by the Assessing Officer.

In conclusion, the appeal of the assessee was allowed for statistical purposes, emphasizing the need for the Assessing Officer to reevaluate the issue after providing the necessary documents and opportunity for the appellant to respond.

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