Tribunal Overturns Disallowance of Deduction for Charitable Donation

The Tribunal set aside the disallowance of deduction under section 80GGA of the Income Tax Act for a donation made to a charitable trust. The Assessing Officer's suspicion that the trust was returning donations back to donors in cash was unsubstantiated, as the trust was duly notified under section 35AC, and there was no evidence of funds being returned. The Department's claim of bogus donations and undue advantage was dismissed due to lack of concrete evidence, similar to a previous case where such disallowances were deleted. The Tribunal allowed the appeal, noting the absence of proof supporting the disallowance.

---

---

Issues:
Disallowance of deduction under section 80GGA of the Income Tax Act for donation made to a charitable trust.

Analysis:
The appeal was against the disallowance of a deduction claimed under section 80GGA of the Income Tax Act for a donation made to a charitable trust. The Assessing Officer had disallowed the deduction on the suspicion that the trust might be returning the donation amount back to the donors in cash. However, the trust was duly notified under section 35AC at the time of donation, and there was no evidence to prove that the donation amount had been received back by the assessee. The Tribunal referred to similar cases where such disallowances were deleted due to lack of evidence of funds being returned to the donors.

The Department argued that during a search operation on the charitable trust, it was found that donations were being returned to donors in cash after charging a commission. The Department claimed that the assessee had taken undue advantage of these bogus donations. However, the Tribunal noted that there was no concrete evidence to support this claim and that the disallowance was made solely on suspicion.

In a similar case, the co-ordinate bench had set aside an addition made on similar grounds, stating that the addition was based on surmise and conjecture and lacked any evidence of funds being received back by the assessee. Following this precedent and considering the lack of evidence in the present case, the Tribunal set aside the impugned order and allowed the appeal of the assessee.

---