2021 (12) TMI 987 - AT - Income Tax

Tribunal Grants Deduction, Upholds Donations for AY 2010-13

The Tribunal allowed the assessee's appeal for AY 2010-11, overturning the disallowance of deduction under section 35AC of Rs. 15 lakh. The Tribunal found ... Disallowance deduction u/s.35AC - donation to Navjeevan Charitable Trust was not genuine and thereby disallowing the claim of deduction - HELD THAT:- The assessee has made donation in the year 2009-10, 2010-11 & 2011-12. At the time of donation to Navjeevan Charitable Trust, the Trust was operational and there was no investigation in those Assessment Years. The Revenue at no point of time pointed out that the donation made by the assessee to SHG and PH were returned back to the assessee in the form of cash. In fact, all the records were before the Assessing Officer which stated that the assessee has made those donations as per the approved terms of donation under the Income Tax Act. The assessee has made the donation as per the provisions of the Income Tax Act and no defect was pointed out by the Assessing Officer or by the CIT(A) regarding the donation to Navjeevan Charitable Trust. In fact, the Revenue authorities could not establish that the said amount was returned back to the assessee from any of the records as well. - Decided in favour of assessee. Issues:Challenge to disallowance deduction u/s. 35AC of Rs. 15 lakh made by AO for AY 2010-11.Validity of CIT(A) upholding disallowance of donation to Navjeevan Charitable Trust u/s. 35AC.Genuineness of donation to Navjeevan Charitable Trust and eligibility for deduction u/s. 35AC.Analysis:In the case, the assessee challenged the disallowance of deduction u/s. 35AC of Rs. 15 lakh made by the Assessing Officer for AY 2010-11. The CIT(A) confirmed the disallowance, alleging the donation to Navjeevan Charitable Trust was not genuine. The assessee contended that the donation was made as per approved terms under the Income Tax Act and was not returned in cash. The Tribunal referred to a similar case where the benefit of deduction was allowed, emphasizing that withdrawal of approval later does not affect eligibility. The Tribunal found no evidence that the donation was returned to the assessee in cash, leading to the allowance of the appeal for AY 2010-11.Regarding the genuineness of the donation to Navjeevan Charitable Trust, the Tribunal noted that the Revenue failed to establish that the donation amount was returned to the assessee. The Tribunal emphasized the importance of cross-examination and cited a High Court judgment stating that unverified statements cannot be used against the assessee. As no tangible material was presented by the Revenue, the Tribunal directed the AO to delete the addition made, thereby allowing the appeal related to the donation to Navjeevan Charitable Trust under section 35AC for AY 2010-11.The Tribunal also considered appeals for AYs 2011-12 & 2012-13, finding no distinguishing facts. As the donations were made in accordance with the Income Tax Act, and no defects were identified by the authorities, all three appeals by the assessee were allowed. The Tribunal emphasized the lack of evidence supporting the Revenue's claims and the adherence to statutory provisions by the assessee. Consequently, the disallowance of deductions and additions made by the authorities were overturned, granting relief to the assessee across all three assessment years.In conclusion, the Tribunal's detailed analysis focused on the genuineness of donations to Navjeevan Charitable Trust, adherence to statutory provisions, and the lack of evidence supporting the Revenue's contentions. The judgments in favor of the assessee were based on legal principles, statutory compliance, and the absence of concrete proof against the assessee's claims.