2023 (12) TMI 767 - AT - Income Tax

Assessment order erroneous for inadequate inquiry into Section 80GGC donation deduction claim lacking essential receipt details

Rakesh Balubhai Padariya Versus Pr. Commissioner of Income Tax-3, Ahmedabad

The ITAT Ahmedabad upheld the CIT's revision u/s 263, finding the AO's assessment order erroneous due to inadequate inquiry regarding the assessee's ... Revision u/s 263 - deduction u/s 80GGC as allowed without making adequate inquiry by AO - CIT noted that assessee has claimed deduction under Section 80GGC for donation made to one political party 'Apna Desh Party' which in the facts of the instant case, was found to be bogus - HELD THAT:- There was an evident lack of enquiry by the assessing officer, while accepting the claim of deduction of donation by the assessee, while framing the assessment order. In the instant case, certain noteworthy discrepancies emanating from facts of the case ought to have been enquired by the assessing officer, while framing the assessment, and he should not have simply accepted the version offered by the assessee. In this case, an analysis of receipts issued by “Apna Desh Party” it was observed that such receipts did not contain details of cheque number, bank name, date of cheque etc. issued. PCIT has also correctly observed that on perusal of website of “Apna Desh Party”, which provided list of donor and name-wise list, the list did not include the name of the assessee in respect of three different receipts, which also establishes the fact that the donation is bogus. It was further observed that though the assessee has given donation in cheque, same is found to be out of donation / loan received from Ranchhorbhai Tapubhai Patel. We agree with the observations made by PCIT that it is quite unusual that assessee is taking loans for making the aforesaid donations and accordingly, the Assessing Officer should have made further enquiries to ascertain whether the aforesaid loan is genuine in the first place or not. While passing the assessment order, the AO did not enquire into the details / list of donations received by such party which is available in public domain and such list does not include the name of the assessee. While framing the assessment, the Assessing Officer simply accepted the version of the assessee and did not make any attempt to verify the genuineness of the receipts issued by “Apna Desh Party”. Accordingly, even without considering the material which PCIT took note of pertaining to adverse material / information obtained during search proceedings, in our view the assessment order is still erroneous on account of evident lack of enquiry in respect of information available in public domain. Decided against assessee. Issues Involved:1. Legality of the order under Section 263 passed by the Principal Commissioner of Income Tax (Pr. CIT).2. Adequacy of inquiry into the deduction claimed under Section 80GGC.3. Reliance on material and statements not confronted to the appellant.4. Genuineness of the donation made to 'Apna Desh Party'.Summary:1. Legality of the Order under Section 263:The assessee contested the order passed by the Pr. CIT under Section 263, arguing that the assessment order dated 08.10.2020 was neither erroneous nor prejudicial to the interest of the revenue. The Pr. CIT held that the order was erroneous and prejudicial because the deduction under Section 80GGC was allowed without adequate inquiry.2. Adequacy of Inquiry into the Deduction Claimed under Section 80GGC:The Pr. CIT observed that the assessment order did not include proper inquiries into the donation of Rs. 25,00,000/- made to 'Apna Desh Party.' The receipts did not contain essential details like cheque number, bank name, and date. Additionally, the donation was found to be bogus as the name of the assessee did not appear in the list of donors available in the public domain. The Pr. CIT concluded that the AO failed to verify the genuineness of the donation and the loan received by the assessee from Ranchhorbhai Tapubhai Patel, which was used for making the donation.3. Reliance on Material and Statements Not Confronted to the Appellant:The assessee argued that the Pr. CIT relied on material and statements related to 'Apna Desh Party' which were not provided to the appellant during the revision proceedings. The Pr. CIT had relied on findings from a search action under Section 132, which indicated that 'Apna Desh Party' was involved in bogus donations. The Tribunal held that the assessment order was still erroneous due to the lack of inquiry, even without considering the search materials.4. Genuineness of the Donation Made to 'Apna Desh Party':The Tribunal noted that the AO did not make any effort to verify the genuineness of the donation receipts issued by 'Apna Desh Party.' The Pr. CIT observed that the party was involved in a racket of bogus donations, and the donation made by the assessee was part of this scheme. The Tribunal agreed with the Pr. CIT's findings that the donation was bogus and that the AO's failure to make proper inquiries rendered the assessment order erroneous and prejudicial to the interest of the revenue.Conclusion:The Tribunal found no infirmity in the order passed by the Pr. CIT under Section 263 and dismissed the appeal of the assessee, upholding the Pr. CIT's decision to set aside the assessment order for further verification.