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

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 Section 80GGC deduction claim for donations to Apna Desh Party. The party's donation receipts lacked essential details like cheque numbers and bank information. The party's website donor list did not include the assessee's name despite three claimed donations. The assessee funded donations through loans from an individual, which required verification of genuineness. The AO failed to conduct proper inquiry into publicly available information and simply accepted the assessee's version without verifying receipt authenticity.

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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.

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