1992 (1) TMI 157 - AT - Income Tax

Tribunal grants deduction for genuine donation despite middleman's misappropriation

The Tribunal allowed the appeal, granting the deduction under section 80GGA for a genuine donation made by the assessee to Ramakrishna Vivekanand Mission ... Authorised Representative, Scientific Research Issues Involved:1. Whether the Commissioner of Income-tax (Appeals) was right in upholding the disallowance of deduction for Rs. 1,98,000 under section 80GGA of the Income-tax Act.2. The genuineness of the donation made by the assessee to Ramakrishna Vivekanand Mission.3. The impact of the misappropriation of funds by the middleman on the assessee's claim for deduction.4. The relevance of the time limit for the purpose of grant of deduction under section 80GGA read with section 35CCA.Detailed Analysis:1. Disallowance of Deduction under Section 80GGA:The primary issue in this appeal is whether the disallowance of the deduction for Rs. 1,98,000 under section 80GGA was justified. The assessee, a Chief Executive of Usha International, made a donation of Rs. 2 lacs to Ramakrishna Vivekanand Mission via two cheques. The Income-tax Officer and the Commissioner of Income-tax (Appeals) disallowed the deduction, concluding that the donation was not genuine and was an attempt to conceal income by furnishing inaccurate particulars.2. Genuineness of the Donation:The assessee argued that the donation was genuine, made in good faith to an authorized agent of the Mission. The cheques were issued to Mr. Vipin Mehra, who misappropriated Rs. 1,98,000. The Mission later received the misappropriated funds in January 1986 and issued a back-dated receipt. The Tribunal noted that the evidence on record, including letters from the Mission, confirmed that the donation was received by the Mission's agent and later recovered. The Tribunal emphasized that there was no evidence of collusion between the assessee, the agent, and the Mission to defraud the Revenue.3. Impact of Misappropriation by the Middleman:The Tribunal held that the misappropriation by the middleman should not affect the assessee's claim for deduction. The donation was made in good faith, and the agent's defalcation was a matter between the Mission and its agent. The Tribunal found that the Department's suspicion of a general racket of bogus donations under section 80GGA unduly influenced its judgment. The Tribunal concluded that the assessee made a genuine donation in March 1983, and the subsequent recovery of funds by the Mission and issuance of a back-dated receipt validated the claim.4. Time Limit for Grant of Deduction:The Tribunal dismissed the argument regarding the expiry of the approval for deduction under section 80GGA read with section 35CCA. Since the donation was made in March 1983 when the exemption was in full force, the time limit was not relevant. The Tribunal allowed the assessee's appeal, concluding that the donation was genuine and made within the stipulated period for tax exemption.Conclusion:The Tribunal found that the assessee made a genuine donation to Ramakrishna Vivekanand Mission in March 1983. The misappropriation by the middleman did not negate the genuineness of the donation. The Tribunal allowed the assessee's appeal, granting the deduction under section 80GGA, and dismissed concerns regarding the time limit for the exemption. The Tribunal emphasized that the evidence supported the assessee's claim and that the Department's suspicion was unfounded.