Bogus political donations deduction under section 80GGC revised for verification failures; deduction disallowed and appeal dismissed.

Revisionary scrutiny found the assessing officer failed to verify donation receipts and the genuineness of three donee political entities, rendering the assessment erroneous and prejudicial to revenue. The Principal CIT demonstrated material on record showing non-examination of vital aspects of the section 80GGC claim and relied on precedent that non-examination of an entire claim is an error amendable to revision. Consequentially, the revision under the superior officer's jurisdiction was upheld and the deduction for the bogus donations was disallowed, decision adverse to the assessee.

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Issues: Whether the Principal Commissioner of Income Tax validly invoked section 263 of the Income-tax Act, 1961 to set aside the assessment insofar as deduction claimed under section 80GGC for donations to certain political parties, on the ground that the assessment order was erroneous and prejudicial to the interests of the Revenue.

Analysis: The assessment accepted the returned income after the Assessing Officer called for and recorded donation receipts and bank statements. Subsequent review by the Principal CIT disclosed material discrepancies in the records, including donation receipts with donor names not matching the assessee and objective indicia that three donee entities were non-genuine and involved in tax-evasion through bogus donations. The apparent inquiries conducted by the Assessing Officer did not include meaningful verification of the identity, genuineness and eligibility of the donee political parties or reconciliation of glaring inconsistencies in the documentary record. The position is distinguishable from cases where a complete inquiry was conducted and revision was sought only on the basis of later external developments; here the revision is founded on concrete defects in the assessment record itself. Reliance on the Supreme Court principle that non-examination of an issue in respect of the whole claim renders an order erroneous was applied to conclude that both limbs of section 263 (erroneous and prejudicial to revenue) are satisfied.

Conclusion: Section 263 was rightly invoked; the Principal Commissioners order setting aside the assessment in respect of the deduction under section 80GGC is upheld and the appeal is dismissed (decision in favour of Revenue).

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