Disallowance and unexplained income additions fail where bank records, Form 16, and exemption evidence support the assessee's explanation.

The ITAT Delhi upheld relief where the assessee substantiated that the donation claim under section 80GGC was actually Rs. 6,00,000, so the higher disallowance did not survive. It also sustained deletion of the addition under section 69A read with section 115BBE on the time deposit, as bank credits, salary records and disclosed income supported the source explanation. In respect of gratuity, leave encashment, children education allowance and other exempt receipts, the tribunal accepted Form 16 and employment records showing coverage under section 10 exemptions, and the Revenue failed to rebut those findings. The assessee's appellate relief was thus maintained in full.

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Issues: (i) Whether the disallowance of donation claim under section 80GGC of the Income-tax Act, 1961 was to be sustained at Rs. 8,00,000 or restricted to Rs. 6,00,000; (ii) Whether the addition of Rs. 1,00,00,000 made under section 69A read with section 115BBE of the Income-tax Act, 1961 on account of time deposit was sustainable; (iii) Whether the addition of Rs. 13,01,200 on account of gratuity, leave encashment, children education allowance and other exempt allowances was sustainable.

Issue (i): Whether the disallowance of donation claim under section 80GGC of the Income-tax Act, 1961 was to be sustained at Rs. 8,00,000 or restricted to Rs. 6,00,000.

Analysis: The appellate findings accepted the bank statement and supporting material showing that the actual donation made was Rs. 6,00,000 and not Rs. 8,00,000. The Revenue did not bring material to dislodge that factual finding. The premise for making the higher disallowance therefore did not survive.

Conclusion: The restriction of the disallowance to Rs. 6,00,000 was upheld and the Revenue failed on this issue.

Issue (ii): Whether the addition of Rs. 1,00,00,000 made under section 69A read with section 115BBE of the Income-tax Act, 1961 on account of time deposit was sustainable.

Analysis: The material on record showed regular credits in the bank account, a returned income of Rs. 5,46,84,197, and salary income reflected in Form 16. On that basis, the time deposit was treated as arising from disclosed credits, and the Revenue did not rebut the appellate finding or show any infirmity in the source explanation.

Conclusion: The deletion of the addition under section 69A read with section 115BBE was upheld and the Revenue failed on this issue.

Issue (iii): Whether the addition of Rs. 13,01,200 on account of gratuity, leave encashment, children education allowance and other exempt allowances was sustainable.

Analysis: The appellate authority accepted that the impugned receipts were supported by Form 16 and related employment records and were covered by the claimed exemptions under section 10 of the Income-tax Act, 1961. The Revenue was unable to rebut those findings with contrary material.

Conclusion: The deletion of the addition relating to exempt allowances was upheld and the Revenue failed on this issue.

Final Conclusion: All substantive additions challenged by the Revenue were found unsustainable, and the assessee's relief granted in appeal was maintained in full.

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