TaxTMI 
TaxTMI 
2025 (9) TMI 1579
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....issued notice u/s. 142(1) of the Act on 05/11/2021, calling upon the assessee to furnish section/subsection wise details of deductions claimed under Chapter VI-A with supporting documentary evidences, details of earnings under relevant heads, note on eligibility criteria, and bank statements along with details of all bank accounts. 2.3 In response, the assessee submitted his detailed reply dated 17/11/2021 enclosing, inter alia, audited accounts, computation of income, passbook of PPF account, medical insurance premium receipts, and receipts of donations made to political parties under section 80GGC of the Act. The assessee specifically furnished receipts in respect of donations made to the Kisan Party of India (Rs.15,00,000/- in aggregate) as well as other political parties, along with bank account statements substantiating the claim. 2.4 After examination of the submissions, the AO, in the assessment order dated 25/08/2022 passed u/s. 143(3) r.w.s. 144B of the Act, accepted the claim of deduction made by the assessee under section 80GGC, along with other deductions, and completed the assessment by accepting the returned income. 2.5 Subsequently, the learned PCIT, on exam....
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.... the matter in greater depth before allowing such claim. Placing reliance on the ratio laid down by various judicial forums, the PCIT concluded that the assessment order dated 25/08/2022 passed u/s. 143(3) r.w.s. 144B of the Act suffered from error both on facts and in law, and such error had caused prejudice to the interest of the Revenue. The PCIT, therefore, set aside the said assessment order and directed the Assessing Officer to frame a fresh assessment de novo after making proper and detailed enquiries on the claim of deduction u/s. 80GGC of the Act. 3. Aggrieved by the order of PCIT the assessee is in appeal before us raising following grounds: 1. That the learned PCIT has erred in law in holding that the assessment order passed by the Assessing Officer (AO) on 25/08/2022, u/s. 143(3) r.w.s. 144B is erroneous and prejudicial to the interest of the revenue on the ground that the AO was bound to disallow the deduction of Rs. 15,00,000/- u/s. 80GGC of the I.T. Act. He further erred in setting aside the original assessment order finalized as referred above. 2. That the learned PCIT has grievously erred in rejecting the submissions of the Appellant contending....
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.... carried out in the case of the concerned political party. The DR pointed out that the Investigation Wing had unearthed a racket of bogus donations involving the said political party, wherein donations received through banking channels were being returned in cash after deduction of commission. 5.1 The DR invited our attention specifically to para 4.2 of the order of the PCIT, wherein the PCIT has elaborately recorded the basis for invoking jurisdiction u/s. 263, namely, that the assessee's donation of Rs. 15,00,000/- to Kisan Party of India fell within the ambit of such bogus donation racket, and that the Assessing Officer had failed to conduct any meaningful enquiry into the genuineness of the same. According to the DR, the failure of the AO to make proper and necessary enquiry into a claim of deduction, despite the existence of adverse information in the possession of the Department, rendered the assessment order both erroneous and prejudicial to the interests of the Revenue. 5.2 The learned DR further submitted that the assessment order passed by the AO is cryptic and non-speaking, inasmuch as no reasons have been set out while allowing the claim of deduction u/s. 80GGC. I....
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....fter recording that the evidences had been verified, accepted the claim and completed the assessment u/s. 143(3) on 25/08/2022. 7.2 It is also an undisputed fact that the search action under section 132 in the case of the political party was conducted in March 2021, i.e., much prior to the passing of the assessment order. However, the learned PCIT, while invoking revisional jurisdiction, has not referred to or brought on record any incriminating material, seized documents, or statements recorded during such search which specifically connect the assessee's donation to the alleged racket of bogus donations. The order of the PCIT merely proceeds on general observations and on the basis of audit objection, without establishing any nexus of adverse material with the assessee's case. 7.3 In this context, we note that the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (243 ITR 83) has laid down that both conditions, namely, that the assessment order is "erroneous" and "prejudicial to the interests of the Revenue," must be satisfied before the revisional power u/s. 263 can be exercised. Further, the Hon'ble Gujarat High Court in CIT v. Arvind Jewellers (259 ITR 502) and ....
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.... of the National Party President and her husband revealed, in categorical terms, the modus operandi of a bogus donation racket whereby donations were routed through multiple layers and returned to donors after deducting commission. The findings were thus supported by incriminating material and specific statements implicating the party in bogus donation activities. In contrast, in the present case, the assessee had admittedly made donations aggregating to Rs. 30,00,000/- out of his own disclosed funds, including Rs. 15,00,000/- to the Kisan Party of India. The assessee furnished all details in response to notice u/s. 142(1), including receipts and bank statements, which were verified by the AO. Crucially, no incriminating material, no third-party statement, and no specific adverse fact connecting the assessee's donations to any bogus transaction have been brought on record by the PCIT. The reliance on the aforesaid precedents is, therefore, misplaced as the factual matrix is entirely distinguishable. 7.7 Even at the cost of repetition, we note that the assessment order was passed on 25/08/2022 whereas the search action in the case of the political party was conducted in March 202....