TaxTMI 
TaxTMI 
2026 (1) TMI 821
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....-. Subsequently, a revised return under section 139(5) was filed on 25.10.2019, declaring the same total income, with an additional disclosure of TCS of Rs. 19,090/-.In the return of income, the assessee, inter alia, claimed a deduction of Rs. 5,00,000/- under section 80GGC of the Act in respect of a donation stated to have been made to Kisan Party of India, a political party stated to be registered under section 29A of the Representation of the People Act, 1951. The return was initially processed under section 143(1) of the Act. 3. Subsequently, the Jurisdictional Assessing Officer received information through the Risk Management Strategy of the Board, based on inputs from the Investigation Wing, pursuant to search and seizure operations under section 132 conducted in the case of certain Registered Unrecognized Political Parties (RUPPs). As per the said information, some political parties, including Kisan Party of India, were allegedly engaged in providing accommodation entries in the guise of political donations, whereby amounts received through banking channels were returned to donors after deduction of commission. 4. On the basis of the said information, proceedings under....
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....ing Officer concluded that the donation of Rs. 5,00,000/- was not genuine. Accordingly, the deduction claimed under section 80GGC was disallowed and added back to the total income of the assessee. The total income of the assessee was thus assessed at Rs. 1,53,76,220/-, and penalty proceedings under section 270A(9) were initiated separately. 8. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee challenged, inter alia, the assumption of jurisdiction under section 147, the disallowance of deduction under section 80GGC, denial of cross-examination, and non-grant of credit for TDS, advance tax, and TCS. The assessee filed written submissions reiterating that the statutory conditions of section 80GGC were duly fulfilled, that the donation was made through banking channels to a political party registered under section 29A, and that no evidence had been brought on record by the Assessing Officer to demonstrate that any amount was returned to the assessee. It was further contended that reliance on third-party statements without granting cross-examination amounted to violation of principles of natural justice. 9. The C....
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.... 9. The AO erred in not granting credit for TDS amounting to Rs. 5151547/- inspite of same appearing in form 26AS, and inspite of CPC granting the said credit in the intimation under section 143(1). 10. The AO erred in not granting credit for advance tax paid of Rs. 15000/- although the same was granted in intimation under section 143(1). 11. The AO erred in not granting credit of TCS of Rs. 19090/- in spite of same appearing in form 26AS. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal. 11. During the course of hearing before us, the learned Authorized Representative of the assessee vehemently argued the grounds raised in the appeal and, at the outset, assailed the validity of the proceedings initiated under section 147 of the Act by drawing our attention to the notice issued under section 148A(b). It was submitted that the very foundation of the reassessment proceedings is vitiated, as the said notice was issued on the basis of vague, generalized and borrowed information, without there being any tangible material demonstrating escapement of income in the case of the assessee. According to the learned A....
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....rect identification of the donee entity reflects non-application of mind and renders the entire proceedings unsustainable in law. 15. The learned Authorised Representative further pointed out inherent contradictions in the approach of the Assessing Officer by referring to the reproduction of Question No. 13 and the corresponding answer from the statement recorded under section 132(4), as extracted in the order under section 148A(d). It was submitted that while, on the one hand, the Assessing Officer alleged that Kisan Party of India was not engaged in any political or social activity, on the other hand, the answer to Question No. 13 recorded in the same order acknowledges that the party had contested elections and participated in the Bihar Legislative Assembly elections. According to the learned Authorised Representative, such mutually inconsistent observations in the same order demonstrate complete non-application of mind and undermine the credibility of the conclusions drawn by the Assessing Officer. 16. The learned Authorised Representative further contended that the Assessing Officer failed to follow the procedure prescribed under section 148A, inasmuch as no material or ....
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....no material on record to show that any part of the donation amount was returned to the assessee, either in cash or through any other mode, and that the Assessing Officer has not pointed out any defect in the documentary evidences furnished by the assessee. 20. The learned Authorised Representative submitted that the disallowance has been made solely on the basis of generalised allegations, investigation inputs and third-party statements, without any tangible material establishing that the assessee received any benefit in return for the donation. It was contended that once the assessee has discharged the initial onus by furnishing primary evidences, the burden shifts to the Department, which has not been discharged in the present case. 21. In support of the jurisdictional challenge, the learned Authorised Representative placed reliance on the judgment of the Hon'ble Bombay High Court in Anurag Gupta v. Income-tax Officer [2023] 150 taxmann.com 99 / 454 ITR 326, and submitted that the ratio laid down therein squarely applies to the facts of the present case. It was contended that the Hon'ble High Court has categorically held that furnishing of information without supplying the ....
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....error cannot be treated as a mere clerical lapse, as the assumption of jurisdiction under section 147 is contingent upon correct and specific information suggesting escapement of income in the case of the assessee. 26. We also find merit in the contention of the assessee that the notice under section 148A(b) is vague and generalised in nature and does not enclose or disclose any material or evidence forming the basis of the allegations. The Assessing Officer has relied upon statements recorded under section 132(4) of certain third parties and general investigation findings, but no such statements or relevant extracts thereof were ever furnished to the assessee, despite a specific request. On the contrary, in paragraph 5.5 of the order under section 148A(d), the Assessing Officer has taken a categorical stand that there is no statutory mandate to provide the material relied upon along with the show cause notice. 27. This approach, in our view, is contrary to the scheme and object of section 148A. The provision contemplates a meaningful and effective opportunity of being heard, which necessarily presupposes that the assessee is made aware of the material on the basis of which t....
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....proceedings. 31. In view of the above cumulative facts and respectfully following the binding judgment of the Hon'ble Bombay High Court, we hold that the proceedings initiated under section 148, being founded on a defective notice under section 148A(b) and in violation of the mandatory procedure prescribed under section 148A, are unsustainable in law and liable to be quashed. 32. Even otherwise, and without prejudice to our finding on the jurisdictional issue, we find that the disallowance of deduction under section 80GGC cannot be sustained on merits. The assessee has placed on record the donation receipt issued by Kisan Party of India, which clearly mentions the name and PAN of the assessee, the amount of donation of Rs. 5,00,000/-, the mode of payment by cheque, and the specific reference to section 80GGC. The assessee has also furnished the bank statement evidencing payment of the donation through normal banking channels. Further, the registration certificate issued by the Election Commission of India establishes that Kisan Party of India is duly registered under section 29A of the Representation of the People Act, 1951. These facts have not been disputed by the lower aut....