Disallowance of ₹10 Lakh Donation u/s 35AC: ITAT Restores Matter to AO [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) restored the matter to the Assessing Officer (AO) for further examination of the disallowance of a ₹10 Lakh donation claimed under Section 35AC of Income Tax Act,1961.

Mrugeshbhai Ravindrabhai Desai,appellant-assessee, challenged the order dated 28.06.2024 passed by the Commissioner of Income Tax (Appeals)[CIT(A)]  for Assessment Year (AY) 2017-18. 

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The assessee raised several grounds of appeal against the order passed on 28.06.2024 for A.Y. 2017-18, which upheld the disallowance of Rs. 10,00,000 by the AO. The assessee claimed the order was illegal and violated natural justice, as the CIT(A) did not properly consider the evidence or conduct necessary inquiries.

Despite requesting not to receive notices by email, the appellant argued that the CIT(A) continued sending them via email, preventing proper service. The reopening of the case under section 147 was challenged as mechanical, with no proper inquiry or reason given.

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The disallowance of the donation under section 35AC was also contested. Lastly, the appellant noted that the CIT(A) did not grant a video conferencing hearing, as required by the faceless appeal process.

The Revenue had filed for adjournment.

The two member bench comprising Dr.BRR Kumar(Vice President) and Suchitra Kamble(Judicial Member) reviewed the case and found that the issue involved a Rs. 10,00,000 donation claimed under section 35AC to a trust, Bharati Mahila Mandal, which was suspected to be bogus.

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The Revenue had information that receipts for the donation were issued with a 2% commission charge. The individual had not appeared before the AO or the CIT(A), limiting the Revenue's ability to fully examine the matter. The Counsel agreed to donate Rs. 2,000 to the "Prime Minister's National Relief Fund."

The Tribunal decided to restore the matter to the AO for further examination. The AO was instructed to provide necessary documents to the individual and issue a new assessment order after allowing the individual to be heard.

In short,the appeal filed by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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