Vandanaben Rajbhai Parikh Vs PCIT (ITAT Ahmedabad)
Section 263 Validly Invoked Where AO Failed to Properly Verify Bogus Political Donations u/s 80GGC
The Ahmedabad Bench of the Income Tax Appellate Tribunal upheld the revisionary order passed by the Principal CIT under section 263 for AY 2020-21, holding that the assessment order was both erroneous and prejudicial to the interests of the Revenue.
The Tribunal noted that the case was selected for limited scrutiny specifically to examine deductions under Chapter VI-A. Although the Assessing Officer called for general details and allowed deduction u/s 80GGC, he failed to conduct a meaningful and complete inquiry into the genuineness and eligibility of political parties to whom substantial donations were claimed. Serious discrepancies were found in donation receipts, including mismatch in donor names, and three of the political parties were found to be bogus and allegedly involved in tax-evasion scams through accommodation donations.
The Tribunal held that mere collection of receipts and bank statements does not amount to proper verification. Non-examination of foundational facts relating to the identity and genuineness of the donees constituted a clear lack of inquiry. Relying on the Supreme Court’s decision in BSES Rajdhani Power Ltd., the Tribunal ruled that failure to examine the entire claim renders the assessment amenable to revision u/s 263. The assessee’s reliance on earlier ITAT rulings was distinguished on facts. Accordingly, the assessee’s appeal was dismissed and the PCIT’s revisionary order was sustained.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
