ITAT Remands Fresh Verification for Disallowance of Rs 2 Lakh Political Donation Deduction Claim under Section 80GGC

The Income Tax Appellate Tribunal (ITAT) Mumbai,  has ordered a fresh examination of the matter setting aside the disallowance by the AO to the deduction claimed under Section 80GGC of the Income Tax Act after examining the additional evidences produced by the assessee.

The assessee filed her return of income for assessment year 2019-20 and claimed a deduction of Rs 2 lakh under Section 80GGC of the Income Tax Act for a donation made to a political party. Later on, information was received through the Risk Management Strategy (RMS) Portal indicating that certain political parties were allegedly involved in routeing bogus donations, so reassessment proceedings were initiated under Sections 147 and 148 of the Income Tax Act.

During the reassessment proceedings, the assessee submitted documentary evidence, including donation receipts, bank statements evidencing payment through banking channels, and registration details of the political party, the AO relied upon investigation findings and statements recorded during search proceedings conducted on office bearers of the political party and rejected the claim and disallowed the deduction.

The National Faceless Appeal Centre (NFAC) upheld the disallowance, observing that the assessee had failed to establish the genuineness of the transaction.

ITAT observed that the assessee had produced additional evidence before the Tribunal in support of the claim that the donation was genuine and had been made through proper banking channels and that these additional documents required proper examination and verification by the AO before any final conclusion could be drawn regarding the admissibility of the deduction under Section 80GGC.

Accordingly, the Tribunal held that the matter deserved to be restored to the file of the Assessing Officer for fresh adjudication. The ITAT restored the issue relating to the disallowance of deduction under Section 80GGC to the Assessing Officer for fresh examination and adjudication. Consequently, the appeal of the assessee was partly allowed for statistical purposes and that adequate opportunity of hearing be provided to the assessee and that she should be permitted to furnish any further evidence or explanation necessary to substantiate her claim.