ITAT Remands Addition Made on Property Purchase Value Difference And Directs Fresh Examination of the Addition under Section 56(2)(x)

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has directed a fresh examination of the addition under Section 56(2)(x) and upheld the disallowance of the deduction claimed under Section 80GGC in respect of a donation made to a political party.

The assessee, Gobind Daya Singh Marwaha, filed an appeal against the order of the CIT(A), National Faceless Appeal Centre, challenging the reassessment proceedings and additions made by the AO. The AO had disallowed the deduction of Rs. 215,000 claimed under Section 80GGC in respect of the donation made to the Apna Desh Party, treating the same as a bogus donation. In addition, an amount of Rs. 3,278,850 was added under Section 56(2)(x) on account of the difference between the stamp duty value and the purchase consideration of an immovable property acquired by the assessee.

The assessee also questioned the validity of the notice issued under Sections 147 and 148 of the Income Tax Act.

With regard to the challenge against reassessment proceedings, the Tribunal observed that the original reason for reopening was the donation made to the political party, and the Tribunal held that assumption of jurisdiction under Sections 147 and 148 was valid.

On the issue of deduction under Section 80GGC, the Tribunal noted that no fresh material had been produced by the assessee to disprove the findings recorded by the lower authorities. The Tribunal observed that the donation transactions were found to be part of a systematic financial arrangement which worked to legitimise illegal funds and evade taxes. Consequently, the disallowance of deduction under Section 80GGC was upheld.

Regarding the addition of Rs 3,278,850 under Section 56(2)(x), the Tribunal observed that the addition had been made merely on the basis of stamp duty valuation, and it was not clear whether the assessee’s objections had been examined. The order of the CIT(A) was also found to be silent on the issue.

Accordingly, the Tribunal held that the matter required fresh consideration and restored the issue to the AO for fresh adjudication after providing adequate opportunity of hearing to the assessee, and the appeal was partly allowed for statistical purposes.