Section 80GGA deduction denied after trustee admits cash return of cheque donations with 3% commission
Meetu Kumari | Feb 13, 2026 |
ITAT Upholds Disallowance Of Donations That Were Part Of Cash-return Accommodation
The assessee, an individual, filed his return for AY 2010-11, declaring total income of Rs. 10,29,548 and claimed deduction of Rs. 1,00,000 under Section 80GGA in respect of a donation made to Navjeevan Charitable Trust. The donation was made through banking channels and supported by a receipt and Form 58A certificate. At the time of donation, the Trust held approval under Section 35AC.
Thereafter, based on information from the Investigation Wing following a search on the Trust, reassessment proceedings were initiated. The Assessing Officer disallowed the deduction and added Rs. 1 lakh to the assessee’s income. The CIT(A) affirmed the addition, holding that the material gathered during search outweighed the evidentiary value of cheque payment and registration certificates.
Main Issue: Whether deduction under Section 80GGA can be allowed in respect of a donation made to a trust approved under Section 35AC when search findings and trustee statements indicate that donations were part of a cash-return accommodation arrangement.
Tribunal’s Decision: The Tribunal upheld the disallowance of the deduction. It noted that the addition was not made merely because of later withdrawal of approval under Section 35AC, but on the basis of specific incriminating material unearthed during the search on the Trust. The trustee had admitted that donations received by cheque were returned in cash to donors after deducting commission, and that bogus purchase entries were made to facilitate the arrangement.
The Tribunal observed that once the Revenue alleged the donation to be non-genuine based on sworn statements and search material, the burden shifted to the assessee to establish otherwise conclusively. The assessee relied on bank payment, donation receipt, Form 58A certificate, and approval under Section 35AC. But no material was placed on record to rebut the trustee’s admission or to demonstrate that the donation amount was not returned in cash. The Tribunal held that mere payment through cheque does not, by itself, establish genuineness when contrary evidence exists.
Therefore, the disallowance of Rs. 1,00,000 under Section 80GGA was sustained and the appeal was dismissed.
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