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2019 (6) TMI 1574 - AT - Income TaxBogus expenditure/Donation - addition of donation being given to charitable trust on the ground that on the search of the said charitable trust it has been found that it has been incurring only bogus expenditure - HELD THAT - It is undisputed that assessee has submitted the receipt for the donation. The same has been paid by banking channel. There is no evidence on record that the same amount has been received back by the assessee from the said charitable trust. In these circumstances in this addition is solely based on surmise and conjecture and not sustainable in law. Assessee s appeal stands allowed.
Issues:
Appeal against addition of donation as bogus. Analysis: The case involved appeals by the assessee against orders of the Commissioner of Income Tax Appeals for assessment years 2013-14 and 2014-15, where an addition of ?500,000 each as donation was deemed bogus. The background revealed a survey action under section 132 of the Income Tax Act on a charitable trust, which was found to be booking bogus expenditure. The assessee had made a donation to this trust, leading to the reopening of the assessment. The assessing officer, relying on findings regarding the trust, added the donation amount to the assessee's income. The Commissioner of Income Tax Appeals upheld this addition, prompting the assessee to appeal to the ITAT. During the ITAT proceedings, the main issue was the challenge to the addition of ?500,000 donation to the charitable trust, as it was suspected to have been received clandestinely due to the trust's dubious financial activities. The ITAT noted that the assessee had submitted donation receipts and made payments through banking channels, with no evidence of receiving the amount back from the trust. The ITAT concluded that the addition was based on speculation and not supported by concrete evidence, leading to the decision to set aside the lower authorities' orders and delete the addition. Ultimately, the ITAT allowed the assessee's appeal, ruling in favor of the assessee and deleting the addition of the donation amount. The judgment was pronounced on 12.6.2019.
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