2020 (3) TMI 1340 - AT - Income Tax

Deduction u/s.35AC on account of donation given by the appellant - as submitted that appellant has given donation to the registered Charitable Trust by Account Payee cheques relying on the documents produced before him by the trustee of the trust - Also appellant has submitted the receipts issued by the trust to the A.O. at the time of scrutiny proceedings. Merely on the basis of survey conducted by Investigation Wing the donation should not be disallowed. - HELD THAT - AO failed to conduct any inquiry before making disallowance and did not brought on record any fact to establish that donation given by the assessee was subsequently returned back in cash except mere allegations. Reliance was placed on the decision of Hon ble Delhi High Court in CIT V/s A and A Bakery P. Ltd. 2007 (3) TMI 235 - DELHI HIGH COURT to support the conclusions. Finally the disallowance was deleted. We find that fact to be pari-materia the same in this year. The assessee has duly discharged the onus casted upon him and it was incumbent upon Ld. AO to refute the same. However no such inquiry has been conducted and the disallowance has been made on mere allegations. Therefore respectfully following the earlier order 2019 (9) TMI 1541 - ITAT MUMBAI we delete the disallowance as made by Ld. AO.

Summary

Issues:
Assessee's claim u/s 35AC for ?15 Lacs.

Analysis:
The appeal contested the CIT(A)'s order confirming the disallowance of deduction claimed u/s 35AC for a donation of ?15,00,000. The appellant argued that the donation was made to a registered Charitable Trust by Account Payee cheques, supported by documents and receipts. The sole issue was the assessee's claim u/s 35AC for ?15 Lacs. The AR highlighted similar cases where the deduction was allowed, presenting the Tribunal's common order. The DR contended the donations were not genuine, justifying the disallowance. The assessee's deduction was denied during assessment as the trust's expenses were found bogus after a search action. The assessee defended the donation's legitimacy, citing trust registration details and receipts. The deduction was denied, leading to the current challenge.

The Tribunal noted similar cases where the deduction was allowed, shifting the onus to the AO to prove otherwise. The AO failed to conduct inquiries or provide evidence of cash returns, leading to the disallowance's deletion. Citing a Delhi High Court decision, the Tribunal found the assessee had met the burden of proof, requiring the AO to refute with evidence. As no such inquiry was conducted, the disallowance was deemed baseless, following the precedent to delete the disallowance. The appeal was partly allowed based on this order.