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Facts
The assessee claimed a deduction of Rs. 6,00,000/- under Section 80G for a donation of Rs. 12,00,000/- to Aadhar Foundation. The Principal Commissioner (PCIT) initiated proceedings under Section 263, stating the Assessing Officer (AO) had not properly verified the donation, which was suspected to be bogus based on a search action against Aadhar Foundation.
Held
The Tribunal held that the PCIT was justified in revising the assessment order. The AO's failure to conduct further inquiry into the genuineness of the donation, despite information suggesting Aadhar Foundation was involved in bogus donations, rendered the assessment order erroneous and prejudicial to the revenue.
Key Issues
Whether the Principal Commissioner was justified in revising the assessment order under Section 263 when the Assessing Officer had allowed a deduction under Section 80G without conducting sufficient inquiry into the genuineness of the donation, given information about the donee being involved in bogus donations.
Sections Cited
263, 143(3), 80G, 132, 144B, 80GGC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax, Ahmedabad-1 (in short “the PCIT”) dated 12.03.2025 for the Assessment Year (A.Y.) 2020-21 in respect of order passed under revisional jurisdiction under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2020-21 on 22.01.2021 declaring total income of Rs.1,46,70,690/-. The assessment was completed under Section 143(3)
(Assessment Year: 2020-21) Ideal Sheet Metal Stampings & Pressings Pvt. Ltd, vs. PCIT-1 Page 2 of 7 dated 05.09.2022 at Rs.1,46,70,690/- as per return. Subsequently, the case record was called for and examined by the Ld. PCIT. He found that the assessee had claimed deduction of Rs.6,00,000/- under Section 80G of the Act in respect of donation of Rs.12,00,000/- made to the trust M/s. Aadhar Foundation, which was a bogus entity. He noted that a search action under Section 132 of the Act was conducted in the case of M/s. Adhar Foundation wherein it was found that the said entity was engaged in a scam, related to evasion of tax in the form of a bogus donations. According to the Ld. PCIT, the Assessing Officer, in the course of assessment, did not examine this aspect of bogus donation of Rs.12,00,000/- made by the assessee to M/s. Aadhar Foundation. Therefore, the assessment order of the Assessing Officer was held to be erroneous and prejudicial to the interest of revenue. Accordingly, the Ld. PCIT set aside the assessment order dated 05.09.2022 passed u/s143(3) of the Act with a direction to Assessing Officer to pass a fresh assessment order, after examining the bogus donation made by the assessee.
Aggrieved with the order of the Ld. PCIT, the assessee is in appeal before us. The following grounds have been taken in this appeal: -
1. The learned Principals CIT-1 Ahmedabad has erred both in law and in facts in revising and setting aside the Order passed by ld. A.O. u/s.143(3) r.w.s 144B on the ground that the AO had failed to make addition in accordance with the provisions of the Act and that the AO erred in not verifying the issue of alleged bogus donation under section 80G of the Act. The order passed by AO after due verification of issue being neither erroneous nor prejudicial to interest of revenue, PR.CIT erred in revising the said Order. It be so held now and order u/s.263 be set aside.
2. The learned Principal CIT further grievously erred in law and on facts in revising and setting aside the order of assessment when the very issue of donation to made to approved charitable trust was examined and inquired by the Id AO and based on evidences and reply by the appellant, the deduction u/s.80G was rightly allowed. The provisions of (Assessment Year: 2020-21) Ideal Sheet Metal Stampings & Pressings Pvt. Ltd, vs. PCIT-1 Page 3 of 7 section 263 to revise the said assessment order are wrongly invoked. It be so held now.
3. The Id. Principal CIT further erred both in law and on facts in not appreciating the order passed u/s.143(3) after detailed scrutiny and necessary inquiry, the same could not be held to be erroneous or prejudicial to the interest of revenue merely because in his opinion, further inquiry is required to be made. Considering the explanations and details given and in view of settled legal position, regarding the conditions of invoking section 263 of the Act the order passed by AO is not erroneous or prejudicial to interest of revenue. It be so held now.
4. The Id Principal CIT also erred in law and on facts in not properly considering the appellants reply and submissions along with documentary evidences whereby genuineness of donation for making claim u/s.80G were furnished. The order u/s.263 passed without proper consideration of facts and legal position itself is erroneous. It be so held now and order passed by Id PCIT be set aside.
5. The Id. Pr. CIT further erred in law and on facts in not appreciating that there was no evidence regarding the bogus donation or any involvement or receipt of cash against such donation and the alleged statement being not furnished, the opinion held by Id. Pr. CIT is wholly incorrect. It be so held now.
Without prejudice to the above, the order passed by Id. Pr. CIT is invalid, illegal and bad in law being with no firm conclusion.
7. The Id. Principal CIT erred in law and on facts in placing reliance to Explanation-2 to section 263 since it is settled legal position as considered by various judicial pronouncements that it does not give unfettered powers to the Commissioner to assume jurisdiction under section 263 to revise every order of the Assessing Officer to re-examine the issues. It be so held now and order passed by ld. Pr. CIT be cancelled.
8. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing.”
Shri D.K. Parikh, Ld. AR of the assessee, submitted that in the course of assessment, the Assessing Officer had made enquiry in respect of deduction of Rs.6,00,000/- claimed as deduction u/s 80G of the Act and all the relevant documents in this respect were duly filed before him. The Assessing Officer, after considering the reply of the assessee, had taken a conscious decision that the claim of the assessee for deduction u/s 80G (Assessment Year: 2020-21) Ideal Sheet Metal Stampings & Pressings Pvt. Ltd, vs. PCIT-1 Page 4 of 7 of the Act was genuine. Under the circumstances, the Ld. PCIT was not correct in holding that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue as the Assessing Officer had duly examined the relevant facts in the course of assessment. He submitted that the Assessing Officer had taken a plausible view in respect of the claim of the assessee and the Ld. PCIT was not correct in superimposing his view and setting aside the assessment order. The Ld. AR also placed reliance on the decision of Co-ordinate Bench of this Tribunal in the case of Vitthaldas Nathubhai Shah, 178 taxmann.com 632 (Ahmedabad – Trib.)
Per contra, Shri Alpesh Parmar, Ld. CIT-DR submitted that the Assessing Officer had merely accepted the submissions of the assessee without any verification and application of mind. He submitted that a search and seizure action u/s 132 of the Act was conducted on 02.02.2021 and M/s. Aadhar Foundation was also covered in the said action. He submitted that the fact of evasion of tax on bogus donations made to M/s. Aadhar Foundation was already available with the Assessing Officer when the assessment proceeding was in progress. However, the Assessing Officer did not examine the matter and no further enquiry was made to examine the genuineness of the donation and the correctness of claim for deduction u/s 80G of the Act. Therefore, the Ld. PCIT had rightly held that the order of the Assessing Officer was erroneous and prejudicial to the interest of revenue. The Ld. CIT DR relied upon the decision of Co-ordinate Bench of this Tribunal in the case of Sakar Healthcare Limited vs. PCIT, & 1181/Ahd/2025 dated 10.09.2025.
(Assessment Year: 2020-21) Ideal Sheet Metal Stampings & Pressings Pvt. Ltd, vs. PCIT-1 Page 5 of 7 6. We have considered the rival submissions. It is found that the assessee, in the course of assessment, had furnished evidences for donation of Rs.12,00,000/- made to M/s. Aadhar Foundation, in respect of which deduction u/s 80G of the Act was claimed. However, mere furnishing of the receipt does not establish the genuineness of the donation and the claim of deduction made by the assessee. The order of the Ld. PCIT reveals that the Department was in possession of the information that M/s. Aadhar Foundation was involved in providing bogus donations. This fact had emanated from search and seizure action u/s 132 of the Act conducted on 02.02.2021 in respect of political parties and charitable organisation group, including M/s. Aadhar Foundation. In view of this information available with the Assessing Officer, further enquiry was required to be made to examine the genuineness of the donation made by the assessee. The Explanation-2 to Section 263 of the Act stipulates that the order of the Assessing Officer shall be deemed to be erroneous and prejudicial to the interest of the revenue, if the order is passed without making enquiries or verifications which should have been made. In the present case, the Assessing Officer did not make any enquiry which was required to be made, in view of the information available with the Department that M/s Aadhar Foundation was engaged in a scam related to evasion of tax in the form of bogus donations. Therefore, the Ld. PCIT had rightly held that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue.
The assessee has relied upon the decision of Co-ordinate Bench of this Tribunal in the case of Vitthaldas Nathubhai Shah (supra). In that case, the claim of deduction was made under Section 80GGC in respect of donation to a political party and thus the facts are found to be different. On the other hand, in the case of Sakar Healthcare Limited (supra), relied (Assessment Year: 2020-21) Ideal Sheet Metal Stampings & Pressings Pvt. Ltd, vs. PCIT-1 Page 6 of 7 upon by the Revenue, the donation was made to the same entity M/s. Aadhar Foundation, in respect of which deduction u/s 80G of the Act was claimed. The Co-ordinate Bench of this Tribunal had held in that case as under: -
“7. Before us, the only contention of the Ld. Counsel for the assessee was that the assessment order in the present case was passed on 22.09.2022, and the information regarding M/s. Aadhar Foundation indulging in providing alleged bogus donation came to be available with the Department on account of search conducted on 02.02.2021. Therefore, during the pendency of assessment proceedings in the case of the assessee, the AO was in possession of this information and, it is to be presumed therefore that he had allowed assessee's claim of deduction u/s.80G of the Act after considering and in the light of the information in his possession. Ld. Counsel for the assessee, however, admitted that no enquiry specifically was made by the AO on the claim of deduction u/s.80G of the Act in the light of information with the AO/Department about the said entity providing bogus donation.
8. In the light of the above, we do not find any merit in the argument of the Ld. Counsel for the assessee that there was no error in the assessment order in allowing assesses claim of deduction on account of donation made to M/s Aadhar Foundation, u/s 80G of the Act. The admitted fact being that there was information on record of M/s. Aadhar Foundation indulging in providing bogus donations and the AO admittedly having not examined the claim of deduction of the assessee u/s.80G of the Act, in the light and in the backdrop of this information, undoubtedly the assessment order passed in the present case was erroneous causing prejudice to the Revenue. We have no hesitation in upholding the order of the Ld. PCIT holding so.”
In view of the facts of the present case as discussed earlier and respectfully following the decision of Co-ordinate Bench of this Tribunal in the case of Sakar Healthcare Limited (supra), we do not find any merit in the grounds raised by the assessee before us. The Ld. PCIT had rightly held that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue and accordingly the order of the Ld. PCIT is upheld. The grounds raised by the assessee are dismissed.
Order pronounced in the open Court on this 11th December, 2025.