MR. SAURABH ANIL GANDHI ,MUMBAI V. INCOME TAX OFFICER WARD 42(3)(3), MUMBAI

ITA 8437/MUM/2025

AI Insights

The case involves Mr. Saurabh Anil Gandhi, who appealed against the order of the Commissioner of Income Tax (Appeals)-51, Mumbai, which confirmed the disallowance of a deduction under section 80-GGA of the Income Tax Act, 1961. The deduction was claimed for a donation of INR 1 lakh to the Navjeevan Charitable Trust. The primary contention was whether the donation was genuine or part of a scheme where donations were returned in cash after deducting a commission. The Tribunal examined the evidence, including statements from the Trust's trustee, which indicated that the Trust was involved in returning donations in cash, thus treating the donation as non-genuine.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 836039 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 08-12-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: NIKHIL TIWARI AW
• Keywords: Reassessment proceedings; Bogus purchase; Reopening of assessment; Accommodation entries; Reason to believe; Charitable institution; Opportunity of cross examination; Bogus
• Section: 147; 148; 143(3); 132; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “H (SMC)” BENCH, MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No. 8437/MUM/2025 (Assessment Year :2010-11) Mr. Saurabh Anil Gandhi A-502 Chanakya CHS Ltd. Mahavir Nagar, Opp. Ekta Nagar, New Link Road, Kandivali West, Mumbai- 400067 PAN: AELPG7302J ............... Appellant v/s Income Tax Officer 42(3)(3) Kautilya Bhavan, Bandra Kurla Complex, Bandra (East),Mumbai - 400051 ……………… Respondent Assessee by : Shri Nikhil Tiwari a/w Mr. Pranay Gandhi Revenue by : Shri Pravin Salunkhe, Sr. DR Date of Hearing – 02/02/2026 Date of Order - 10/02/2026 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 14/10/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals)-51, Mumbai, [“learned CIT(A)”], for the assessment year 2010-11. 2. In this appeal, the assessee has raised the following grounds: - Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 2 “General Grounds: 1. confirming the action of the Income Tax Officer 35(3)(1), Mumbai ('Ld. AO') of assessing total income of the Appellant at INR 11,29,550 as against the income of INR 10,29,550 declared in the Return of Income ('ROI') filed by the Appellant under the provisions of the Act. Grounds challenging the validity of 're-opening of assessment 2. upholding the action of the AO of re-opening the assessment under section 147 of Act, which was merely based on information received from DIT, Investigation, without having a valid reason to believe and not recording failure on part of the Appellant, of not disclosing the facts pertaining to claim made in return of income. 3. re-opening the assessment proceedings for the captioned assessment year under section 147 of the Act as against section 153C of the Act, being mandatory for a case where incriminating material is found in search of third party and thereby the re-opening proceeding is bad in law. 4. upholding the action of AO of reopening the assessment under section 147 of the Act, which was undertaken merely on the basis of statement recorded during the search/ survey proceedings of a third party, and no other corroborative evidence/material has been brought on record against the Appellant for the purpose of making the reassessment. Grounds against disallowance of deduction claimed under section 80GGA of the Act 5. confirming the action of the Ld. AO of disallowing the deduction claimed under section 80GGA of the Act of Rs.1,00,000/- being amount paid to Navjeevan Charitable Trust ('NCT') merely based on surmises and conjectures that the Appellant was a part of a large cash-return arrangement, without providing any corroborative evidence/material relied against the appellant nor provided any opportunity of cross examination of the parties from whom statement were recorded, despite the same being specifically requested by the Appellant.” 3. Ground no.1 is general in nature. Therefore, the same does not require specific adjudication. 4. Grounds no.2-4, raised in assessee’s appeal, challenging the validity of reopening of assessment, were neither argued nor any documentary evidence in support of these grounds was furnished during the hearing. Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 3 Accordingly, Grounds no.2-4, raised in assessee’s appeal, are dismissed as not pressed. 5. Grounds no.5-8, raised in assessee’s appeal, pertain to the disallowance of deduction claimed under section 80-GGA of the Act. 6. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual, and for the year under consideration, filed his return of income on 25/06/2010, declaring a total income of INR 10,29,548 and claimed a deduction of INR 1 lakh under section 80-GGA of the Act in respect of donation made to the Navjeevan Charitable Trust. Subsequently, on the basis of the information received from the Investigation Wing regarding the search action under section 132 of the Act conducted on the Navjeevan Charitable Trust, wherein it was noticed that all the expenses of the Trust were mere book entries and no genuine expenses were made by the Trust for the purpose of section 35-AC of the Act, and all the donations received in cheque were returned in cash to all the donors after deducting normal commission, notice under section 148 of the Act was issued to the assessee on 28/03/2016. Accordingly, the proceedings under section 147 of the Act were initiated. In response to the notice, the assessee requested to treat the return filed on 25/06/2010 as filed in compliance with the notice issued under section 148 of the Act. During the reassessment proceedings, notice was issued to the assessee to show cause as to why the donation of INR 1 lakh given to the Navjeevan Charitable Trust should not be disallowed and added to the total income. In response, the assessee submitted all his bank records, other donation Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 4 documents and Income Tax papers to prove that he has indeed given a donation to the said Trust. Accordingly, the assessee submitted that the donation given to the Navjeevan Charitable Trust is genuine. 7. The Assessing Officer (“AO”), vide order dated 08/12/2016 passed under section 143(3) read with section 147 of the Act, disagreed with the submissions of the assessee and held that the genuineness of the donation given to the Navjeevan Charitable Trust could not be established. It was further held that the said Trust indulged in availing bogus donations in cheque and returning the same in cash after deducting certain commissions, which is proved by the statement of one of the Trustees of the Trust recorded during the search proceedings. The AO further held that, as per the statement, the expenses incurred by the Trust were bogus. Since the assessee is also one of the donors of the said Trust, the AO treated the entire donation as bogus and disallowed the same. 8. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue and held that the Investigation Wing’s findings demonstrate an organised modus operandi, whereby the donations received via cheque/RTGS were returned to the donor in cash after deducting commission. The learned CIT(A) further noted that the Trust/donee itself has admitted to providing accommodation entries and refunding donations in cash. The relevant findings of the learned CIT(A) are reproduced as follows:– “7.2 The appellant's plea that the donation of Rs 1,00,000/- to Navjeevan Charitable Trust (NCT) was a genuine transaction and therefore deductible is examined in the light of the material on record, the submissions advanced Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 5 and the authoritative decisions cited by the parties. It is trite that the onus of proving entitlement to a deduction rests on the appellant and, as emphasised by the Apex Court in Wipro Ltd., exemption provisions are to be literally construed and claimed benefits must be clearly substantiated by the taxpayer. In the present case the appellant's reliance on the donee's registration under section 12A and notification under section 35AC, the fact of payment through banking channels and certain tribunal orders favourable to other donors is not sufficient to discharge that onus once the Department has produced credible, fresh and corroborative material arising out of a lawful search and survey. The Investigation Wing's findings demonstrate an organised modus operandi: cheques/RTGS receipts into NCT's account, onward routing through brokers and conduit entities, and subsequent cash- payment back to a pattern confirmed by the trustee's donors after deduction of commission admissions recorded in the survey, statements of brokers recorded under oath and donor confirmations in consequential enquiries. Where the donee itself admits to providing accommodation entries and refunding donations in cash, and where independent broker statements and compiled lists of donors corroborate that admission, the legal effect of the donee's earlier registration/notification or the appellant's bank payment is considerably weakened, courts repeatedly instruct that form must yield to substance and that cheque payment alone cannot sanctify a sham transaction. The coordinate decisions relied upon by the appellant are fact- specific and, on the authorities and facts placed before us, are distinguishable: many of those orders turned on an absence of departmental material or on a different evidentiary matrix, whereas here the Department has produced post-donation material of large scale (running into crores) showing an organised accommodation-entry racket a pattern which the Hon'ble involving brokers and numerous beneficiaries Supreme Court has recognised and which has justified cancellation of donee registrations in cases such as Batanagar Education & Research Trust. In these circumstances once the Department confronted the appellant with the survey material and trustee/broker statements, the appellant was required to meet that material with cogent and specific evidence demonstrating application of the donated funds to genuine charitable activity; the appellant has not done so. Further, the questions posed by appellate tribunals in similar contexts why the donation was made to a particular out-station institute, what was the donor's antecedent interest in the institute's objects, whether similar donations were made in past or future years remain unanswered in the appellant's case and these unanswered factual circumstances materially undermine any contention of bona fides. For all these reasons the AO's conclusion that the donation was not genuine is supported by a preponderance of probabilities and by cogent, corroborated departmental material; the AO was therefore justified in disallowing the deduction claimed under section 80GGA. The appellant's ground that the donation was genuine is accordingly rejected and the addition of Rs. 1,00,000/- made by the AO is confirmed.” Being aggrieved, the assessee is in appeal before us. 9. We have considered the submissions of both sides and perused the material available on record. The solitary grievance of the assessee is Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 6 against the addition of INR 1 lakh on account of the disallowance of the deduction claimed under section 80-GGA of the Act by considering the donation made to the Navjeevan Charitable Trust as bogus. 10. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee is a salaried individual and claimed a deduction of INR 1 lakh under section 80-GGA of the Act in respect of the donation made to the Navjeevan Charitable Trust. In this regard, the learned AR referred to the letter dated 10/12/2009 issued to the Trust enclosing the cheque of INR 1 lakh paid as a donation towards the corpus of the Trust. Further, the learned AR referred to the donation receipt dated 26/12/2009 issued by the Trust and the certificate in Form No.58A issued to the Trust. The learned AR also refer to the Notification dated 12/01/2009, whereby, inter alia, the Navjeevan Charitable Trust was approved as an eligible trust under section 35-AC of the Act by the Ministry of Finance, for three financial years beginning from 01/04/2008. The learned AR also referred to the assessee's bank statement, from which a donation of INR 1 lakh was made to the Trust. By referring to the aforenoted documents, forming part of the paper book, the learned AR submitted that at the time when the assessee made the donation to the trust, it was holding a valid registration under section 35-AC of the Act, and thus the payment of donation by the assessee is genuine. In support of its submission, the learned AR placed reliance on the decisions of the Coordinate Bench of the Tribunal, in which the disallowance of the deduction claimed under section Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 7 80-GGA of the Act in respect of a donation made to Navjeevan Charitable Trust was directed to be deleted. 11. On the other hand, the learned Departmental Representative (“learned DR”), by vehemently relying upon the order passed by the lower authorities, submitted that none of the documents relied upon on behalf of the assessee proves that the transaction of payment of donation to the Navjeevan Charitable Trust was genuine in light of the findings of the Investigation Wing and the statement recorded during the search. 12. Having considered the submissions of both sides and perused the material available on record, at the outset, it is evident that in the decisions of the Coordinate Bench of the Tribunal relied upon by the learned AR, the deduction under section 80-GGA of the Act was denied based on the subsequent withdrawal of the approval granted to the Navjeevan Charitable Trust under section 35-AC of the Act. However, in the present case, as evident from the record, the findings of the lower authorities are based on the facts which emerged during the search on the Navjeevan Charitable Trust, wherein it was found that the Trust was merely a bogus entity, which had not incurred any genuine expenses for the purpose of section 35-AC of the Act. In this regard, the lower authorities have placed reliance upon the statement of the Trustee recorded during the course of the search, wherein he admitted that all the donations received in cheque were returned to the donors in cash from time to time, on which commission at the rate of 3% was deducted by the Trust. The relevant portion of the statement of the Trustee of the Navjeevan Charitable Trust is reproduced as follows: – Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 8 “Q.8 In the above questions you have stated that you never purchased goods for any amount and accommodation entries were obtained to book bogus purchases in consequence of which cash was received back from various parties / brokers. What happened to the cash so received? Ans: Sir, we return all the cash to the donors from time to time as and when the donations were received. A commission amount of 3% was deducted before returning back the cash. Out of the 3% commission which we used to receive, a small portion of the amount was spent to purchase food grains for the distribution among the poor for record purpose. …………. Q.9 Please specify the donors to whom the cash was paid back after deducting the commission Ans: Sir, we have paid back all the donors in cash who had made donations to our trust. The details are as per the ledger account seized during the search action on 27-10-2014. …………. Q11 Why is that the trust used to return hack cash to the donors? Ans: Donations made to our trust were on the condition that amounts would be returned back in cash. Commission at 3% was deducted in view of the fact that we used to issue certificates of donations, the benefit of which was taken by the donors in the form of deductions. Only Mr. Ashok Bagaria knew the specific benefit/ deduction which the donors use to get. Since we had to pay back all the donations received to all the donors within a short time as and when they were received, we used to book bogus purchases with accommodation entries without actual purchase of goods.” 13. Thus, on the basis of the aforesaid statement, it was noted that the donations were received via cheque and after routing through the conduit entity, a cash payment was made to the donors after deduction of commission. Accordingly, the lower authorities rejected the reliance placed by the assessee on the registration under section 35-AC granted and payment made through cheque. Therefore, we are of the considered view that the decisions relied upon by the learned AR were rendered in a factual matrix different from that of the present case, and are thus not applicable to the present case. Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 9 14. Further, it is evident from the record that no new documentary evidence has been placed on record by the assessee before us to controvert the findings of the lower authorities, and all these documentary evidences, as relied upon before us, have already been rejected by the lower authorities. Be that as it may, in the present case, it is pertinent to note that once the transaction of donation to the Trust has been alleged to be bogus by the Revenue on the basis of statement recorded during the search on the Trust/Donee, the onus lies on the assessee to prove beyond doubt to the contrary. However, in the present case, the assessee emphasised that the payment to the Trust was made by cheque. As noted in the foregoing paragraphs, the Trustee has himself accepted that all donations paid by cheque were returned to all donors in cash after deduction of a commission @3%. It is further pertinent to note that no evidence has been brought on record by the assessee which indicates that despite the statement recorded during the search, the Trust/Donee subsequently admitted that the donation given by the assessee to the Trust was for genuine purpose and the same was not returned to the assessee in cash. Therefore, we are of the considered view that the documentary evidences placed on record by the assessee do not inspire confidence to decide this issue in favour of the assessee and overturn the findings of the lower authorities that the donation of INR 1 lakh to the Navjeevan Charitable Trust, claimed by the assessee under section 80-GGA of the Act, is bogus. Accordingly, the findings of the lower authorities on this issue are upheld, and Grounds no.5-8, raised in the assessee’s appeal, are dismissed. Printed from counselvise.com ITA No. 8437/Mum/2025 (A.Y. 2010-11) 10 15. In the result, the appeal by the assessee is dismissed. Order pronounced in the open Court on 10/02/2026 Sd/- VIKRAM SINGH YADAV ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 10/02/2026 Disha Raut, Stenographer Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai. Printed from counselvise.com "