The CBDT cancelled my donee's s.35(1)(ii) approval with retrospective effect two years after I donated, and the reassessment has taken away my 175 per cent weighted deduction and added a notional commission. Does the deduction survive?
Yes, on these facts. The Explanation in s.35(1) says in terms that the deduction shall not be denied merely because the approval granted to the institution has been withdrawn after the payment, so a retrospective cancellation is by itself no ground for disallowance. A general Investigation Wing report about the donee, never furnished to the donor and never linked to his particular transaction, will not carry the disallowance either, and the consequential s.69C commission addition falls with it.
Decided by the ITAT (Shri Pawan Singh, Judicial Member and Shri Khettra Mohan Roy, Accountant Member) on 2026-04-06, reported as ITA No. 427/NAG/2024; Assessment Year 2014-15. It bears on section 35(1)(ii), section 35(1), section 35(1)(iii), section 69C, section 147, section 148, section 143(3), section 144B, section 132, section 250, section 234B, section 234C of the Income Tax Act 1961, in Deductions & Disallowances, Reassessment & Reopening and Evidence & Burden of Proof matters.
This is the taxpayer side of the Kolkata bogus-donation line and it is the answer to the standard reassessment built on the CBDT's 2016 notifications withdrawing the approvals of Herbicure Healthcare Bio-Herbal Research Foundation and the School of Human Genetics and Population Health. The limits matter as much as the holding: the protection is statutory and automatic only against the withdrawal of approval. It does not survive where the Revenue puts specific material on record showing that this donor's money came back — the Mumbai Bench in Chromex, on the same donee and the same year, upheld the disallowance because the institution's own admissions before the Settlement Commission and the Supreme Court's decision in Batanagar were on the record. Which side of that line a case falls on is decided by what the Assessing Officer actually produced and whether he offered cross-examination.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee, proprietor of Rana Traders, filed his return for AY 2014-15 on 30 September 2014 declaring Rs 2,23,54,457. A scrutiny assessment under s.143(3) on 27 October 2016 added Rs 3,43,456, which the CIT(A) deleted on 25 June 2018; the weighted deduction under s.35(1)(ii) was accepted in that regular assessment. On 29 March 2014 he had donated Rs 10,00,000 to the School of Human Genetics and Population Health and claimed Rs 17,50,000 as the weighted deduction; the receipt carried the details of the CBDT notification dated 28 January 2010 approving that institution under s.35(1)(ii). The case was reopened under s.147 following information arising from a search under s.132 on 26 May 2017 in the case of Sri Renuka Mata Multi State Urban Co-op. Credit Society Ltd., in which the assessee figured as a beneficiary of Rs 16,30,50,000. In the reassessment the officer accepted the assessee's explanation of the Rs 16,70,50,000 of receipts and made no addition on that account, but disallowed the Rs 17,50,000 weighted deduction on the basis of an Investigation Wing report and the subsequent cancellation of the donee's approval, and added Rs 1,50,000 under s.69C as presumed commission. The Investigation Wing report was not furnished to the assessee with the s.148 notice. The CIT(A)/NFAC dismissed the appeal on 10 June 2024 relying on an ITAT Chennai decision in Smt. Deviyani Dilip Patel and on the Allahabad High Court in PCIT v Mehndipur Balaji.
The appeal was partly allowed (para 17). The disallowance under s.35(1)(ii) was set aside and the Assessing Officer directed to allow the Rs 17,50,000 (para 14): a subsequent cancellation of the donee's approval is no reason for denial in view of the Explanation in s.35(1), and the disallowance had been made on a general Investigation Wing report without any specific reason or justification, and without that report being furnished to the assessee. The s.69C addition of Rs 1,50,000 was deleted as not based on any specific evidence and as not surviving the allowance of the deduction (para 15). The grounds challenging the validity of the s.148 notice were dismissed as infructuous, relief having been granted on the merits (para 16).
The Tribunal recorded that the donation was made on 29 March 2014 through banking channels, that the receipt showed the donee's notification of 28 January 2010, and that the claim had been accepted in the earlier s.143(3) assessment (para 9). It then reproduced the Explanation in s.35(1) and held that subsequent cancellation of the approval can be no reason for denial in view of that provision, adding that the disallowance had been made without pointing to any specific incriminating evidence about this assessee's transaction and that the Investigation Wing report was never supplied before being used adversely (para 9). It distinguished both authorities the CIT(A) had relied on: Deviyani Dilip Patel turned on the assessee there having made no payment by cheque or draft at all, and Mehndipur Balaji is a s.153A decision with nothing to do with s.35(1)(ii) (para 10). It then followed the coordinate Bench in C-DET Explosive Industries, which had held that there is no provision in s.35(1)(ii) for withdrawing recognition retrospectively and that no evidence had been brought to show the donation was routed back in cash, and which had reproduced the Calcutta High Court's judgment in PCIT v Maco Corporation applying CIT v Chotatingrai Tea (paras 11 to 13).
Subsequent cancellation of approval u/s 35(1)(ii) can be no reason for denial of deduction u/s 35(1)(ii) of the Act in view of specific statutory provisions of explanation to section 35(1)(ii) & (iii) of the Act.
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Handle my notice → Ask a CA on WhatsAppYes, on these facts. The Explanation in s.35(1) says in terms that the deduction shall not be denied merely because the approval granted to the institution has been withdrawn after the payment, so a retrospective cancellation is by itself no ground for disallowance. A general Investigation Wing report about the donee, never furnished to the donor and never linked to his particular transaction, will not carry the disallowance either, and the consequential s.69C commission addition falls with it. This was decided by the ITAT (Shri Pawan Singh, Judicial Member and Shri Khettra Mohan Roy, Accountant Member) and bears on section 35(1)(ii), section 35(1), section 35(1)(iii), section 69C, section 147, section 148, section 143(3), section 144B, section 132, section 250, section 234B, section 234C of the Income Tax Act 1961. It is reported as ITA No. 427/NAG/2024; Assessment Year 2014-15. This is the taxpayer side of the Kolkata bogus-donation line and it is the answer to the standard reassessment built on the CBDT's 2016 notifications withdrawing the approvals of Herbicure Healthcare Bio-Herbal Research Foundation and the School of Human Genetics and Population Health. The limits matter as much as the holding: the protection is statutory and automatic only against the withdrawal of approval. It does not survive where the Revenue puts specific material on record showing that this donor's money came back — the Mumbai Bench in Chromex, on the same donee and the same year, upheld the disallowance because the institution's own admissions before the Settlement Commission and the Supreme Court's decision in Batanagar were on the record. Which side of that line a case falls on is decided by what the Assessing Officer actually produced and whether he offered cross-examination. If it applies to you, the first step is this: Put on record the donee's notification under s.35(1)(ii) and its currency on the date of the donation — here the CBDT notification dated 28 January 2010 was printed on the receipt itself.
The assessee, proprietor of Rana Traders, filed his return for AY 2014-15 on 30 September 2014 declaring Rs 2,23,54,457. A scrutiny assessment under s.143(3) on 27 October 2016 added Rs 3,43,456, which the CIT(A) deleted on 25 June 2018; the weighted deduction under s.35(1)(ii) was accepted in that regular assessment. On 29 March 2014 he had donated Rs 10,00,000 to the School of Human Genetics and Population Health and claimed Rs 17,50,000 as the weighted deduction; the receipt carried the details of the CBDT notification dated 28 January 2010 approving that institution under s.35(1)(ii). The case was reopened under s.147 following information arising from a search under s.132 on 26 May 2017 in the case of Sri Renuka Mata Multi State Urban Co-op. Credit Society Ltd., in which the assessee figured as a beneficiary of Rs 16,30,50,000. In the reassessment the officer accepted the assessee's explanation of the Rs 16,70,50,000 of receipts and made no addition on that account, but disallowed the Rs 17,50,000 weighted deduction on the basis of an Investigation Wing report and the subsequent cancellation of the donee's approval, and added Rs 1,50,000 under s.69C as presumed commission. The Investigation Wing report was not furnished to the assessee with the s.148 notice. The CIT(A)/NFAC dismissed the appeal on 10 June 2024 relying on an ITAT Chennai decision in Smt. Deviyani Dilip Patel and on the Allahabad High Court in PCIT v Mehndipur Balaji. The matter was decided on 2026-04-06 by the ITAT (Shri Pawan Singh, Judicial Member and Shri Khettra Mohan Roy, Accountant Member). On those facts the ITAT held as follows. The appeal was partly allowed (para 17). The disallowance under s.35(1)(ii) was set aside and the Assessing Officer directed to allow the Rs 17,50,000 (para 14): a subsequent cancellation of the donee's approval is no reason for denial in view of the Explanation in s.35(1), and the disallowance had been made on a general Investigation Wing report without any specific reason or justification, and without that report being furnished to the assessee. The s.69C addition of Rs 1,50,000 was deleted as not based on any specific evidence and as not surviving the allowance of the deduction (para 15). The grounds challenging the validity of the s.148 notice were dismissed as infructuous, relief having been granted on the merits (para 16).
The Tribunal recorded that the donation was made on 29 March 2014 through banking channels, that the receipt showed the donee's notification of 28 January 2010, and that the claim had been accepted in the earlier s.143(3) assessment (para 9). It then reproduced the Explanation in s.35(1) and held that subsequent cancellation of the approval can be no reason for denial in view of that provision, adding that the disallowance had been made without pointing to any specific incriminating evidence about this assessee's transaction and that the Investigation Wing report was never supplied before being used adversely (para 9). It distinguished both authorities the CIT(A) had relied on: Deviyani Dilip Patel turned on the assessee there having made no payment by cheque or draft at all, and Mehndipur Balaji is a s.153A decision with nothing to do with s.35(1)(ii) (para 10). It then followed the coordinate Bench in C-DET Explosive Industries, which had held that there is no provision in s.35(1)(ii) for withdrawing recognition retrospectively and that no evidence had been brought to show the donation was routed back in cash, and which had reproduced the Calcutta High Court's judgment in PCIT v Maco Corporation applying CIT v Chotatingrai Tea (paras 11 to 13). In the words reproduced by the source cited on this page: "Subsequent cancellation of approval u/s 35(1)(ii) can be no reason for denial of deduction u/s 35(1)(ii) of the Act in view of specific statutory provisions of explanation to section 35(1)(ii) & (iii) of the Act." The decision followed or applied C-DET Explosive Industries Pvt. Ltd., ITA Nos. 310 to 312/Nag/2019, decided 30 October 2023 — followed; PCIT v. Maco Corpn. (India) (P.) Ltd. (2022) 144 taxmann.com 39 (Calcutta) — relied on; CIT v. Chotatingrai Tea (2002) 258 ITR 529 (SC) — applied through the Calcutta High Court judgment; Andaman Timber Industries v. Commissioner of Central Excise — relied on by the assessee on cross-examination.
It was decided by the ITAT on 2026-04-06 and is reported as ITA No. 427/NAG/2024; Assessment Year 2014-15. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 35(1)(ii), section 35(1), section 35(1)(iii), section 69C, section 147, section 148, section 143(3), section 144B, section 132, section 250, section 234B, section 234C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was partly allowed (para 17). The disallowance under s.35(1)(ii) was set aside and the Assessing Officer directed to allow the Rs 17,50,000 (para 14): a subsequent cancellation of the donee's approval is no reason for denial in view of the Explanation in s.35(1), and the disallowance had been made on a general Investigation Wing report without any specific reason or justification, and without that report being furnished to the assessee. The s.69C addition of Rs 1,50,000 was deleted as not based on any specific evidence and as not surviving the allowance of the deduction (para 15). The grounds challenging the validity of the s.148 notice were dismissed as infructuous, relief having been granted on the merits (para 16). It arises in Deductions & Disallowances, Reassessment & Reopening and Evidence & Burden of Proof matters, on section 35(1)(ii), section 35(1), section 35(1)(iii), section 69C, section 147, section 148, section 143(3), section 144B, section 132, section 250, section 234B, section 234C of the Income Tax Act 1961, and was decided by Shri Pawan Singh, Judicial Member and Shri Khettra Mohan Roy, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Quote the Explanation in s.35(1) verbatim in your reply; the Tribunal reproduced it twice and treated it as decisive. Demand the Investigation Wing report relied on, and if it is withheld take the Andaman Timber Industries point that a statement not furnished and not offered for cross-examination cannot be used against you. Force the Assessing Officer to identify assessee-specific material — a bank trail, a confirmation, a statement naming you — rather than a general modus operandi diagram. Attack the consequential s.69C commission addition as parasitic: if the donation stands, the notional commission has no independent evidentiary basis. Check where your appeal lies before relying on this: the Calcutta High Court has affirmed the line in PCIT v Maco Corporation, but the Mumbai Bench has declined to follow it after Batanagar.
Searched for later treatment; none was found. That is not the same as a source affirming it. Decided 6 April 2026; no appeal against it has been traced, and no decision applying, following or affirming this order was found. The line of authority it follows has been affirmed by the Calcutta High Court in PCIT v. Maco Corporation India Pvt. Ltd., ITA/35/2021, decided 12 August 2022, but that judgment is affirmation of the line and not treatment of this order. Against it, the Mumbai Bench in Chromex v. DCIT-17(1), ITA No. 3793/Mum/2024, decided 28 August 2025, upheld an identical disallowance on donations to the same institution for the same assessment year, holding that Chotatingrai Tea is distinguishable where fraud is established and that coordinate Bench decisions rendered without the benefit of CIT (Exemption) v. Batanagar Education and Research Trust cannot be applied. The two orders are reconcilable on the evidence rather than on the law, and the disagreement is between Tribunal benches, so this is not a case of High Courts differing. A practitioner must not present the proposition as unqualified. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to 17 numbered paragraphs, with the disposal at para 17. The document contains TWO paragraphs numbered 12: the first is inside the block quotation at para 11 reproducing the coordinate Bench order in C-DET Explosive Industries Pvt. Ltd., ITA Nos. 310 to 312/Nag/2019, and the second is the Nagpur Bench's own. The quoted block also carries paragraphs numbered 10 and 11 belonging to C-DET, and inside those a further quotation of the Calcutta High Court in PCIT v Maco Corporation. Every locator cited here is the Nagpur Bench's own text. Two further points. First, the Bench and the assessee both call the saving provision the 'Explanation' to s.35(1) and reproduce it; it is elsewhere described as the 'fifth proviso to s.35(1)'. That is not what these judgments say, and the expression 'fifth proviso to sub-section (1) of section 35' belongs to CBDT's Form 10A and 10AB extension circulars, where it denotes the post-2021 approval-application provision and not the saving provision. Whether the saving words now sit in an Explanation or in a proviso has not been established, and nothing is stated about it here. Second, para 12 records that the Bombay High Court appeal against C-DET, ITA No. 5 of 2025, was 'dismissed as withdrawn' on 24 December 2025 because the special order to file the appeal was absent; that is not an affirmance on the merits and must not be cited as one. The reference at para 7 to 'order dated 30/10/2033' is an obvious typographical error for 2023. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was partly allowed (para 17). The disallowance under s.35(1)(ii) was set aside and the Assessing Officer directed to allow the Rs 17,50,000 (para 14): a subsequent cancellation of the donee's approval is no reason for denial in view of the Explanation in s.35(1), and the disallowance had been made on a general Investigation Wing report without any specific reason or justification, and without that report being furnished to the assessee. The s.69C addition of Rs 1,50,000 was deleted as not based on any specific evidence and as not surviving the allowance of the deduction (para 15). The grounds challenging the validity of the s.148 notice were dismissed as infructuous, relief having been granted on the merits (para 16).
TaxSphere, “Ashokkumar Gokulchand Sananda v ACIT, Akola Circle”, https://taxnotice.vittsphere.com/caselaw/case/ashokkumar-gokulchand-sananda-35-1-ii-retrospective-withdrawal/ (validity last checked 2026-09-16)
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Is there any High Court authority that a donor keeps his s.35(1)(ii) weighted deduction when the donee's approval is cancelled with retrospective effect after the payment?
My client says the Explanation in s.35(1) protects him because the donee's approval was live on the day he paid. The department has the donee's own admission before the Settlement Commission that the money went back in cash. Is the statutory protection enough?
The CPC disallowed my s.80GGA deduction in the s.143(1) intimation because I have business income. Can I still get relief for the same donation under s.35(1)(ii), and can I raise it in a s.154 application?
We were given a refund when the return was processed under s.143(1). On scrutiny the Assessing Officer has now raised a demand and has also charged interest under s.234D on the refund. Is that right, for how long does the interest run, and can he do it for an assessment year that is older than the section itself?
