Akshit Jain vs DCIT

ORDER

“1.

That on facts & in law assessment order dated 15.01.2025 passed u/s 147 is void abinito. Deduction u/s 80GGC was denied on the basis of third party statement. Assessee has specially asked to provide an opportunity to cross examine these persons in view of judgement of Hon'ble Supreme Court in the case of Andaman Timber Industries vs Commissioner of Central Excise. Therefore, adverse inference drawn on the basis of third party statement is totally wrong & unjustified and assessment order is liable to be quashed.

2.

That Ld. AO as well as CIT(A) erred in not allowing deduction of Rs. 600,000/- u/s 80GGC of the Act. Assessee has duly fulfilled all the conditions as prescribed for claiming deduction u/s 80GGC of the Act. Therefore, not allowing deduction of Rs. 600,000/- u/s 80GGC of the Act is totally wrong & unjustified and same is to be allowed in full.

3.

That Ld. AO as well as CIT(A) erred in not allowing deduction of Rs. 3165/- u/s 80TTA of the Act. During the year assessee has interest of Rs. 3165/- on saving bank account and same was claimed as deduction u/s 80TTA of the Act. Your honour is requested to allow deduction u/s 80TTA as per the provisions of the Act.

4.

That the assessee craves for leave to raise, withdraw, and amend any ground in appeal before or during the hearing of appeal.”

“Special provision relating to incomes of political parties.

13A. Any income….. ….. ….. ….. Provided that—…. Provided further that if the treasurer of such political party or any other person authorised by that political party in this behalf fails to submit a report under sub-section (3) of section 29C of the Representation of the People Act, 1951 (43 of 1951) for a financial year, no exemption under this section shall be available for that political party for such financial year: ………” (emphasis supplied by us)

“10.

As per the facts of the present case, the AO received information from DDIT(Inv) regarding scam in the form of donations to political parties for claim of bogus donations u/s 80GGC / 80CCB of the Act which were rerouted back to the owner in cash RTGS / NEFT or other banking channels. Since the Rashtriya Samajwadi Party (Secular) was one of the main entity and covered in the RUPPs Group of Ahmadabad. As per records this party was established on 21.10.2008 and its registered address as per its website is Samruddhi Complex, Opp- Sakar-3, Income Tax Page | 5 Mi ling P. Shroff Circle, Ahmedabad. However, during pre-search enquiry, no party office was found at the aforesaid address. Therefore, further analysis was carried out from the data available with department/open source. During the analysis, it was revealed that in accordance with PAN database/facebook page of the party, its addresses were found as: (i) UG 8 Harekrishna Complex Nr CTM Cross Road Amraiwadi Ahmedabad (receipts of donation submitted by the assessee contains this address) and (ii) A/104, Rajshree Avenue, B/h. -Nr. Dinesh Hall, Ashram Road, Ahmedabad, respectively. However, during the presearch enquiry, no party office was found at these addresses also. Smt. Sandhya Singh is the national president of SVPP. 11. Therefore after evaluating the records, I found that the modus-operandi of this political party was that the donation was received through cheque in the bank account of the party and then routed through intermediary(ies) (which is generally shell entity(ies) controlled by either the persons running the party or by any other person) in the garb of various purchases or other payments, which are found to be bogus in nature. This money was then re-routed through various layers, and returned to the original donors, primarily in the form of cash, in lieu of some commission that ranges from 3.5% to 5%. It is pertinent to mention here that the political party doesn't pay any tax since it is exempt u/s 13A of the Act. 12. During the search proceedings, on 07.09.2022, statement on oath u/s 132(4) of the I.T. Act, was recorded of Smt. Sandhya Singh, National Party President of the Rashtriya Samajwadi Party (Secular).As evident from the declaration made on oath by Smt. Sandhya Singh that although she was national party president of the party, however, all the work related with was being looked-after by her husband Shri Bishwajeet Singh. She was not aware about any activity of the party. Further, vide Q.No. 18 and 19, she was categorically asked regarding details of bank accounts, books of accounts, nature and quantum of the expenditures of the Rashtriya, Samajwadi Party. In reply to the same, she again stated that she was not aware of any details regarding these subjects. She stated that all these things are being handled by her husband Shri Bishwajeet Singh. 13. The statement of Shri Bishwajeet Singh, on oath u/s 132(4) of the I.T. Act, was recorded on 07.09.2022. However, during the statement proceedings, Shrí Bishwajeet Singh admitted the fact that on his instance, his wife Smt. Sandhya Singh joined RSP, as president. During the statement proceedings, Shri Bishwajeet Singh also revealed that the party i.e. RSP was involved in bogus donations scam across India and founder of party i.e. Shri Surya Nath Chaturvedi carried out bogus donations scam since inception of the party. He further stated that after deducting certain commission donations were being returned to the donors. Shri Bishwajeet Singh further explained the modus-operandi of the bogus donation scam. He stated that Shri Riteshkuraar S Shah arranges bogus donations for the party as Ritesh Shah had wide network of CAs across India. Thus he used to convinces CAs for bringing bogus donations to the party and Ritesh Shah was keeping and issuing donations receipts to the donors through these CAs. Bishwajeet, Singh further stated that his own number had been registered in the Bank Account of the party which was maintained with Punjab National Bank. 14 Furthermore, Bishwajeet Singh had also examined the modus-operandi regarding generation of cash, which was subsequently returned to the donors. He stated that after layering of fund through bank accounts of various dummy entities, donated amounts are being credited in the bank accounts of APMCshops. From the accounts of APMC shops, the cash iswithdrawn to return it to the original donors. He stated that these were also being handled by the Shri Ritesh Shah. Bishwajit Singh submitted list of some bogus entities used for cash generation, which is reproduced by the assessing officer in the assessment order. 15 During the post search inquiries, statement of Amitkumar Chaturvedi (AHLPC7736R), past president of political party was also recorded, he categorically admitted that the party was engaged in bogus donations scam. He explained the modus operandi of the party with respect to donation received by the party. He stated that the party arranges donations through CAs/commission agents from, various individuals. On receipt of such donations, party follows the following two modus: 16. The party withdraws cash from its bank account and returns donated amount to the donors either directly or through angadiya/CAs/commission deducting certain commission. 17. Donated, amount was transferred to bank accounts of various dummy entities. The amount was transferred for layering purpose and to show that such entities had facilitated in purchase of agro-based products e.g. wheat, rice, vegetables etc, from the vendor of APMC market. At last, the donated amounts were transferred to accounts of vendor of APMC Market. From these accounts, cash was withdrawn and returned to donors after deducting certain commission. He had categorically stated that these transactions were sham transactions and reflected only on paper. He further stated that no goods were ever being purchased from any entities. He had also mentioned that cash were being withdrawn from the accounts of vendors of APMC Market as there was no restriction of cash with drawal on the bank accounts of vendors of APMC Market. 18. It is pertinent to refer to the fact that on verification with the website of regional Chief Electoral Officer where the party was registered i.e. CEO, Gujarat State, it was been found that Rashtriya Samajwadi Party (Secular) had not filed any contribution report, since F.Y. 2013-14 onward (details with respect to filing of contribution report was available on the state CEO's website from F.Y. 2013-14 to 2021-22). 19. It is thus evident that the conditions laid down in section 13A of the Income Tax Act was clearly not fulfilled by the party since F.Y. 2013-14. Accordingly, the party was not entitled to claim exemptions on the income earned since F.Y. 2013-14. In this connection, details of ITR and the date of filing of report u/s 29C of R.P. Act since 2017-18. 20. From the entire facts as discussed by me above I found that its crystal clear that not only had the party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it had also been, mentioning in its Income Tax Return of F.Y. 201819 that no contribution report had been filed u/s 29C of the R.P. Act, 1951. 21. In view of the facts discussed above, I am of the view that donation received by "Rashtriya Samajwadi Party(Secular) was bogus and cash had been received back by the assessee in lieu of cheque. The entire modus operandi of said political party was discussed by the AO as well which clearly indicates that donation given by assessee was bogus. 22. I also observed that there was no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements were correct and valid. 23. Since it has been established that the donations received by Rashtriya Samajvadi Party (Secular) was bogus, therefore the assessee was not entitled to claim deduction u/s 80GGC of the Act and 80G(5) of the Act and in this regard reliance has also been placed upon the decision of the Coordinate Bench of ITAT Pune in the case of Abhishek Ashok Lohade, which is reproduced below: …. …. 25. In view of the above discussion I have no hesitation in confirming the order of Ld. CIT(A) since in this case sham transactions have undertaken by Rashtriya Samajwadi Party (Secular) along with the assessee and assessee was fully aware above the nefarious / illegal activities being carried out by the Rashtriya Samajwadi Party (Secular) and was thus part of the tax fraud scam. 26. I once again reiterated that fraud vitiated even the most solemn proceedings and even the principles of natural justice have no application. I am also of the view that justice / laws are meant for imparting justice between the parties and one who comes to the court, must come with clean hands, head and heart, therefore a person whose case is based on falsehood has no legal right to approach the court and no court will allow itself to be used as a instrument of fraud and no court can allow its eyes to be closed to the fact that it was being used as an instrument of fraud. 27. Therefore, considering the overall facts and circumstances as discussed in detail above the decisions relied upon by the assessee are not at all applicable to the facts of the present case and are factually distinguishable. Therefore considering the overall circumstances I am of the considered view that orders passed by Ld. CIT(A) are legally correct and even no new facts or circumstances have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, I see no reasons to interfere into or to deviate from the lawful findings so recorded by Ld. CIT(A). Hence, the grounds raised by the assessee stands dismissed.”