Arpit Sehgal vs Income Tax Officer

“6 . I have care fully consider ed the grounds of appeal, the asses sment or der pass ed u/s 147 r.w.s. 144B dat ed 15.01.2025, and t he written submissions along with doc uments file d by the appellant.

6.1

At the first ins tanc e, the a ppellant has chall enged the reass essme nt proceedi ngs o n grounds of limitati on and lack of approval by t he c ompet ent aut hority. H owever , the fac ts on rec ord clearly es tablis h that no tice u/s 1 48 dat ed 18.04.2023. These wer e dul y served and co mplied with. The ass ess ee also filed return on 18.05.2023 in res ponse ther eto. The gr ounds ta ken by the appella nt regardi ng limitation a nd sancti on do not hold, si nc e t he action was initia ted withi n t he framew ork o f section 147– 151 of the Ac t. R elianc e i s placed on the settl ed principle tha t onc e the assessee has participated i n t he reass essme nt pro ce edi ngs and filed return i n r espo nse, proc edur al obj ections c annot i nvali date t he reass es sme nt when tangi ble material exists. T he challenge on this ground is rejected.

6.2

The ass ess ee claimed deducti on of Rs.3,00,000/- u/s 80GGC for donation t o Sardar Vallabhai Patel Party. Documentary evi dence suc h as donation rec eipt, registr ati on certificate u/s 29A of t he Repres entation of People Act, and bank st ateme nt were furnis hed al ong with som e other material. However, duri ng t he searc h and s eizure operation u/s 132 in t he case of Registered Unrec ogni zed Political Parti es (RUPPs), it was categorically established on the basis of seized mater ial, digit al data , and stateme nts of key office b earer s that these entities were engaged i n a systematic scam of providi ng accommodation entries in t he guise of donations. The do nati ons were routed through multiple shell entities and ret urned t o the or igi nal dono rs i n cas h after char gi ng co mmission. Specifi c evidences i ncluding bogus donatio n receipts, diaries , WhatsApp chats, and stat ements of party functi onaries were found and seized. The party i n question had no genui ne political acti vity or presence and was only a c onduit for the bo gus donation rac ket.

6.3

The appellant’s reliance on t he plain language of section 80GGC and the fact of payme nt thr ough banki ng channel cannot over ride the subs tantive fi ndi ng that t he entire transacti on was s ham. The documentary complianc e is onl y a façade to gi ve c ol our of l egitimac y to a non-genui ne transaction. Courts hav e co nsistently held that when s urr ounding circumstances and mate rial evidence dem onst rate that an appare nt tr ansacti on is not real, the claim cannot be allowed merely on the basis of formal paper work.

6.4

Further, the appellant has faile d to discharge the onus of provi ng t hat the donatio n was genui ne in subst anc e and not par t of the racke t unearthed i n t he searc h. Me re prod ucti on of rec eipt and bank statement cannot displac e t he adv ers e material coll ected during investigati on. Accor di ngly, I hol d that the Assessing Officer was jus tified i n disallowi ng t he claim of deduction of Rs . 3,00,000/- u/s 80GGC.

7.

In view of the foregoing, all t he gr ounds of ap peal raised by the appellant fail. The additi on of Rs. 3,00,000/- made by the Assessing Officer is confirmed. The appeal is, therefore, dismissed.”