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Judgment
PER MADHUMITA ROY, JM:
The instant appeal filed by the assessee is directed against the order dated 16.01.2026 passed by the ld. Commissioner of Income-tax (Appeals), NFAC, Delhi [hereinafter referred to as ‘the Ld. CIT(A)’] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the assessment order dated 03.02.2025 passed by the AO, Assessment Unit (hereinafter referred to as 'the AO') under section 147 read with section 144B of the Act for Assessment Year 2019-20.
The assessee has raised the following grounds of appeal :-
1.“Because the learned Assessing Officer, has erred in law and on facts in confirming the disallowance of Rs.4,00,000/- claimed under Section 80GGC of the Income Tax Act, 1961, despite the fact that the political contribution was made through proper banking channels on two specific dates in compliance with the statutory requirements in the following manner:
Bank Name Amount Date HDFC Rs.2,00,000 25.09.2018 State Bank of India Rs.2,00,000 14.03.2019 2.Because the receipt for political donation dated 25.09.2018 and 31.03.2019 for Rs.2,00,000 each is duly presented on record to the AO but he has failed to consider the same.
3.Because the learned authorities below have failed to appreciate that the Appellant had furnished complete documentary evidence including bank statements and donation receipts issued by Rashtriya Samajwadi Party, hence the deduction under Section 80GGC could not be denied in the absence of cogent evidence showing that the amount was returned to the Appellant, therefore the disallowance is arbitrary and unsustainable in law, judgement in support has been quoted for reference:
Hon'ble ITAT Raipur Bench In the matter of "The Assistant Commissioner of Income Tax, vs. Anuj Prakash Gupta; Date of pronouncement: 05.02.2026"
At the time of hearing, the assessee himself appeared. The allegation of the Department is that the said political party in which the assessee had made donation was tainted party providing bogus accommodation entries through donations. However, the A.O had not brought out any evidence which suggests that the said political party has derived commission and has paid money back to the assessee through backdoor. Nothing has been brought on record by the A.O to establish the direct nexus regarding benefit derived by the assessee from the said political party while making the said donation. In view of the aforesaid facts and circumstances, I do not find any infirmity with the findings of the Ld. CIT(Appeals)/NFAC which is hereby upheld.
4.Because the impugned addition has been made merely on the basis of general allegations arising from search proceedings conducted in the case of certain third parties and not on the basis of any direct or independent evidence against the Appellant.
5.Because the learned authorities erred in relying upon statements allegedly recorded from office bearers of the political party without granting the Appellant an opportunity to cross-examine such persons, thereby violating the principles of natural justice.
6.Because the learned Commissioner of income Tax (Appeals) further erred in rejecting the rectification application filed under Section 154 by holding that there was no mistake apparent on record, despite failure to consider the material judicial precedent relied upon by the Appellant.
7.Because the impugned orders passed by the authorities below are contrary to the facts on record and the provisions of the Income Tax Act, 1961, and therefore the disallowance of Rs. 4,00,000/-deserves to be deleted.
8.Because the assessee respectfully reserves the right to raise additional grounds of Appeal or to amend or to Alter or revise the existing grounds as may be required in the interest of justice at any stage prior to the hearing of the appeal.
PRAYER:
In view of the facts and grounds stated hereinabove, it is most respectfully prayed that this Hon'ble Authority may kindly be pleased to:
a)Allow the present appeal and kindly quash the order issued by CIT(A) under section 250 of the Income Tax Act, 1961 seeking disallowance of amount of Rs. 4,00,000 under Section 80GGC of the Income Tax Act, 1961, and hold that the Appellant is duly entitled to the said deduction as the political contribution was made through proper banking channels and in compliance with the statutory provisions.
b)Allow the present appeal and stay the ongoing demand notices issued against the appellant.
c)Pass any other or further order(s) as this Hon'ble Authority may deem fit and proper in the facts and circumstances of the case, in the interest of justice and equity.”
The appeal is barred for limitation for 515 days in respect of which an application for condonation of delay has been filed the content whereof seems to be genuine and, therefore, delay is condoned.
The matter relates to disallowance of Rs.4 lacs claimed u/s 80GGC of the Act being the political contribution made by the assessee through banking channel on two specific dates.
The assessee is a salaried person employed in Credit Suisse Services (India) Pvt. Ltd. A search and seizure action under Section 132 of the Income Tax Act, 1961 was conducted in the case of RUPPs group of Ahmedabad on 07.09.2022 wherein fact of donations to Political Parties for claiming bogus deduction under Section 80GGC/80GGB of the Act were found to be re-routed back to the donors in cash/RTGS/NEFT or other banking channels.
The assessee was also to have been engaged in such payment of donation to the political parties and income totaling to Rs.2 lac chargeable to tax as escaped assessment as of the opinion of the Revenue and notice, therefore, was served with the notice issued under Section 148 of the Act dated 13.04.2023. Such reopening of assessment was ultimately finalized upon making addition of Rs.4 lac in the hands of the assessee claimed under Section 80GGC of the Act which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us.
The assessee in fact, donated Rs.4 lacs to Rashtriya Samajwadi Party registered political party through proper banking channels. Supported documentary evidences including bank records and donation receipts were duly furnished before the authorities below in support of the claim of deduction made under Section 80GGC of the Act. The case was initiated in the background of the search action conducted under Section 132 of the Act in the case of RUPP Group of Ahmedabad included several registered unrecognized political parties and related entities and the donation made by the assessee before us stated to be covered in the said proceedings.
Before us, the Learned Counsel appearing for the assessee in support of the genuine donation made by him has drawn our attention to page 14 of the paper book wherefrom it appears that Rs.2 lacs has been donated through RTGS to Samajwadi Party through HDFC Bank on 29.05.2018 and balance donation of Rs.2 lacs has been made by the assessee through State Bank of India that too through transfer from its account to the said political party which is evident from the statement of account of the assessee lying with the SBI Bank, New Delhi appearing at pages 1 to 23 of the paper book filed before us. In this connection, the assessee has further relied upon a judgment passed by the Co-ordinate Bench of Tribunal in the case of ACIT vs. Anuj Prakash Gupta by the Raipur Bench of ITAT on 05.02.2026 wherein it was observed that the AO has not brought out any evidence suggesting that the said political party has derived commission and has paid money back to the assessee through backdoor. In the absence of direct nexus regarding benefit derived by the assessee from the said political party to whom the donation was made has not been able to be established, the order passed by the Learned CIT(A) in deleting the addition in hands of the assessee was upheld. Needless to mention that the fact as narrated hereinabove is identical to that of the fact narrated before us by the respective Counsel and also on record. He has further relied upon the judgment passed by the Co-ordinate Bench in the case of Ashish Dubey vs. ACIT, Circle – 30(1), New Delhi wherein disallowance of the claim of deduction under Section 80GGC of the Act to the tune of Rs.25 lacs in respect of donation made to Rashtriya Komi Ekta Party was challenged. Finally, considering the letter issued by the Election Commission of India, which recognizes Rashtriya Komi Ekta Party as a political party registered under Section 29A of the Representation of the People Act, 1951 and a copy of confirmation by way of e-mail dated 19.12.2017 from the said party and also considering the bank statement corroborating the fact of donations being made to the said political party by banking channels and the receipt made by the political party, the acknowledgment, appeal was allowed.
Donation made to the political party also part of the paper book filed before us appearing at pages 24 and 25 herein. The payment of donation made by the assessee and the receipt of acknowledgment to the assessee are, thus, on record. The assessee as a donor cannot be faulted and disallowance/ denial of deduction made in the fact and circumstances of the case and therefore, found to be wrong.
In this regard, we have also considered the Judgment passed by the Co-ordinate Bench of the Tribunal in ITA No. 222/Del/2020 for A.Y 2015-16 wherein on the identical facts, following observation was made:-
“Appreciating the material on record it comes up that at page no. 5 of the paper book assessee has provided a copy of receipt of donation issued by Rashtriya Komi Ekta Party. PAN of Rashtriya Komi Ekta Party is made available at page no. 6, which is similar to one mentioned on the receipt. Further, at page nos. 7 & 8 assessee has provided a copy of letter dated 19.01.2001 from Election Commission of India, which recognizes Rashtriya Komi Ekta Party as a political party registered u/s 29A of the Representation of the People Act, 1951. A copy of ITR of Rashtriya Komi Ekta Party for relevant assessment year 2015-16 is provided at page no. 9. The assessee has also provided a copy of confirmation by way of email dated 19.12.2017 from Rashtriya Komi Ekta Party at page nos. 10 & 11 of the paper book. The extract of assessee’s bank statement, available at pages 12-22 of the paper book, corroborates the fact of donations being made to the said political party by banking channel and corresponds to the details mentioned in the receipt 3 ITA no. 222/Del/2020 issued by the said political party as made available at page 5 of the paper book. However, this evidence is discredited by the tax authorities below on the basis that the said political party has not shown the donation in its return of income. The order of learned CIT(A) shows that aforesaid evidences were found to substantiate that assessee had paid donation to the registered political party. We are of the considered view that once the assessee had established, on the basis of material evidences, the fact of payment of the donation and the receipt acknowledged to the assessee then the mere fact that the political party on its part has failed to account for the donation received, the assessee as a donor cannot be faulted so as to deny the deduction. Grounds raised are sustained. Appeal of assessee is allowed with consequential effect.”
Thus, having regard to the entire aspect of the matter, we do not find any reason for disallowance of deduction made to the political party namely; Rashtriya Samajwadi Party which is supported by sufficient corroborating evidences being the bank statement and the receipt acknowledging such payment of donation by the assessee issued by the Rashtriya Samajwadi Party. The order passed by the authorities below is found to be bad in law not sustainable and therefore quashed.
In the result, Assessee’s appeal is, therefore, allowed.