Sumit Maloo Vs ITO (ITAT Jaipur)
Documents Ignored, Additions Unjustified: Jaipur ITAT Restores Political Donation Issue &; Grants Multiple Tax Deductions
Summary: The assessee, Sumit Maloo, filed an appeal against the order of the NFAC/CIT(A) confirming various disallowances made in a reassessment for AY 2019-20. The proceedings originated from a search conducted on three registered unrecognised political parties, namely Manvadhikar National Party, Kishan Adhikar Party & Kisan Party of India, besides two charitable organisations.
According to the Revenue, these entities received donations through cheque, RTGS or NEFT, routed the money through several layers & returned it to the original donors in cash after deducting commission of 3.5% to 5%. The Revenue alleged that the arrangement enabled donors to claim deductions u/s 80GGB or 80GGC while recovering the donated amount in cash.
On the basis of the information received, the AO alleged that the assessee had obtained an accommodation entry by making a political donation of ₹1,00,000 to Manvadhikar National Party & claiming deduction u/s 80GGC. The assessee produced his Form 26AS, Form 16, donation receipt & other documents. Nevertheless, the AO disallowed the political donation claim along with deductions or exemptions relating to EPF contribution, house rent, medical expenditure & charitable donation. The total income was assessed at ₹16,73,240. The CIT(A) confirmed the disallowances, leading to the appeal before the Tribunal.
Issues before the Tribunal
The Tribunal was required to determine whether the political donation deduction could be denied merely on the basis of statements recorded from persons connected with the political party, without conducting an assessee-specific enquiry or granting cross-examination. It also examined the assessee’s claims of ₹1,38,400 u/s 80C, ₹2,54,000 u/s 10(13A), ₹50,000 u/s 80D & ₹50,000 u/s 80G.
Political donation u/s 80GGC
The Revenue relied principally upon the statements of Ram Bhawan Ojha & Tribhawan Ramkalp Ojha, who were allegedly controlling Manvadhikar National Party & Kishan Adhikar Party. Those statements indicated that political donations were accepted through banking channels & returned in cash after retaining commission.
The assessee contended that his donation was genuine & supported by a receipt issued by the political party, HDFC Bank statement showing payments of ₹90,000 & ₹10,000, & evidence that the political party was registered u/s 29A of the Representation of the People Act, 1951. He was neither confronted with any specific adverse material nor permitted to cross-examine the persons whose statements formed the basis of the disallowance.
The Tribunal found that the AO & CIT(A) had proceeded solely on third-party statements. No independent enquiry was conducted to establish that the assessee received cash in return for the donation. There was also no finding explaining how the assessee participated in obtaining a fictitious deduction. The documentary evidence produced by him was not properly examined.
The Tribunal held that an addition could not be sustained merely on third-party statements without enquiry & cross-examination. However, instead of allowing the deduction outright, it restored the issue to the AO for fresh adjudication after examining the material furnished by the assessee.
EPF deduction u/s 80C
The assessee claimed deduction of ₹1,38,400 towards contribution to his EPF account. He produced the EPF passbook & Form 16 issued by the employer, both recording the contribution. The lower authorities disallowed the deduction without properly examining these documents.
The Tribunal found that the contribution was clearly reflected in the EPF records & Form 16. Since the evidence substantiated the payment, it directed that the deduction of ₹1,38,400 be allowed.
House rent exemption u/s 10(13A)
The assessee claimed exemption of ₹2,54,000 against rent of ₹2,91,000 paid for residential accommodation in Mumbai. He furnished the rent agreement, rent receipts containing the landlord’s name, address & PAN, besides Form 16 showing that the employer had granted the exemption.
The Tribunal described these documents as self-speaking & observed that the AO & CIT(A) had arbitrarily ignored them. It held that the exemption was admissible, subject to verification by the AO.
Medical expenditure u/s 80D
The assessee claimed ₹50,000 towards medical expenditure incurred for his father, a senior citizen suffering from Parkinson’s disease. He furnished the doctor’s prescription, his father’s Aadhaar card, bank entries showing purchase of medicines & payments of ₹1,95,000 made for medical treatment.
The Tribunal held that the documents established the father’s age, illness, dependency & medical expenditure. It therefore directed that the deduction of ₹50,000 u/s 80D be allowed. The order also referred to Parkinson’s disease as being covered by Rule 11DD, though that rule ordinarily relates to specified disease deduction u/s 80DDB.
Charitable donation u/s 80G
The assessee donated ₹1,00,000 to Baldeodas Bhagirathi Shah Trust, Mumbai & claimed deduction of ₹50,000. The authorities alleged that the receipt & approval were not furnished. Before the Tribunal, however, the assessee produced the trust’s approval u/s 80G, donation receipt & banking evidence.
Finding that relevant documents were available but had been overlooked, the Tribunal directed the AO to allow the ₹50,000 deduction after verification. The appeal was consequently partly allowed.
Practical implications
The ruling reinforces that search findings against an organisation cannot automatically establish wrongdoing by every donor. An assessee-specific connection, evidence of cash-back & opportunity for cross-examination are essential before treating a banking-channel donation as an accommodation entry.
It also demonstrates that tax authorities must deal with documentary evidence through reasoned findings. EPF passbooks, Form 16, rent receipts, medical records, bank statements & approval certificates cannot be disregarded without verification. However, political donations to entities implicated in searches remain vulnerable to detailed examination, even where payment was made through banking channels.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
1. The Appellant, Sumit Maloo (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 12.02.2026 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] qua the assessment order for Assessment year 2019-20 on the grounds inter-alia that:-
“1. Based on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance made by the Ld. AO by not allowing deduction under section 80C of the Act of Rs 1,38,400 being amount deposited by the Appellant in the 1 Employee Provident Fund account of the Appellant maintained F with the Employees’ Provident Fund Organization without considering that the Appellant had duly furnished his passbook evidencing contribution made to his account during the subject year.
2. Based on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance made by the Ld. AO by not allowing exemption under section 10(13A) of the Act of Rs 2,54,000 being amount paid by the Appellant on 2 account of rent of Rs 2,91,000 during the year without considering that the Appellant had duly furnished the rent receipts containing the PAN, name and address of landlord as the Appellant was residing in rented premises in Mumbai for employment.
3. Based on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance made by the Ld. AO by not allowing deduction under section 80D of the Act of Rs 50,000 being amount paid by the Appellant on account of 3 medical expenditure incurred on his father suffering from Parkinsons (PSP) being a progressive neurological disease from year 2017 without considering that the Appellant had duly furnished doctors certificate and self-declaration for the expenditure incurred by the Appellant.
4. Based on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance made by the Ld. AO by not allowing deduction under section 80DDB of the Act of Rs 1,00,000 being amount paid by the Appellant on account of medical treatment incurred on his father suffering from Parkinsons (PSP) being a progressive neurological disease from year 2017 without considering that the Appellant had duly furnished doctors certificate evidencing illness being suffered by his father who left in the year August 2021.
5. Based on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance made by the Ld. AO by not allowing deduction under section 80G of the Act of Rs 50,000 being amount of Rs 1,00,000 paid by the Appellant through banking channel on account of donation to Baldeodas Bhagirathi Shah Trust, Mumbai who has been granted exemption certificate under section 80G of the Act without considering that the Appellant had duly furnished the 80G approval of the trust, donation receipts and the bank statement evidencing payment to the trust.
6. Based on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowance made by the Ld. AO by not allowing deduction under section 80GGC of the Act of Rs 1,00,000 being amount paid by the Appellant through banking channel Manvadhikar National Party, a political party duly registered under section 29A of the Representation of People Act, 1951 without appreciating that a) the Appellant duly proved the genuineness of the donation made through receipts and bank statements and b) without prejudice, the FAO made addition only on the basis of assumptions and surmises and without brining any evidence on record of receipt of cash by the Appellant.
7. The appellant craves to alter, amend and modify any ground of appeal.”
2. Briefly stated, facts necessary for consideration and adjudication of the issues at hand are : During the course of search at the premises of three registered Unrecognized Political Parties namely Manvadhikar National Party, Kishan Adhikar Party and Kisan Party of India along with two charitable organizations namely All India Social Education Charitable Trust and Aadhar Foundation run by two group of individuals. One group comprises of Ram Bhawan Ojha and his brother Tribhawan Ramkalp Ojha, controlling two Political Parties namely Manvadhikar National Party and Kishan Adhikar Party along with one charitable organization called All India Social Education Charitable Trust. The second group is of Shri Saumil Kiritbha Bhadiadra who was looking after the activities of Kisan Party of India and Aadhar Foundation. Donation was received through cheque/RTGS/NEFT and the said money was re-routed through various layers and returned to the original donors in the form of cash in lieu of some commissions to the tune of 3.5% to 5%. Donors claimed deduction u/s 80GGB/ and 80GGC of the Act and consequently, income earned by donors is escaped tax net.
3. As per information available with the Assessing Officer the assessee has obtained accommodation entry in the form of political donation of Rs. 1,00,000/- from Manvadhikar National Party in A.Y. 2019-20 and thereby claimed deduction u/s 80GGC of the Act. They filed submissions, Form 26AS, statement donation receipt issued by Manvadhikar National Party, Form 16 etc. Declining the contentions raised by the assessee, the AO proceeded to disallow the claim of donation u/s 80GGC Rs. 1,50,000/- u/s 80DDB Rs. 1,00,000/- u/s 80D, Rs. 50,000/- u/s 80D Rs. 2,54,000/- U/s 10(13A) and disallowed claim of Rs. 1,38,400/-u/s 80C and thereby assessed the total income of Rs. 16,73,240/-.
4. Assessee carried the matter before Ld. CIT(A) by way of filing appeal, who has dismissed the same. Feeling aggrieved with the impugned order passed by the Ld. CIT(A), assessee has come up before the Tribunal by way of filing the present appeal.
5. We have heard Ld. ARs for the appellant and Ld. DR for the Revenue and perused the record available on file.
6. Bare perusal of the impugned order passed by Ld. CIT(A) when read with the assessment order it goes to prove that Revenue Authorities have proceeded on the basis of statement of Ram Bhawan Ojha and Tribhawan Ramkalp Ojha of Manvadhikar National Party and Kisan Adhikar Party regarding the entry given in lieu of commission, however no enquiry has been made by the AO as well as Ld. CIT(A) nor the assessee has been given any opportunity to cross examine Ram Bhawan Ojha and Tribhawan Ramkalp Ojha. When the assessee has duly produced receipt issued by the said party, which is available at page 38 of the paper book, bank statement issued by HDFC bank proving donation of Rs. 90,000/- and Rs. 10,000/- on March, 2014 and registration of the political party u/s 29A of the Representation of People Act, 1951 available at page 34 and 35 of the paper book, no findings have been returned by the AO. How the assessee was into getting fictitious deduction no findings have been returned by Ld. CIT(A) if the said political party was not in existence. Merely on the basis of statement of Ram Bhawan Ojha and Tribhawan Ram Kalp Ojha addition cannot be made. So in these circumstances, we deem it necessary to remand this issue back to the AO to decide afresh on the basis of material made available on record by the assessee.
7. So far as question of claiming deduction by the assessee to the tune of Rs. 1,38,400/- u/s 80C of the Act is concerned, both the Assessing Officer as well as Ld. CIT(A) has disallowed the deduction without pursuing Employee Provident Fund (EPF) pass book brought on record by the assessee along with Form 16A issued by employer. We have perused the EPF pass book available at page 19-20 and Form 16 available at page 17 of the paper book, which go to prove that amount of Rs. 1,38,400/- is duly recorded Form 16 available at page 16 to 17 of the paper book. Similarly, in the EPF pass book maintained by the Employees Provident Fund Organization also shows that the amount deducted is duly recorded. So In these circumstances, Ld. CIT(A) has erred in disallowing deduction of Rs. 1,38,400/- claimed by the assessee u/s 80G, hence the same is ordered to be allowed.
8. So far as disallowing of exemption claimed by the assessee u/s 10(13A) of the Act to the tune of Rs. 2,54,000/- being amount paid by the assessee on account of rent of Rs. 2,91,000/- is concerned, the assessee has duly furnished rent note, rent receipt bearing name and address of PAN of the landlord available at page 10, 21 to 24 along with form 16 issued by the employer, wherein employer allowed deduction of Rs. 2,54,000/- u/s 10(13A) of the Act on account of rent payment. All these documents relied upon the assessee are self speaking but AO as well as Ld. CIT(A) has not discussed these documents rather arbitrarily disallowed the amount. We are of the considered view that this deduction is admissible to the assessee, however subject to verification by the AO.
9. Assessee’s claim of Rs. 50,000/- u/s 80D on account of medical expenditure for parent (senior citizen) has been disallowed by the AO and confirmed by the Ld. CIT(A) on the ground that documentary evidence has been furnished by the assessee. It is a case of the assessee that his father who was suffering from Parkinsons deceased since, 2017 was dependent upon him on which has been incurred medical expenditure from Rs. 1.50 lakhs to 2 lakhs in a year, however assessee’s father has expired in August, 2021. The assessee placed on record Doctor’s Prescription available at page 26, Aadhar card of his father showing him as senior citizen at page 27 of the paper book. Placed on record entries in the bank statements which shows that the medical expenses have been incurred by the assessee on account of purchase of medicine and also bank statement which shows that payment made by the assessee to his father amounting to Rs. 1,95,000/- for the purpose of medical treatment.
10. We have perused all the documents placed on record by the AO, which goes to prove that assessee’s father who was senior citizen was suffering from Parkinson, in which regular medical treatment is given it being neurological decease. Parkinson deceased is also covered under rule 11DDI(1) of IT Rules for the purpose of claiming deduction u/s 80D of the Act. In these circumstances, we are of the considered view that Ld. CIT(A) has erred in confirming the disallowance of Rs. 50,000/- claimed by the assessee u/s 80D on account of medical expenditure for his father, a senior citizen. Accordingly the same is ordered to be allowed.
11. Ld. CIT(A) has also confirmed the disallowance of deduction to the tune of Rs. 50,000/- u/s 80G on account of donation of Rs. 1,00,000/- paid to Baldeodas Bhagirathi Shah Trust, Mumbai stating that no donation receipt has been furnished nor registration certificate u/s 80G in respect of the trust has been brought on record. However Learned counsel for the assessee brought on record approval u/s 80G issued by Ld. CIT(A) available at page 29 of the paper book. Assessee also placed on record receipt of making donation of Rs. 1,00,000/- through banking channel available at page 29 of the paper book. The AO has disallowed this deduction on ground of non furnishing of documentary evidences. However from the record it is proved from the same that assessee has duly furnished documentary evidence but the AO as well as Ld. CIT(A) has erred in disallowing the same. Accordingly the AO is directed to allow the deduction of Rs. 50,000/- u/s 80G of the Act after due verification.
12. In view of what has been discussed above, the present appeal filed by the appellant is partly allowed.
Order pronounced in the open court on 25-08-2026
