Ankit Atulkumar Shah Vs ITO (ITAT Ahmedabad)
Political Donation: Bank Payment and Receipt Cannot Rescue a Bogus Claim
₹1 Lakh Deduction Under Section 80GGC Denied
The Ahmedabad Tribunal has upheld the disallowance of a ₹1 lakh political donation claimed under Section 80GGC, holding that payment through banking channels and production of a donation receipt could not overcome the search material supporting the finding of an accommodation entry.
The Tribunal also rejected the assessee’s challenges to the validity of reassessment, including objections concerning limitation, the competent sanctioning authority, electronic authentication and the use of Section 148A.
The appeal was dismissed both on jurisdictional grounds and on the merits of the deduction.
Reopening Challenged on Several Grounds
For AY 2019-20, the assessee argued that the Section 148 notice had been issued after expiry of three years from the end of the assessment year.
According to him, the reopening therefore attracted Section 149(1)(b). Since the alleged escaped income was below ₹50 lakh, he contended that the notice could not legally be issued.
He further argued that approval should have been obtained from the Principal Chief Commissioner, rather than the Principal Commissioner. Additional objections concerned an allegedly unsigned approval and the procedure adopted for reopening based on third-party search information.
These objections required the Tribunal to examine the applicable computation of limitation and the conditions governing the reopening route.
Reply Period Excluded from Limitation
The Tribunal held that the time granted to the assessee to respond to the Section 148A(b) notice had to be excluded under the applicable proviso to Section 149(1).
After that exclusion, it found that the Section 148 notice fell within the computed three-year period. Consequently, Section 149(1)(b) did not apply.
Under Section 149(1)(a), reopening could be initiated even where the escaped income was below ₹50 lakh. The assessee’s threshold objection therefore failed.
The order mentions 4 May 2023 in paragraph 3 and 5 April 2023 in paragraph 4 as the notice date. This inconsistency should be kept in view when examining the chronology; the Tribunal’s conclusion expressly rests on exclusion of the reply period.
Principal Commissioner’s Approval Upheld
Since the Tribunal treated the reopening as falling within the applicable three-year period, it held that the Principal Commissioner was the correct specified authority under Section 151.
The approval form’s reference to Section 149(1)(b) was treated as a clerical error or procedural irregularity. The Tribunal considered that the form had to be read in its entirety, rather than allowing that reference alone to determine the validity of sanction.
It also rejected the authentication objection. The electronic approval displayed the name, office and designation of the sanctioning authority, satisfying the requirements relied upon by the Tribunal under Rule 127A.
Third-Party Search Did Not Automatically Displace Section 148A
The assessee contended that the search-related deeming provisions made the Section 148A procedure inapplicable.
The Tribunal held that the deeming fiction under Explanation 2(iv) to Section 148 operated only upon satisfaction of its prescribed conditions.
There was nothing on record establishing satisfaction of the necessary prior-approval condition for invoking that fiction. The Assessing Officer was therefore required to follow Section 148A, including granting the assessee an opportunity.
Since that procedure had been followed, the Tribunal found no jurisdictional defect on this ground.
Documentary Form Could Not Establish Genuineness
On merits, the Tribunal held that bank payment and a donation receipt were insufficient in the face of contrary investigation material.
It followed decisions concerning similar political donations, including Mihir Bipinbhai Parekh, Milind Pankajbhai Shroff, Ritesh Sugan Jain, Rajen Jayantilal Merchant and Kanal Sanatkumar Raval.
The discussion of those decisions described a mechanism involving receipt of donations through bank accounts, transfer through intermediary entities and generation of cash for return to donors after commission.
In the present appeal, the Tribunal concluded that the assessee had failed to establish a genuine contribution eligible under Section 80GGC, while the findings of the authorities below were supported by search material.
Surrounding Circumstances Matter
The reasoning adopted also referred to CIT v. Durga Prasad More, 82 ITR 540 (SC) and Sumati Dayal v. CIT, 214 ITR 801 (SC).
These authorities recognise that tax authorities may examine the surrounding circumstances and human probabilities when determining the real nature of a transaction.
The Tribunal accordingly upheld the ₹1 lakh disallowance and dismissed the appeal.
Author’s Comments
The decision reinforces that evidence of payment establishes the movement of money, while the genuineness of the donation remains a separate question. A receipt does not conclusively answer investigation material suggesting that the transaction formed part of an accommodation arrangement.
Equally, the order should not be read as holding that every donation to a political party subjected to search is automatically disallowable. Its conclusion rests on the material supporting the findings and the assessee’s failure to establish genuineness.
The limitation discussion also shows why the statutory exclusions must be examined before applying the ₹50 lakh threshold.
A bank entry proves payment. Eligibility for deduction requires the transaction to withstand examination of its substance.
Cases Discussed
- Mihir Bipinbhai Parekh Vs DCIT, ITA No. 1173/MUM/2026 (ITAT Mumbai) – Similar Section 80GGC dispute involving political donations; Tribunal noted that the appeal challenging the disallowance had been dismissed.
- Kanal Sanatkumar Raval Vs ITO, ITA No. 2155/AHD/2025 (ITAT Ahmedabad) – Followed on the effect of investigation material showing alleged layering of political donations and return of cash to donors.
- Ritesh Sugan Jain Vs ITO, ITA No. 8546/MUM/2025 (ITAT Mumbai) – Similar Section 80GGC claim rejected where investigation material supported the finding of an accommodation-entry arrangement.
- Rajen Jayantilal Merchant Vs ITO, ITA No. 1683/AHD/2025 (ITAT Ahmedabad) – Cited as a coordinate-bench decision sustaining disallowance of a similar political-donation deduction.
- Milind Pankajbhai Shroff Vs Pr. CIT-1, Rajkot, ITA No. 93/RJT/2023, dated 20.05.2024 (ITAT Rajkot) – Detailed findings concerning Rashtriya Samajwadi Party (Secular), alleged routing of donations through intermediaries and return of funds after commission were reproduced and followed.
- CIT v. Durga Prasad More, (1971) 82 ITR 540 (SC) – Relied upon for looking beyond documentary form to surrounding circumstances and the reality of a transaction.
- Sumati Dayal v. CIT, (1995) 214 ITR 801 (SC) – Relied upon for application of human probabilities and surrounding circumstances in determining the true character of a transaction.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
1. The present appeal has been preferred by the Assessee against the Order, dated 03/12/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 23/01/2025, passed under Section 147 of the Income Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2019-2020.
2. The Assessee has raised the following grounds of appeal:
1. The Ld. AO has erred in law and on facts by not obtaining prior approval of the competent authority as required under Explanation 2(iv) to Section 148, rendering the reassessment proceedings invalid, particularly when case is reopened based on third party search.
2. The Ld. AO has erred in law and on facts in initiating the reassessment proceedings, which are unsustainable in law, as recourse has been taken to the provisions of Section 148A in circumstances where the said provision was not applicable, particularly when initiation of proceedings under Section 148 was otherwise barred by limitation. Accordingly the reopening is invalid in law
3. The Ld. AO has erred in law and on facts in invoking Section 149(1)(b), despite for matters beyond three years from the end of A.Y. 2019-20 the alleged escapement should exceed Rs. 50,00,000/-which is not fulfilled in present case.
4. The Ld. AO has erred in obtaining approval u/s 151 from the PCIT instead of the PCCIT despite he himself has invoked Section 149(1)(b) in the 151-approval form. Such approval from an incompetent authority vitiates the reassessment proceedings.
5. The Ld. AO has erred in law and on facts by relying on an unsigned approval u/s 151, in violation of Section 282A and the DSC Policy, 2018. The absence of valid sanction renders the reassessment proceedings void
6. The Ld. AO has erred in law and on facts in completing the assessment through the NFAC, even though the matter ernanates from search-related information, for which jurisdiction is specifically conferred upon the Central Circle. The assessment order passed by an authority lacking such jurisdiction is therefore vitiated in law and liable to be held void ab initio.
7. The Ld. CIT(A) has upheld the decision of Ld. AO by disallowing the deduction of Rs. 1,00,000/-claimed u/s 80GGC, without properly appreciating the evidences and documents furnished by the assessee. The disallowance is unjustified and contrary to the material on record.
By way of Ground No.1 to 6 raised in the present appeal, the Assessee has challenged the validity of reassessment proceedings. Ground No.7 raised by the Assessee challenges the disallowance made by the Assessing Officer on merits. We have head both the sides and have perused the material on record. We have also taken into consideration the synopsis/submission filed by the Assessee as well as the judgments relied upon during the course of hearing.
Ground No. 1 to 6
3. The relevant facts for adjudication of grounds under consideration are that for the Assessment Year 2019-2020 reassessment proceedings were initiated in the case of the Assessee and notice under Section 148 of the Act was issued on 04/05/2023. According to the Assessee the period of 3 years from the end of the relevant assessment year expired on 31/03/2023. Therefore, According to the Assessee the notice under Section 148 of the Act was issued after the expiry of 3 years from the end of relevant assessment year. Consequently, provisions contained in Section 149(1)(b) of the Act were attracted. It was contended on behalf of the Assessee that reassessment proceedings were bad in law since requisite approval under Section 149(1)(b) of the Act read with Section 151 of the Act was not taken from Principal Chief Commissioner of Income Tax. Even otherwise, the amount of income that is said to have escaped assessment was below the threshold limit of 50 Lacs specified in Section 149(1)(b) of the Act and therefore, no notice under Section 148 of the Act could have been issued after the expiry of 3 years in the present case.
4. On perusal of record, we find that in case the time granted to the Assessee to file reply to notice issued under Section 148A(b) of the Act is excluded, the notice under Section 148 of the Act (issued on 05/04/2023) was issued within a period of 3 years as computed after taking into consideration Proviso 5 to Section 149(1) of the Act. Therefore, the contention raised by the Assessee that the notice under Section 148 of the Act was issued after the expiry of three years cannot be accepted and accordingly, we hold that the provision of Section of 149(1)(b) of the Act would not apply in the facts and circumstances of the present case.
5. As per the applicable provisions contained in Section 149(1)(a) of the Act, reassessment proceedings can be initiated even if the income escaping assessment is less than INR.50 Lakhs. Therefore, we find not infirmity in relation to initiation of reassessment proceedings in this regard.
6. We note that even the approval under Section 151 of the Act has been taken from Principal Commissioner of Income Tax under Section 151 of the Act, which is the correct specified authority. The reference to Section 149(1)(b) in the approval form is a mere clerical error/procedural irregularity as we are of the view that the approval form is to be considered in its entirety.
7. Further, we note that the approval issued under Section 151 of the Act contains the name, office, and designation of the specified authority. As per Rule 127A of the Income Tax Rule 1962 [for short ‘IT Rules’] every notice/document communicated in electronic from shall be deemed to be authenticated the name and office of the Income Tax Authority in displayed as part of electronic record. In the present case we find that the requirements of Rule 127A of the Act are satisfied. The approval issued under Section 151 of the Act contains the name, office and designation of the specified authority.
8. As regard applicability of the provisions contained in Section 148A of the Act read with Explanation 2(vi) to Section 148 of the Act is concerned, we do not find any merit in the contention advanced on behalf of the Assessee in view of the following. We note that provision contain in Explanation 2(iv) to Section 148 of the Act create a deeming fiction which comes into operation on satisfaction of condition specified therein. The effect the aforesaid deeming fiction is that the Assessing Officer is deemed to have information in his possession which suggests that income chargeable tax has escaped assessment in the case of the Assessee and consequently, the Assessing Officer is not required to undertake process of conducting inquiry and granting opportunity to the Assessee as contained in Section 148A of the Act before issuance of notice under Section 148 of the Act. In the present case it is admitted position that the Assessing Officer has followed procedure contained in 148A of the Act before issuing the notice under Section 148 of the Act. There is nothing on record to show that the conditions specified for triggering the deeming fiction contained in Explanation 2(iv) to Section 148 of the Act, being prior approval from specified authority, was satisfied. Therefore, the Assessing Officer was required to carry out investigation and grant opportunity to the Assessee in terms of Section 148A of the Act. It is not the case of the Assessee that the procedure specified in Section 148A of the Act was not followed by the Assessing Officer.
9. In view of the above, we do not find any merit in the contention advanced on behalf of the Assessee challenging the validity of reassessment proceedings and reject that the contention of the Assessee that the reassessment proceedings suffer from any jurisdiction defect. We hold that the reassessment proceedings were conducted in compliance with the application provision contained in Section 147, 148, 148A, 149 and 151 of the Act. Accordingly, Ground No.1 to 6 raised by the Assessee are dismissed.
Ground No.7
10. As regards Ground No.7 raised by the Assessee challenging the disallowance made by the Assessing Officer under section 80GGC of the Act is concerned, we find that the identical issues had come up for consideration before the Tribunal in the case of (a) Mihir Bipinbhai Parekh Vs. DCIT (ITA No. 1173/MUM/2026),, (b) Milind Pankajbhai Shroff Vs. Pr. CIT-1, Rajkot (ITA No.93/RJT/2023), (c) Ritesh Sugan Jain Vs. ITO (ITA No. 8546/MUM/2025), and (d) Rajen Jayantilal Merchant Vs. ITO (ITA No. 1683/AHD/2025). We note that in all the aforesaid cases the Tribunal dismissed the appeal preferred by the assessee challenging the order passed by Learned CIT(A) upholding the decision of the assessing officer making disallowance of deduction claimed by the assessee under section 80GGC of the Act in respect of similar donations made political parties which were subjected to search action. Contentions identical to those raised by the Assessee in the present case were rejected by the Tribunal. The decisions relied upon by the Learned Authorised Representative for the Assessee are distinguishable on facts and do not advance the case of the Assessee. Mere payment through banking channels and production of donation receipts cannot override the fact that overwhelming evidence was found which showed that the political party was engaged in providing accommodation entries. In the case of Kanal Sanatkumar Raval, Ahmedabad vs ITO, Ward-1(2)(1), Ahmedabad (ITA No. 2155/AHD/2025), after taking into consideration the material brought on record by the Revenue as well as the findings emerging from the investigation report, the Tribunal followed the view taken by the Co-ordinate Benches of this Tribunal in above/identical matters, and dismissed similar grounds raised by the Assessee holding as under:
“6. Ld. Counsel appearing for the assessee filed same set of documents filed before the Assessing Officer and reiterated its submissions. Nothing new documents or evidences filed before us to deviate from the findings of the Lower Authorities. The Ld AO has clearly brought out facts that bank accounts of above political parties have been used by the accommodation entry provider, where the donation received by cheques were layered through various bank accounts and ultimately cash was returned back. The same is not disputed by the assessee with relevant materials. Further the Ld AO made a detailed enquiry of RSP and its Bank accounts and transfer of funds to one Shri Mukesh Mehta proprietor of two firms and he transferred it to Waheguru Enterprise and Sapan Traders, which is clearly a systematic financial maneuver to legitimate illicit moneys and evade taxes. In the absence of any fresh materials in support of the assessee’s claim. The Grounds raised by the assessee is devoid of merits and liable to be dismissed.”
5. We also find that similar issue stands adjudicated by the Co-ordinate benches of this Tribunal in the cases of :-
(i) Mihir Bipinbhai Parekh Vs. DCIT (ITA No. 1173/Mum/2026),
(ii) Milind Pankajbhai Shroff Vs. Pr. CIT-1, Rajkot (ITA No.93/RJT/2023), Ritesh Sugan Jain Vs. ITO (ITA No. 8546/Mum/2025),
(iii) Rajen Jayantilal Merchant Vs. ITO (ITA No. 1683/Ahd/2025),
6. For the sake of ready reference, the detailed adjudication in the case of Milind Pankajbhai Shroff, vs The Pr. CIT 1, Rajkot in ITA No.93/RJT/2023 dtd 20/05/2024 is reproduced as under :-
“22. Now, we shall also adjudicate the other arguments advanced by Id. DR for the revenue to the effect that “fraud vitiates everything”. In this connection, at the cost of repetition, we reiterate the findings of Id PCIT, which are as follows:
(i) Rashtriya Samajwadi Party (Secular) is a Registered Unrecognized Political Party and it is one of the 23 RUPPs covered in the RUPPs Group of Ahmedabad. This party was established on 21.10.2008 and its registered address as per its website is Samruddhi Complex, Opp- Sakar-3, Income Tax Circle, Ahmedabad. However, during pre-search enquiry, no party office is found at the aforesaid address.
(ii) The modus-operandi of this political party is that the donation is 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. 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.
(iii) 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 is national party president of the party, however, all the work related with party is 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 is not aware of any details regarding these subjects. She stated that all these things are being handled by her husband Shri Bishwajeet Singh.
(iv) It is on record that statement of Shri Bishwajeet Singh, on oath u/s 132(4) of the I.T. Act, was recorded on 07.09.2022. During the statement proceedings, Shri 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 revealed that the party i.e. RSP is 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 are being returned to the donors.
(v) Furthermore, Shri Bishwajeet Singh stated that these affairs are also being the handled by the Shri Ritesh Shah. Shri Bishwajit Singh submitted list of some bogus entities used for cash generation, which is reproduced by Id PCIT on page number 13 of his order.
(vi) During the post search inquiries, statement of Shri Amitkumar Chaturvedi (AHLPC7736R), past president of political party was also recorded, he categorically admitted that the party was engaged in bogus donations scam.
(vii) It is relevant to refer to the fact that on verification with the website of regional Chief Electoral Officer where the party is registered i.e. CEO, Gujarat State, it has been found that Rashtriya Samajwadi Party (Secular) has not filed any contribution report, since F.Y. 2013-14 onward.
(viii) The party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it has also been, mentioning in its Income Tax Return of F.Y. 2018-19 that no contribution report has been filed u/s 29C of the R.P. Act, 1951.
(ix) Rashtriya Samajwadi Party (Secular) is not registered, as of today, as informed by Id Counsel for the assessee, with Election Commission of India/R.P. Act, 1951.
(x) There is no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements are correct and valid.
On analysis of gathered data of the conducted search, it was learnt that these RUPP’s are either not carrying out any sort of genuine political or social activity or they are carrying out such activities to project themselves as genuine parties. However, in reality these political parties are being used as a vehicle of accommodation entries under the garb of political activities. The biggest advantage of creating a façade of a political party to propagate the accommodation entry scam is the fact that the income of political party is completely exempt from taxation as long as conditions laid down in section 13A of the Act, are satisfied. The persons making donations to such organizations, at the same time received back the donations made by them in the form of cash after deduction of certain percentage of commission. By this way, the assessee i.e. the donor becomes eligible for the deduction u/s 80GGC of the Act and evades the income tax liability by claiming 100% deduction on donated amount irrespective of his/her ITR. Further, In the light of disclosures made by Shri Suryanath Chaturvedi the former president and founder member of RSP (Secular), it is an established fact the Rashtriya Samajwadi Party has been formed to carry out bogus donations scam and bogus donation activities are being carried out from the inception of the party. All the party presidents from the inception have admitted that the RUPP is involved in the bogus donation scam. Moreover, Umapati IT Solution is a paper entity and has been used for layering of bogus donation received in the bank accounts of RSP(Secular).
23. From the above facts, it is abundantly clear that donation received by “Rashtriya Samajwadi Party” is bogus. The assessee has claimed deduction under Section 80GGC of the Act, and 80G(5) of the Act, which is also bogus and to that extent Assessment Order passed by assessing officer is erroneous and prejudicial to the interest of Revenue. There is a saying that The ‘tail’ cannot wag the ‘dog’. When there is a fraud, then the details and documents submitted by the assessee, before the assessing officer, during the assessment proceedings, do not assist the assessee in any manner, that is, the assessee cannot take the plea that he has submitted enough documents and details before the assessing officer and assessing officer has taken the plausible view. For that reliance can be placed on the judgment of the Coordinate Bench of ITAT Pune, in the case of Abhishek Ashok Lohade in From the above facts and relying on the decision cited above, it is abundantly clear that donation received by “Rashtriya Samajwadi Party” is bogus. The assessee has claimed deduction under Section 80GGC of the Act, which is also bogus and to that extent the assessment order passed by assessing officer in disallowing the deduction claimed by the assessee u/s 80GGC to the tune of Rs.xxxxx/- is upheld.”
7. It is now well settled by the Hon’ble Supreme Court in the cases of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) that the taxing authorities are not required to put on blinkers while examining a transaction merely because it is supported by documentary evidence. They are entitled to look beyond the apparent, examine the surrounding circumstances, apply the test of human probabilities and ascertain the real nature of the transaction. Where the cumulative facts and attending circumstances establish that the apparent is not the real, the Revenue is justified in drawing an inference based on the preponderance of probabilities.
In the present case, the investigation material, statements recorded under section 132(4), bank trail analysis and the established modus operandi of the recipient political party constitute a complete chain of circumstances which overwhelmingly demonstrate that the impugned donation was merely an accommodation entry and not a genuine contribution eligible for deduction under section 80GGC of the Act.
8. In view of the foregoing discussion, the material brought on record by the Revenue, the findings emerging from the investigation and respectfully following the consistent view taken by the Co-ordinate Benches of this Tribunal in identical matters, we hold that the assessee has failed to establish that the impugned contribution represented a genuine donation eligible for deduction under section 80GGC of the Act. Mere payment through banking channels and production of donation receipts cannot, in the facts of the present case, override the overwhelming evidence demonstrating that the recipient political party was engaged in providing accommodation entries through a systematic layering of funds. The decisions relied upon by the Ld. AR are distinguishable on facts and do not advance the case of the assessee. We, therefore, find no infirmity in the order of the Ld. CIT(A) affirming the disallowance made by the Assessing Officer. Accordingly, the grounds raised by the assessee are dismissed.
9. In the result, the appeal of the assessee is dismissed.” (Emphasis Supplied)
11. Given the facts and circumstances of the present case, we find no reason to depart from the consistent view taken by the Tribunal in identical cases. WE note that in the present case also the Assessee had failed to establish that the donation made to political party represented a genuine donation eligible for deduction under section 80GGC of the Act. On the other hand, the findings of the authorities below are supported by the material found during search. Therefore, we decline to interfere with the order passed by the Learned CIT(A) confirming the disallowance made by the Assessing Officer by rejecting deduction of INR.1,00,000/- claimed by the Assessee under Section 80GGC of the Act. Accordingly, Ground No.7 raised by the Assessee is dismissed.
12. In result, present appeal preferred by the Assessee is dismissed.
Order pronounced on 30.09.2026
