Kailashben Kanjibhai Patel Vs ITO (ITAT Rajkot)
Political Party’s Accounting Default Cannot Deny Deduction for a Proven Donation
The Legal Principle
The Rajkot Tribunal held that a donor cannot be denied deduction merely because the recipient political party failed to account for the donation, where payment and acknowledgment are established through reliable evidence.
Following its earlier decision in Nikhil Nitinbhai Bhuptani v. ITO, the Tribunal deleted the ₹5 lakh disallowance relating to a political donation and allowed the assessee’s appeal.
The ruling places the distinction clearly: the donor must establish the contribution, but the political party’s subsequent accounting omission does not automatically invalidate that proof.
Background of the Dispute
The assessee claimed deduction for ₹5,00,000 donated to a political party during the year relevant to Assessment Year 2024–25.
The Assessing Officer disallowed the amount in an assessment under section 143(3) dated 16 March 2026. The CIT(A), through the National Faceless Appeal Centre, upheld the disallowance by an order dated 9 June 2026.
The assessee approached the Tribunal, challenging the confirmation of the disallowance.
The present order is brief and does not independently reproduce the full assessment reasoning or the assessee’s complete documentary record. Instead, it decides the controversy by applying an earlier coordinate Bench decision whose facts were considered similar.
Donation Through Banking Channels and Valid Registration
At the hearing, the authorised representative submitted that the issue was covered by Nikhil Nitinbhai Bhuptani, ITA No. 479/Rjt/2025, AY 2019–20, decided on 30 October 2025.
Counsel explained that the earlier decision had accepted the deduction where the donation was made through banking channels and the political party’s registration certificate was effective at the time of donation.
The Departmental Representative supported the Assessing Officer’s findings.
The Tribunal found no reason to take a different view and reproduced the earlier decision’s reasoning concerning proof of payment and the recipient party’s failure to account for the contribution.
Evidence Considered in the Adopted Precedent
The reproduced precedent concerned a donation to Rashtriya Komi Ekta Party.
The donor had furnished a donation receipt and the political party’s PAN, which corresponded with the PAN appearing on the receipt. An Election Commission letter established that the party was registered under section 29A of the Representation of the People Act, 1951.
The documentary record also included an email confirmation from the political party and the donor’s bank statement. The bank entries corroborated payment through banking channels and matched the particulars recorded in the donation receipt.
Thus, the claim was supported by several mutually consistent documents, rather than a receipt or bank debit considered in isolation.
These particulars belong to the precedent quoted in the present order. The Tribunal applied its reasoning after recording that the present assessee’s facts were similar.
Recipient’s Omission Did Not Negate the Donor’s Evidence
In the adopted precedent, the tax authorities had discredited the evidence because the political party had not shown the donation in its return of income.
However, the material established that the donor had paid the contribution to the registered political party and that the party had acknowledged its receipt.
The Tribunal held that, once payment and acknowledgment were established, the donor could not be faulted merely because the recipient failed to account for the donation.
The crucial point was that an omission in the recipient’s reporting did not, by itself, disprove the transaction established by the donor’s documents.
That principle governed the present appeal.
Tribunal Deleted the ₹5 Lakh Disallowance
The Tribunal recorded that the present facts were similar to those in Nikhil Nitinbhai Bhuptani and that there was no relevant change in facts or law.
It further observed that the Revenue had produced no material warranting departure from the findings supporting the coordinate Bench decision.
Accordingly, it deleted the ₹5 lakh addition arising from the political-donation disallowance and allowed the appeal.
The relief was final at the Tribunal stage. The matter was not restored to the Assessing Officer for further enquiry.
Author’s Comments
A recipient’s accounting default cannot automatically become the donor’s tax default. Once the donor establishes an actual contribution through reliable and consistent evidence, denial requires something more than the political party’s omission from its return.
The decision also demonstrates the value of maintaining a complete record. The adopted precedent relied on banking evidence, acknowledgment, PAN particulars, registration documents and confirmation. Their consistency supported the conclusion that the donation had actually been made.
At the same time, the ruling should not be described as granting automatic deduction for every payment routed through a bank. A banking transaction establishes movement of funds; the supporting documents establish the recipient and the nature of the payment.
Nor does the order decide a case involving proof of money being returned to the donor or a fictitious contribution. Its principle is narrower and useful: non-accounting by the political party alone cannot defeat an otherwise proved donation.
For practitioners, the focus should remain on establishing payment, acknowledgment and the recipient’s qualifying status at the relevant time, while requiring the Department to identify concrete material if it seeks to reject that evidence.
Cases Discussed
- Nikhil Nitinbhai Bhuptani Vs ITO (ITAT Rajkot)– ITA No. 479/Rjt/2025
FULL TEXT OF THE ORIGINAL ORDER OF ITAT RAJKOT
Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year 2024-25, is directed against the order passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 09.06.2026 by the National Faceless Appeal Centre (NFAC), Delhi/ Commissioner of Income Tax (Appeals) [in short ‘Ld. CIT(A)’], which in turn arises out of an assessment order passed by the Assessing Officer u/s.143(3) of the Act dated 16.03.2026.
2. Grounds of appeal raised by the assessee are as follows:
1. The Commissioner of Income Tax (Appeals) erred in upholding the disallowing Rs.5,00,000/- being the amount paid as donation to a political party
3. When the appeal was called out for hearing, Ld. Counsel for the assessee invited my attention that the issue is squarely covered in favour of the assessee by the judgment of the Coordinate Bench of ITAT Rajkot, in the case of Nikhil Nitinbhai Bhuptani, in ITA No.479/Rjt/2025, for AY 2019-20, order dated 30.10.2025 and stated that the issue under consideration relating to political donation is squarely covered by the said judgment, wherein the Tribunal held that donation was made to Political Parties through banking channel and since the certificate of the Political Party was effective at the time of donation therefore addition made by the AO was deleted by the Tribunal
4. On the other hand, Ld. DR for the revenue relied on the findings of the Assessing Officer.
5. I have heard, both the parties. I see no reason to take any other view of the matter, then the view so taken by the ITAT Rajkot, Bench in the case of Nikhil Nitinbhai Bhuptani (supra) vide order dated 30.10.2025, in this order, the Tribunal has inter alia observed as follows:
“4. Appreciating the material on record it comes up that at page no. 5 of the paper book assesse 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 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 Appeal of assessee is allowed with consequential effect.” cannot be faulted so as to deny the deduction. Grounds raised are sustained.
6. As the issue is squarely covered in favour of the assessee by the decision of the ITAT Rajkot, Bench in the case of Nikhil Nitinbhai Bhuptani (supra), the assessee’s facts under consideration is similar to Nikhil Nitinbhai Bhuptani (supra) and, there is no change in facts and law and the Revenue is unable to produce any materials to controvert the aforesaid findings of the ITAT Rajkot, Bench in case of Nikhil Nitinbhai Bhuptani (supra), therefore, I respectfully following the binding precedent of the ITAT Rajkot, Bench, delete the addition made by the assessing officer.
10. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open Court on 09/10/2026.
