Dhirubhai Madhubhai Domadiya Vs ITO (ITAT Rajkot)
Political Party’s Failure to Account for Donation Cannot Deny Donor’s Deduction: ITAT
Introduction
The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) allowed three appeals concerning donations to political parties. Following the coordinate bench decision in Ashish Dubey vs. ACIT, the Tribunal deleted the additions made by the Assessing Officers.
The principle applied was that where a donor establishes the payment of a political donation through supporting evidence and an acknowledged receipt, the political party’s failure to account for that donation cannot, by itself, justify denying the donor’s deduction.
The Tribunal found that the issues in the three appeals were identical and that the Revenue had not produced material warranting a departure from the precedent.
Background of the Appeals
The consolidated order dealt with appeals filed by Dhirubhai Madhubhai Domadiya, Ramesh Chimanlal Gavit and Sadhnaba Kripalsinh Parmar, all relating to Assessment Year 2024-25.
The appeals challenged separate orders passed under section 250 of the Income-tax Act, 1961, by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. Those appellate proceedings arose from separate assessments completed under section 143(3).
Since the appeals involved a common issue concerning donations to political parties, the Tribunal heard them together and disposed of them through a consolidated order.
The order does not separately specify the donation amounts or reproduce the assessment findings for each appellant. Its decision rests on the applicability of the coordinate bench ruling cited during the hearing.
Assessees’ Submissions Before ITAT
The assessees’ representative relied on Ashish Dubey vs. ACIT, ITA No. 222/Del/2020, decided on 8 May 2024, concerning Assessment Year 2015-16.
It was submitted that the cited decision covered donations made to a political party through banking channels, with supporting evidence concerning the party’s registration. The representative argued that the issues in the present appeals were squarely covered by that judgment and placed a copy before the Tribunal.
The Revenue’s representative, on the other hand, relied on the findings of the Assessing Officers.
The Tribunal examined the precedent and found no reason to take a different view on the common issue raised in the appeals.
Evidence Considered in Ashish Dubey’s Case
The Tribunal reproduced the relevant findings from Ashish Dubey, where the donor had furnished several documents supporting the political donation.
These included a donation receipt issued by Rashtriya Komi Ekta Party, the party’s PAN details and a letter dated 19 January 2001 from the Election Commission of India, evidencing registration under section 29A of the Representation of the People Act, 1951.
The supporting material also included the political party’s income-tax return for the relevant year, an email confirmation dated 19 December 2017, and extracts from the donor’s bank statement.
The bank entries corroborated the payment through banking channels and corresponded with the particulars recorded in the donation receipt. These documents were discussed as evidence in the cited precedent; the present consolidated order does not separately reproduce equivalent documents for each of the three appellants.
Recipient’s Accounting Failure Cannot Be Attributed to Donor
In Ashish Dubey, the tax authorities had discredited the donation evidence because the political party had not shown the donation in its income-tax return.
However, the coordinate bench noted that the evidence substantiated payment to a registered political party. Once the donor had established actual payment through material evidence and acknowledgment by the recipient, the recipient’s failure to account for the amount could not be attributed to the donor.
The distinction was between proof of the donor’s payment and the political party’s subsequent accounting treatment. The latter omission, standing alone, did not negate the evidence establishing the former.
Accordingly, the coordinate bench had allowed the donor’s appeal with consequential effect.
Rajkot ITAT Applies Coordinate Bench Ruling
Applying that reasoning, the Rajkot Bench held that the issue in the three appeals was squarely covered in favour of the assessees.
It recorded that there was no change in facts and law warranting a different conclusion. It further observed that the Revenue had been unable to produce material controverting the findings relied upon from the coordinate bench decision.
Since all three appeals involved similar and identical issues concerning political donations, the Tribunal followed the precedent and deleted the additions made by the Assessing Officers.
Final Outcome and Significance
The Tribunal allowed all three appeals for Assessment Year 2024-25 through its order pronounced on 23 October 2026.
The ruling highlights the importance of documentary evidence establishing a political donation, including payment records, acknowledgment and evidence concerning the recipient’s registration.
Its central principle is that a recipient political party’s failure to record a donation does not, by itself, defeat the donor’s deduction where payment is established by evidence. The Tribunal granted relief by applying that principle to the common issue before it, without recording separate donation amounts or detailed factual findings for each appellant.
Cases Discussed
- Ashish Dubey Vs ACIT (ITA No. 222/Del/2020; ITAT Delhi; 08.05.2024; AY 2015-16) — followed; original TaxGuru case URL not independently verified. Related TaxGuru coverage.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT RAJKOT
Captioned three appeals filed by the different assessees, pertaining same Assessment Year 2024-25, are directed against the separate orders passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi, which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 143(3) of the Act.
2. Since, the issues involved in all the appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order.
3.When these appeals were called out for hearing, the Ld. Counsel for the assessee invited my attention to the order dated 08.05.2024 passed by the Division Bench of Tribunal in the case of Ashish Dubey vs. ACIT in ITA No. 222/Del/2020 for A.Y. 2015-16, wherein it was held that donation was made to political party through banking channel and the certificate of the political party was effective. Therefore, addition made by the assessing officer should be deleted. The Ld. Counsel also submitted that these appeals are squarely covered by the above said judgement of the Tribunal. A copy of the judgement was also placed before the Bench.
4. On the other hand, the Ld. DR for the revenue relied on the findings of the assessing officer.
5. I see no reason to take any other view of the matter then the view so taken by the Hon’ble ITAT, Rajkot Bench in the case of Ashish Dubey (supra). 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 cannot be faulted so as to deny the deduction. Grounds raised are sustained. Appeal of assessee is allowed with consequential effect.”
6. As the issue is squarely covered in favour of the assessee by the decision of the Co-ordinate Bench in the case of Ashish Dubey (supra), there is no change in facts and law and the Revenue is unable to produce any materials to controvert the aforesaid findings of the Co-ordinate Bench in case of Ashish Dubey (supra), since the issue involved in these three appeals are similar and identical and pertain to donation to political party, therefore, I respectfully following the binding precedent of the Co-ordinate Bench in case of Ashish Dubey (supra), delete the addition made by the Assessing Officer.
7. In the result, these three appeals (in ITA Nos. 1074 & 1075 & 1265/Rjt/2026 for AY 2024-25) are allowed.
Order is pronounced in the open Court on 23/10/2026.
