Anil Jayantilal Khatri Vs DCIT (ITAT Ahmedabad)
Political Donation Through Bank Not Enough: ITAT Upholds Section 80GGC Disallowance Over Accommodation Entry Findings
Donation Receipt Cannot Override Contrary Investigation Evidence
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance of a ₹1.50 lakh political donation deduction under Section 80GGC, holding that payment through banking channels and production of a donation receipt did not establish genuineness when contrary investigation material demonstrated an accommodation-entry arrangement.
The Tribunal relied on search findings, statements recorded under Section 132(4), bank trail analysis and the recipient party’s established modus operandi. It concluded that the contribution was not a genuine donation eligible for deduction.
The assessee’s appeal challenging the disallowance and the related assessment treatment was dismissed.
Case Details
The decision was delivered in Anil Jayantilal Khatri v. Deputy Commissioner of Income-tax, Circle 3(1)(1), Ahmedabad, ITA No. 2053/Ahd/2025, concerning Assessment Year 2019-20.
The order was pronounced on 16 October 2026 by Vice-President Dr. B.R.R. Kumar, sitting on the Ahmedabad SMC Bench.
The appeal arose from the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, dated 21 August 2025.
No one appeared for the assessee at the hearing. The Tribunal proceeded after hearing the Departmental Representative, observing that coordinate Bench decisions covered the issue.
Background: Deduction Claimed for Apna Desh Party Donation
The assessee filed his return declaring total income of ₹3,88,620, after claiming a deduction of ₹1,50,000 under Section 80GGC for a donation to Apna Desh Party, a Registered Unrecognised Political Party (RUPP).
The payment was made through banking channels and supported by a donation receipt.
Subsequently, information emerged from search and seizure proceedings conducted by the Investigation Wing in cases involving various RUPPs, including Apna Desh Party. Based on that information, the assessment was reopened.
During reassessment, the assessee submitted the donation receipt, bank statements and other documents. He maintained that the contribution was genuine and specifically stated that no amount had been received back by him.
Assessing Officer Rejects Claim
The Assessing Officer relied on the Investigation Wing’s findings concerning the alleged accommodation-entry activities of Apna Desh Party.
He disallowed the ₹1.50 lakh deduction under Section 80GGC and also treated the same amount as unexplained money under Section 69A read with Section 115BBE.
The CIT(A) upheld the assessment treatment. It observed that the investigation had established the party’s modus operandi and that the assessee had not demonstrated genuineness beyond the primary documents.
The assessee consequently approached the Tribunal, challenging both the deduction disallowance and the consequential addition.
Tribunal Relies on Coordinate Bench Decisions
The Tribunal referred to an earlier decision in Saurabh Pravinbhai Patel v. ITO, ITA No. 1017/Ahd/2023, dated 30 April 2025, in which a political donation deduction was disallowed after examining investigation material, the banking trail and the recipient’s modus operandi.
It also referred to decisions involving Mihir Bipinbhai Parekh, Milind Pankajbhai Shroff, Ritesh Sugan Jain and Rajen Jayantilal Merchant.
The order reproduced detailed findings from Milind Pankajbhai Shroff v. Pr. CIT-1, Rajkot, concerning Rashtriya Samajwadi Party (Secular). Those findings described a system in which donations received through banks were routed through intermediaries and returned to donors in cash after deducting commission.
These reproduced findings concerned the party involved in that precedent. The present assessee’s donation was to Apna Desh Party.
Surrounding Circumstances and Human Probabilities Considered
The Tribunal invoked the Supreme Court decisions in CIT v. Durga Prasad More and Sumati Dayal v. CIT.
It explained that tax authorities may examine the surrounding circumstances and real substance of a transaction, rather than accept its apparent character solely because supporting documents exist.
Applying that approach, the Tribunal held that the investigation material, recorded statements, banking analysis and established operating pattern formed a complete chain of circumstances demonstrating that the disputed donation was an accommodation entry.
The assessee’s bank payment and receipt did not, in the Tribunal’s assessment, outweigh that evidence.
Genuineness Must Survive Examination of the Evidence
The Tribunal held that the assessee had failed to establish that the contribution represented a genuine political donation qualifying under Section 80GGC.
It emphasised that the recipient party’s systematic layering of funds and accommodation-entry activities could not be disregarded merely because the assessee had produced routine documentary evidence.
The finding was therefore based on the cumulative investigation record, rather than simply on the recipient’s status as a registered unrecognised political party.
Final Outcome
The Tribunal found no infirmity in the CIT(A)’s order and dismissed the appeal, leaving the challenged assessment treatment undisturbed.
Its substantive reasoning focused on the donation’s genuineness and the Section 80GGC disallowance. The order did not separately develop an independent analysis of the statutory requirements for the Section 69A addition.
The ruling underscores that banking-channel payment and a donation receipt must be assessed alongside contrary evidence concerning the transaction’s actual nature.
Cases Discussed
- Mihir Bipinbhai Parekh v. DCIT — ITA No. 1173/Mum/2026
- Milind Pankajbhai Shroff v. Pr. CIT-1, Rajkot — ITA No. 93/RJT/2023; 20.05.2024
- Ritesh Sugan Jain v. ITO — ITA No. 8546/Mum/2025
- Rajen Jayantilal Merchant v. ITO — ITA No. 1683/Ahd/2025
- Saurabh Pravinbhai Patel v. ITO — ITA No. 1017/Ahd/2023; 30.04.2025
- Abhishek Ashok Lohade — ITA No. 816/PUN/2018; 22.11.2022
- CIT v. Durga Prasad More — (1971) 82 ITR 540 (SC)
- Sumati Dayal v. CIT — (1995) 214 ITR 801 (SC)
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “CIT(A)” for short), dated 21.08.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for Assessment Year (AY) 2019-20.
2. The main grievance of the assessee is against the action of the Ld. CIT(A) in confirming the disallowance of deduction of Rs.1,50,000/- claimed u/s 80GGC of the Act in respect of donation made to Apna Desh Party and in sustaining the consequential addition of Rs.1,50,000/- u/s 69A r.w.s. 115BBE of the Act.
3. None appeared on behalf of the assessee at the time of hearing. However, since the issue involved in the present appeal is covered by the
4. In this case, the assessee has filed his return of income for the year under consideration declaring total income of Rs.3,88,620/-, which included a deduction of Rs.1,50,000/- claimed u/s 80GGC of the Act in respect of donation made to Apna Desh Party, a Registered Unrecognised Political Party (RUPP). The donation was made through banking channels and was supported by a donation receipt. Subsequently, on the basis of information emanating from search and seizure proceedings conducted by the Investigation Wing in the cases of various RUPPs, including Apna Desh Party, the assessment was reopened. During the reassessment proceedings, the assessee furnished the donation receipt, bank statements and other relevant documents and submitted that the donation was genuine and that no amount had been received back by him. The Assessing Officer, relying upon the findings of the Investigation Wing regarding the alleged accommodation-entry activities of Apna Desh Party, disallowed the deduction of Rs.1,50,000/- claimed u/s 80GGC and treated the same amount as unexplained money u/s 69A r.w.s. 115BBE of the Act.
5. On appeal, the Ld. CIT(A), vide order dated 21.08.2025, upheld the action of the Assessing Officer, observing that the Investigation Wing had established the modus operandi of Apna Desh Party in providing accommodation entries and that the assessee had failed to establish the genuineness of the donation beyond the primary documentary evidence.
6. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal
7. Heard the rival contentions and perused the material available on record. It has been noticed that an identical issue concerning bogus political donations claimed under section 80GGC of the Act was considered by the Co-ordinate Bench in ITA No.1017/Ahd/2023, vide order dated 30.04.2025, wherein, upon consideration of the investigation material, bank trail and modus operandi of the recipient political party, the disallowance under section 80GGC was upheld.
8. Similar issue also 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),
(iii) Ritesh Sugan Jain Vs. ITO (ITA No. 8546/Mum/2025),
(iv) Rajen Jayantilal Merchant Vs. ITO (ITA No. 1683/Ahd/2025),
(v) Saurabh Pravinbhai Patel Vs. ITO (ITA No. 1017/Ahd/2023).
9. 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
(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 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 ITA No.816/PUN/2018, order dated 22.11.2022.
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.”
10. 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 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.
11. 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, it is held 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. Accordingly, no infirmity is found in the order of the Ld. CIT(A) affirming the disallowance made by the Assessing Officer. The grounds raised by the assessee are, therefore, dismissed.
12. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 16.10.2026.
