5% Commission Formula Insufficient: Political Donation Allowed u/s 80GGC, s. 69A Addition Deleted

Manoj Kumar Jagetia Vs ITO (ITAT Jodhpur)

A 5% Commission Formula Is Not Evidence—Political Donation Allowed u/s 80GGC & Imaginary Cash-Back Addition u/s 69A Deleted

Summary:

The Donation That Triggered Reassessment

The Assessee, an employee of Balkrishna Industries Ltd., filed his original return for AY 2019-20 on 19.08.2019 declaring total income of ₹17,26,020. He claimed deduction of ₹3 lakh u/s 80GGC for a contribution made to Rashtriya Samajwadi Party (Secular).

A search u/s 132 was subsequently conducted on 07.09.2022 against a group of registered unrecognised political parties, intermediary entities and alleged exit providers in Ahmedabad. According to the AO, the seized material included donation receipts, diaries, loose papers & WhatsApp chats, while statements of certain office-bearers were recorded u/s 132(4). The Department alleged that donations received through banking channels were routed through intermediaries and returned to donors in cash after deduction of commission ranging from 3.5% to 5%.

On the basis of this information, proceedings u/s 148A were initiated and notice u/s 148 was issued on 10.04.2023.

Bank Payment In, Alleged Cash Payment Out

The Assessee reiterated the same income in the return filed pursuant to reopening. During reassessment, he furnished his computation, Form 16, bank statements, donation receipt and bank entry evidencing payment to the political party. He denied receiving any cash in return and requested the AO to furnish the material allegedly proving such repayment. He also sought the statements relied upon and an opportunity to cross-examine the concerned third parties.

The AO nevertheless treated the political party as an accommodation-entry provider, disallowed the ₹3 lakh deduction u/s 80GGC and inferred that the Assessee had received ₹2,85,000 in cash after deduction of 5% commission. The amount was added u/s 69A and subjected to section 115BBE. A further disallowance of ₹2,050 u/s 80D was made. Total income was assessed at ₹23,13,070.

The reassessment was completed u/s 147 read with section 144B on 07.01.2025.

Registration, Not Recognition, Is the Statutory Test

The ITAT examined section 80GGC and noted that the provision permits deduction of a contribution made by an eligible person to a political party, except where the contribution is made in cash. For this purpose, a political party means a political party registered u/s 29A of the Representation of the People Act, 1951. The provision does not require that the recipient be a recognised political party or that it must have contested elections during the relevant period. Registration and recognition are distinct concepts.

In the present case, the Department itself proceeded on the basis that Rashtriya Samajwadi Party (Secular) was a registered unrecognised political party. The payment through a banking channel and issuance of the donation receipt had not been disproved.

Modus Operandi Can Begin an Inquiry, Not End It

The Tribunal accepted that banking-channel payment and a donation receipt cannot by themselves sanctify a sham transaction. But an allegation of accommodation entry still requires evidence connecting the alleged operation to the particular assessee.

The Tribunal found that the controversy before it was whether general material found during the search of the RUPP group, without assessee-specific evidence of repayment, could justify both denial of the ₹3 lakh deduction and addition of ₹2.85 lakh u/s 69A. The record showed that the Assessee had made the payment through banking channels, furnished the bank statement and donation receipt, and that no cash or other unexplained money was found in his possession.

The general findings against the recipient political party could not automatically be imported into the assessment of every donor. The Revenue was required to confront the donor with specific material and establish the transactional nexus.

Third-Party Presumptions Cannot Travel Automatically

The material relied upon by the Revenue was recovered from third parties. It was not found in the possession or control of the Assessee. The Tribunal therefore held that presumptions u/ss 132(4A) and 292C did not establish that the Assessee had received cash.

More importantly, a statutory presumption cannot establish a fact which the document itself does not record. A record identifying the Assessee as a donor may support the fact that he made the contribution; it cannot automatically establish that he received cash in return unless the document contains material to that effect.

Precedents Distinguished & Followed

The ITAT followed the Co-ordinate Bench decision in Mukesh Somani v. Assessing Officer, ITA No. 1140/Jodh/2025, order dated 02.06.2026. That case involved the same AY 2019-20, the same political party and investigation information concerning alleged accommodation entries. The Co-ordinate Bench had found that the AO had not brought evidence establishing that the political party derived commission and paid money back to the donor.

The Mukesh Somani Bench had followed the Raipur Bench decision in ACIT v. Anuj Prakash Gupta, [2026] 183 taxmann.com 392 (Raipur-Trib.). On materially identical facts, the Jodhpur Bench found no distinguishing evidence connecting the present Assessee with cash repayment and held that judicial consistency required the same view.

The Revenue’s reliance on Jayeshkumar Gopalbhai Akbari and Miling P. Shroff v. Pr. CIT was not accepted as determinative. The Tribunal distinguished the latter in particular because it arose in the context of section 263 proceedings concerning lack of inquiry; it did not decide, after completion of an investigation, whether cash had actually been returned to a particular donor.

Section 69A Cannot Rest on a Calculator

The decisive defect in the section 69A addition was the absence of proof that the Assessee actually received or owned the alleged cash.

The Tribunal recorded that no money was found in the possession of the Assessee. There was no statement specifically alleging delivery of cash to him and no documentary or digital evidence recording such delivery had been identified. The alleged ownership and receipt of ₹2,85,000 were inferred merely by reducing 5% commission from the ₹3 lakh contribution. The Tribunal held that such an arithmetical inference did not satisfy the foundational requirements of section 69A.

Although the test of preponderance of probabilities applies in income-tax proceedings, the Tribunal emphasized that probability must arise from proved foundational facts; it cannot take the place of evidence altogether.

The Final Verdict

The ITAT held that the Assessee had discharged his initial burden by establishing the identity and status of the recipient, payment through a banking channel and issuance of the donation receipt. The Revenue failed to bring cogent material establishing that the contribution was returned to the Assessee in cash.

Accordingly, the ITAT directed the AO to allow the ₹3,00,000 deduction u/s 80GGC and deleted the ₹2,85,000 addition u/s 69A. The challenge to the validity of reassessment was left open as academic, since the additions were deleted on merits. The appeal was allowed.

A suspected political party may justify investigation—but an AO cannot convert a ₹3 lakh cheque into ₹2.85 lakh cash merely by pressing “minus 5%” on a calculator.

List of Cases Discussed / Relied Upon

• Mukesh Somani v. Assessing Officer, ITA No. 1140/Jodh/2025, order dated 02.06.2026 — Co-ordinate Bench decision involving AY 2019-20, the same political party and alleged accommodation entries; followed for want of evidence establishing cash repayment to the donor.
• ACIT v. Anuj Prakash Gupta, [2026] 183 taxmann.com 392 (Raipur-Trib.) — Raipur Bench decision followed by the Jodhpur Bench through Mukesh Somani.
• Jayeshkumar Gopalbhai Akbari — distinguished on the facts relied upon by the Revenue.
• Miling P. Shroff v. Pr. CIT — distinguished because the issue arose in section 263 proceedings concerning lack of inquiry, rather than determination of an assessee-specific cash repayment after investigation.

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT JODHPUR

This appeal by the assessee is directed against the order dated 24.09.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, [hereinafter referred to as “the CIT(A)”] under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] for the assessment year 2019-20. The learned CIT(A) dismissed the appeal of the assessee and upheld the reassessment order dated 07.01.2025 passed under section 147 read with section 144B of the Act.

2. The assessee has raised the following grounds of appeal:

1. The Ld. CIT(A) erred in upholding the reassessment initiated u/s 147, as it was based solely on third-party search information in the case of other persons and lacked any independent application of mind or objective satisfaction by the AO; consequently, the reopening is legally infirm, invalid, and liable to be quashed.

2. The Ld. CIT(A) failed to appreciate that the AO neither provided the statements or documents relied upon from the search proceedings nor granted any opportunity for cross-examination of the alleged third-party statements, amounting to a gross violation of the principles of natural justice and thereby rendering the addition bad in law.

3. The Ld. CIT(A) erred in confirming the disallowance of the deduction u/s 80GGC of Rs.3,00,000/- despite the appellant having substantiated the donation through proper banking channels and supporting receipts from the political party, and without the Department bringing any material evidence on record to establish that the said amount was ever returned to the appellant.

4. The Ld. CIT(A) erred in upholding the addition of Rs.2,85,000/- u/s 69A solely on the basis of an alleged generic modus operandi attributed to certain RUPP entities, without producing any direct evidence that the appellant received back any cash or was found in possession of unexplained money. The burden of proof under section 69A was not discharged by the Revenue.

5. The Ld. CIT(A) erred in mechanically relying on generalized investigation findings and alleged third-party confessions recorded u/s 132(4) in the case of political party operatives, and in incorrectly applying them to the appellant without any specific corroborative linkage.

6. The Ld. CIT(A) erred in relying on judgments not applicable to the facts of the present case while ignoring binding judicial precedents supporting the allowability of deduction u/s 80GGC where donations are made through verifiable banking channels.

7. The order of the Ld. CIT(A) is bad in law, contrary to facts, arbitrary and unsustainable, and the additions confirmed therein deserve to be deleted in full.

The appellant craves leave to add, amend, alter or withdraw any of the above grounds at the time of hearing.

Facts of the Case

3. The assessee is an individual and was employed with Balkrishna Industries Ltd., Mumbai. The assessee filed his original return of income for the assessment year 2019-20 on 19.08.2019 under section 139(1) of the Act, declaring total income of Rs.17,26,020/-. The assessee claimed deductions aggregating to Rs.4,67,500/- under Chapter VI-A of the Act. The return was processed under section 143(1)(a) of the Act.

4. Subsequently, a search under section 132 of the Act was conducted on 07.09.2022 in the cases of a group of registered unrecognized political parties at Ahmedabad, described in the assessment order as the “RUPP group of Ahmedabad”. According to the Assessing Officer, the search covered 23 registered unrecognized political parties, 35 intermediary entities and three alleged exit providers. Rashtriya Samajwadi Party (Secular), PAN AAAAR7090L, was stated to be one of the registered unrecognized political parties covered in the search.

5. The Assessing Officer recorded that documents relating to donation receipts, diaries containing details of commission, loose papers and WhatsApp chats found in the mobile phones of the office-bearers and alleged handlers of the political parties were seized during the search. Statements of certain office-bearers were also recorded under section 132(4) of the Act. According to the information received by the Assessing Officer, these political parties were accepting donations through cheque, RTGS or NEFT, routing the money through intermediary entities and returning the amount to the donors in cash after deducting commission ranging from 3.5% to 5%.

6. The information received by the Assessing Officer indicated that the assessee had made a political contribution of Rs.3,00,000/- to Rashtriya Samajwadi Party (Secular) during the financial year 2018-19 and had claimed deduction of the said amount under section 80GGC of the Act.

7. On the basis of the said information, proceedings under section 148A were initiated. After passing an order under section 148A(d) and obtaining the prescribed approval, a notice under section 148 was issued on 10.04.2023. In response, the assessee filed his return of income on 09.05.2023 declaring the same total income of Rs.17,26,020/-. A notice under section 143(2) was issued on 22.05.2024. In response, the assessee furnished a reply on 17.06.2024 along with, inter alia, the computation of total income, details of bank accounts, Form No.16, bank statement, proof of payment of life insurance premium, invoice relating to mediclaim and preventive health check-up, donation receipt and the relevant bank entry evidencing payment of the donation. A further notice under section 142(1) was issued on 06.08.2024. The assessee filed a reply on 21.08.2024 and furnished the documents called for by the Assessing Officer. A final show-cause notice was issued on 21.11.2024, to which the assessee responded on 28.11.2024. On the request of the assessee, an opportunity of hearing through video conference was also provided, and the assessee filed a further response on 13.12.2024.

8. The assessee submitted before the Assessing Officer that the donation of Rs.3,00,000/- was genuine and had been made through an official banking channel. The assessee furnished the bank statement evidencing the payment and the receipt issued by Rashtriya Samajwadi Party (Secular). It was contended that the source of the contribution was fully explained and that the conditions prescribed under section 80GGC of the Act stood satisfied. The assessee denied having received the donation amount or any part thereof in cash. It was contended that the conclusion regarding the receipt of Rs.2,85,000/- in cash had been drawn without any direct evidence. The assessee requested the Assessing Officer to furnish the evidence allegedly establishing repayment of cash to him. The assessee further submitted that the proposed additions were based upon statements of third parties and material found during a search conducted in their cases. The relied-upon statements and documents were not furnished to the assessee, nor was an opportunity to cross-examine the persons whose statements were proposed to be used against him provided. The assessee contended that a general allegation against the political party could not establish that the particular contribution made by him was an accommodation entry.

9. The Assessing Officer did not accept the explanation of the assessee. He observed that the material collected during the search and the statements of the office-bearers established that Rashtriya Samajwadi Party (Secular) was engaged in accepting donations through banking channels and returning the amounts to the donors in cash after deducting commission.

10. The Assessing Officer observed that the assessee had not produced any evidence regarding the political activities of the recipient party or explained the reason for making the contribution to a party which allegedly had no political presence and had not complied with the requirements of the Election Commission of India. The Assessing Officer concluded that the assessee had knowingly entered into a transaction with the political party for obtaining a deduction under section 80GGC of the Act.

11. The Assessing Officer accordingly disallowed the deduction of Rs.3,00,000/- claimed under section 80GGC. He further inferred that the assessee received Rs.2,85,000/- in cash after deduction of commission of 5% from the donation of Rs.3,00,000/-. The said amount was treated as unexplained money under section 69A and was subjected to the provisions of section 115BBE of the Act. The Assessing Officer also noticed that the assessee had claimed deduction of Rs.7,500/- under section 80D, whereas the invoice furnished by him evidenced payment of only Rs.5,450/-. The balance amount of Rs.2,050/- was, therefore, disallowed. The total income was computed as under:

12. The reassessment was completed under section 147 read with section 144B on 07.01.2025. Penalty proceedings under sections 270A and 271AAC(1) were separately initiated.

13. Aggrieved by the reassessment order, the assessee instituted an appeal before the learned CIT(A). The assessee challenged the validity of the reopening, the disallowance under section 80GGC and the addition under section 69A.

14. The assessee reiterated that the reopening was based upon third-party information without independent application of mind by the Assessing Officer. On the merits, the assessee submitted that the donation was made to a registered political party through a banking channel and was supported by a donation receipt. It was contended that the wrongdoing of the recipient, if any, could not result in denial of the deduction to a donor who had fulfilled the statutory conditions. The assessee further submitted that no material had been produced to establish repayment of the donation in cash. The allegation of repayment was based entirely on statements of third parties which were not furnished to the assessee and in respect of which no opportunity of cross-examination had been provided.

15. The learned CIT(A) upheld the validity of the reassessment proceedings. It was held that specific information had been received pursuant to the search conducted in the cases of the RUPP group and that the assessee’s name appeared in the list of beneficiaries. The learned CIT(A) observed that the Assessing Officer had verified the return of income and found that the assessee had claimed deduction under section 80GGC in respect of the contribution referred to in the information. The reopening was, therefore, held to be based upon tangible material and independent satisfaction.

16. On the merits, the learned CIT(A) held that Rashtriya Samajwadi Party (Secular) was engaged in providing accommodation entries by accepting donations through banking channels and returning the money to donors in cash after deducting commission. According to the learned CIT(A), the statements of the office-bearers, diaries, WhatsApp chats and analysis of the bank accounts corroborated the modus operandi. The learned CIT(A) held that the assessee had not demonstrated that his contribution was an exception to the general practice followed by the political party. The learned CIT(A), therefore, confirmed the disallowance of Rs.3,00,000/- under section 80GGC.

17. The learned CIT(A) further held that the seized material and statements established that the donations were returned to the donors in cash. The assessee had failed to rebut the evidence by producing any contrary material. Reference was also made to the presumptions under sections 132(4A) and 292C of the Act. The addition of Rs.2,85,000/- under section 69A was accordingly sustained. The disallowance of Rs.2,050/- under section 80D was also confirmed on the ground that the assessee had not furnished any evidence in excess of the invoice for Rs.5,450/-. Consequently, the appeal was dismissed.

18. Before us, the learned Authorised Representative (AR) reiterated the facts and submitted that the assessee had discharged the burden cast upon him under section 80GGC. The contribution of Rs.3,00,000/- was made to Rashtriya Samajwadi Party (Secular) through a banking channel. The assessee had furnished the bank statement evidencing the payment and the receipt issued by the political party. The status of the recipient as a registered unrecognized political party had not been disputed by the Assessing Officer.

19. The learned AR submitted that no material had been brought on record to establish that the donation, or any part thereof, was returned to the assessee in cash. The statements of the office-bearers of the political party and the documents allegedly found during the search were neither furnished to the assessee nor was an opportunity of cross-examination afforded. Reliance was placed, inter alia, on the decision of the Co-ordinate Bench in the case of Mukesh Somani v. Assessing Officer, ITA No.1140/Jodh/2025, order dated 02.06.2026.

20. The learned Departmental Representative (DR), on the other hand, relied upon the order of the learned CIT(A). The learned DR invited our attention to page 31 of the impugned order and submitted that the learned CIT(A) had duly considered and distinguished the decisions relied upon by the assessee. It was submitted that the search material established that the political party was accepting donations through banking channels and returning the amounts to donors in cash after deducting commission. The learned DR accordingly supported the disallowance under section 80GGC and the addition under section 69A.

21. We have considered the rival submissions and perused the material available on record, including the assessment order, the impugned appellate order and the decisions placed before us. The controversy is whether the general material found during the search in the cases of the RUPP group, without any assessee-specific evidence of repayment, is sufficient to deny the deduction of Rs.3,00,000/- under section 80GGC and further to assess Rs.2,85,000/- as unexplained money under section 69A.

22. The facts emerge from the record are that the assessee made a payment of Rs.3,00,000/- to Rashtriya Samajwadi Party (Secular); the payment was made through a banking channel; the assessee furnished the bank statement and the donation receipt; the recipient was treated by the Department as a registered unrecognized political party and no cash or other unexplained money was found in the possession of the assessee.

23. The dispute is confined to the allegation that the political party returned Rs.2,85,000/- to the assessee in cash after deducting commission of 5%.

24. Section 80GGC permits deduction of a contribution made by an eligible person to a political party, except where the contribution is made in cash. For this purpose, a political party means a political party registered under section 29A of the Representation of the People Act, 1951. The provision does not require that the recipient should be a recognized political party or that it should have contested elections during the relevant period. Registration and recognition are distinct concepts.

25. In the present case, the Department itself proceeded on the basis that Rashtriya Samajwadi Party (Secular) was a registered unrecognized political party. The payment through a banking channel and the issuance of the donation receipt have not been disproved.

26. The fact that a contribution has been made through banking channels and is supported by a receipt cannot, by itself, conclude the matter if the Revenue brings reliable evidence showing that the transaction was a mere accommodation entry. The question, however, is whether the material relied upon by the Revenue establishes such a nexus in the case of the present assessee.

27. The search material referred to by the Revenue was found in the cases of the political parties, intermediary entities and their office-bearers. The material may establish the modus operandi attributed to those entities. It does not, without more, establish that every donor who made a contribution through banking channels received cash back.

28. The general findings recorded against the recipient political party cannot automatically be imported into the assessment of every donor without confronting the donor with the specific material and establishing the transactional nexus. When the assessee has produced primary evidence in the form of the bank statement and donation receipt, the same cannot be rejected merely by applying a generalized allegation without producing the material said to establish repayment to the assessee.

29. The learned CIT(A) invoked the presumptions under sections 132(4A) and 292C of the Act. In our considered view, the said presumptions do not establish the alleged receipt of cash by the present assessee. The presumptions primarily operate in respect of the person from whose possession or control the books of account, documents, money or other assets are found. The material referred to by the authorities below was not found in the possession or control of the assessee. In any event, a statutory presumption cannot establish a fact which the document itself does not record. A record showing the assessee as a donor may support the admitted fact that the assessee made a contribution, but it cannot be presumed to establish that the assessee received cash in return unless the document contains some material to that effect.

30. The issue is directly covered by the decision of the Co-ordinate Bench in Mukesh Somani v. Assessing Officer, ITA No.1140/Jodh/2025, order dated 02.06.2026. The said case also related to the assessment year 2019-20, a contribution to Rashtriya Samajwadi Party (Secular) and information received from the Investigation Wing regarding alleged accommodation entries. The Co-ordinate Bench recorded in paragraph 4 as under:

“The Department allegation was that the said political party to which the assessee had made donation was tainted party providing bogus accommodation entries through donation. However, the AO had not brought on record, any evidence which suggests that the said political party has derived commission and has paid money back to the assessee through backdoor. Thus, nothing has been brought on record by the AO to establish the direct nexus regarding benefit derived by the assessee from the said political party while making the said donation of Rs. 1,00,000/-.” 

31. The operative finding in paragraph 5 reads as under:

“Following the ITAT Raipur Bench decision on parity of facts, we delete the addition of Rs. 1,00,000/- made by the AO u/s 80GGC of the Act.” 

32. The factual foundation in the present appeal is materially identical. No distinguishing evidence linking the present assessee with repayment of cash has been brought to our notice. Judicial consistency, therefore, requires that the view taken by the Co-ordinate Bench be followed.

33. In Mukesh Somani v. Assessing Officer, the Co-ordinate Bench followed the decision of the Raipur Bench in ACIT v. Anuj Prakash Gupta [2026] 183 taxmann.com 392 (Raipur-Trib.). The relevant extract reproduced in the order reads as under:

“At the time of hearing, the assessee himself appeared. The allegation of the Department is that the said political party in which the assessee had made donation was tainted party providing bogus accommodation entries through donations. However, the A.O had not brought out any evidence which suggests that the said political party has derived commission and has paid money back to the assessee through backdoor. Nothing has been brought on record by the A.O to establish the direct nexus regarding benefit derived by the assessee from the said political party while making the said donation.

In view of the aforesaid facts and circumstances, I do not find any infirmity with the findings of the Ld. CIT(Appeals)/NFAC which is hereby upheld.”

 34. The principle emerging from the aforesaid decisions is that evidence regarding the conduct of the recipient political party may justify an inquiry, but it cannot dispense with proof connecting the particular donor with the alleged cash-backtransaction. The said principle applies squarely to the present case.

35. The decision in JayeshkumarGopalbhai Akbari v. DCIT, ITA No.49/SRT/2024, order dated 28.03.2024, relied upon by the authorities below, is distinguishable on material facts. In that case, the donation was made to a different political party, namely Rashtriya Komi Ekta Party. The donation of Rs.50,00,000/- constituted almost half of the assessee’s gross total income. The Co-ordinate Bench further found that the relevant bank details had not been furnished before the authorities below and that the recipient political party had not acknowledged the contribution in
its return.

Paragraph 10 of the said order records:

“We have independently examined the facts of the present case. We find that the assessee has not replied to basic question and the objection raised by the assessing officer about his doubt on the genuineness of contribution to such political party, except claiming that it is not his duty to verify the affairs of such political party. It is not the case of the assessee that he is one of the main officer bearer or having any organisational post either at the District level or State level in the said political party. Even the assessee has not provided the details of his bank account or the bank account of such political party. Before us, the assessee has filed copy of the receipt of contribution/donation to the said political party alongwith the bank statement. No certificate is furnished in the form of verification of list of documents, if such bank statement is filed before lower authorities.” 

36. In the present case, the bank statement and donation receipt were furnished during the assessment proceedings. There is also no finding that the recipient political party did not acknowledge the contribution made by the present assessee. The factual deficiencies noticed in Jayeshkumar Gopalbhai Akbari are, therefore, absent in the present case.

37. The decision in Miling P. Shroff v. Pr. CIT, ITA No.93/RJT/2023, order dated 20.05.2024, also does not conclude the controversy before us. That appeal arose out of proceedings under section 263 of the Act. The Tribunal found that the Assessing Officer had not conducted anyinquiry concerning the claim under section 80GGC.Paragraph 17 of the said order records:

“We note that assessee had paid donations of Rs 30,00,000/- to one political party known as „Rashtriya Samajwadi Party(Secular)‟ and claimed the 100% deduction under chapter VI-A, under section 80GGC of the Act, for said donation, the assessing officer never conducted enquiry by way of issuing notice under section 142 (1) of the Act. That is, assessee had contributed donation of a sum of Rs.30,00,000/- under section 80GGC of the Act to the „Rashtriya Samajwadi Party (Secular)‟, a political party, which remain unexamined and unattended on the part of the assessing officer. Hence, it is a case of no enquiry, on the part of the assessing officer, so far deduction under section 80 GGC of the Act, is concerned.”

38. Thus, the issue before the Co-ordinate Bench in that case was whether the original assessment order was erroneous and prejudicial to the interests of the Revenue because the Assessing Officer had not conducted an inquiry. The Co-ordinate Bench was not adjudicating, after completion of an inquiry, whether any particular amount had actually been returned to that assessee. Observations made in the context of the jurisdiction under section 263 cannot substitute the requirement of assessee-specific evidence in a completed reassessment. The observations regarding fraud in Miling P. Shroff were also founded upon the nature and scope of the proceedings under section 263.  Before any transaction of a particular assessee can be treated as fraudulent, the foundational facts connecting that assessee with the fraud must first be established. A general conclusion regarding the activities of the recipient cannot, by itself, establish participation by every donor.

39. The disallowance under section 80GGC and the addition under section 69A stand on different statutory foundations. Even if the material available with the Revenue was sufficient to initiate an inquiry into the genuineness of the donation, an addition under section 69A could be made only after establishing that the assessee was found to be the owner of money which was not recorded in the books of account, if any, and in respect of which the explanation offered was not satisfactory.

40. No money was found in the possession of the assessee. There is no statement specifically alleging delivery of cash to the assessee and no documentary or digital evidence recording such delivery has been identified. The ownership and receipt of Rs.2,85,000/- have been inferred merely by reducing commission of 5% from the contribution of Rs.3,00,000/-. Such an arithmetical inference does not satisfy the foundational requirements of section 69A.

41. The learned CIT(A) observed that the absence of seizure of cash from the assessee was not decisive and that the matter could be determined on the preponderance of probabilities. There can be no dispute that the test of preponderance of probabilities is applicable in income-tax proceedings. However, a probability must arise from proved foundational facts. It cannot take the place of evidence altogether.

42. Before drawing the adverse inference, the Revenue was required to establish at least some assessee-specific circumstance indicating the return of money. In the absence of any such material, the conclusion that the assessee received exactly Rs.2,85,000/- remains conjectural. The initial burden of establishing receipt and ownership of unexplained money under section 69A was not discharged by the Revenue.

43. In view of the foregoing discussion, we hold that the assessee discharged the initial burden by establishing the identity and status of the recipient, payment through a banking channel and issuance of the donation receipt. The Revenue failed to bring on record any cogent material establishing that the contribution was returned to the assessee in cash.

44. The disallowance of Rs.3,00,000/- under section 80GGC is, therefore, unsustainable. We direct the Assessing Officer to allow the deduction of Rs.3,00,000/- under section 80GGC. For the same reasons, and independently for want of satisfaction of the statutory ingredients of section 69A, the addition of Rs.2,85,000/- is directed to be deleted. Grounds Nos.2 to 6 are accordingly allowed.

45. Ground No.1 challenges the validity of the reassessment proceedings. Since we have deleted the disallowance under section 80GGC and the addition under section 69A on the merits, adjudication of the validity of reopening in relation to those issues would be academic. We, therefore, leave the legal issue raised in Ground No.1 open without expressing any concluded opinion thereon.

46. Ground No.7 is general and does not require separate adjudication.

47. In the result, the appeal of the assessee is allowed in terms indicated above.

Order pronounced on 01.09.2026.