Rajen Jayantilal Merchant Vs Assessment Unit (ITAT Ahmedabad)
The appeal was filed by Rajen Jayantilal Merchant before the ITAT Ahmedabad challenging the appellate order dated 02.07.2025 passed by the CIT(A), National Faceless Appeal Centre, Delhi, arising from the reassessment order under Sections 147 read with 144B of the Income Tax Act, 1961, for Assessment Year 2019-20. The assessee had declared total income of Rs.8,25,580/- in his original return filed on 26-10-2019 after claiming deductions under Chapter VIA, including Rs.1,50,000/- under Section 80GGC for donations to political parties. The assessment was reopened on the grounds that the donation of Rs.1,50,000/- to the Rashtriya Samajwadi Party (Secular), a registered unrecognized political party (RUPP), was a bogus entry intended to claim an inadmissible deduction under Section 80GGC.
In response, the assessee filed an updated return on 22-05-2023 reiterating the same donation claim and submitted a donation receipt, relevant bank statements, and the party’s registration certificate. However, the Assessing Officer (AO) noted that post-search enquiries into 23 RUPPs in Ahmedabad revealed that such donations were systematically returned to the donor after deducting a percentage, establishing them as non-genuine. Consequently, the AO disallowed the deduction, treating the donation as a bogus accommodation entry, and included it in taxable income.
