“Craft a strong response to an Income Tax notice under Section 148A(b) regarding a donation to a Political party. Challenge the lack of supporting documents provided and demand concrete evidence justifying the allegation of bogus donations. Cite legal precedents, such as decisions by the Hon’ble Gujarat High Court and ITAT Ahmedabad, emphasizing that the donation is genuine and compliant with Section 80GGC of the Income Tax Act, 1961. Assert your right to claim deductions and request the withdrawal of the proceedings.”
Objection to notice u/s 148A(b) of Income Tax Act issued to beneficiary for donation made to Political party
Sub.: Reply in response to Notice issued under clause(b) of the section 148A of the Income Tax Act, 1961 for Asst. Year 2019-20
This is in connection with the notice received under clause (b) of the section 148A of the Act having DIN: ……………….dated …………….. wherein you have stated that you have information which suggests that income chargeable to tax for the Assessment Year 2019-20 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961 in my case. You have therefore asked me to show-cause as to why a notice section 148 of the Income tax Act, 1961 should not be issued. In this regard, I have to respectfully submit as under:
1. Ongoing through the notice, on very first page, you have stated that “The details of the information/ enquiry conducted on which reliance is being placed, along with supporting documents, are enclosed with this notice” However, I have received this notice only and there is no any attachment or supporting documents enclosed with the notice. The copy of screen shot from online portal is also attached herewith as per Annexure-1 in this regard. Thus, your above statement is factually incorrect. Therefore, I kindly request you to provide me all such documentary evidences, on which you are relied upon, depending upon which you are alleging that the income chargeable to tax for the Assessment Year 2019-20 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961 in my case. Without documentary evidences justifying your contention, the notice issued u/s 148A(b) of the Act is incorrect and illegal and the whole reopening of assessment is bad in law and void-ab-initio.
2. Now coming to the ANNEXURE part, it is observed that you have stated in Para 1.1 of your notice as“On the basis of information available with this office, it is found that you have made donation of Rs.90000/- to Party during the F.Y. 2018-19. During the course of Search action u/s 132 of the Act on Registered Unrecognized Political Parties (“RUPP” in short) and post search enquiries made by the department in this regard, it was established that the donation made to such Registered Unrecognized Political Parties in your case is in the nature of scam for claiming bogus deduction u/s80GGC/80GGB of the Act and intended to defraud the legitimate tax of the assessee. The amounts were returned back to the donor after deducting certain percentage from it. As per information, you have made aforesaid donation during the year which is proved to be a non-genuine.” However, you have not provided me any such document, information, material or statement recorded on which you have relied upon to issue notice under clause (b) of section 148A of the Act. I have to further state that kindly provide me specific evidence showing my involvement and proving donation made by me as bogus, may be in any form such as statement recorded or any other material or documentary evidences on which you are relied upon and from which you have formed an opinion that the donation made by me to Party is bogus and accordingly, there is an escapement of income. Until, you are not providing such concrete basis or evidences, there is no question of treating the donation made by me as bogus and there is no question of escapment of income merely on basis of general information received by you. Therefore, at this stage, the whole proceeding initiated by you u/s 148A of the Act is bad in law.
3. In fact, you have even not provided me a single piece of paper or any specific documentary evidence till the date showing that – i) How Party was involved in taking bogus donation, ii) How myself was involved in making the bogus donation, iii) How the donation made by me made to Party during the year is bogus and on what grounds, iv) how and on what basis, you are alleging that the donation made by me during the year is returned back to me. All these questions are still remains unanswered at your end. You have not justified anywhere in the whole notice issued u/s 148A(b) of the Act that the donation claimed by me u/s 80GGB/80GGC in the return of income filed is bogus. It is really surprising and shocking that if you do not have any basis showing or proving your contention then on what grounds you are claiming that the donation made by me is bogus and to that extent there is an escapement of income. At present the allegation made by me regarding bogus appears to be totally baseless and with prejudiced mind.
4. I have to further state that kindly provide me specific evidence showing my involvement and providing donation made by me as bogus, may be in any form such as statement recorded or any other material or documentary evidences on which you are relied upon and from which you have formed an opinion that the donation made by me to Party is bogus and accordingly, there is an escapement of income. Until, you are not providing such concrete basis or evidences, there is no question of treating the donation made by me as bogus and there is no question of escapement of income merely on basis of general information received by you. Therefore, the whole proceeding initiated by you u/s 148A of the Act is bad in law.
5. I have to submit that at the time of making donation, to further verify genuineness of the Political party, I had asked for and obtained the Certificate issued by Election Commission of India to Party, which are attached herewith as per Annexure-3. I have also observed some information to the extent available on various platform and to the best of my knowledge, from which some of facts have been emerged as under –
- The Party has been established since 2008 and from that year, the party is actively involved in Political movement around all over India. The Party is one of the largest Political parties in India contesting election regularly.
- The party is always participating in Election activities and consistently contesting elections every time with more than 100 candidatures from the party all over India. According to my knowledge, the Party has contested and also won the seats in past elections, which you can verify from the Election Commission website.
- Party is also having its own website and strongly and actively does Election campaigning on social media and present everywhere on various public platform such as face book, you tube, Twitter etc. from which Election activity of Party can be viewed and verified.
Thus, I was able to convince myself about genuineness of the party relied upon the registration granted by Election Commission of India i.e., most trusted body of Government and accordingly made the donation. Thus the liability to verify the genuineness party has been duly discharged at my end at the time of making donation and therefore I am clearly eligible for deduction u/s 80GGB/80GGC of the Income tax Act, 1961 towards donation made to the Party.
6. I have to further state that the donation made by me to Party during the year is completely genuine and correct in view of following:
- Myself being an Individual and not the local authorities and artificial juridical person which is either wholly or partly funded by the Government and thus I am clearly eligible to make the donation and claim donation as per the provisions of Section 80GGC of the Act
- I have made the donation to Party is duly registered as Political party with Election Commission of India as per the provisions of Section 29A of the Representation of People Act, 1951 from year 2008. Therefore, the Party is a Political party to whom I can make the donation as per the provisions of Section 80GGC of the Act.
- It is undisputed fact that I have made the donation through banking channel and not in cash or kind. Further the Political party has valid bank account as per the banking norms prescribed by the RBI and in that account only, I have made the donation as per legal permitted banking channel.
7. In addition to the above, I have to further submit that the donors are least concerned about what the political party is doing with the donation received, as it is none of them business. It is the sole responsibility of the party to make good use of it for the defined object provided in its constitution as held by various ITATs and High Courts in their decisions.
I rely upon the decision of Hon’ble Gujarat High Court in case of THE PRINCIPAL COMMISSIONER OF INCOME TAX-3 Versus M/S THAKKAR GOVINDBHAI GANPATLAL HUF – R/TAX APPEAL NO. 881 of 2019, wherein the Hon’ble Court has held as under and allowed the identical issue in favour of the assessee.
“6. We have duly considered rival The AO is harping upon an information supplied by the survey tern of Calcutta. He has not specifically recorded statement of representative of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received C/TAXAP/881/2019 ORDER the same was repaid in cash, has been brought on record. In the absence of such circumstances, donation given by the assessee to the donee, on which the assessee no mechanism to check the veraci, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue. We allow this ground”
8. In the facts of the present case, the CIT(Appeals) has given the finding of the fact that the amount of donation was transferred to the Herbicure through Bank channel and there is no evidence that the same is returned back in cash. “
I further reply upon the decision of Hon’ble ITAT Ahmedabad in case of ACIT v. Armee Infotech [2022] 136 taxmann.com 128 wherein it is held as under :
Section 80GGC of the Income-tax Act, 1961 – Deductions – Political contribution (Allowability of) – Assessment years 2012-13 and 2014-15 – Whether section 80GGC provides deduction of any amount of contribution made by an assessee in previous year to a political party, however, donation should not be given by a local authority or by a corporation funded by Government – Held, yes – Whether Act nowhere puts obligation upon donor to ensure how funds are utilized by donee towards their objects – Held, yes – Whether further, once donation has been made, donee is also not under obligation to keep a track of donation and no donee will be under influence of donor for arranging its affairs – Held, yes – Whether therefore, funds given by assessee as donation to political parties and charitable Institutions (donees) under section 80GGC could not have been disallowed treating same as bogus on ground that donees failed to use it for object which had been eligible to receive donation – Held, yes [Para 32] [In favour of assessee]
Relying the upon the above decisions, the donation made by me is completely genuine and rightly claimed u/s 80GGC of the Act in the ITR filed and thus the same can not be considered as bogus. The above decisions being decisions of Jurisdictional ITAT and High Court decision are clearly binding on you and not accepting the view taken by the Jurisdictional Authority is clearly a contempt of court.
In view of the above submission and documentary evidences attached herewith, it is proved beyond the doubt that the donation made by me to Party is genuine and is eligible as per the provisions of Section 80GGC of Income Tax Act ,1961. Therefore, the proceeding initiated by you issuing notice u/s 148A(b) of the Act is totally illegal and invalid in the eyes of law, as there is not at all any escapement of income. I therefore request you to drop the proceeding-initiated u/s 148A(b) of the act and oblige.
If you require any further information in this regard, please let me know before passing any order in this regard.
Thanking you,
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