Tarunaben Maganlal Bhut Vs ITO (ITAT Rajkot)
ITAT Rajkot allows ₹5 lakh Section 80GGC deduction, following Ashish Dubey: recipient political party’s accounting default alone cannot defeat donor’s claim.
Political Party’s Accounting Default Cannot Defeat Donor’s Claim: ITAT Allows ₹5 Lakh Section 80GGC Deduction
The Income Tax Appellate Tribunal (ITAT), Rajkot Bench, has deleted a ₹5 lakh disallowance under Section 80GGC, following a coordinate bench ruling that a donor cannot be denied deduction merely because the recipient political party failed to account for the donation.
In Tarunaben Maganlal Bhut vs. ITO, the Tribunal accepted that the dispute was covered by Ashish Dubey vs. ACIT, where documentary evidence established payment to a registered political party through banking channels.
The Tribunal found no change in facts or law warranting a different view and noted that the Revenue had produced no material to controvert the precedent relied upon. The assessee’s appeal for Assessment Year 2024-25 was allowed.
Background: ₹5 Lakh Political Donation Deduction Disallowed
The dispute arose from an assessment order passed under Section 147 on 12 January 2026, disallowing the assessee’s claim for ₹5 lakh under Section 80GGC. The CIT(A)/National Faceless Appeal Centre, Delhi, upheld the disallowance through an order dated 23 April 2026.
The assessee challenged that decision before the Tribunal, contending that the contribution had been made to a political party registered under the applicable law and that payment was routed through banking channels rather than cash.
Assessee Questioned Reliance on Third-Party Allegations
In her grounds of appeal, the assessee challenged reliance on adverse material and third-party statements allegedly not supplied or confronted during assessment. She also raised denial of cross-examination and argued that no evidence showed the donated amount was returned to her. These were the assessee’s objections, not separate findings decided by the Tribunal.
Reliance Placed on Ashish Dubey Decision
The assessee relied on Ashish Dubey vs. ACIT, ITA No. 222/Del/2020, decided on 8 May 2024, concerning AY 2015-16. The Revenue supported the lower authorities.
Documentary Evidence Was Central to the Precedent
The reproduced findings in Ashish Dubey referred to a donation receipt, PAN, Election Commission registration, the political party’s income-tax return, email confirmation and bank statement. Those documents substantiated the payment, and the recipient party’s failure to report it did not by itself defeat the donor’s claim.
Tribunal Deletes the Disallowance
Finding the issue covered by Ashish Dubey and no contrary material from the Revenue, the Rajkot Bench deleted the ₹5 lakh addition and allowed the appeal.
Cases Discussed
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2024-25, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 23.04.2026 by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘AO’) u/s. 147 of the Act dated 12.01.2026.
2. The Grounds of Appeal raised by the assessee are as follows:
1. On the facts and in the circumstances of the case and in law the Commissioner of Income Tax Appeals NFAC erred in upholding the assessment order passed by the Assessing Officer and confirming the disallowance of deduction of 5,00,000/- claimed by the appellant under section 80GGC of the Income tax Act 1961 and the order is bad in law and liable to be quashed.
2. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) erred in holding that there was no violation of principles of natural justice despite the fact that adverse material including statements of third parties relied upon in the assessment was not provided to the appellant nor confronted during the proceedings thereby denying opportunity of being heard. The Commissioner of Income Tax (Appeals) further erred in holding that the show cause notice dated 20. 11. 2025 was adequate whereas the same did not contain specific allegations OR evidence relied upon and therefore the proceedings are invalid. The Commissioner of Income Tax (Appeals) erred in denying the right of cross examination of third parties whose statements form the basis of addition and such denial renders the reliance on such statements invalid.
3. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) erred in confirming the disallowance under section 80GGC by holding that the donation was not genuine without appreciating that all statutory conditions were satisfied. The contribution was made to a political party registered under applicable law and the amount was paid through banking channel and not in cash. The appellant cannot be held responsible for any alleged non- compliance done by political party and the deduction cannot be denied on that basis.
4. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) erred in upholding the addition based solely on general findings relating to third parties without bringing any direct or corroborative evidence against the appellant. There is no evidence to establish that the appellant received any amount back and therefore the addition is based on presumptions and cannot be sustained. The appellant has discharged the primary onus by providing bank statement and receipt and the burden thereafter was on the department which has not been discharged.
5. On the facts and in the circumstances of the case the Commissioner of Income Tax (Appeals) erred in applying judicial principles without appreciating that there is no material to establish any cash trail or wrongdoing by the appellant. The addition has been sustained merely on suspicion and general allegations which cannot take the place of legal proof.
6. The appellant craves leave to add amend alter OR withdraw any grounds of appeal at OR before the time of hearing.
3. When this appeal was called out for hearing, Ld. Counsel for the assessee invited my contention 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 donation made to political party through banking channel and the certificate of the political party was effective, therefore, addition made by the AO was deleted. The Commissioner of Income Tax (Appeals) also erred in confirming the disallowance under section 80GGC by holding that the donation was not genuine without appreciating that all statutory conditions were satisfied. The contribution was made to a political party registered under applicable law and the amount was paid through banking channel and not in cash. The appellant cannot be held responsible for any alleged non- compliance done by political party and the deduction cannot be denied on that basis. The Ld. Counsel for the assessee submitted that present appeal is squarely covered by the aforesaid order of the Tribunal. A copy which was also placed before the Bench.
4. Ld. DR for the Revenue relied on the orders of the authorities below.
5. I see no reason to take any other view of the matter, then the view so taken by the Division Bench of this Tribunal in the case of Ashish Dubey (supra) vide order dated 08.05.2024 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), and 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), 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, appeal filed by the assessee is allowed.
Order is pronounced in the open Court Today on 21/10/2026.
