Nitin T Bhuptani Vs ACIT (ITAT Rajkot)
Donor Cannot Be Punished for the Political Party’s Alleged Misconduct: Section 80GGC Deduction Allowed Where Donation Was Made Through Banking Channel
The Rajkot ITAT has allowed deduction u/s 80GGC for a donation made to a political party through banking channels, holding that the donor’s claim could not be rejected merely because the recipient political party was subsequently alleged to be involved in facilitating bogus donations.
Where the political party was active and duly registered at the time of donation, the payment was made through a banking channel and the donor possessed documentary evidence of the contribution, the assessee could not be denied deduction in the absence of material establishing that the donated amount was actually returned to him.
The assessee, Nitin T. Bhuptani, filed his return for AY 2019-20 declaring a total income of ₹11,94,480. In the return, he claimed deduction u/s 80GGC in respect of a donation of ₹1,80,000 made to Yuva Jan Jagruti Party.
Section 80GGC permits an individual and other eligible non-corporate taxpayers to claim deduction for contributions made to a political party registered u/s 29A of the Representation of the People Act, 1951 or to an electoral trust. However, no deduction is permissible where the contribution is made in cash.
The assessee’s return was subsequently reopened by issuing notice u/s 148 on 11.04.2023 to examine the genuineness and correctness of the deduction. During the reassessment proceedings, the AO issued a show-cause notice dated 29.01.2025.
The assessee explained that Yuva Jan Jagruti Party was an active political party when the contribution was made. The donation was not paid in cash but through a regular banking channel. Accordingly, the statutory conditions prescribed u/s 80GGC stood satisfied and the deduction could not be denied merely because the Department subsequently raised allegations against the recipient party.
The AO rejected the explanation. According to the information available with the Department, Yuva Jan Jagruti Party was involved in a bogus-donation arrangement under which it facilitated claims of deduction u/s 80GGC or 80GGB and thereafter routed the contribution back to the donors in cash, through RTGS, NEFT or other banking channels.
Based on this general allegation, the AO treated the assessee’s contribution as a bogus donation and disallowed the deduction of ₹1.80 lakh. The reassessment was completed u/s 147 read with Section 144B. The CIT(A), NFAC, confirmed the disallowance.
Before the Tribunal, the assessee submitted that the issue was covered by the Rajkot ITAT decision in Nihil Nitinbhai Bhuptani v. ITO – ITA No. 479/Rjt/2025, order dated 30.10.2025, which related to the same assessment year and involved a similar deduction claim.
In Nihil Nitinbhai Bhuptani, the Rajkot Bench had followed the Delhi ITAT decision in Ashish Dubey v. ACIT – ITA No. 222/Del/2020, order dated 08.05.2024. In Ashish Dubey, the assessee had made a donation to Rashtriya Komi Ekta Party and produced the donation receipt, PAN of the political party, Election Commission registration u/s 29A, the party’s return of income, confirmation from the party & the donor’s bank statement.
The documentary evidence established that payment had been made to a registered political party through banking channels and that the payment corresponded with the donation receipt. The authorities nevertheless denied the deduction because the political party had not reflected the donation in its own return of income.
The Delhi ITAT held that once the assessee established the payment of donation through documentary evidence and produced an acknowledgement from the registered political party, the donor could not be faulted merely because the political party failed to account for the donation in its return. A lapse or default committed by the recipient could not, without more, invalidate the donor’s otherwise substantiated claim.
Following Ashish Dubey, the Rajkot Bench in Nihil Nitinbhai Bhuptani deleted the addition. It held that where the assessee’s facts were materially similar and the Revenue failed to produce contrary evidence, the Section 80GGC deduction was allowable.
In the present appeal, the Tribunal found that the issue was squarely covered by Nihil Nitinbhai Bhuptani. The Revenue could not point out any material change in facts or law, nor could it produce evidence to controvert the earlier findings of the co-ordinate Bench.
The Tribunal, therefore, followed the binding co-ordinate Bench decision and allowed the assessee’s appeal. The disallowance of ₹1,80,000 claimed u/s 80GGC was deleted.
Though the assessee had also challenged the validity of the reopening u/s 148, the order contains no separate adjudication of that ground. Since the appeal was allowed by deleting the disallowance on merits, the reassessment challenge did not affect the ultimate relief.
Author’s Comment
The ruling rests upon an important distinction between an allegation against the recipient political party and proof against the individual donor. The existence of investigation material suggesting that a political party facilitated bogus donations may justify reopening or a detailed inquiry. It does not automatically prove that every person who donated to that party received the money back.
For denying deduction in a particular donor’s case, there should ordinarily be some evidentiary link connecting the assessee with the alleged accommodation-entry mechanism. This may consist of a statement naming the donor, evidence of cash repayment, a fund trail, correspondence, commission payment or some other material showing that the donation was not genuine.
A donation receipt and banking-channel payment are important pieces of evidence, but they should not be regarded as an absolute shield in every case. If the Revenue produces credible evidence that the amount travelled back to the donor, the apparent banking transaction may be disregarded as a colourable arrangement.
Conversely, a general finding that the political party was involved in suspicious activities cannot replace taxpayer-specific proof. The Department cannot move directly from “the party accepted bogus donations” to “this assessee’s donation was bogus” without establishing the connecting link.
The decision in Ashish Dubey concerned a somewhat different factual allegation – the political party’s failure to account for the donation in its return. The present case involved a broader allegation of a bogus-donation scam. Nevertheless, the Rajkot Bench treated the matter as covered by its earlier decision in Nihil Nitinbhai Bhuptani, and the Revenue failed to demonstrate any distinguishing material concerning this assessee.
The principle emerging from the order is clear: suspicion surrounding a political party may justify investigation, but deduction u/s 80GGC cannot be denied to an individual donor unless the Revenue travels from a general allegation to specific evidence connecting him with the money’s return.
Cases Discussed
- Nihil Nitinbhai Bhuptani Vs ITO (ITAT Rajkot) – ITA No. 479/Rjt/2025, order dated 30.10.2025.
- Ashish Dubey Vs ACIT (ITAT Delhi) – ITA No. 222/Del/2020, order dated 08.05.2024.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
1. Captioned appeal filed by the assessee, pertaining to assessment year 2019-20, is directed against the order passed under Section-250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 22.01.2026 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 u/s.147, r.w.s. 144(B) of the Act dated 07.03.2025.
2. Grounds of appeal raised by the assessee are as follows:
1. The Commissioner of Income Taxi (Appeal) erred in confirming the reopening of the assessment by issue of notice under section 148 of the Act. The reopening of the assessment is not justified.
2. The Commissioner of Income Tax (Appeal) erred in upholding the disallowance of claim made by the Appellant under 80GGC on account of donation made by the Appellant to a political party. The disallowance of the claim is not justified.
3. Succinctly, the factual panorama of the case is that assessee before me is an Individual. The assessee had filed return of income for Financial Year 2018-19 relevant to Assessment Year 2019-20 at Rs.11,94,480/-. As per information, the assessee claimed deduction under chapter VI-A for donation given to political party. On the basis of information and after following the due procedure, notice u/s 148 was issued on 11.04.2023 to examine genuineness and correctness of claim of deduction u/s 80GGC of the Act. During the year the assessee gave donation of Rs.1,80,000/- political party namely Yuva Jan jagruti Party and claimed the deduction u/s 80GGC of the Act. On the basis of Information collected during the assessment proceedings, a Show Cause was issued to the assessee on 29.01.2025.
4. In response to the show cause notice, the assessee submitted that when he gave the donation then party was active and donation was given through banking channel. Therefore, deduction should be allowed to him. However, assessing officer rejected the contention of the assessee and held that the Yuva Jan jagruti Party is involved in bogus donations scam. The said party (YJJP) facilitates bogus donations to the donors for claiming bogus deduction u/s 80GGC/80GGB of the Act which are then re-routed back to the donors in cash/RTGS/NEFT or other banking channels, therefore, assessing officer disallowed the deduction claimed u/s 80GGC of the Income Tax Act, 1961 and the said deduction u/s 80GGC claimed at Rs.1,80,000/- was added to the income of the assessee.
5. Being aggrieved by the said order of the Assessing Officer, the assessee filed an appeal before the Ld.CIT(A), but remained unsuccessful. Therefore, assessee is left with no other alternative but to knock on the doors of the Tribunal with this appeal praying for justice.
6. Learned Counsel for the assessee, argued that issue under consideration is covered by the decision of the Hon’ble ITAT, Rajkot Bench in the case of Nihil Nitinbhai Bhuptani in ITA No.479/Rjt/2025 for AY 2019-20, vide order dated 30.10.2025. The Ld. Counsel submitted that present appeal is squarely covered by the above said judgement of the Tribunal, in favour of assessee. A copy of the judgement was also placed before the Bench.
7. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which I have already noted in my earlier para and is not being repeated for the sake of brevity.
8. I have heard, both the parties. I see no reason to take any other view of the matter then the view so taken by the Hon’ble ITAT, Rajkot Bench in the case of Nihil Nitinbhai Bhuptani in ITA No.479/Rjt/2025 for AY 2019-20, vide order dated 30.10.2025. In this order, the Tribunal has inter alia observed as under:
“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 since the certificate of the political party was effective at the time of donation, therefore, addition made by the AO was deleted. 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. The 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 the Tribunal-Delhi 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), the assessee’s facts under consideration is similar to 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.
9. As the issue is squarely covered in favour of the assessee by the decision of the ITAT, Rajkot Bench in the case of Nihil Nitinbhai Bhuptani in ITA No.479/Rjt/2025 for AY 2019-20, and there is no change in facts and law and the revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). I find no reason to interfere in the said order of the Division Bench. Therefore, respectfully following the binding precedent of the co-ordinate Bench (supra), I allow the appeal of the assessee.
10. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open Court on 11/09/2026.
