Malhar Nitin Bhuptani Vs ACIT (ITAT Rajkot)
Political Party’s Failure to Account for Donation Cannot Defeat Donor’s Proven Section 80GGC Claim
The Legal Principle
The Rajkot Tribunal held that where an assessee establishes payment of a donation to a registered political party through supporting documents and banking records, the political party’s failure to account for that donation cannot, by itself, justify denial of deduction to the donor.
Following its earlier decision in Nikhil Nitinbhai Bhuptani v. ITO, the Tribunal deleted the ₹1,40,000 disallowance under section 80GGC and allowed the assessee’s appeal.
The ruling distinguishes between proof of the donor’s payment and a reporting or accounting failure attributable to the recipient political party.
Background of the Dispute
The assessee claimed a deduction of ₹1.40 lakh under section 80GGC for a donation made to a political party during the year relevant to Assessment Year 2019–20.
The Assessing Officer disallowed the claim in an assessment passed under section 147 read with section 144, dated 20 January 2025.
The CIT(A), through the National Faceless Appeal Centre, confirmed the disallowance by an order dated 11 July 2026.
Before the Tribunal, the assessee challenged the denial of deduction, contending that it was contrary to the applicable provision and unsupported by the facts.
Earlier Rajkot Decision Covered the Issue
At the hearing, the assessee’s authorised representative submitted that the controversy was covered by Nikhil Nitinbhai Bhuptani, ITA No. 479/Rjt/2025, decided on 30 October 2025.
Counsel explained that the earlier decision had accepted the deduction where the donation was made through banking channels and the political party’s registration was effective when the contribution was made.
The Departmental Representative relied on the Assessing Officer’s findings.
The Tribunal found no reason to depart from the earlier decision and reproduced its reasoning concerning the documents establishing the donation and the recipient’s failure to account for it.
What the Supporting Documents Established
The reproduced precedent concerned a donation to Rashtriya Komi Ekta Party.
The evidentiary record included a donation receipt, the party’s PAN and an Election Commission letter establishing its registration under section 29A of the Representation of the People Act, 1951.
An email confirmation from the political party and the donor’s bank statement were also available. The banking entries corresponded with the details appearing in the donation receipt.
Taken together, these documents established payment through banking channels and acknowledgment by the registered political party.
These detailed documents are described in the precedent reproduced in the present order. The Tribunal treated the present assessee’s facts as similar; it did not separately narrate an equally detailed documentary record for the ₹1.40 lakh contribution.
Recipient’s Omission Could Not Discredit Established Payment
In the adopted reasoning, the tax authorities had rejected the claim because the political party had not shown the donation in its return.
However, the supporting evidence had established that the assessee paid the donation and that the recipient acknowledged it.
The Tribunal held that, once those facts were established, the donor could not be faulted merely because the political party failed to account for the amount received.
The omission in the recipient’s records did not, without more, negate the banking evidence, receipt and confirmation supporting the donor’s claim.
This was the substantive principle applied to the present appeal.
Revenue Produced No Material Warranting a Different Conclusion
The Tribunal recorded that the present facts were similar to those in Nikhil Nitinbhai Bhuptani and that there was no relevant change in facts or law.
It further noted that the Revenue had not produced material sufficient to controvert the findings supporting the coordinate Bench precedent.
Respectfully following that decision, it deleted the ₹1,40,000 addition arising from disallowance of the section 80GGC deduction.
The appeal was allowed outright. The matter was not remanded for further verification.
Author’s Comments
A donor’s entitlement cannot depend entirely on whether the recipient maintains and reports its accounts correctly. Where payment and acknowledgment are established, the recipient’s omission requires examination rather than automatic attribution to the donor.
The decision nevertheless should not be presented as holding that a bank transfer alone proves every political donation. The adopted precedent relied on a combination of banking records, receipt, PAN, registration evidence and confirmation.
There is also a distinction between a recipient’s reporting failure and evidence that a donation was a sham or that money was returned to the donor. The present order grants relief on the evidentiary footing accepted by the Tribunal; it does not decide those different circumstances.
For practitioners, the useful principle is precise: the political party’s non-accounting is not, by itself, enough to defeat a donation otherwise proved by reliable material. A complete and internally consistent documentary record remains central to defending the deduction.
Cases Discussed
- Nikhil Nitinbhai Bhuptani Vs ITO (ITAT Rajkot) – ITA No. 479/Rjt/2025; Assessment Year 2019-20; Order dated 30/10/2025. Followed. The Tribunal relied on the earlier decision holding that an otherwise established political donation cannot be disallowed merely because the recipient political party failed to account for it in its return.
FULL TEXT OF THE ORIGINAL ORDER OF ITAT RAJKOT
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 11.07.2026 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 of the Act, dated 20.01.2025.
2. Grounds of appeal raised by the assessee are as follows:
“The Learned Commissioner of Income Tax (Appeals) erred in law and on the facts of the case in confirming the disallowance of Rs.1,40,000, being the amount of donation made to political parties, which was claimed as a deduction under Section 80GGC of the Income-tax Act, 1961. The disallowance is unjustified, contrary to the provisions of the Act, and liable to be deleted.”
3. When the appeal was called out for hearing, Ld. Counsel for the assessee invited my attention that the issue is squarely covered in favour of the assessee by the decision of the ITAT Rajkot, in the case of Nikhil Nitinbhai Bhuptani, in ITA No.479/Rjt/2025, for AY 2019-20, order dated 30.10.2025 and stated that the issue under consideration relating to political donation is squarely covered by the said judgment, wherein the Tribunal held that donation was made to Political Parties 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 by the Tribunal.
4. On the other hand, Ld. DR for the revenue relied on the findings of the Assessing Officer.
5. 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 ITAT Rajkot Bench in the case of Nikhil Nitinbhai Bhuptani (supra) vide order dated 30.10.2025, 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 Malhar Nitinkumar Bhuptani v. ACIT 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 ITAT Rajkot Bench in the case of Nikhil Nitinbhai Bhuptani (supra), the assessee’s facts under consideration is similar to Nikhil Nitinbhai Bhuptani (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 ITAT Rajkot Bench in case of Nikhil Nitinbhai Bhuptani (supra), therefore, I respectfully following the binding precedent of the ITAT Rajkot Bench, delete the addition made by the assessing officer.
7. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open Court on 09/10/2026.
