In a landmark decision, the Income Tax Appellate Tribunal (ITAT) Ahmedabad has upheld the order passed by the Principal Commissioner of Income Tax-3, Ahmedabad, challenging the adequacy of inquiry by the Assessing Officer (AO) regarding political donations claimed under Section 80GGC. The case, Rakesh Balubhai Padariya Vs PCIT, revolves around the assessment year 2018-19, where the assessee’s claim of a deduction amounting to Rs. 25,00,000 for donations made to a political party named “Apna Desh Party” was scrutinized and subsequently challenged under Section 263 of the Income Tax Act, 1961.
Background and Principal CIT’s Observations
The assessee filed a return declaring a total income of Rs. 66,20,230 for AY 2018-19. During the assessment finalized on 08/10/2020 under Section 143(3), the assessee claimed a deduction for a donation of Rs. 25,00,000 under Section 80GGC. However, upon verification, the Principal CIT noted discrepancies in the donation receipts and the absence of the assessee’s name in the official donor list on the party’s website, raising concerns over the genuineness of the donation. Further investigation linked the donation to a broader network of bogus donations facilitated by accommodation entries, leading to the conclusion that the donation claimed was bogus.
ITAT’s Analysis and Decision
The ITAT Ahmedabad, after a thorough review, concurred with the Principal CIT’s findings. The Tribunal highlighted the lack of inquiry from the AO’s side, especially considering the discrepancies in the donation receipts and the lack of documentation to substantiate the genuineness of the loan from which the donation was allegedly funded. The Tribunal underscored the necessity of a more in-depth investigation into such claims, given the public availability of the donor list and the established modus operandi of “Apna Desh Party” in facilitating bogus donations. Consequently, the ITAT dismissed the assessee’s appeal, affirming the Principal CIT’s revision order under Section 263 as both lawful and justified.
