Sumit Maloo Vs ITO (ITAT Jaipur)
Documents Ignored, Additions Unjustified: Jaipur ITAT Restores Political Donation Issue &; Grants Multiple Tax Deductions
Summary: The assessee, Sumit Maloo, filed an appeal against the order of the NFAC/CIT(A) confirming various disallowances made in a reassessment for AY 2019-20. The proceedings originated from a search conducted on three registered unrecognised political parties, namely Manvadhikar National Party, Kishan Adhikar Party & Kisan Party of India, besides two charitable organisations.
According to the Revenue, these entities received donations through cheque, RTGS or NEFT, routed the money through several layers & returned it to the original donors in cash after deducting commission of 3.5% to 5%. The Revenue alleged that the arrangement enabled donors to claim deductions u/s 80GGB or 80GGC while recovering the donated amount in cash.
On the basis of the information received, the AO alleged that the assessee had obtained an accommodation entry by making a political donation of ₹1,00,000 to Manvadhikar National Party & claiming deduction u/s 80GGC. The assessee produced his Form 26AS, Form 16, donation receipt & other documents. Nevertheless, the AO disallowed the political donation claim along with deductions or exemptions relating to EPF contribution, house rent, medical expenditure & charitable donation. The total income was assessed at ₹16,73,240. The CIT(A) confirmed the disallowances, leading to the appeal before the Tribunal.
Issues before the Tribunal
The Tribunal was required to determine whether the political donation deduction could be denied merely on the basis of statements recorded from persons connected with the political party, without conducting an assessee-specific enquiry or granting cross-examination. It also examined the assessee’s claims of ₹1,38,400 u/s 80C, ₹2,54,000 u/s 10(13A), ₹50,000 u/s 80D & ₹50,000 u/s 80G.
Political donation u/s 80GGC
The Revenue relied principally upon the statements of Ram Bhawan Ojha & Tribhawan Ramkalp Ojha, who were allegedly controlling Manvadhikar National Party & Kishan Adhikar Party. Those statements indicated that political donations were accepted through banking channels & returned in cash after retaining commission.
