Case Law Details
ACIT Vs Anuj Prakash Gupta (ITAT Raipur)
The Revenue filed an appeal against the order dated 27.11.2025 passed by the Commissioner of Income Tax (Appeals)/NFAC for Assessment Year 2019–20, challenging the deletion of an addition of ₹2,00,000 made by the Assessing Officer (AO) by disallowing a deduction claimed under Section 80GGC of the Income-tax Act, 1961. The deduction related to a donation made by the assessee to a political party.
The AO had disallowed the deduction after reopening the assessment under Sections 147/148, based on information received from the Investigation Wing, Ahmedabad. This information arose from a search conducted under Section 132 in the case of the RUPPs group, during which the concerned political party was identified as one of the entities allegedly involved in providing accommodation entries in the guise of political donations. The Revenue contended that statements of key functionaries of the party indicated that donations were refunded after retaining commission and that the assessee failed to establish the genuineness of the donation or the creditworthiness of the recipient.
Before the first appellate authority, the CIT(A)/NFAC noted that there was no dispute regarding the fact that the assessee had made the payment of ₹2,00,000 through banking channels and had obtained a printed receipt. While acknowledging that the political party had been identified by the Investigation Wing as being involved in circular accommodation transactions, the CIT(A) emphasized that the AO had not brought any direct or specific material on record to show that the assessee had received any refund of the donation. The assessee was also not confronted with any specific evidence nor provided an opportunity to cross-examine the persons whose statements were relied upon by the AO.
The CIT(A) held that the disallowance was made solely on the basis of general presumptions arising from search findings in third-party cases. It was observed that although the wider investigation might point to systemic irregularities, a disallowance in the hands of an individual donor requires primary evidence establishing the non-genuineness of that particular transaction. In the absence of any bank trail, statement, or confirmation linking the assessee to an alleged refund of the donation, the disallowance under Section 80GGC could not be sustained. Accordingly, the addition of ₹2,00,000 was deleted.
During the hearing before the Tribunal, the assessee appeared in person. The Tribunal noted that the Department’s allegation rested on the general finding that the political party was tainted and engaged in providing bogus accommodation entries. However, the AO had failed to bring any evidence on record to demonstrate that the assessee derived any benefit from the donation or that any amount was routed back to him. No direct nexus was established between the assessee and any alleged refund or commission mechanism.
After considering the facts and circumstances, the Tribunal found no infirmity in the order of the CIT(A)/NFAC. It held that, in the absence of assessee-specific evidence, the disallowance based purely on general allegations could not be upheld. Consequently, the appeal filed by the Revenue was dismissed, and the order of the CIT(A) was affirmed. The decision was pronounced in open court on 5 February 2026 by the Income Tax Appellate Tribunal, Raipur Bench.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
1. The present appeal preferred by the Revenue emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 27.11.2025 for the assessment year 2019-20 as per the following grounds of appeal:
“1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A)/NFAC was justified in deleting the addition of Rs.2,00,000/- made by the Assessing Officer on account of disallowance of deduction claimed u/s.80GGC of the Act, without appreciating that the assessee had failed to establish the genuineness of the donation made to the Rashtriya Samajwadi Party (Secular), which was found to be one of the entities involved in providing accommodation entries in the guise of political donations as revealed during the search operation on RUPPs and related intermediaries?
2. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in holding that no cogent material was brought on record against the specific transaction, ignoring that the onus was on the assessee to substantiate the claim of deduction u/s 80GGC by proving the genuineness of the donation and the creditworthiness of the recipient, which the assessee failed to do despite being provided adequate opportunities.
3. Whether on the facts and in the circumstance of the case and in law, ld. CIT(A) was justified in holding that the disallowance could not be sustained in the absence of assessee specific evidence of refund of donation, ignoring the fact that once the recipient entity is proved to be a conduit for accommodation entries, the onus lies heavily on the assessee to establish the genuineness and bona fide nature of the transaction.
4. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in ignoring the findings of the Assessing Officer regarding the assessee’s involvement in a larger racket of tax evasion through bogus donations to political parties, which fails under the exception provided in Para 3.1(h) of CBDT Circular No.05/2024, dated 15.03.2024, thereby making this case fit for appeal notwithstanding the monetary limit prescribed in Circular No.09/2024 dated 17.09.2024.
5. Any other ground that may adduced at the time of hearing.”
2. In this case, the assessee had claimed deduction of Rs.2 lakhs u/s. 80GGC of the Income Tax Act, 1961 (for short ‘the Act’) for donation given to Rashtriya Samajwadi Party (Secular). That consequent upon search action carried in the case of RUPPs group, Ahmedabad as per Section 132 of the Act, the political party i.e. Rashtriya Samajwadi Party (Secular) was found to be one of the entities that was involved in providing accommodation entries. Based on the information received from Investigation Wing, Ahmedabad that the said political party was involved in providing accommodation entries of bogus donation, the case of the assessee was reopened u/s.147/148 of the Act, wherein the A.O had disallowed deduction of Rs.2 lakhs u/s. 80GGC of the Act.
3. When the matter went before the first appellate authority, the Ld. CIT(Appeals)/NFAC had deleted the addition observing as follows:
“It is not in dispute that the appellant made payment of Rs.2,00,000/- through banking mode and obtained a printed receipt. However, there is also no dispute that the said political party was one of the entities identified by the Investigation Wing as engaged in circular accommodation transactions. Statements of key functionaries recorded on oath admitted to the refund of donations after retaining commission. On the other hand, there is no direct material brought by the AO to show that the appellant in particular received any refund of the alleged donation, nor was the appellant confronted with specific evidence or given cross-examination of persons whose statements were relied upon. The AO disallowed the deduction entirely on a general presumption arising from search findings in third-party cases. While the wider investigation points to systemic irregularities, disallowance in the hands of each donor requires primary evidence establishing the non-genuineness of that specific transaction. The AO has not shown any bank trail, statement, or confirmation linking the assessee to the alleged refund. Therefore, the disallowance made purely on presumption and general findings cannot be upheld in absence of specific corroboration. Accordingly, the disallowance of Rs.2,00,000/- under Section 80GGC is deleted in appeal.”
4. At the time of hearing, the assessee himself appeared. The allegation of the Department is that the said political party in which the assessee had made donation was tainted party providing bogus accommodation entries through donations. However, the A.O had not brought out any evidence which suggests that the said political party has derived commission and has paid money back to the assessee through backdoor. Nothing has been brought on record by the A.O to establish the direct nexus regarding benefit derived by the assessee from the said political party while making the said donation.
5. In view of the aforesaid facts and circumstances, I do not find any infirmity with the findings of the Ld. CIT(Appeals)/NFAC which is hereby upheld.
6. As per the above terms grounds of appeal raised by the Revenue are dismissed.
7. In the result, appeal of the Revenue is dismissed.
Order pronounced in open court on 5th day of February, 2026.
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