Ritesh Sugan Jain Vs ITO (ITAT Mumbai)
Bogus Political Donation Claim Rejected Due to Evidence of Accommodation Entry Scheme; Donation Deduction Disallowed Due to Findings of Fake Political Funding Scheme; Tax Deduction Rejected Where Donation Was Routed Back Through Intermediaries; Bogus Donation Scheme Leads to Denial of Section 80GGC Benefit; Search Findings Proving Fake Donations Result in Disallowance of Tax Claim; Deduction Claim Fails as Political Party Found Involved in Tax Evasion Mechanism.
Core Issue:- Whether deduction claimed under Section 80GGC in respect of donation to a Registered Unrecognized Political Party (RUPP), namely Rashtriya Samajwadi Party (Secular), is allowable when such donation is alleged to be bogus and part of an accommodation entry scam.
Facts:- The assessee filed return of income declaring total income of ₹9,52,310/- and claimed deduction of ₹9,90,000/- under Section 80GGC towards donation made to Rashtriya Samajwadi Party (Secular). Based on information received from the Investigation Wing through the Insight portal, it was found that the said political party was involved in a systematic bogus donation racket wherein funds received through banking channels were routed through multiple layers and returned to donors in cash after deduction of commission.
Accordingly, proceedings under Section 148A were initiated, and after considering the assessee’s submissions (which were not found satisfactory), notice under Section 148 was issued on 20.04.2023. During assessment proceedings, the AO relied upon search and seizure action conducted on 07.09.2022 on a group of Registered Unrecognized Political Parties (RUPPs) at Ahmedabad, where extensive evidence was gathered revealing that such entities were engaged in providing accommodation entries in the guise of political donations.
