Hina Nalinbhai Patel Vs ITO (ITAT Ahmedabad)
Summary: The Ahmedabad Bench of the Income Tax Appellate Tribunal, in Hina Nalinbhai Patel Vs ITO, upheld the disallowance of a ₹20,00,000 deduction claimed under Section 80GGC of the Income-tax Act, 1961, for a contribution to Sardar Vallabhbhai Patel Party. The Tribunal found that the assessee had not effectively rebutted investigation material indicating that the recipient political party was used to provide accommodation entries in the guise of donations.
Although the appeal was partly allowed for statistical purposes, the relief was confined to directing verification of separate deductions claimed under Sections 80C and 80D. The assessee, an individual manufacturing chemical products through M/s Shiva Chemicals, filed her return for AY 2019-20 on 28 September 2019 declaring income of ₹7,69,210. Following information obtained during searches concerning registered unrecognised political parties, the assessment was reopened. The Assessing Officer disallowed the ₹20 lakh political contribution along with deductions of ₹1,50,000 under Section 80C and ₹20,000 under Section 80D.
The NFAC CIT(A), by order dated 28 February 2026, upheld these disallowances. Before the Tribunal, the assessee relied on donation receipts, party registration and identification documents, election-related records and banking evidence, while also challenging the reassessment and claiming credit for TDS of ₹7,648 and self-assessment tax of ₹68,120. The Tribunal relied on investigation findings, bank-trail analysis, statements under Section 132(4), and decisions concerning alleged bogus political donations. Referring to the Supreme Court rulings in CIT v. Durga Prasad More and Sumati Dayal v. CIT, it emphasised that documentary records and banking channels do not conclusively establish genuineness when surrounding circumstances and human probabilities indicate otherwise.
It accordingly sustained the Section 80GGC disallowance. For the deductions under Sections 80C and 80D, however, it directed the assessee to furnish receipts and bank statements before the jurisdictional Assessing Officer, who must verify and allow the claims as appropriate. The order does not expressly grant the other reliefs requested in the grounds of appeal.
Cases Discussed
- CIT v. Durga Prasad More — (1971) 82 ITR 540 (SC). Tax authorities may consider surrounding circumstances and the reality behind apparent transactions.
- Sumati Dayal v. CIT — (1995) 214 ITR 801 (SC). Human probabilities may be applied in assessing genuineness.
- Abhishek Ashok Lohade — ITA No. 816/PUN/2018, ITAT Pune, order dated 22.11.2022. Cited in the reproduced coordinate-bench decision.
- Milind Pankajbhai Shroff v. Pr. CIT-1, Rajkot — ITA No. 93/RJT/2023, order dated 20.05.2024. Extended findings on alleged bogus donations reproduced in the order.
- Saurabh Pravinbhai Patel v. ITO — ITA No. 1017/Ahd/2023, order dated 30.04.2025. Earlier Ahmedabad Bench decision relied upon regarding political donations.
- Rajen Jayantilal Merchant v. ITO — ITA No. 1683/Ahd/2025. Similar issue noted by the Tribunal.
- Ritesh Sugan Jain v. ITO — ITA No. 8546/Mum/2025. Similar issue noted by the Tribunal.
- Mihir Bipinbhai Parekh v. DCIT — ITA No. 1173/Mum/2026. Similar issue noted by the Tribunal.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “CIT(A)” for short), dated 28.02.2026 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” for short], for Assessment Year (AY) 2019-20.
2. The Assessee has taken following grounds of appeal:-
“1. That on the facts and in the circumstances of the case and in law, the Learned Assessing Officer as well as the Learned Commissioner of Income Tax (Appeals) erred in sustaining the assessment order without properly appreciating the facts, evidences and submissions placed on record, and therefore the impugned order deserves to be quashed.
2. That the Learned Authorities below erred in disallowing the deductions claimed under sections 80C, 80D and 80GGC of the Income- tax Act, 1961, despite the Appellant having furnished complete documentary evidence substantiating the claims in accordance with law.
3. That the Learned Assessing Officer failed to properly verify and consider the documentary evidence submitted during the assessment proceedings, including:
-
- Receipt of political contribution under section 80GGC ;
- Registration Certificate of the political party under section 29A of the Representation of the People Act, 1951;
- PAN of the political party;
- Documents evidencing participation of the political party in elections; and
- Bank statement reflecting payment of the political contribution.
Therefore, the disallowance made is arbitrary, unjustified and liable to be deleted.
4. That the Learned Assessing Officer passed the assessment order without granting an effective opportunity of personal hearing and without properly considering the submissions of the Appellant, thereby violating the principles of natural justice and rendering the assessment order bad in law.
5. That the reassessment proceedings initiated under section 147 of the Income-tax Act are invalid, without proper jurisdiction and based on incorrect appreciation of facts, and therefore deserve to be quashed.
6. That the Learned Assessing Officer has erred in law and on facts in raising an unsustainable tax demand by failing to grant the Appellant the legitimate tax credits available in her case, namely:
-
- TDS Credit: 7,648/-
- Self-Assessment Tax: 68,120/- paid at the time of filing the Return of Income.
The aforesaid credits were duly reflected in the return of income and supported by records available with the Department. Non-grant of these credits has resulted in an excessive and incorrect tax demand and therefore the Assessing Officer may kindly be directed to allow the said credits while recomputing the tax liability.”
3. The brief facts of the case are that, the assessee, an individual engaged in the business of manufacturing chemical products under the name M/s Shiva Chemicals, filed her return of income for the year under consideration on 28.09.2019 declaring total income of Rs.7,69,210/-. Subsequently, on the basis of information gathered during search proceedings in the case of Registered Unrecognised Political Parties (RUPP) group, the assessment was reopened. The assessee had claimed a deduction of Rs.20,00,000/- u/s 80GGC for donation made to Sardar Vallabhbhai Patel Party (SVPP), besides deductions of Rs.1,50,000/- u/s 80C and Rs.20,000/- u/s 80D of the Act. The Assessing Officer treated the political donation as non-genuine and disallowed the aforesaid deductions. The Ld. CIT(A) confirmed the disallowances, against which the assessee is in appeal before the Tribunal.
4. Before us, the Ld. AR submitted that the assessee had duly furnished the requisite documentary evidence in support of the deductions claimed u/s 80GGC , 80C and 80D and, therefore, the disallowances sustained by the Ld. CIT(A) were not justified.
5. The Ld. DR, on the other hand, supported the orders of the lower authorities.
6. We have heard the rival submissions and perused the material available on record.
In respect of the claim of Rs.20,00,000/- u/s 80GGC of the Act, the material gathered during the search proceedings revealed that the concerned political party was being used for providing accommodation entries in the guise of political donations. The assessee has failed to effectively rebut the said material or establish the genuineness of the impugned contribution. We further note that the identical issue relating to bogus political donations u/s80GGC was considered by the Co-ordinate Bench in ITA No.1017/Ahd/2023, vide order dated 30.04.2025, wherein, on the basis of the investigation material, bank trail and modus operandi of the recipient political party, the disallowance u/s 80GGC was upheld.
7. We also find that similar issue stands adjudicated by the Co-ordinate benches of this Tribunal in the cases of:-
(i) Mihir Bipinbhai Parekh Vs. DCIT (ITA No. 1173/Mum/2026),
(ii) Milind Pankajbhai Shroff Vs. Pr. CIT-1, Rajkot (ITA No.93/RJT/2023), Ritesh Sugan Jain Vs. ITO (ITA No. 8546/Mum/2025),
(iii) Rajen Jayantilal Merchant Vs. ITO (ITA No. 1683/Ahd/2025),
(iv) Saurabh Pravinbhai Patel Vs. ITO (ITA No. 1017/Ahd/2023).
8. For the sake of ready reference, the detailed adjudication in the case of Milind Pankajbhai Shroff, vs The Pr. CIT 1, Rajkot in ITA No.93/RJT/2023 dtd 20/05/2024 is reproduced as under:-
“22. Now, we shall also adjudicate the other arguments advanced by Id. DR for the revenue to the effect that “fraud vitiates everything”. In this connection, at the cost of repetition, we reiterate the findings of Id PCIT, which are as follows:
(i) Rashtriya Samajwadi Party (Secular) is a Registered Unrecognized Political Party and it is one of the 23 RUPPs covered in the RUPPs Group of Ahmedabad. This party was established on 21.10.2008 and its registered address as per its website is Samruddhi Complex, Opp- Sakar-3, Income Tax Circle, Ahmedabad. However, during pre-search enquiry, no party office is found at the aforesaid address.
(ii) The modus-operandi of this political party is that the donation is received through cheque in the bank account of the party and then routed through intermediary(ies) (which is generally shell entity(ies) controlled by either the persons running the party or by any other person) in the garb of various purchases or other payments, which are found to be bogus in nature. It is pertinent to mention here that the political party doesn’t pay any tax since it is exempt u/s 13A of the Act.
(iii) During the search proceedings, on 07.09.2022, statement on oath u/s 132(4) of the I.T. Act, was recorded of Smt. Sandhya Singh, National Party President of the Rashtriya Samajwadi Party (Secular). As evident from the declaration made on oath by Smt. Sandhya Singh that although she is national party president of the party, however, all the work related with party is being looked-after by her husband Shri Bishwajeet Singh. She was not aware about any activity of the party. Further, vide Q. No. 18 and 19, she was categorically asked regarding details of bank accounts, books of accounts, nature and quantum of the expenditures of the Rashtriya, Samajwadi Party. In reply to the same, she again stated that she is not aware of any details regarding these subjects. She stated that all these things are being handled by her husband Shri Bishwajeet Singh.
(iv) It is on record that statement of Shri Bishwajeet Singh, on oath u/s 132(4) of the I.T. Act, was recorded on 07.09.2022. During the statement proceedings, Shri Bishwajeet Singh admitted the fact that on his instance, his wife Smt. Sandhya Singh joined RSP, as president. During the statement proceedings, Shri Bishwajeet Singh revealed that the party i.e. RSP is involved in bogus donations scam across India and founder of party i.e. Shri Surya Nath Chaturvedi carried out bogus donations scam since inception of the party. He further stated that after deducting certain commission donations are being returned to the donors.
(v) Furthermore, Shri Bishwajeet Singh stated that these affairs are also being the handled by the Shri Ritesh Shah. Shri Bishwajit Singh submitted list of some bogus entities used for cash generation, which is reproduced by Id PCIT on page number 13 of his order.
(vi) During the post search inquiries, statement of Shri Amitkumar Chaturvedi (AHLPC7736R), past president of political party was also recorded, he categorically admitted that the party was engaged in bogus donations scam.
(vii) It is relevant to refer to the fact that on verification with the website of regional Chief Electoral Officer where the party is registered i.e. CEO, Gujarat State, it has been found that Rashtriya Samajwadi Party (Secular) has not filed any contribution report, since F.Y. 2013-14 onward.
(viii) The party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it has also been, mentioning in its Income Tax Return of F.Y. 2018-19 that no contribution report has been filed u/s 29C of the R.P. Act, 1951.
(ix) Rashtriya Samajwadi Party (Secular) is not registered, as of today, as informed by Id Counsel for the assessee, with Election Commission of India/R.P. Act, 1951.
(x) There is no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements are correct and valid.
On analysis of gathered data of the conducted search, it was learnt that these RUPP’s are either not carrying out any sort of genuine political or social activity or they are carrying out such activities to project themselves as genuine parties. However, in reality these political parties are being used as a vehicle of accommodation entries under the garb of political activities. The biggest advantage of creating a façade of a political party to propagate the accommodation entry scam is the fact that the income of political party is completely exempt from taxation as long as conditions laid down in section 13A of the Act, are satisfied. The persons making donations to such organizations, at the same time received back the donations made by them in the form of cash after deduction of certain percentage of commission. By this way, the assessee i.e. the donor becomes eligible for the deduction u/s80GGC of the Act and evades the income tax liability by claiming 100% deduction on donated amount irrespective of his/her ITR. Further, In the light of disclosures made by Shri Suryanath Chaturvedi the former president and founder member of RSP (Secular), it is an established fact the Rashtriya Samajwadi Party has been formed to carry out bogus donations scam and bogus donation activities are being carried out from the inception of the party. All the party presidents from the inception have admitted that the RUPP is involved in the bogus donation scam. Moreover, Umapati IT Solution is a paper entity and has been used for layering of bogus donation received in the bank accounts of RSP(Secular).
23. From the above facts, it is abundantly clear that donation received by “Rashtriya Samajwadi Party” is bogus. The assessee has claimed deduction under Section 80GGC of the Act, and 80G(5) of the Act, which is also bogus and to that extent Assessment Order passed by assessing officer is erroneous and prejudicial to the interest of Revenue. There is a saying that The ‘tail’ cannot wag the ‘dog’. When there is a fraud, then the details and documents submitted by the assessee, before the assessing officer, during the assessment proceedings, do not assist the assessee in any manner, that is, the assessee cannot take the plea that he has submitted enough documents and details before the assessing officer and assessing officer has taken the plausible view. For that reliance can be placed on the judgment of the Coordinate Bench of ITAT Pune, in the case of Abhishek Ashok Lohade in ITA No.816/PUN/2018, order dated 22.11.2022.
From the above facts and relying on the decision cited above, it is abundantly clear that donation received by “Rashtriya Samajwadi Party” is bogus. The assessee has claimed deduction under Section80GGC of the Act, which is also bogus and to that extent the assessment order passed by assessing officer in disallowing the deduction claimed by the assessee u/s80GGC to the tune of Rs.xxxxx/- is upheld.”
9. It is now well settled by the Hon’ble Supreme Court in the cases of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) that the taxing authorities are not required to put on blinkers while examining a transaction merely because it is supported by documentary evidence. They are entitled to look beyond the apparent, examine the surrounding circumstances, apply the test of human probabilities and ascertain the real nature of the transaction. Where the cumulative facts and attending circumstances establish that the apparent is not the real, the Revenue is justified in drawing an inference based on the preponderance of probabilities. In the present case, the investigation material, statements recorded under section 132(4), bank trail analysis and the established modus operandi of the recipient political party constitute a complete chain of circumstances which overwhelmingly demonstrate that the impugned donation was merely an accommodation entry and not a genuine contribution eligible for deduction under section 80GGC of the Act.
10. In view of the foregoing discussion, the material brought on record by the Revenue, the findings emerging from the investigation and respectfully following the consistent view taken by the Co-ordinate Benches of this Tribunal in identical matters, we hold that the assessee has failed to establish that the impugned contribution represented a genuine donation eligible for deduction under section 80GGC of the Act. Mere payment through banking channels and production of donation receipts cannot, in the facts of the present case, override the overwhelming evidence demonstrating that the recipient political party was engaged in providing accommodation entries through a systematic layering of funds. The decisions relied upon by the Ld. AR are distinguishable on facts and do not advance the case of the assessee. We, therefore, find no infirmity in the order of the Ld. CIT(A) affirming the disallowance made by the Assessing Officer. Accordingly, the grounds raised by the assessee in this regard are dismissed.
11. As regards the deductions of Rs.1,50,000/- u/s 80C and Rs.20,000/- u/s 80D of the Act, the assessee shall produce receipt/bank statement providing the same before the JAO who shall verify and allow the same.
12. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 16.09.20206.
