Case Law Details
Sunil Kamlashankar Dubey Vs ITO (ITAT Mumbai)
Mumbai ITAT upheld disallowance of ₹2 lakh claimed u/s 80GGC, holding that the alleged political donation was not genuine despite payment through banking channels.
The Tribunal observed:
- Reopening was based on search findings on political parties engaged in bogus donation entries, including cash return after commission
- The assessee claimed donation to such a party but:
- Failed to provide any credible evidence of genuine intent or connection
- Could not establish association or involvement with the political party
On reopening:
- ITAT upheld validity relying on prima facie material (Raymond Woollen Mills principle)
- Assessee failed to file objections as per GKN Driveshafts, weakening challenge
On merits:
- Mere banking channel payment and receipt is not sufficient
- Applying test of human probabilities:
- Assessee (salary ₹1 lakh/month) donating ₹2 lakh appeared improbable
- No evidence that donation was bona fide or for legitimate political purpose
On procedural grounds:
- No cross-examination sought by assessee, hence argument rejected
Accordingly:
- Disallowance u/s 80GGC confirmed
- Appeal dismissed in full
The ruling reinforces a key principle: “Documentation alone cannot prove genuineness—transactions must pass the test of human probability.”
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assesseeis directed against the order of Ld. CIT(A) / NFAC dated 15.07.2025 for A.Y. 2019-20. The assessee has raised following grounds of appeal;
i. That the reassessment u/s 147 based on generic 3 VRU/CRIU intelligence without assessee-specific material lacks live nexus, rendering proceedings void ab-initio.
ii. That the mandatory pre-assessment enquiry u/s 148A is vitiated as complete relied-upon documents were not supplied, defeating meaningful hearing opportunity.
iii. That the authorities relied upon third-party statements without affording cross-examination opportunity, breaching natural justice. [Andaman Timber Industries v. CCE (SC)]
iv. That the CIT(A) order violates Section 250(6) by failing to address specific submissions point-wise and demonstrating non-application of mind.
v. That the disallowance u/s 80GGC is erroneous as statutory conditions are satisfied: banking channel payment, Section 29A registration, proper disclosure. “Unrecognised party” is not a statutory bar.
vi. That the CIT(A) abdicated co-terminus powers by issuing vague directions instead of conclusively deciding the Chapter VI-A claim.
vii. That sustaining disallowance on grounds not raised in 7 show cause notice violates SCN-order congruence, rendering addition ultra vires.
viii. That interest u/s 234A/B/C and penalty u/s 270A deserve deletion given bona fide compliance and consequential nature.
2. Brief facts of the case are that the assessee is an individual, filed his return of income for AY 2019-20 on 23.08.2019, declaring income of Rs. 8,31,810/-. The case of the assessee was reopened on the basis of information in the Insight portal that his search and seizure action under Section 132 was carried out on various political parties and charitable organisation on 02.02.2021 at the premises of Manvadhikar National Party (MNP). During the course of search operation, it was revealed that such political party has accepted donation from various individual through banking channel and after deducting certain percentage of commission, the amount was returned. The assessee has claimed donation of Rs.2.00 Lacs to Manvadhikar National Party and claim deduction under Section 80GGC. On the basis of such information, the Assessing Officer (in short ‘AO’) recorded reasons of reopening and after obtaining necessary approval, notice was issued under Section 148 on 11.04.2023. In response to notice under Section 148, the assessee filed his return of income on 26.05.2023, declaring income of Rs. 8,76,810/-. During the assessment proceeding, the AO noted that assessee has claimed various deductions including deduction of Rs.2.00 Lacs under Section 80 GGC. The AO issued show cause notice to substantiate the genuineness of such deduction and as to why such deduction be not treated as bogus. The assessee filed his reply dated 09.12.2024. The assessee in his reply stated that the donation was given in good faith through bank account. He was not aware about operation undertaken by Ram Bhawan Ojha. The reply of assessee was not accepted by AO and it was added back to the income of assessee for assessment year dated 20.01.2025.
3. Aggrieved by the action of AO, the assessee filed appeal before CIT(A). Before CIT (A), the assessee filed detailed statement of fact. Submission of assessee are extracted by Ld. CIT(A) at page No. 3 to 39. The assessee in its submission raised various factual and legal issues. The assessee while challenging the validity of reopening submitted that case was reopened, based on three party information without any independent application of mind and relied upon decision of GKN Driveshaft’s (India) Ltd. vs. ITO (2003) 259 ITR 19 (SC). The assessee also stated that there was no fresh tangible material for reopening. There is no direct evidence against the assessee. The assessee made a genuine donation. Donation were made through banking channel. The assessee disclosed complete details. The assessee made transaction in good faith. When the assessee made transaction, the political party was a registered political party. Donation was made through account payee cheque. Valid receipt was obtained. During assessment, the assessee made timely compliance. There was no application of mind of AO, on various evidences furnished by assessee. No specific material was brought on record in implicating the assessee. No independent verification was carried out by AO on the allegation against the assessee. The AO relied on general statement. The assessee also relied on a number of decisions in hi submissions.
4. The Ld. CIT(A) after considering the submissions of assessee recorded his finding in para 6.3.1 wherein he recorded about basis of information for reopening, which was based on a search action of various political parties and charitable organisation. He also referred the modus operandi of political parties during the search action. In para 6.3.3, the Ld. CIT (A) relied upon the decision of Surat Bench in Jayeshkumar Gopalbhai Akbari [2024] 162 com395 (Surat-Trib.) wherein similar disallowance of deduction to political party was upheld. The Ld. CIT(A) also relied upon other decision of Rajkot Tribunal in Milind Pankajbhai Shroff in ITA No. 96/RJT/2023 and Ahmedabad Tribunal in Rakesh Balubhai Padariya [2023] 157 taxmann.com 695 (Ahmadabad-Trib). The Ld. CIT(A) on considering the specific facts of the case of assessee held that assessee was employed with Bandhan Bank Ltd. and having annual salary of Rs. 14,90,112/- and has given a donation of Rs. 2.00 Lacs to a political party who was covered in the search which does not seems to be genuine. Further aggrieved, the assessee has filed present appeal before Tribunal.
5. I have heard the submission of Ld. Authorised Representative (in short ‘AR’) of the assessee and Ld. Senor departmental representative (Sr. DR) for the revenue. The Ld. AR of the assessee also furnished written synopsis in support of his oral submissions. Against the validity of reopening under Section 147, the Ld. AR of the assessee submits that there was no live link of the information with the AO. There is no seized material specified by AO in the assessment order which may indicate the name of assessee. Despite specific request, no statement of any person, on the basis of which the AO formed his opinion about bogus entry, is provided to the assessee. To support his view, the Ld. AR of the assessee relied upon decision of Hon’ble Apex Court in Andaman Timber Industries v. CCE (2015) 4 SCC 481. The Ld. AR of the assessee submits that the case law relied by Ld. CIT(A) in his finding are distinguishable and is not applicable on the facts of the case. The assessee entered in a bonafide manner. The assessee obtained valid receipt. Payments were made through banking channel. There is no evidence that the case was returned back to the assessee.
6. On the other hand, the Ld. Sr. DR for the revenue submits that at the time of reopening reason to believe is sufficient in making formation of plea that income has escaped assessment. Sufficiently, all reason is not to be seen at the time of reopening as has been held by Hon’ble Apex Court in Raymond Woolen Mills (1999) 263 ITR 34 (SC). The Ld. CIT(A) passed a speaking order relying upon the decision of various benches of Tribunal on the similar issue. Payment through banking channel will establish the legitimacy of a transaction if it is a sham transaction. The assessee is a salaried employee and has given donation of Rs.2.00 lacs to a political party whose incidents are not fair.
7. At the time of hearing of the case, I raised certain question to Ld. AR of the assessee that how the assessee is associated with such political party whether the assessee is a primary member or active member of such political party or such political party have ever participated in any Municipal State or Parliamentary elections. Whether the assessee ever participated in any political meeting or any activities of such political party. No satisfactory, explanation was given by Ld. AR of the assessee.
8. I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. I have also deliberated on the written submission of Ld. AR of the assessee and the decision relied by him. I find that the assessee has raised multiple grounds of appeal which are not in consonance with Rule 8 of Income Tax (Appellate Tribunal) Rules-1963. However, in my considered view, there are only two substantial grounds of appeal. Firstly, relates to validity of reopening under Section 147 and issuance of notice under section 146 and secondly of validity of addition/ disallowance of Rs.2.00 Lacs under Section 80GGC. All other grounds of appeal are either narration of facts or argumentative in nature.
9. First ground of appeal relates to validity of reopening. I find that case of assessee was reopened on the basis of information with the AO that search action was carried out on certain political party including Manvadhikar National Party and other charitable association. In the information it was communicated that such political party was indulging in taking bogus donation of providing cash entries through intermediary. The assessee has also claimed donation of Rs.2.00 Lacs paid to such political party. On perusal of assessment order, I find that no such objection is filed by the assessee against the reopening before AO. No material is placed before me to show that any objection either during assessment on on receipt of reasons recorded was raised before AO as per decision of Hon’ble Supreme Court in GKN Driveshaft’s (supra) to challenge the validity of reopening within time. The Hon’ble Apex Court in Raymond Woolen Mills (1999) 263 ITR 34 (SC), held that only prima facie material if exists is sufficient to justify reopening. The correctness or sufficiency of that material is not to be examined at this stage. The AO must have reasonable ground to form his belief that income had escaped assessment and not whether that belief was ultimately correct. I find that ultimately the information received to the AO with the transaction of donation by assessee is found to be correct. Thus, I do not find any force in the submission of assessee against the reopening under section 147.
10. So far as the other grounds taken in oral and written submission that no cross examination was provided by AO, the assessee has not placed any material on record to show that any cross examination was sought by assessee before AO. So far as the merit of disallowance under Section 80GGC is concerned, I find that before AO, the assessee in its reply dated 09.12.2024, the assessee simply stated that he has paid a donation in a good faith. No other facts which convince that about the activities of such political party, which persuaded the assessee to pay a donation of Rs. 2.00 Lacs is brought on record. The donation of Rs. 2.00 lacs is more than of his monthly salary. Assessee is an employee of Bandhan Bank and his earning just more than Rs.1.00 Lac per month, still he has donated Rs. 2.00 Lacs which is beyond human probabilities. During the hearing, I raised certain question as to whether the assessee is associated with such political party or the manner in which he is connected with such political party. No satisfactory explanation is given by Ld. AR of the assessee.
11. I find that Ld. CIT (A) confirm the action of AO by relying upon various decision of Tribunal including the decision of Surat Bench in Jayeshkumar Gopalbhai Akbari (supra). The said decision is authored by undersigned where similar disallowance by was upheld. Considering the overall facts and circumstances, I am not convince that donation given by assessee was bona fide. Thus, I do not find any merit in the grounds of appeal raised by assessee. In the result, the substantial grounds no. 2 is dismissed.
12. In the result, the appeal is dismissed.
Order was pronounced on 21/04/2026 in open Court.
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