ITAT Ahmedabad Denies Section 80GGC Deduction on Bogus Political Donations Despite Bank Routing

The Income Tax Appellate Tribunal (ITAT) has consistently taken a stringent stance against the misuse of tax-exempt political contributions. In a significant ruling, the ITAT Ahmedabad, in the case of Sarojben Gaurang Doshi Vs ITO, dismissed the appeal filed by the assessee, thereby upholding the disallowance of a ₹6,00,000 deduction claimed under Section 80GGC of the Income Tax Act 1961. The Tribunal decisively ruled that mere routing of funds through official banking channels and the possession of donation receipts are insufficient to validate a political contribution if overwhelming evidence points toward a systematic accommodation entry mechanism.

This comprehensive summary delves into the factual matrix, the arguments presented by both the assessee and the Revenue, the detailed modus operandi of the alleged bogus donations, and the critical judicial precedents that guided the Tribunal's final verdict.

Factual Matrix of the Case

The dispute pertains to the Assessment Year 2019-20. The assessee originally filed her return of income declaring a total income of ₹5,02,130. Subsequently, the Income Tax Department received actionable intelligence regarding a nationwide network of bogus political donations involving Registered Unrecognized Political Parties (RUPPs). Based on this information, reassessment proceedings were initiated under Section 147, and a notice under Section 148 of the Income Tax Act 1961 was issued to the assessee. In response, the assessee maintained her original returned income.

During the scrutiny proceedings, the Assessing Officer (AO) identified that the assessee had claimed a deduction of ₹6,00,000 under Section 80GGC for a financial contribution made to a political entity named Rashtriya Samajwadi Party (Secular).

To substantiate the claim, the assessee submitted several documentary proofs, including:

• The official donation receipt issued by the political party.
• Bank account statements demonstrating that the payment was executed via formal banking channels.
• Registration credentials proving the entity was a recognized political party.

The Revenue's Investigation and Findings

Despite the documentary evidence, the Assessing Officer relied heavily on the findings of a widespread investigation and search operations conducted by the Department into the RUPP group. The Verification Unit's report indicated that the Rashtriya Samajwadi Party (Secular) was actively facilitating accommodation entries under the guise of receiving political donations.