ITAT Ahmedabad Partly Relieves Assessee on Medical & LTC Claims; Political Donation and Specified Disease Deduction Sent Back for Re‑examination

Background of the Dispute

The matter in Abhishek Rajeshbhai Karia Vs ITO (ITAT Ahmedabad) arises from reassessment proceedings for Assessment Year 2019-20. The reassessment was initiated under Section 147 read with Section 144B of the Income Tax Act 1961, primarily to examine a substantial claim of deduction under Section 80GGC for donation to a political party.

The assessee had:

  • Filed the original return under Section 139(1) and later revised it under Section 139(5)
  • Disclosed total income of Rs. 16,95,590
  • Claimed deductions under:
    • Section 80C
    • Section 80D
    • Section 80DD
    • Section 80DDB
    • Section 80GGC

The revised return was processed, a Section 143(1) intimation resulted in a refund which was duly paid. Later, a Section 148A notice was issued questioning the genuineness and eligibility of the claim of Rs. 4,00,000 under Section 80GGC relating to donation to a political party registered under Section 29A of the Representation of the People Act, 1951.

Following reply by the assessee, reassessment was initiated and culminated in an order under Section 147 r.w.s. 144B dated 11.03.2025, wherein multiple deductions and an exemption aggregating to Rs. 7,92,000 were disallowed, namely:

  • Section 80GGC – Rs. 4,00,000
  • Section 80D – Rs. 75,000
  • Section 80DD – Rs. 1,05,000
  • Section 80DDB – Rs. 87,000
  • Section 10(5) – Rs. 1,25,000

The reassessment also led to a dispute over:

  • Computation of total income
  • Restriction of TDS credit
  • Levy of interest under Section 234C and consequential interest under Section 234B

The first appeal before the NFAC (CIT(A)) was dismissed, leading to the present appeal before the ITAT Ahmedabad.

Composition of Income and Deductions in Revised Return

The assessee’s revised return disclosed:

  • Gross Total Income – Rs. 25,12,585 comprising:

    • Salary income (computed) – Rs. 26,81,353
    • Interest on bank fixed deposits – Rs. 31,232
    • Loss under the head “Income from House Property” (self‑occupied) – Rs. 2,00,000 (negative)

  • Deductions under Chapter VI‑A – Rs. 8,17,000 under:

    • Section 80C – Rs. 1,50,000
    • Section 80D – Rs. 75,000
    • Section 80DD – Rs. 1,05,000
    • Section 80DDB – Rs. 87,000
    • Section 80GGC – Rs. 4,00,000

After processing and rectification, a refund of Rs. 1,89,790 (including interest) was issued to the assessee.

Subsequently, on 29.03.2023, notice under Section 148A was issued, focusing on the Section 80GGC donation to Rashtriya Samajwadi Party (Secular), a political party registered under Section 29A of the Representation of the People Act, 1951, alleged to be part of a wider issue of bogus political donations made to a Registered Un-recognized Political Party (RUPP).

Despite detailed submissions, the AO proceeded with reassessment and ultimately disallowed various claims.

Ground‑wise Discussion Before ITAT

1. Deduction under Section 80GGC – Political Donation of Rs. 4,00,000

Assessee’s Position

The assessee contended that:

  • A total of Rs. 4,00,000 was contributed to Rashtriya Samajwadi Party (Secular) on 3rd February 2019 and 11th March 2019 through banking channels, not in cash.
  • Valid receipts numbered 020495 (04th February 2019) and 027894 (31st March 2019) were issued by the political party.
  • The party is registered under Section 29A of the Representation of the People Act, 1951, and hence falls within the definition of “political party” for purposes of Section 80GGC.

Section 80GGC was reproduced and key statutory conditions were highlighted:

  1. The contributor must be a person other than a local authority or a Government-funded artificial juridical person.
  2. The contribution must be made to a political party or electoral trust.
  3. The contribution must not be in cash.
  4. Explanation: “political party” means a political party registered under Section 29A of the Representation of the People Act, 1951.

The assessee stressed that:

  • The statute does not distinguish between “recognised” and “unrecognised” political parties; it only requires registration under Section 29A.
  • The AO had relied on general statements recorded from officials of certain political parties to allege that donations were routed back in cash, but no specific evidence linked the assessee to receipt of any cash or benefit.
  • The AO’s own order did not contain any material proving that the assessee got cash back.

The assessee also relied on: