Jaipur ITAT Restores Political Donation Issue, Allows Multiple Deductions Despite Search-Based Disallowances – Sumit Maloo vs ITO
Background and Context
The Income Tax Appellate Tribunal, Jaipur Bench, delivered a significant ruling in Sumit Maloo Vs ITO (ITAT Jaipur), vide ITA No: 752/JPR/2026, pronounced on 25/08/2026, concerning Assessment Year 2019-20. The case arose from a reassessment proceeding in which the Assessing Officer disallowed several deductions and exemptions claimed by the assessee, primarily on the basis of search-related findings against certain political parties. The CIT(A)/NFAC confirmed those disallowances, prompting the assessee to approach the Tribunal.
The order touches upon five distinct deduction and exemption heads, each carrying its own evidentiary and legal dimension. The ruling is instructive both for assessees whose claims are denied on the strength of third-party statements, and for those whose supporting documents are overlooked without any reasoned analysis.
Genesis of the Dispute
The Search and the Accommodation Entry Allegation
The proceedings trace their origin to a search operation conducted at the premises of three registered but unrecognised political parties — Manvadhikar National Party, Kishan Adhikar Party and Kisan Party of India — along with two charitable organisations, namely All India Social Education Charitable Trust and Aadhar Foundation.
These entities were run by two separate groups. The first group consisted of Ram Bhawan Ojha and his brother Tribhawan Ramkalp Ojha, who were found to be controlling Manvadhikar National Party, Kishan Adhikar Party and All India Social Education Charitable Trust. The second group centred around Shri Saumil Kiritbha Bhadiadra, who managed Kisan Party of India and Aadhar Foundation.
During the search, it emerged that donations were received by these entities through cheque, RTGS or NEFT, after which the funds were routed through multiple layers and returned to the original donors in cash, with the intermediaries retaining a commission ranging from 3.5% to 5%. Donors who participated in this arrangement claimed deductions under Section 80GGB or Section 80GGC of the Income Tax Act, 1961, thereby allowing taxable income to escape the tax net.
Application to the Assessee
Based on intelligence gathered during the search, the Assessing Officer alleged that the assessee had obtained an accommodation entry by making a political donation of ₹1,00,000 to Manvadhikar National Party in AY 2019-20 and had claimed deduction under Section 80GGC. The assessee responded by producing Form 26AS, Form 16, a donation receipt issued by the political party, and bank statements from HDFC Bank. Despite these submissions, the AO disallowed not only the political donation deduction but also the following:
- Deduction of ₹1,38,400 under
Section 80Ctowards EPF contribution - Exemption of ₹2,54,000 under
Section 10(13A)towards house rent allowance - Deduction of ₹50,000 under
Section 80Dtowards medical expenditure for a senior citizen parent - Deduction of ₹50,000 under
Section 80Gtowards charitable donation
As a result, the total income of the assessee was assessed at ₹16,73,240. The CIT(A)/NFAC upheld all the disallowances in its order dated 12.02.2026, leading the assessee to file the present appeal before the Tribunal.
Issues Before the Tribunal
The Tribunal was called upon to adjudicate the following: