LALIT KUMAR PERIWAL,NAVI MUMBAI vs. INCOME TAX OFFICER, NAVI MUMBAI

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ITA 3862/MUM/2026Status: DisposedITAT Mumbai15 September 2026AY 2019-2011 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the disallowance of the deduction under Section 80GGC. It found that the donation was part of a scheme to claim bogus deductions, and the assessee failed to discharge the onus of proof regarding the genuineness of the transaction.

What were the facts?

The assessee claimed a deduction under Section 80GGC for a donation made to a political party. The Assessing Officer (AO) disallowed this deduction, and the Commissioner (Appeals) upheld the AO's decision. The assessee appealed to the ITAT.

What were the issues?

Whether the donation made to the political party was genuine and eligible for deduction under Section 80GGC, or if it was part of a fraudulent scheme to claim bogus deductions.

Which sections of the Income-tax Act were involved?

Section 80GGC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR

Pronounced: 15.09.2026

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NATIONAL FACELESS APPEAL CENTRE (NFAC) vide DIN: ITBA/NFAC/S/250/2025-26/1084637331(1) dated 10-Jan-2026 for the Assessment Year 2019-20. The Assessee has raised the following grounds of appeal:

1) Notice under section 148 is void ab initio due to digital signature timing defect. The AO claims the notice us 148 dated 31.03.2023 was duly served at 11:38:37 PM. However the digital signature affixed on the very same notice bears the timestamp of 11:44:50 PM on 31.03.2023. The notice was thus purportedly delivered 6 minutes and 13 seconds before it was digitally signed. An unsigned document has no legal existence under the Information Technology Act 2000. A document not yet in existence cannot be served. The notice is void ab initio and the entire reassessment proceedings including the assessment order dated 24.03.2024 and demand of Rs. 28,429 are without jurisdiction and liable to be quashed. This objection was raised before AO but not addressed. CIT(A) dismissed this without dealing with the factual discrepancy on merits. 2) Violation of mandatory faceless assessment scheme us 144B renders reassessment void. The notices us 148A(b) and 148 were issued directly by the Jurisdictional Assessing Officer: ITO Ward 28(2)(1), Mumbai. This is in direct violation of the mandatory faceless assessment mechanism prescribed us 144B of the Act read with the Faceless Assessment Scheme 2019 as amended by Finance Act 2021. The Finance Act 2021 brought reassessment proceedings within the faceless framework. Direct involvement of the Jurisdictional AO is a procedural illegality that goes to the root of jurisdiction. Both the AO and CIT(A) failed to address this ground. The entire reassessment is void and the demand of Rs. 28,429 is liable to be quashed. 3) Disallowance under section 80GGC is unjustified as both mandatory statutory conditions are fulfilled and no specific evidence exists against the appellant. Condition (a): Rashtriya Samajwadi Party (Secular) is duly registered us 29A of the Representation of the People Act 1951. Registration certificate produced. Condition (b): Donation of Rs. 75,000 was made via IMPS through banking channel on 07.01.2019. Not made in cash. Donation receipt dated 07.01.2019 produced. Bank statement confirming payment produced. Form 26AS produced. The AO has not produced any evidence that (i) any amount was returned to the appellant, (ii) the appellant was party to any fraudulent scheme, OR (iii) any document found during search mentions the appellant by name in any incriminating context. Disallowance without cogent evidence is unsustainable. 4) Binding and directly applicable judicial precedents support the appellant. (a) ITAT Raipur in ACIT vs. Anuj Prakash Gupta (ITA No. 11.RPR.2026 dated 05.02.2026): identical political party (Rashtriya Samajwadi Party Secular), identical AY 2019.20, ITAT dismissed department appeal and upheld 80GGC deduction holding that general assumptions without direct evidence against specific assessee cannot sustain disallowance and suspicion cannot replace evidence. (b) ITAT Ahmedabad in ACIT vs. Armee Infotech: donation to RUPP allowed us 80GGC. Held that a donor cannot be held responsible for how the political party uses the donated funds. The donee is an independent taxable entity. Both decisions are directly on point and support deletion of the addition of Rs. 75,000. 5) Addition is based on borrowed satisfaction which is impermissible in law. The AO has mechanically relied on findings of the Investigation Wing arising from search of RUPP group of Ahmedabad us 132 on 07.09.2022. The AO has not independently applied his mind to the facts of the appellants case. There is no material in the appellants case record which independently justifies reopening OR addition. It is settled law that borrowed satisfaction is not valid satisfaction for purposes of Section 147. The AO must have reason to believe based on material in his own possession pertaining to the specific assessee. No such independent material exists in the present case. Both the assessment order and CIT(A) order are silent on this aspect. 6) Denial of cross examination of relied upon witnesses violates principles of natural justice and renders the assessment order a nullity. The appellant by letter dated 15.02.2024 specifically requested: (a) cross examination of key persons of Rashtriya Samajwadi Party (Secular) whose statements formed basis of addition, and (b) copy of such statements at least one week before hearing. Both requests were denied without any reason OR justification. The Honourable Supreme Court in Andaman Timber Industries vs. CCE (2015) 281 CTR 241 unequivocally held that not allowing cross examination of witnesses whose statements form basis of impugned order amounts to serious flaw rendering the order a nullity as it violates principles of natural justice. CIT(A) erred in relying on CIT vs. Chhabil Dass Agarwal to dismiss this ground. 7) Non supply of statements and seized material used against appellant is a violation of natural justice. The AO relied on statements recorded from office bearers of Rashtriya Samajwadi Party (Secular) and documents including loose papers, diaries and WhatsApp chats seized during search of RUPP group. None of this material was supplied to the appellant despite specific written request. The Honourable Bombay High Court in H.R. Mehta vs. ACIT (289 ITR 561) held that the Revenue must at minimum provide the material used against the assessee and permit cross examination of deponents. The Delhi High Court in CIT vs. Ashwani Gupta (322 ITR 396) held that non supply of seized material and denial of cross examination vitiates the assessment order and the addition is liable to be deleted. 8) Both the assessment order and CIT(A) order are non speaking orders and are vitiated by non application of mind. The appellant cited the following binding judicial precedents during assessment proceedings: (a) Andaman Timber Industries vs. CCE SC 2015, (b) H.R. Mehta vs. ACIT Bombay HC, (c) CIT vs. Ashwani Gupta Delhi HC, (d) Amitabh Bansal vs. ITO ITAT Delhi, (e) Chartered Motors vs. ACIT ITAT Ahmedabad, (f) CBI vs. V.C. Shukla SC 1998, (g) CIT vs. Atam Valves P&H HC. Not a single precedent was mentioned, discussed, distinguished OR dealt with in either order. It is settled law that failure to address binding judicial precedents cited by assessee amounts to non application of mind and renders the order perverse and liable to be set aside. 9) Penalty proceedings initiated us 270A for alleged mis reporting of income are wholly without basis and liable to be dropped. The appellant claimed deduction us 80GGC bona fide on the basis of a genuine donation with full and complete disclosure in the original return filed on 06.07.2019. The deduction was based on a valid donation receipt, banking proof and registration certificate of the political party. There is no concealment, misrepresentation, suppression OR mis reporting of any fact. Section 270A(8) requires a specific finding of furnishing of inaccurate particulars OR misrepresentation of facts. No such finding has been made on the basis of any evidence specific to the appellant. Penalty being wholly consequential to the addition must also fall if the addition is deleted. 10) The Appellant craves leave to add, alter, amend, modify OR withdraw any of the above Grounds of Appeal at OR before the time of hearing, with the permission of this Honble Tribunal.

2.

Although the assessee has raised a number of grounds, he has made an endorsement that he is not pressing all the grounds except Ground Nos. 3 and 4. Therefore, we have decided to adjudicate Ground Nos. 3 and 4 firstly.

3.

Both the grounds, i.e., Ground Nos. 3 and 4, raised by the assessee relates to challenging the order of the Ld. CIT(A) in confirming the additions made by the AO by rejecting the disallowance sought by the assessee under section 80GGC of the Income Tax Act in respect of donations made by the assessee of Rs. 75,000/- to a political party.

4.

We have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that, as per the order of assessment, the assessee had given a donation of Rs. 75,000/- to Rashtriya Samajwadi Party for claiming deduction under section 80GGC of the Income Tax Act, which was then rerouted back to the donors in cash/RTGS/NEFT or through other banking channels.

5.

It was also noticed by the AO from the return of income that the assessee had claimed deduction under section 80GGC of the Act on account of donation to a political party. Accordingly, the case of the assessee was reopened and, consequently, after serving statutory notices and providing an opportunity of hearing to the assessee, additions were made, which were challenged before the Ld. CIT(A), who also upheld the same by dismissing the appeal of the assessee.

6.

After having evaluated the orders passed by the Revenue Authorities, we find that it is an undisputed fact that a search and seizure action under section 132 of the Income Tax Act was conducted in the case of RUPPS Group of Ahmedabad on 07/09/2022. In this case, a total of 23 registered unrecognised political parties, more than 35 bogus intermediaries, and three major exit providers were covered, which was collectively called as RUPP group. The relevant extract of assessment order is reproduced herein below:

7.

Since the assessee is also one of the beneficiaries, who had made a donation of Rs. 75,000/- to Rashtriya Samajwadi Party (RSP) and claimed deduction of 100% under section 80GGC of the Act, whereas during the search action, it was clearly established that such types of donations were being made only for the purpose of claiming bogus deduction under section 80GGC/80GGB of the Act, which were then rerouted back to the donors in different forms.

8.

Although search and seizure action was conducted by the Department and, during the course of the said search and seizure, certain documents were also seized, the presumption of correctness is attached to the investigations carried out by the Department, as these were carried out by the officers of the Department, and thus the presumption of correctness is attached to the action carried out by the Department.

9.

The assessee has not placed on record anything in order to uproot the presumption attached to the discharge of the official duties of the departmental officers.

10.

As far as the issue of circumstantial evidence is concerned, in this regard, the assessee has miserably failed to discharge its onus of proof and establish the relevance of the surrounding circumstances of the case.

11.

On this proposition, we rely upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More, 1972, 82 ITR 540, wherein the Hon'ble Supreme Court has categorically reiterated the principles to the effect that, "what is apparent may not be real, and the test of human probabilities has to be applied to understand if the apparent is real, and if the transaction fails to withstand the test of human probabilities, has to be taken as an ingenuine transaction even if documentary evidences suggest otherwise."

12.

Moreover, the Hon'ble Supreme Court, in another case titled Juggilal Kamlapat vs. CIT, 1969, 73 ITR 702, has also held that the Income Tax authorities are entitled to pierce the veil of corporate entity and look at the reality of the transactions, and in exceptional cases, the court can lift the veil of corporate entity to pay regard to the economic realities behind the legal facade.

13.

Similarly, in our view, the Assessing Officer has the power to disregard the corporate entity if it is used for tax evasion or to circumvent tax obligations or to perpetuate any fraud.

14.

We also derive strength from the decision of the Hon'ble Delhi High Court in the case of PNB Finance Limited vs. Shital Prasad Jain, 1983, 54 Comp. Cas. 66, wherein it was held that the doctrine of piercing the corporate veil, wherever necessary, might be invoked by the court in the interest of justice and to prevent the corporate entity from being used as an instrument of fraud, and the fundamental principle of corporate personality itself might be disregarded having regard to the exigencies of the situation and for the ends of justice.

15.

We are further of the view that if the economic realities of a transaction between the assessee and others are analysed, and the exigency of the circumstances surrounding it reveals that the transaction has been entered into only to defraud the Revenue, causing injustice to it, the authorities should look behind the real purpose of the transaction and deal with the consequence of the transaction in a manner in which it should have been dealt with otherwise.

16.

Even otherwise, we, being the judicial authorities, are not expected to put our seal of approval on the misdeeds being carried out by certain tax evaders. Therefore, applying these principles in mind, we are convinced that the assessee is not entitled to any disallowance as claimed under section 80GGC, more particularly when the investigation has been carried out in detail, and an elaborate order has been passed by the AO as well as the Ld. CIT(A).

17.

Even otherwise, no new facts or circumstances have been placed on record in order to controvert or rebut the findings so recorded by the Ld. CIT(A). Therefore, we feel no reason to interfere with or deviate from the well-reasoned order passed by the Ld. CIT(A).

18.

It would not be out of place to mention here that the coordinate Bench of the ITAT, in the case of ACIT vs. Anuj Prakash Gupta, has decided the case in favour of the assessee by holding that the AO could not bring out any evidence which suggested that the said political party had derived commission and had paid money back to the appellant through the back door. To our mind, the facts and circumstances contained in the said decision, being pari materia, are altogether different from the facts and circumstances contained in the present case.

19.

In the present case, an elaborate investigation took place wherein, during the course of search and seizure, it was abundantly clear that the said political party was just created to accept bogus donations, whereas no real work was found to be carried out. Thus, at this stage, we cannot ignore the detailed findings arrived at during the search and seizure proceedings.

Therefore, the decision of the coordinate Bench is not found applicable to the facts of the present case.

20.

Considering the totality of the facts and circumstances, we uphold the order passed by the Ld. CIT(A) and dismiss the appeal filed by the assessee without cost.

21.

In the result, appeal filed by the Assessee stands dismissed.

Order pronounced in the open court on 15.09.2026.

Sd/- Sd/- PRABHASH SHANKAR SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 15.09.2026 RY-SrPS Copy to: LALIT KUMAR PERIWAL, R4, 3401, 34TH FLOOR, Q ISLANDS, AURAM HOUSE, AURAM Q PARC, PLOT 1 NO.4/1, GHANSOLI, NAVI MUMBAI-400710, MAHARASHTRA INCOME TAX OFFICER, VASHI RAILWAY STATION 2 COMMERCIAL COMPLEX BUILDING, VASHI, NAVI MUMBAI-400703, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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