REKHA RANI,FARIDABAD, HARYANA vs. ITO, FARIDABAD AAYKAR BHAWAN

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: “SMC” NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA No.5712/Del/2026 Assessment Year: 2019-20 Rekha Rani, Vs. Income Tax Officer, B-189, Puri Amanvillas, Ward-2(1), Sector-89, Faridabad, Faridabad Haryana PAN: AQFPR7572M (Appellant) (Respondent) Assessee by Ms. Priti Goyal, CA Department by Sh. Nirmal Nangia, Sr. DR

Date of hearing 09.07.2026 Date of pronouncement 09.07.2026 ORDER This assessee’s appeal for assessment year 2019-20, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1087839574(1), dated 24.03.2026 involving proceedings under section 147 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused. 2. Coming the first and foremost issue of donation of Rs.1 lakh, it transpires at the outset during the course of hearing with the

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able assistance coming from both the parties that the learned lower authorities have refused section 80GGC deduction claim amounting to Rs.1 lakh; in assessment order dated 27.12.2024 and upheld in the lower appellate discussion as under: 9.2 I have gone through the assessment order, submissions made by the appellant and the facts of the case. 9.2.1 It is emanating that assessee had made donation of Rs. 100000/- to unrecognised political party as mentioned in the assessment order. 9.2.2 It is worth mentioning here that the disallowance of deduction claimed u/s 80GGC is based on specific information received through the CRIU/VRU Insight Portal. Which indicated that the assessee had claimed deduction in respect of a donation made to Rashtriya Samajwadi Party (Secular), an unrecognized political party. Assessing Officer further noted that the said political party has not been filing statutory contribution reports, which are mandatory for claiming exemption u/s 13A. Further, Assessing Officer has mentioned in the assessment order that ‘in her written submission dated 14.12.2024, the assessee stated that she had been "innocently caught and expressed willingness to pay the tax. Which indicates acceptance of the non- genuine nature of the claim.’ 9.2.3 Assessing Officer has further pointed out that the above information is further supported by the background findings of the Investigation Wing arising from a search and seizure action u/s 132 conducted on 07.09.2022 in the case of the RUPPS Group of Ahmedabad, wherein several Registered Unrecognized Political Parties (RUPPS), intermediary entities and exit providers were covered. During the course of the said search, documentary and digital materials such as donation receipts, records indicating commission, loose papers and electronic communications of office bearers and associated persons were seized and examined. Assessing Officer stated that the findings revealed that certain unrecognized political parties, including Rashtriya Samajwadi Party (Secular), were receiving donations which were not commensurate with or supported by any corresponding political 2 | P a g e

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activity. In view of the assessee's failure to establish the genuineness of the donation beyond the banking trail, and considering the surrounding facts and information available on record, I am of the opinion that the claim of deduction u/s 80GGC was rightly disallowed by the AO. 9.2.4 Assessing Officer has further mentioned various judicial pronouncements as below: “The findings of the Assessing Officer are further fortified by a recent and directly applicable decision of the Hon'ble ITAT, Ahmedabad Bench, in the case of Rajen Jayantilal Merchant v. Assessment Unit, Jurisdictional AO [2025] 180 taxmann.com 568 (Ahd-Trib.), decided on 13.11.2025, wherein on identical facts for A.Y. 2019-20, donation made to Rashtriya Samajwadi Party (Secular) was held to be a non-genuine accommodation entry and the disallowance of deduction u/s 80ccc was upheld. The Hon'ble Tribunal categorically held that mere production of donation receipts and proof of payment through banking channels does not establish genuineness where investigation material demonstrates routing and layering of funds. The Tribunal also relied upon earlier co-ordinate Bench decisions, including Saurabh Pravinbhai Patel & Bruesh Pravinbhai Patel AOP v. Assessment Unit (ITA No. l0l7lAhdl2023 dated 30.04.2025), involving the same political party and identical modus operandi.” 9.3 Thus, in view of the aforesaid facts, surrounding circumstances and the binding judicial precedent on identical facts, the disallowance of Rs.1,00,000/- made by the Assessing Officer u/s 80GGC is legally sustainable and deserves to be upheld.” 3. Suffice to say, it has come on record that the tribunal’s another learned coordinate bench in [2025] 180 taxmann.com 568 (Ahmedabad-Trib.) Rajen Jayantilal Merchant Vs. Assessment Unit has already applied its mind whilst deciding the instant issue in the department’s favour that such a deduction claim of donation made to Rastriya Samajwadi Party (supra) is bogus in nature, as follow: 3 | P a g e

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““2. Brief facts of the case is that the assessee is an individual filed his Return of Income for the Asst. Year 2019-20 on 26-10-2019 declaring total income of Rs.8,25,580/- after claiming deduction under Chapter VIA of Rs. 3,17,858/- which is inclusive of donation of Rs.1,50,000/- u/s. 80GGC of the Act given to Political Parties. The assessment was reopened since the assessee has given donation of Rs.1,50,000/- to Rashtriya Samajwadi Party (Secular) which is the registered unrecognized political party and claiming bogus deduction u/s. 80GGC of the Act. 2.1. In response, the assessee filed Return of Income on 22-052023 claiming the same original return including donation of Rs.1,50,000/- u/s. 80GGC of the Act. The assessee was issued a show cause notice, in reply the assessee filed a donation receipt given by Rashtriya Samajwadi Party (Secular), copy of the relevant bank statement and Certificate of Registration of Rashtriya Samajwadi Party (Secular). The assessing officer considered the same and held that Post Search enquiries on registered unrecognized political parties group of Ahmedabad (23 registered unrecognized political parties), it was established that the donation made to such Registered Unrecognized Political Parties (RUPP) in the nature of scam claiming bogus deduction u/s. 80GGC/80GGB of the Act and intended to defraud the legitimate tax of the assessee. The amounts were returned to the donor after deducting certain percentage from it. As it was proved to be non-genuine and bogus, the same was disallowed and demanded tax thereon. 3. Aggrieved against the re assessment order, assessee filed appeal before Ld. CIT(A) who has confirmed the addition by detailed appellate order. 4. Aggrieved against the same, assessee is in appeal before us raising the following Grounds of Appeal: 1. That the re-opening of the assessment by the Jurisdictional Assessing Officer by issuing the notice us 148 is bad-in-law and the assessment order passed by the Faceless Assessing Officer also bad-in-law on two grounds viz. (a) the notice was issued without the A.O. recording his own satisfaction about the escapement of an income and (b) the notice should have been issued by the Faceless Jurisdictional A.O. in view of the provisions of section 151A of the Act as also the CBDT notification no. 18/2022 dt. 29-3-2022. 2. That the A.O. erred in not allowing deduction of Rs. 150,000/- claimed by the appellant in respect of a donation to a registered political party by NEFT/RTGS in spite of fulfilling all the pre-conditions laid down under the said section and producing the Donation receipt issued by the said political party. It is submitted that on the basis of the evidences produced by the appellant and the facts mentioned in the Statement of Facts, the said deduction is clearly admissible, particularly in the absence of any cogent evidence produced by the A.O. against the appellant and supporting the return of donation money to the appellant and hence, the same be allowed. 3. That the A.O. also erred in not allowing the deduction claimed u/s 80-GGC in violation of the principles of natural justice by not furnishing the copies of the statements recorded relied upon by

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him and by not allowing the cross-examination opportunity to the appellant. 5. Ld. Chartered Accountant appearing for the assessee request for adjournment as he is busy with preparation and submission of Tax Audit Report which is falling due on 10-11-2025, the adjournment request was rejected. 6. Further careful consideration of the grounds of appeal, it is noted that the identical issue was considered by Co-ordinate Bench of this Tribunal in Saurabh Pravinbhai Patel and Brijesh Pravinbhai Patel AOP v. Assessment Unit, Income Tax Department [IT Appeal No. 1017 (Ahd) of 2023,dated 30-4-2025] on donation made to political parties u/s. 80GGC of the Act wherein it was held as follows: "4. Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A). After considering the Tribunal's decision, confirmed the disallowance made by the Assessing Officer by observing as follows: "While adjudicating the instant case by the undersigned, the eyeopening facts came in notice in the case of Pavan Anil Bakeri v. Deputy Commissioner of Income-tax adjudicated by the Hon'ble ITAT, Ahmedabad Bench which changed the course of the case to a whole new direction In the above case the Hon'ble ITAT held that where assessee made donation to a political party and claimed deduction under section 80GGC, since Assessing Officer found that bank accounts of above political party had been used by accommodation entry provider where donation received by cheques were layered though various bank accounts and ultimately cash was returned back, donation claimed under section 80GGC was merely accommodation entry and thus, disallowance of deduction under section 80GGC was proper. The sequence of events in the above case are "The assessee paid donation of Rs 52,00,000/- to Rashtriya Samajwadi Party (Secular) To verify the genuineness and utilization purpose of the donation, a notice u/s 133(6) was issued on 5-10-2018 to Rashtriya Samajwadi Party (RSP) There was no representation from RSP Therefore another opportunity was granted vide letter dated 16-10-2018 Again there was no response from RSP. Therefore, a summon u/s 131(1) of the Act was issued to Shri S.N. Chaturvedi, National President, RSP to attend the office on 19-11-2018 to produce the requisite the donation details. No one attended the office of the said date of hearing. 21 RSP is a political party registered with Election Commission of India. The Assessing Officer called for the bank details of RSP with Oriental Bank of Commerce, New Naroda Branch. From the perusal of the bank statement, it was observed there was a credit entry of Rs. 52,00,000/-on 07-10-2015 which is donation given by the assessee and there was two debit entries amounting to Rs. 27.00,000/- and Rs 25,00,000/- respectively on the same day On further enquiry from the Oriental Bank of Commerce the amount of Rs. 27,00,000/- credited to Sterlite Inc and Rs 25,00,000/-credited to Shah And Co. on 7-10-2015. 2.2. On examination of the RSP bank statement, it was found that it is a general practice of crediting huge cash and subsequently transfering to 5 | P a g e

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another party on same day. Further analysis of the transaction particulars reveals that the cash was transferred to mainly four parties namely Guru Enterprise, Unique Trading, Mahavaisnavi and KK Indersriz. It was also observed that no cash withdrawal for expenses like rent, electricity, water, newspaper, fuel etc of RSP and is not reflecting in the bank account. There is an Inspector of Income-tax was deputed to visit the premises of RSP at UG-8. Harekrishna Complex, C.TM Char Rasta, Amraiwadi, Ahmedabad- 380026 on 15-11-2018 The Inspector submitted his report that RSP office situated on 2nd Floor of 3 storey building which is a small shop and shutter of which was half closed on that day. Nearby peoples were inquired that RSP Office which is found to be closed in most of the times. Copy of the said RSP Office photographs is reproduced in the assessment order. Further perusal of the records of RSP it is observed that during the assessment year 2016-17, RSP has received only donation amounting to Rs. 14,73,309/- whereas as per the bank account statement of the RSP in Oriental Bank of Commerce, total amount credited is Rs. 38,15,03,885/-That apart from RSP is maintaining two other bank account one at Bank of India and another of Central Bank of India. Further enquiry of Mis. Sterlite Inc and Shah And Co both the accounts were closed on 30-3-2016. An enquiry by the Bank both the proprietorship firms, where there is no stocks found and the office premises were being occupied by another person. 2.3 On further verification the donation amount of Rs. 52,00,000/-paid by the assessee to RSP was transferred to Waheguru Enterprise and Sapan Traders on 7-10-2015 of Rs. 25,00 000/-and Rs. 27,00,000/- respectively. This systematic pattern of transferring the funds credited by RSP clearly establishes the modus operandi of the account opening i.e. to route or transfer the funds of RSP back to the donator. Thus the assessee gave Rs. 52,00,000/- to RSP in the form of donation which was transferred to accounts of Shri Mukesh Mehta who claimed to be a businessman. Again the said amount was transferred to Sapan Traders and Waheguru Enterprise. Thus the donation claimed to be paid by the assesse is found to be bogus and the same is disallowed u/s. 80GGC of the Act and added back to the total income of the assessee and also initiated penalty proceedings u/s. 271(1)(c) of the Act for concealment of income." On further appeal Ld. CIT (A) observed in the case "The Assessing Officer has clearly brought out facts that bank accounts of above political party have been used by the accommodation entry provider where the donation received by cheques were layered through various bank accounts and ultimately cash was returned back. I therefore, agree with the findings given by the AO that donation of Rs. 52,00,000/-claimed u/s. 80GGC is merely accommodation entry. The Honorable ITAT Ahmedabad in the case of Pavankumar M. Sanghvi v. ITO, Wd. 3(1)(2), Baroda [2017] 81 taxmann.com 308 on the issue of accommodation entry has observed as under- "8. As I proceed to deal with genuineness aspect, it is important to bear in mind the fact that what is genuine and what is not genuine is a matter of perception based on facts of the case vis-a-vis the ground realities. The facts of the case cannot be considered in isolation with the ground realities. It will, 6 | P a g e

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therefore, be useful to understand as to how the shell entries, which the loan creditors are alleged to be, typically function, and then compare these characteristics with the facts of the case and in the light of well settled legal principles. A shell entity is generally an entity without any significant trading, manufacturing or service activity, or with high volume low margin transactions to give it colour of a normal business entity used as a vehicle for various financial manoeuvers. A shell entity, by itself, it not an illegal entity but it is their act of abatement, of, and being part of financial manoeuvring to legitimize illicit monies and evade taxes, that takes it actions beyond what is legally permissible These entities have every semblance of a genuine business its legal ownership by persons in existence, statutory documentation as necessary for a legitimate business and a documentation trail as a legitimate transaction would normally follow. The only thing which sets its apart from a genuine business entity is lack of genuineness in its actual operations. The operations camed out by these entities, are only to facilitate financial manoeuvring for the benefit of its clients, or with that predominant underlying objective, to give the colour of genuineness to these entities. These shell entities, which are routinely used to launder unaccounted monies, are a fact of life, and as much a part of the underbelly of the financial world, as many other evils. Even a layman, much less a Member of this specialized Tribunal, cannot be oblivious of these ground realities." In the aforesaid case, the Hon'ble ITAT bench held "As regarding ground no. 2, donation of Rs. 52,00,000/- made u/s. 80GGC, the ground is general in nature. The assessee has not produced any additional evidence in support of its claim. In fact the assessee had stated that it had cordial relationship with Mr. Kamlendu Tripathi Secretary of RSP and no other criteria was followed for making these donations. The Ld AO made a detailed enquiry of RSP and its Bank accounts and transfer of funds to one Shri Mukesh Mehta proprietor of two firms and he transferred it to Waheguru Enterprise and Sapan Traders, which is clearly a systematic financial maneuver to legitimate illicit moneys and evade taxes. It is appropriate to follow the Hon'ble Supreme Court judgment, wherein SLP filed by the assessee is dismissed confirming the Tribunal's decision to come to the conclusion that the entire loan transaction was not genuine, in the case of Pavankumar M. Sanghvi v. ITO [2018] 97 taxmann.com 398/258 Taxman 160 (SC) which held as follows: Assessee received certain sum as loan from two companies -Assessing Officer having found that said lender companies were shell entities added loan amount to income of assessee under section 68-Bank statement of lender companies revealed high transactions during day and a consistently minimal balance at end of working day-Further day when assessee was given loan there were credil entries of almost similar amounts, and balance after these transactions was a small amount Tribunal taking into account bank statements of lender companies and fact that assessee failed to produce these lenders for verification held that alleged loan transactions were not genuine -High Court by impugned order held that since Tribunal had given elaborate reasons to come to conclusion that entire loan transaction was not genuine, appeal filed before it was to be dismissed 7 | P a g e

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Whether Special Leave Petition against impugned order was to be dismissed. 5.2 In the absence of any evidence from the assessee, the grounds raised by the assessee are untenable and therefore the same is rejected. The findings given by the lower authorities does not require any interference and the addition is sustained. It is pertinent to mention here that out of two political parties to whom the appellant paid total donation of Rs. 1,13,51,000/- the modus operandi of the one political party named the Rashtriya Samajwadi Party (Secular) has already been discussed in details in the preceding paragraphs of the instant order. It can be safely presumed that the modus operandi of other political party named Kisan party of India is also indulging only in providing accommodation entry as can be ascertained from various newspaper reports and enquiries which is being conducted by various institutions. In view of the findings in the above case I am inclined to agree with the decision made by the AO during the assessment proceedings regarding the donation made was basically a bogus donation as the Political Party is indulging only in providing accommodation entry. Thus in view of the above discussion, the submission made by the appellant regarding the claim of deduction for donation of Rs. 1.13.51,000/- to be allowed is not acceptable as already discussed in detail in the preceding Paras of the instant order. Therefore, the ground of appeal stands dismissed." 5. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The learned National Faceless Appeal Centre has erred in law and facts by confirming the disallowance of claim for deduction under section 80GGC of the Act of Rs.1,13,51,000/- made by the learned A.O. and therefore the learned A.O. be directed to allow the same while computing total income. 2. That the appellant craves liberty to add, amend and alter any ground of appeal before the final hearing. 6. Ld. Counsel appearing for the assessee filed same set of documents filed before the Assessing Officer and reiterated its submissions. Nothing new documents or evidences filed before us to deviate from the findings of the Lower Authorities. The Ld AO has clearly brought out facts that bank accounts of above political parties have been used by the accommodation entry provider, where the donation received by cheques were layered through various bank accounts and ultimately cash was returned back. The same is not disputed by the assessee with relevant materials. Further the Ld AO made a detailed enquiry of RSP and its Bank accounts and transfer of funds to one Shri Mukesh Mehta proprietor of two firms and he transferred it to Waheguru Enterprise and Sapan Traders, which is clearly a systematic financial maneuver to legitimate illicit moneys and evade taxes. In the absence of any fresh materials in support of the assessee's claim. The Grounds raised by the assessee is devoid of merits and liable to be dismissed."

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6.1. Respectfully following the above decision of the Co-ordinate Bench, the grounds raised by the assessee are devoid of merits and the same are hereby dismissed. 7. In the result, the appeal filed by the Assessee is dismissed.” That being the case, I find no merit in the assessee’s first and foremost argument since standing on identical footing which is hereby rejected in very terms. 4. Coming to the remaining grounds relating to claims of deduction under sections 80C, 80D, 80DDB and HRA exemption u/s 10(13A), amounting to Rs.1,50,000/-, Rs.20,000/-, Rs.40,000/- and Rs.33,579/-; respectively, disallowed by the Assessing Officer and affirmed in the CIT(A)’s appellate discussion, learned counsel vehemently submits that the assessee could not furnish the documentary evidences supporting her claims. In this factual backdrop, I thus deem it appropriate to restore the instant appeal back to the learned Assessing Officer to this very extent for its afresh appropriate adjudication, as per law, within three effective opportunities of hearing, in consequential proceedings. No other ground or argument has been pressed. 5. This assessee’s appeal is partly allowed for statistical purposes. Order pronounced in the open court on 9th July, 2026

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Sd/- (SATBEER SINGH GODARA) JUDICIAL MEMBER Dated: 10th August, 2026. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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