ATUL M PARMAR,AHMEDABAD vs. DCIT CIRCLE 3(1)(1), VEJALPUR

Invalid Reopening u/s 147 and Violation of Conditions Precedent: The Ld. CIT(A) erred in upholding the reopening u/s 147 r.w.s. 148A which was based solely on general information from the RUPP search without tangible material OR reason to believe that income specifically escaped assessment in the Appellant case. The AO - 2– 212 SC. The order u/s 148A(d) was passed without independent verification OR sharing material violating natural justice.

Erroneous Disallowance of Deduction u/s 80GGC Without Specific Evidence: The Ld. CIT(A) erred in confirming the disallowance of Rs 5 00 000 deduction u/s 80GGC by treating the donation as bogus relying on unsubstantiated general allegations from the RUPP search such as statements of unspecified key persons OR donors without copies being provided. No evidence was adduced to prove: (i) the Appellant involvement in the modus operandi (ii) return of funds to the Appellant in cash OR otherwise (iii) non genuineness of the donation paid via banking channel This contravenes the burden of proof on the department u/s 68 69C as held in CIT vs Anwar Ali 1970 76 ITR 696 SC and ignores the Appellant unrebutted submissions of bank proof receipt and no cash back.

Violation of Principles of Natural Justice and Non Provision of Relied Upon Material: The Ld. CIT(A) failed to address the Appellant repeated requests for: (i) specific documentary evidences OR statements from the search such as how the party OR assignee was involved proof of cash return to the Appellant 3 (ii) opportunity for cross examination of witnesses key persons OR donors and (iii) inquiry into the Appellant specific case. Adverse inferences were drawn without affording fair hearing rendering the orders void ab initio as per Kishinchand

Failure to Appreciate Genuineness of Donation and Political Party: The Ld. CIT(A) erred in ignoring evidence of the donation genuineness including: (i) payment via banking channel bank statement submitted (ii) Donation Receipt issued by the political party Annexure 1 (iii) active election participation contested past elections verifiable on ECI website and (iv) public presence on social media for campaigning. The party is a legitimate RUPP not de registered at the time and the Appellant acted in good faith without knowledge of any scam. Disallowance on presumptive basis without rebutting these facts is arbitrary contrary to PCIT vs Meenakshi Overseas P Ltd 2017 395 ITR 677 Del HC.

Unlawful Initiation and Upholding of Penalty Proceedings u/s 270A: The Ld. CIT(A) erred in not quashing the penalty initiation u/s 270A for under reporting as the addition lacks basis 5 in evidence and stems from general information not specific misreporting by the Appellant. Penalty cannot be imposed mechanically without proving mens rea OR concealment as per CIT vs Reliance Petroproducts P Ltd 2010 322 ITR 158 SC.

Utilisation of Donation by Political Party is Not the Appellant Responsibility: The learned CIT(A) erred in law in imputing alleged misuse OR routing of funds by the recipient political party to the Appellant. It is submitted that section 80GGC does not cast any obligation on the donor to monitor verify OR control the utilisation of funds by the political party after the donation is made. Once the donation is made - 3– to a political party registered with the Election Commission of India through permissible banking channels the donor responsibility stands discharged. Any subsequent alleged misuse OR irregularity in utilisation of funds by the political party cannot be attributed to the donor nor can it be a ground for denial of deduction under section 80GGC.

Erroneous Computation of Income Tax and Interest: The Ld. CIT(A) erred in upholding the assessed income of Rs 4860130 7 demand of Rs 301047 including interest u/s 234A,B,C,D without verifying the Appellant claims OR rectifying computational errors if any.

Erroneous Adjustment of Refund Against Disputed Outstanding Demand During Pendency of Appeal: The Ld. CIT(A) erred in not addressing OR quashing the department action in partially adjusting refund due to the Appellant as per Refund Banker SBI intimation for AY 2024 25 OR later status dated 28 Oct 2024 against the disputed demand for AY 2019 20 while the appeal against the assessment order u/s 147 r.w.s. 144B dated 05.06.2024 upheld by CIT(A) vide order dated 21.11.2025 remains pending before this Honble Tribunal rendering the demand sub justice.

Levy of Interest u/s 234B is Without Juri iction and Contrary to Law: The Ld. CIT(A) erred in upholding the levy of interest under section 234B on the assessed tax shortfall arising solely due to the disallowance in reassessment proceedings u/s 147 when the advance tax paid by the Appellant along with TDS if any exceeded 90 percent of the tax determinable on the returned regular assessment prior to reassessment. Since the Appellant had duly paid advance tax exceeding 90 percent threshold based on returned income no default u/s 234B(1) at the time of original return processing and the addition was made later without any underestimation attributable to the Appellant levy of interest u/s 234B beyond the incremental portion is arbitrary contrary to the provisions of section 234B(3) and violative of judicial precedents holding that interest cannot be levied WHARE no initial default in advance tax existed and the enhancement is due to reassessment additions.

General Ground: The orders of the AO and CIT(A) are bad in law against facts and passed with prejudiced mind warranting deletion of the addition and quashing of penalty proceedings. The appellant craves leave to add, alter, amend withdraw any grounds(s) before/during hearing.

The solitary issue raised by the assessee is with regard to the validity of the reopening under section 147 of the Act and the confirmation of the disallowance of deduction of Rs. 5,00,000/- claimed under section 80GGC by treating the donation as bogus.

The brief facts of the case are that the assessee is an individual. As per the available information, during the relevant period the appellant filed Income Tax Return u/s.139 of the Act for the AY 2019-120 declaring total income at Rs.43,60,130/- after claiming deduction u/s.80GGC of Rs.5,00,00/- againt the donation made to a political party viz. Rashtrya Samajvadi party (secular). In the case of the assessee, specific information was received as per Risk Management Strategy (RMS) through insight portal under the head “”CRU/VRU cases” for the financial year 2018-19 relevant to 132 of the Act in the case of Registered Unrecognized Political Parties (RUPPs) Group of Ahmedabad on 07.09.2022. in this search, a total of 23 registered Unrecognized Political Parties, 35 bogus intermediary entities and 3 major exit providers were covered which was combined called as RUPP ground of Ahhmedabad out of which one party is Rashtriya Samajwadi Party (Secular), PANAAAAR7090L to which the assessee has made bogus donation to the tune of Rs.5,00,000/- to the unrecognized political party i.e Rashtriya Samajwadi Party (Secular), PAN-AAAAR7090L during the assessment year 2019-20. Accordingly, order u/s.143(A)(d) of the Act was passed and consequently the case was re-opened us.147 of the IT Act on the basis of specific information received and a notice u/s.148 was issued on 19.04.2023 after obtaining necessary approval of the Specific Authority. Assessee filed return of income in response to the notice u/s.148 declaring total income of Rs.43,60,130/- and claimed deduction u/s.80GGC of Rs.5,00,000/-. In response to the notices issued during the course of assessment proceedings, copy of bank statement, donation receipt, etc for the Assessment Year 2019-20 were submitted. Further it was stated that the amount of donation of Rs.5,00,000/- was given banking channel. Assessment was concluded vide order dated 05.06.2024 disallowing the deduction claimed u/s.80GGC by relying on the information available with the department regarding the bogus donation being received by RUPPS.

Aggrieved by the Assessment Order, the assessee filed an appeal before the Ld.CIT(A), who dismissed the appeal of the assessee by observing as follows:

Aggrieved by the order of the Ld. CIT(A), the Assessee filed appeal before the Tribunal.

It is observed that the reassessment proceedings were initiated on the basis of information received pursuant to the search conducted under section 132 of the Act, and the Assessing Officer followed the prescribed procedure for reopening the assessment. Accordingly, Ground No. 1 raised by the assessee is dismissed.

On careful consideration of the grounds of appeal, it is found that the identical issue was considered by Co-ordinate Bench of this Tribunal in in the case of Saurabh Pravinbhai Patel Vs. ITO in ITA No. 1017/Ahd/2023 vide order dated 30.04.2025 on donation made to political parties u/s. 80GGC of the Act wherein it was held as follows:

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, 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 came 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 - 9– 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 credit 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 Whether Special Leave Petition against impugned order was to be dismissed.

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.”

Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal:

That the appellant craves liberty to add, amend and alter any ground of appeal before the final hearing.

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.”

It is found that similar issue stands adjudicated by the Co-ordinate benches of this Tribunal in the cases of :-

For the sake of ready reference, the detailed adjudication in the case of Milind Pankajbhai Shroff, vs The Pr. CIT 1, Rajkot in ITA No.93/RJT/2023 dtd 20/05/2024 is reproduced as under :-

Now, we shall also adjudicate the other arguments advanced by Id. DR for the revenue to the effect that "fraud vitiates everything". In this connection, at the cost of repetition, we reiterate the findings of Id PCIT, which are as follows: (i) Rashtriya Samajwadi Party (Secular) is a Registered Unrecognized Political Party and it is one of the 23 RUPPs covered in the RUPPs Group of Ahmedabad. This party was established on 21.10.2008 and its registered address as per its website is Samruddhi Complex, Opp- Sakar-3, Income Tax Circle, Ahmedabad. However, during pre-search enquiry, no party office is found at the aforesaid address. (ii) The modus-operandi of this political party is that the donation is received through cheque in the bank account of the party and then routed through - 11– intermediary(ies) (which is generally shell entity(ies) controlled by either the persons running the party or by any other person) in the garb of various purchases or other payments, which are found to be bogus in nature. It is pertinent to mention here that the political party doesn't pay any tax since it is exempt u/s 13A of the Act. (iii) During the search proceedings, on 07.09.2022, statement on oath u/s 132(4) of the I.T. Act, was recorded of Smt. Sandhya Singh, National Party President of the Rashtriya Samajwadi Party (Secular). As evident from the declaration made on oath by Smt. Sandhya Singh that although she is national party president of the party, however, all the work related with party is being looked-after by her husband Shri Bishwajeet Singh. She was not aware about any activity of the party. Further, vide Q. No. 18 and 19, she was categorically asked regarding details of bank accounts, books of accounts, nature and quantum of the expenditures of the Rashtriya, Samajwadi Party. In reply to the same, she again stated that she is not aware of any details regarding these subjects. She stated that all these things are being handled by her husband Shri Bishwajeet Singh. (iv) It is on record that statement of Shri Bishwajeet Singh, on oath u/s 132(4) of the I.T. Act, was recorded on 07.09.2022. During the statement proceedings, Shri Bishwajeet Singh admitted the fact that on his instance, his wife Smt. Sandhya Singh joined RSP, as president. During the statement proceedings, Shri Bishwajeet Singh revealed that the party i.e. RSP is involved in bogus donations scam across India and founder of party i.e. Shri Surya Nath Chaturvedi carried out bogus donations scam since inception of the party. He further stated that after deducting certain commission donations are being returned to the donors. (v) Furthermore, Shri Bishwajeet Singh stated that these affairs are also being the handled by the Shri Ritesh Shah. Shri Bishwajit Singh submitted list of some bogus entities used for cash generation, which is reproduced by Id PCIT on page number 13 of his order. (vi) During the post search inquiries, statement of Shri Amitkumar Chaturvedi (AHLPC7736R), past president of political party was also recorded, he categorically admitted that the party was engaged in bogus donations scam. (vii) It is relevant to refer to the fact that on verification with the website of regional Chief Electoral Officer where the party is registered i.e. CEO, Gujarat State, it has been found that Rashtriya Samajwadi Party (Secular) has not filed any contribution report, since F.Y. 2013-14 onward. (viii) The party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it has also been, mentioning in its Income Tax Return of F.Y. 2018-19 that no contribution report has been filed u/s 29C of the R.P. Act, 1951. (ix) Rashtriya Samajwadi Party (Secular) is not registered, as of today, as informed by Id Counsel for the assessee, with Election Commission of India/R.P. Act, 1951. ITA No. 319/AHD/2026, AY-2019-20 - 12– (x) There is no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements are correct and valid. On analysis of gathered data of the conducted search, it was learnt that these RUPP's are either not carrying out any sort of genuine political or social activity or they are carrying out such activities to project themselves as genuine parties. However, in reality these political parties are being used as a vehicle of accommodation entries under the garb of political activities. The biggest advantage of creating a façade of a political party to propagate the accommodation entry scam is the fact that the income of political party is completely exempt from taxation as long as conditions laid down in section 13A of the Act, are satisfied. The persons making donations to such organizations, at the same time received back the donations made by them in the form of cash after deduction of certain percentage of commission. By this way, the assessee i.e. the donor becomes eligible for the deduction u/s 80GGC of the Act and evades the income tax liability by claiming 100% deduction on donated amount irrespective of his/her ITR. Further, In the light of disclosures made by Shri Suryanath Chaturvedi the former president and founder member of RSP (Secular), it is an established fact the Rashtriya Samajwadi Party has been formed to carry out bogus donations scam and bogus donation activities are being carried out from the inception of the party. All the party presidents from the inception have admitted that the RUPP is involved in the bogus donation scam. Moreover, Umapati IT Solution is a paper entity and has been used for layering of bogus donation received in the bank accounts of RSP(Secular).

From the above facts, it is abundantly clear that donation received by "Rashtriya Samajwadi Party" is bogus. The assessee has claimed deduction under Section 80GGC of the Act, and 80G(5) of the Act, which is also bogus and to that extent Assessment Order passed by assessing officer is erroneous and prejudicial to the interest of Revenue. There is a saying that The 'tail' cannot wag the 'dog'. When there is a fraud, then the details and documents submitted by the assessee, before the assessing officer, during the assessment proceedings, do not assist the assessee in any manner, that is, the assessee cannot take the plea that he has submitted enough documents and details before the assessing officer and assessing officer has taken the plausible view. For that reliance can be placed on the judgment of the Coordinate Bench of ITAT Pune, in the case of Abhishek Ashok Lohade in ITA No.816/PUN/2018, order dated 22.11.2022. From the above facts and relying on the decision cited above, it is abundantly clear that donation received by "Rashtriya Samajwadi Party" is bogus. The assessee has claimed deduction under Section 80GGC of the Act, which is also bogus and to that extent the assessment order passed by assessing officer in disallowing the deduction claimed by the assessee u/s 80GGC to the tune of Rs.xxxxx/- is upheld."

It is now well settled by the Hon'ble Supreme Court in the cases of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) that the taxing authorities are not required to put on blinkers while examining a transaction merely because it is supported by documentary evidence. They are entitled to look beyond the apparent, examine the surrounding circumstances, apply the test of human probabilities and ascertain the real nature of the transaction. Where the cumulative facts and attending circumstances establish that the apparent is not the real, the Revenue is justified in drawing an inference based on the preponderance of probabilities. In the present case, the investigation material, statements recorded under section 132(4), bank trail analysis and the established modus operandi of the recipient political party constitute a complete chain of circumstances which overwhelmingly demonstrate that the impugned donation was merely an accommodation entry and not a genuine contribution eligible for deduction under section 80GGC of the Act.

In view of the foregoing discussion, the material brought on record by the Revenue, the findings emerging from the investigation and respectfully following the consistent view taken by the Co-ordinate Benches of this Tribunal in identical matters the assessee has failed to establish that the impugned contribution represented a genuine donation eligible for deduction under section 80GGC of the Act. Mere payment through banking channels and production of donation receipts cannot, in the facts of the present case, override the overwhelming evidence demonstrating that the recipient political party was engaged in providing accommodation entries through a systematic layering of funds. The decisions relied upon by the Ld. AR are distinguishable on facts and do not advance the case of the assessee. Therefore, there is no infirmity in the order of the Ld. CIT(A) affirming the disallowance made by the Assessing Officer. Accordingly, the grounds raised by the assessee are dismissed.

In the result, the appeal of the assessee is dismissed.

""थ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT 4. आयकरआयु"(अपील) /The CIT(A)- 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड"फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायकपंजीकार (Dy./Asstt.