INCOME TAX OFFICER 24(2)(1), MUMBAI, MUMBAI vs. JAY MAHAVIRCHAND JAIN, MUMBAI

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ITA 1903/MUM/2026Status: DisposedITAT Mumbai28 July 2026AY 2019-205 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in deleting the disallowance, finding that the political party was involved in a tax evasion racket. The Tribunal relied on a coordinate bench decision with identical facts.

What were the facts?

The Department appealed the deletion of a disallowance of Rs. 2,45,000 made under Section 80GGC for bogus political donations. The disallowance was based on information from a search on a political party which admitted to refunding donations after retaining commission.

What were the issues?

Whether the CIT(A) was justified in deleting the disallowance of bogus political donations based on search material and sworn statements indicating a tax evasion racket.

Which sections of the Income-tax Act were involved?

Section 80GGC,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Department against the order of Ld. CIT(A), NFAC vide DIN: ITBA/NFAC/S/250/2025-26/1083467455(1) dated 09- Dec-2025 for the Assessment Year 2019-20. The Department has raised the following grounds of appeal:

1.

Whether On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the disallowance of Rs.2,45,000/- made under section 80GGC of the Income Tax Act, 1961 on account of bogus political donation, without properly appreciating the incriminating material unearthed during the search conducted u/s 132 in the case of Rashtriya Samajwadi Party (Secular), duly incorporated in Assessment Order.

2.

Whether On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the disallowance was based on mere presumption, ignoring the fact that the political party in question was specifically covered in the search action and that sworn statements of key persons admitted to refunding donations in cash after retaining commission.

3.

Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that no direct material was brought on record linking the assessee to refund of donation, without appreciating that the entire scheme of accommodation entries was unearthed during search proceedings and that the assessee's transaction formed part of such tainted transactions.

4.

Whether, on the facts and in the circumstances of the case and in law, the ld.CIT(A) failed to consider the modus operandi of the political party, which was largely engaged in providing such entries for the purpose of tax evasion.

5.

It is prayed that this appeal is filed even if the tax effect is below the monetary limit since the case falls under exception specified in para-3.1(h) of the CBDT Circular 05/2024 dated 15.03.2024.

2.

None appeared on behalf of the assessee when the case was called out repeatedly. From the case records, I notice that summons in this case were sent by the Registry through speed post as well as email. More than one month has passed since the summons were issued at the address provided by the assessee in Form No. 36. Therefore, drawing an inference under the General Clauses Act, it is presumed that the service of summons/notice has been duly effected.

3.

On the other hand, the learned DR present in the Court was ready with the arguments. Therefore, I proceed to hear the appeal ex parte.

4.

All the grounds raised by the Revenue are interrelated and interconnected and relates to challenging the order of the learned CIT(A) in deleting the disallowance made by the AO under section 80GGC on account of political donation.

5.

At the very outset, the learned DR relied upon the decision of the Coordinate Bench of the ITAT in the case of Rajen Jayantilal Merchant vs. Assessment Unit, Jurisdictional AO reported in 180 taxmann.com 568 (Ahmedabad - Trib.), involving identical facts.

6.

I have heard the learned DR and perused the material available on record. I notice that the information was received by the AO on the basis of a search under section 132 of the Act conducted on 07.07.2022 in the case of the RUPPs Group, Ahmedabad. The documents seized during the course of search contained information showing that the assessee had made bogus donations to Rashtriya Samajwadi Party (Secular), which was covered in the search. Accordingly, the case of the assessee was reopened, and the inquiries revealed that the said so-called political parties were engaged in a huge tax evasion racket and existed solely for the purpose of evading and abetting tax evasion while earning commission in the process. The detailed modus operandi has already been discussed in the assessment order. Moreover, reliance has been placed on the decision of the Coordinate Bench of the ITAT in Rajen Jayantilal Merchant vs. Assessment Unit, Jurisdictional AO (supra).

7.

Accordingly, I set aside the order of the learned CIT(A) and restore the order passed by the AO. Thus the grounds raised by the Revenue stands allowed.

8.

In the result, the appeal filed by the Department stands allowed.

Order pronounced in the open court on 28.07.2026.

Sd/- SANDEEP GOSAIN JUDICIAL MEMBER Mumbai Dated: 28.07.2026 RY-SrPS Copy to: INCOME TAX OFFICER 24(2)(1), MUMBAI, 608, 6TH FLOOR PIRAMAL CHAMBERS, INCOME TAX OFFICE, LALBAUG, LOWER 1 PAREL, MUMBAI - 400012, MUMBAI-400012, MAHARASHTRA JAY MAHAVIRCHAND JAIN, 2, FLR. SHIV SHAKTI BLDG., 4 TH 2 M.P.LANE, J.P. ROAD ANDHERI (W), MUMBAI 400058, MAHARASHTRA, INDIA, MUMBAI-400058, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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