ABHISHEK KUMAR SRIVASTAVA,DELHI vs. INCOME TAX OFFICER, WARD 27(1)(1), NAVI MUMBAI

The brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2024-25 on 21.10.2024 declaring total income of ₹50,22,260/- after claiming deduction of ₹13,51,000/- under section 80GGC of the Act. The case was selected for scrutiny on the basis of information that the donee, Public Political Party, was one of the Registered Unrecognized Political Parties identified by the Investigation Wing as being involved in providing accommodation entries in the guise of political donations. As per the information available with the Department, donations received through banking channels were routed through intermediary entities and thereafter returned to the donors after deduction of commission.

During the assessment proceedings, the assessee furnished donation receipts, bank-related documents, PAN and Election Commission registration details of the political party. The Assessing Officer, however, noticed certain discrepancies. In the computation furnished by the assessee, a donation of ₹10,55,410/- was shown as having been made to Kushaal Janta Party, whereas in the subsequent computation deduction of ₹13,51,000/- was claimed in respect of Public Political Party.

The Assessing Officer asked the assessee to furnish the complete statement of the said Axis Bank account and also to explain his association or contact with the political party and the persons through whom the donation was made. The assessee did not respond to the final communication dated 21.01.2026 and the complete Axis Bank statement was also not furnished. The Assessing Officer further noted that Public Political Party had been identified in the Investigation Wing material as a party engaged in accepting bogus donations for commission and had also not filed its annual audit/contribution report for the relevant year. Considering these facts together and applying the test of human probabilities, the Assessing Officer disallowed the deduction of ₹13,51,000/- claimed under section 80GGC and computed the total income at ₹63,73,260/-.

The assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A) noted that the material available with the Assessing Officer specifically identified Public Political Party as an entity involved in providing accommodation entries through bogus political donations. The learned CIT(A), after considering the material on record and the decisions in Jayeshkumar Gopalbhai Akbari v. DCIT [2024] 162 taxmann.com 395 (Surat-Trib.), Pavan Anil Bakeri v. DCIT [2022] 142 taxmann.com 574 (Ahmedabad- Trib.) and other decisions referred to in the appellate order, held that merely making payment through banking channels and possessing a donation receipt would not establish the genuineness of the donation where the surrounding material showed that the recipient itself was involved in providing accommodation entries. The disallowance of ₹13,51,000/- was accordingly upheld and the appeal of the assessee was dismissed.

The assessee is in appeal before us against the order passed by the learned CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival submissions. The case of the assessee is that the donation was made through banking channels to a political party registered under section 29A of the Representation of the People Act, 1951. The assessee has also relied upon the donation receipts, PAN and registration details of the political party. It is further argued that there is no direct evidence to show that any part of the donation was returned to the assessee.

There is no dispute that registration of the political party and payment through banking channels are relevant facts. However, these facts cannot be viewed in isolation when there is material on record raising serious doubt about the genuineness of the transaction. The Hon'ble Supreme Court in CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) has held that the taxing authorities are entitled to look beyond the apparent form of a transaction and examine the surrounding circumstances and human probabilities in order to find out its real nature.

An important subsequent development also requires consideration. The very same donee, Public Political Party, was before the Hon'ble Delhi High Court in Public Political Party v. DCIT, ITA Nos. 434, 435, 439, 442, 443, 444, 449 and 480 of 2026, order dated 13.07.2026, reported in [2026] 188 taxmann.com 477 (Delhi). The Hon'ble High Court upheld the factual findings of the Tribunal that the political party was issuing bogus donation receipts to enable persons to claim deductions under sections 80GGB and 80GGC and that the amounts received as donations were being paid back to the persons from whom they were received. The relevant observations of the Hon'ble Delhi High Court are reproduced below:

We are conscious that the above decision was rendered in the case of the political party itself and does not record any specific finding that this particular assessee received back the amount donated by him. At the same time, the decision is clearly relevant while examining the character and modus operandi of the very same donee. The assessee's claim, therefore, cannot be accepted merely because a donation receipt was issued and the payment was made through banking channels. Once the recipient itself has been judicially found to have been issuing bogus donation receipts and returning the amounts to donors, the facts relating to the assessee's own transaction have to be examined more closely.

On such examination, we find that the assessee has not satisfactorily explained the circumstances surrounding the transaction. There is a clear inconsistency in the computations furnished during assessment proceedings regarding both the amount of donation and the name of the political party. Further, despite a specific opportunity, the assessee did not furnish the complete statement of the Axis Bank account from which the UPI payments were made. He also did not furnish the details sought by the Assessing Officer regarding the person through whom he came in contact with the political party or the circumstances in which the donation was arranged. These are deficiencies arising from the assessee's own case and are not merely general observations based upon the Investigation Wing report.

We are also unable to accept the contention that the conditions of section 80GGC of the Act is satisfied merely because the recipient was registered with the Election Commission and the payment was made otherwise than in cash. A transaction which is an accommodation entry does not become genuine merely because it is routed through a bank or supported by a receipt.

The assessee has relied upon ACIT v. Anuj Prakash Gupta, ITA No.11/RPR/2026, order dated 05.02.2026, wherein relief was granted in the absence of material establishing a direct connection between that assessee and the alleged return of the donation. We have considered the said decision. However, it was rendered on its own facts and concerned a donation to Rashtriya Samajwadi Party (Secular). In the present case, apart from the deficiencies noticed in the assessee's own evidence, we also have the subsequent decision of the Hon'ble Delhi High Court concerning Public Political Party itself, affirming the factual finding that the party was issuing bogus donation receipts and returning the purported donations. The factual position before us is, therefore, materially different.

We have also considered the contention regarding non-supply of third- party statements and denial of cross-examination. In the present case, the disallowance is not being sustained merely on the basis of any untested third- party statement. It is based on the cumulative material available on record, the specific information concerning the donee party, the inconsistencies in the assessee's own computations, failure to furnish the complete Axis Bank statement and other details specifically called for, non-response to the final enquiry and the subsequent judicial findings concerning the modus operandi of the same political party. The decision in Andaman Timber Industries v. CCE (2015) 62 taxmann.com 3/324 ELT 641 (SC), therefore, does not assist the assessee on the facts of the present case.

Considering the totality of the facts, we find no reason to interfere with the order of the learned CIT(A). We have considered the written submissions filed by the learned Counsel for the assessee. However, the documents relied upon by the assessee merely establish the formal movement of money and issuance of a receipt. Having regard to the material concerning the donee party and the deficiencies in the assessee's own explanation, we are not satisfied that the payment represented a genuine political contribution eligible for deduction under section 80GGC of the Act.

Accordingly, Ground Nos. 1 to 10 are dismissed and the disallowance of ₹13,51,000/- under section 80GGC is upheld. Ground No.11, relating to initiation of penalty proceedings under section 270A, is premature at this stage and is dismissed accordingly. Ground No.12 is general in nature and requires no separate adjudication.

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