PUBLIC POLITICAL PARTY vs. DEPUTY COMMISSIONER OF INCOME TAX AND ANR
What did the High Court hold?
The High Court upheld the Tribunal's order. It found that the Tribunal had made a categorical finding of fact that the assessee issued bogus donation receipts to enable donors to claim deductions under Sections 80GGB and 80GGC, and that the purported donation amounts were returned to the donors. This finding of fact, being unassailable under Section 260A, led the court to agree with the Tribunal's approach of taxing 6% of the amount as income, rather than the entire donation, as it represented the commission for facilitating false receipts. The court rejected the assessee's claim for exemption under Section 13A, stating that a violator of the law cannot claim exemption. Furthermore, the court noted that the assessee had flouted the second proviso to Section 13A by filing improper reports or no reports at all in certain assessment years, thereby losing its eligibility for exemption under Section 13A. The appeals were dismissed.
What were the facts?
The appellant, a Public Political Party, challenged a common order dated December 17, 2025, passed by the Income Tax Appellate Tribunal (Tribunal). The Tribunal's order dealt with appeals filed by the appellant concerning additions made by the Assessing Officer (AO) and affirmed by the Commissioner Income Tax (Appeals) [CIT(A)]. The core of the dispute involved additions under Section 68 of the Income Tax Act, 1961 (the Act), and the subsequent claim for exemption under Section 13A of the Act. The Tribunal found that the appellant issued forged donation receipts to facilitate deductions for donors under Sections 80GGB and 80GGC, and that the purported donation amounts were returned to the donors. The AO had made additions under Section 68, which the Tribunal modified.
What were the issues?
1. Whether the Tribunal erred in directing the addition of 6% of the donation/contribution under Section 56 of the Act, when it had concluded that the addition under Section 68 of the Act was not sustainable? (Question of law and fact, concerning Section 56 and Section 68 of the Act). Assessee's Contention: The appellant argued that if the addition under Section 68 was unsustainable, then as a natural corollary, its income should be eligible for exemption under Section 13A of the Act. The appellant contended that the Tribunal could not have directed an addition under Section 56 when it found the Section 68 addition untenable. Revenue's Contention: The revenue argued that the appellant issued forged receipts and returned the donation amounts to the payers. The Tribunal correctly held that instead of adding the entire amount under Section 68, 6% of the amount, representing commission, should be added under Section 56. The revenue maintained that the entire amount should have been added under Section 68 as originally done by the AO. The revenue also pointed out that the appellant failed to submit reports to the Election Commission of India as required by the second proviso to Section 13A.
Which sections of the Income-tax Act were involved?
Section 68,Section 56,Section 13A,Section 80GGB,Section 80GGC,Section 260A
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R %
2026
By way of present appeals, the appellant has challenged the common order dated 17.12.2025 passed by the Income Tax Appellate Tribunal ‘C’ Bench, New Delhi, (hereinafter referred to as ‘Tribunal’) in the appeals filed by the appellant. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/07/2026 at 11:52:10
Learned counsel for the appellant argued that when the Tribunal has come to a conclusion that the addition under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), made by the Assessing Officer (AO) as affirmed by the Commissioner Income Tax, (Appeal) [hereinafter referred to as ‘CIT (A)]’, was not sustainable it could not have directed addition of 6% of the donation/contribution under Section 56 of the Act of 1961. 3. He argued that once the addition made under Section 68 of the Act of 1961 was found to be untenable, then as a natural corollary, the appellant’s income was eligible for exemption under Section 13A of the Act of 1961. 4. Mr. Shlok Chandra, learned Senior Standing Counsel, on the other hand, argued that the appellant, a political party has as neither done any political activity nor has it received any genuine political contribution or donation and as a matter of fact it had issued forged receipts. He further submitted that a perusal of the order of the Tribunal and record would reveal that it had issued receipts of the donation and had given back the amount to the payers for which, the Assessing Officer had made addition under Section 68 of the Act of 1961. He argued that the Tribunal in turn has held that instead of adding the entire amount i.e., 6%, being commission in fact on such amount should be added under Section 56 of the Act of 1961. He nevertheless maintained that this is without prejudice to the Department’s stand that as a matter of fact entire amount should have been added under Section 68 of the Act of 1961, as has been done by the Assessing Officer.
Heard learned counsel for the parties.
On perusal of the record and orders of the authorities below, more particularly, the order of the Tribunal, we find that the Tribunal has recorded a This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/07/2026 at 11:52:10
categorical finding that the assessee has indulged in issuing bogus donation receipts to various persons in a bid to give them undue advantage of deductions under Section 80GGB and Section 80GGC of the Act of 1961. 7. The Tribunal has recorded a finding that the so-called amount received as donation has been paid back to the persons from whom the amount was purportedly received. Such finding recorded by the Tribunal is a finding of fact, which cannot be interfered with by this Court under Section 260A of the Act of 1961. 8. If such finding is taken into consideration, then we do not find any error or infirmity in the approach of the Tribunal. It has rightly taken 6% of the total amount as assessee’s income rather than the entire amount of purported donation. Because the assessee had facilitated false donation receipts in order to enable them to claim deduction under Section 80GGB and 80GGC of the Act of 1961. 9. Assessee’s claim that once the addition under Section 68 of the Act of 1961 is deleted, the appellant should get benefit of Section 13A of the Act of 1961 is misplaced and misconceived, inasmuch as a violator of law, cannot claim exemption. Such benefit will result in mischief with the mandate of the provisions of Section 13A of the Act, as appellant’s books of accounts do not reflect a true and correct picture.
A perusal of the assessment order (para No. 4.13.1) shows that the appellant had failed to submit report to the Election Commission of India as per second proviso to Section 13A of the Act of 1961. 11. In light of the findings recorded by the AO and CIT (A), we are of the view that the appellant has flouted the second proviso to Section 13A of the Act of 1961 by filing the improper report in some assessment years, while in This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/07/2026 at 11:52:10
other assessment years, it did not file any report at all. Therefore, the assessee had lost the very eligibility to claim exemption under Section 13A of the Act of 1961. 12. The appeals along with pending applications, therefore, fail. DINESH MEHTA, J. RAJNEESH KUMAR GUPTA, J. JULY 13, 2026 neelam This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/07/2026 at 11:52:10
More judgments on Section 68
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- Ajaybhai Dineshbhai Bagdai, Near Central… vs The Income Tax Officer, Ward-1(2)(1), New…ITA 74/RJT/2026[2013-14]Status: Disposed19 Oct 2026AY 2013-14
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