PRASAD SIDDHARTH THORAT,MUMBAI vs. ASSESSING OFFICER, KAUTILYA BHAVAN

That the disallowance is based on conjectures and surmises without any contrary evidence produced by the Department.

That the appellant, being a salaried person, had no motive to inflate deductions, and the donation was made in good faith.

The appellant craves leave to add, alter, or amend any ground of appeal at the time of hearing.

On the other hand Ld. DR refuted the contentions of the assessee and requested for dismissal of the appeal as the same is time barred.

Considering the entire factual position as explained before us and also keeping in view, the principles laid down by Hon’ble Supreme Court in the case of Land Acquisition Collector Vs. Mst. Katiji& Ors., [1987] AIR 1353 (SC),wherein it has been held that where substantial justice is pitted against technicalities of non-deliberate delay, then in that eventuality substantial justice is to be preferred. In our view the principals of advancing substantial justice is of prime importance. Hence considering the explanation put forth by the Assessee by justifiably and properly explaining the delay which occurred in filing the appeal and construing the expression "sufficient cause" liberally I am inclined to condone the delay in filing the appeal. Therefore I condone the delay and admit the appeal to be heard on merits.

Ground No. 1 to 6 all the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in sustaining the

Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before the revenue authorities. It was submitted that assessee is one of such beneficiary who had made donations amounting to Rs. 2,00,000/- to Rashtriya Samajvadi Party (Secular) and thus is entitled to claim deduction u/s 80GGC of the Act for the donation of Rs. 2,00,000/-. It was submitted that AO and Ld. CIT(A) erred in sustaining the disallowance of Rs. 2,00,000/- claimed u/s 80GGC of the Act despite the fact that the assessee had made donations through account payee cheque through banking channels to the political party which was duly registered u/s 29A of the representation of peoples Act 1951.

Ld. AR also drawn my attention to the fact that the requisite documentary evidences regarding receipt, PAN, registration certificate had already been furnished during the proceedings before the revenue authorities and also relied upon the decision of the Coordinate bench in the case of ACIT Vs. Armyee Infotech in decided on 11.01.2022 and the decision in the case of Deepal Mittal Vs. ACIT.

I have heard the counsels for both the parties, perused the material placed on record, judgments cited before me and also the orders passed by the revenue authorities. From the records I noticed that the assessee had filed his Return of Income for A.Y. 2019-20 on 24.07.2019 declaring total income of Rs.7,31,630/-. The ITR filed by the assessee was processed u/s. 143(1) of the Act.

As per the facts of the present case, the AO received information from DDIT(Inv) regarding scam in the form of donations to political parties for claim of bogus donations u/s 80GGC / 80CCB of the Act which were rerouted back to the owner in cash RTGS / NEFT or other banking channels. Since the Rashtriya Samajwadi Party (Secular) was one of the main entity and covered in the RUPPs Group of Ahmadabad. As per records this party was established on 21.10.2008 and its registered address as per its website is Samruddhi Complex, Opp- Sakar-3, Income Tax Page | 5 Miling P. Shroff Circle, Ahmedabad. However, during pre-search enquiry, no party office was found at the aforesaid address. Therefore, further analysis was carried out from the data available with department/open source. During the analysis, it was revealed that in accordance with PAN

Therefore after evaluating the records, I found that the modus-operandi of this political party was that the donation was received through cheque in the bank account of the party and then routed through 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. This money was then re-routed through various layers, and returned to the original donors, primarily in the form of cash, in lieu of some commission that ranges from 3.5% to 5%. 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.

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

The statement of Shri Bishwajeet Singh, on oath u/s 132(4) of the I.T. Act, was recorded on 07.09.2022. However, during the statement proceedings, Shrí 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 also revealed that the party i.e. RSP was 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 were being returned to the donors. Shri Bishwajeet Singh further explained the modus-operandi of the bogus

The party withdraws cash from its bank account and returns donated amount to the donors either directly or through angadiya/CAs/commission agents after deducting certain commission.

Donated, amount was transferred to bank accounts of various dummy entities. The amount was transferred for layering purpose and to show that such entities had facilitated in purchase of agro-based products e.g. wheat, rice, vegetables etc, from the vendor of APMC market. At last, the donated amounts were transferred to accounts of vendor of APMC Market. From these accounts, cash was withdrawn and returned to donors after deducting certain commission. He had categorically stated that these transactions were sham transactions and reflected only on paper. He further stated that no goods were ever being purchased from any entities. He had also mentioned that cash were being withdrawn from the accounts of vendors of APMC Market as there was no restriction of cash with drawal on the bank accounts of vendors of APMC Market.

It is pertinent to refer to the fact that on verification with the website of regional Chief Electoral Officer where

It is thus evident that the conditions laid down in section 13A of the Income Tax Act was clearly not fulfilled by the party since F.Y. 2013-14. Accordingly, the party was not entitled to claim exemptions on the income earned since F.Y. 2013-14. In this connection, details of ITR and the date of filing of report u/s 29C of R.P. Act since 2017-18.

From the entire facts as discussed by me above I found that its crystal clear that not only had the party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it had also been, mentioning in its Income Tax Return of F.Y. 2018- 19 that no contribution report had been filed u/s 29C of the R.P. Act, 1951.

In view of the facts discussed above, I am of the view that donation received by "Rashtriya Samajwadi Party(Secular) was bogus and cash had been received back by the assessee in lieu of cheque. The entire modus operandi of said political party was discussed by the AO as well which clearly indicates that donation given by assessee was bogus.

I also observed that there was no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements were correct and valid.

Since it has been established that the donations received by Rashtriya Samajvadi Party (Secular) was bogus, therefore the assessee was not entitled to claim deduction u/s 80GGC of the Act and 80G(5) of the Act and in this regard reliance has also been placed upon the decision of the Coordinate Bench of ITAT Pune in the case of Abhishek Ashok Lohade, which is reproduced below:

In the said case it was clearly stated that the courts of law are meant for imparting justice between the parties and one who comes to the court, must come with clean hands. A person whose case is based on falsehood has no right to approach the Court. A litigant who approaches the court, is bound to produce all the documents executed by him which are relevant to the litigation. If a vital document is withheld in order to gain advantage on the other side he would be guilty of playing fraud on court as well as on the opposite party.

I once again reiterated that fraud vitiated even the most solemn proceedings and even the principles of natural justice have no application. I am also of the view that justice / laws are meant for imparting justice between the parties and one who comes to the court, must come with clean hands, head and heart, therefore a person whose case is based on falsehood has no legal right to approach the court and no court will allow itself to be used as a instrument of fraud and no court can allow its eyes to be closed to the fact that it was being used as an instrument of fraud.

Therefore, considering the overall facts and circumstances as discussed in detail above the decisions relied upon by the assessee are not at all applicable to the facts of the present case and are factually distinguishable. Therefore considering the overall circumstances I am of the considered view that orders passed by Ld. CIT(A) are legally correct and even no new facts or circumstances have been brought on record before

In the result the appeal filed by the assessee stands dismissed.