ARPIT SEHGAL,DELHI vs. THE INCOME TAX OFFICER, WARD 68(5), DELHI, DELHI

Heard both the parties at length. Case file perused.

It transpires at the outset during the course of hearing with the able assistance coming from both the parties that the learned lower authorities have refused section 80GGC deduction claimed by the assessee amounting to Rs.3,00,000/-; in assessment order dated 15.01.2025 and upheld in the lower appellate discussion as under:

Arpit Sehgal “6. I have carefully considered the grounds of appeal, the assessment order passed u/s 147 r.w.s. 144B dated 15.01.2025, and the written submissions along with documents filed by the appellant. 6.1 At the first instance, the appellant has challenged the reassessment proceedings on grounds of limitation and lack of approval by the competent authority. However, the facts on record clearly establish that notice u/s 148 dated 18.04.2023. These were duly served and complied with. The assessee also filed return on 18.05.2023 in response thereto. The grounds taken by the appellant regarding limitation and sanction do not hold, since the action was initiated within the framework of section 147– 151 of the Act. Reliance is placed on the settled principle that once the assessee has participated in the reassessment proceedings and filed return in response, procedural objections cannot invalidate the reassessment when tangible material exists. The challenge on this ground is rejected. 6.2 The assessee claimed deduction of Rs.3,00,000/- u/s 80GGC for donation to Sardar Vallabhai Patel Party. Documentary evidence such as donation receipt, registration certificate u/s 29A of the Representation of People Act, and bank statement were furnished along with some other material. However, during the search and seizure operation u/s 132 in the case of Registered Unrecognized Political Parties (RUPPs), it was categorically established on the basis of seized material, digital data, and statements of key office bearers that these entities were engaged in a systematic scam of providing accommodation entries in the guise of donations. The donations were routed through multiple shell entities and returned to the original donors in cash after charging commission. Specific evidences including bogus donation receipts, diaries, WhatsApp chats, and statements of party functionaries were found and seized. The party in question had no genuine political activity or presence and was only a conduit for the bogus donation racket. 6.3 The appellant’s reliance on the plain language of section 80GGC and the fact of payment through banking channel cannot override the substantive finding that the entire transaction was sham. The documentary compliance is only a façade to give colour of legitimacy to a non-genuine transaction. Courts have consistently held that when surrounding circumstances and material evidence demonstrate that an apparent transaction is not real, the claim cannot be allowed merely on the basis of formal paperwork.

1. 1. Arpit Sehgal 6.4 Further, the appellant has failed to discharge the onus of proving that the donation was genuine in substance and not part of the racket unearthed in the search. Mere production of receipt and bank statement cannot displace the adverse material collected during investigation. Accordingly, I hold that the Assessing Officer was justified in disallowing the claim of deduction of Rs. 3,00,000/- u/s 80GGC.

In view of the foregoing, all the grounds of appeal