SHRI RAM AGRAWAL,MATHURA vs. ITO WARD 72(1), DELHI

Date of hearing 26.11.2025 Date of pronouncement 26.11.2025 ORDER This assessee’s appeal for assessment year 2023-24, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1081179900(1), dated 25.09.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2. 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. 10 lakhs; in assessment order dated 07.02.2025 and upheld in the lower appellate discussion as under: “4. निर्णय / Decision: The assessee has filed its return on 20.07.2023 declaring total income at Rs.34,41,970/- after claiming deduction of Rs. 16,01,705/- under chapter- VIA of the Act. Thereafter, assessee filed the revised return on 23.12.2023 u/s. 139(5) of the Act declaring total income of Rs.34,73,227/- after claiming deduction of Rs. 16,03,350/-under chapter- VIA of the Act. The case was selected for scrutiny and assessment completed u/s. 143(3) read with section 144B of the Act at a total income of Rs. 44,73,227/- on 07/02/2025. Hence, this appeal. The only issue for consideration is the denial donation u/s.80GGC. In the order of assessment, the AO has concluded as under: 3.5.1 The case of the assessee for A.Y. 2023-24 was selected for scrutiny under the Eassessment Scheme, 2019. The assessee has filed its ITR-2 for the A.Y. 2023-24 on 20.07.2023 declaring total income at Rs.34,41,970/- after claiming Rs 16,01,705/- under chapter- VIA of the Act. Thereafter, assessee filed the revised return on 23.12.2023 u/s. 139(5) of the Act declaring total income of Rs. 34,73,227/- after claiming deduction of Rs. 16,03,350/- under chapter- VIA of the Act. Subsequently, notice u/s 143(2) of the Act was issued in the case on 19.06.2024. On perusal of the data available with the department, it is seen that the case has been selected for the assessment proceedings due to the following reason/s- 1. Claim of Deduction from Total Income under Chapter VI-A 3.5.2 Further, during the assessment proceedings, to verify the above mentioned information from third party, the notice was issued u/s 133(6) of the I.T. Act to the National People's Party. In response, reply was received from the National People's Party. However, National Peoples Party, in its reply submitted on 03.01.25, has explicitly confirmed that no contribution

2 | P a g e has been received from Shri Ram Agrawal by National Peoples Party during the FY 2022-23 relevant to AY 2023-24. 3.5.3 During the assessment proceedings, the assessee was required to show cause as to why this amount of Rs. 10,00,000/- claimed as deduction u/s. 80GGC of the Act by you should not be disallowed, and added back to your total income of the year under reference. However, the assessee failed to prove conclusively that the said contribution/donation is made by him to NPP only in its own account, and thereby, failed to explain that why the same should not be disallowed. 3.5.4 In the case of Dev Dutt vs. Union of India and others reported in (2008) 8 SCC 725, the Hon'ble Supreme Court held as under. ………………………………………… Therefore, it is not unreasonable or arbitrary to complete assessment in this case after making disallowance/addition. The assessee failed to prove conclusively that the said contribution/donation is made by him to NPP only in its own account. 1.1. In view of the foregoing discussion, following conclusion is drawn:- The case of the assessee for A. Y. 2023-24 was selected for scrutiny under the E assessment Scheme, 2019. The assessee has filed its ITR-2 for the A.Y. 2023-24 on 20.07.2023 declaring total income at Rs. 34,41,970/- after claiming deduction of Rs. 16,01,705/- under chapter- VIA of the Act. Thereafter, assessee filed the revised return on 23.12.2023 u/s. 139(5) of the Act declaring total income of Rs. 34,73,227/- after claiming deduction of Rs. 16,03,350/- under chapter- VIA of the Act. Subsequently, notice u/s. 143(2) of the Act was issued in the case on 19.06.2024. On perusal of the data available with the department, it is seen that the case has been selected for the assessment proceedings due to the following reason/s-Claim of Deduction from Total Income under Chapter VI-A. During the course of assessment proceedings, it is seen that the assessee has claimed large deduction of Rs. 10,00,000/- under section 80GGC of the Act for contribution/donation made to National Peoples Party, but the assessee failed to prove conclusively that the said contribution/donation is made by him to NPP only in its own account. Therefore, as discussed in detail in foregoing paras and particularly in para-3.4 above, assessee failed to prove the genuineness of the said transaction to NPP and also failed to explain satisfactorily that why the same should not be disallowed. Thus, the 3 | P a g e amount of Rs. 10,00,000/- claimed by assessee as deduction u/s. 80GGC of the Act is disallowed, and added back to the total income of the assessee for the year under reference. In reply, the appellant submits: A careful and holistic perusal of the impugned order will reveal that the assessment has been concluded with a preconceived notion for disallowing the deduction claimed under Chapter VIA of the Act. The explanations of the Assessee have been arbitrarily rejected by the Au The reasons for rejection are stated in para 34 of the impugned order, they are sa in number and the errors in the rejection order are explained seriatim as under The denial was not confronted to the Assessee thus violating the principles of natural justice. The Assessee was denied an opportunity to respond to or rebut the alleged denial. The denial by itself of the NPP Authorities is untrue.

4 | P a g e Furthermore, it is pertinent to note that the AU missed the point that a party denying receipts of funds despite clear transactional evidence would have ulterior motives possibly inked to compliance with disclosure norms before the Election Commission of India and other authorities. The AU failed to appreciate this angle or to conduct any further inquiry in this context Therefore, the AU's decision to disallow the deduction is not only procedurally flawed but also legally untenable. CONCLUSION, In light of the irrefutable evidence furnished by the Assessee- specifically the official receipt from the political party and the corresponding bank entry confirming the transaction the disallowance of the deduction under Section 80GGC is arbitrary ana fallacious and without merit. The AU failed to follow the basic principles of natural justice and has disregarded material evidence Accordingly, it is submitted that the deduction claimed under Section 80GGC must be directed to be allowed. A search and seizure action u/s 132 of the Act was conducted in the case of RUPPS Group of Ahmedabad on 07.09.2022. A total of 23 Registered Unrecognized Political Parties, more than 35 bogus intermediary entities and 3 major exit providers were covered which were called as RUPP Group of Ahmedabad. The search was conducted after credible evidence of a scam going on in the form of donations to political parties for claiming bonus deduction u/s 80GGC/80GGB of the Act which are then re-routed back to the donors in cash/RTGS/NEFT or other banking channels, was gathered and collated with other relevant data points. Enquiries revealed that a few such so called political parties are engaged in huge tax evasion racket and that these are formed for the sole purpose of aiding and abetting tax evasion and earning commission in the process. Documentary and digital evidences collected during the course of search action, were confronted with the key persons of the group and subsequently seized based on which the modus operandi of donation scam was revealed. One of the findings of the search was that the RUPP political parties have been formed by the current office bearers or have been brought from the other handlers to earn commission income by running bogus donation racket. These RUPPs carry out a scam of soliciting bogus donations from various persons which is then routed through various intermediaries and returned to the donor in the form of cash/RTGS/NEFT or other banking channels, after charging a 5 | P a g e commission in the range of 1.5% to 5% of the amount donated. The modus operandi detected in the course of search operation revealed that the donation is received through cheques/NEFT/RTGS in the RUPP's bank account. Thereafter, such amounts are routed to an intermediary in the form of expenses towards political and social welfare activities. Various bogus individuals/proprietary concerns/companies are found to be active agents in this scam and comprise the point at which either cash is withdrawn or again transferred to another bogus layering entity to get converted to cash or to return to the original donors through banking channel. The donors used these RUPPS for claiming bogus deduction u/s 80GGC/80GGB of the Act. Since the whole process is bogus and non- genuine, all the expenses shown by the RUPPs in the books are bogus. In this connection, reference invited to the decision in the case of Milind Pankajbhai Shroff, vs The Pr. CIT-1, Rajkot in dtd 20/05/2024 wherin it has been stated: 22. Now, we shall also adjudicate the other arguments advanced by Id. DR for the revenue to the effect that "fraud vitiates everything". In this connection, at the cost of repetition, we reiterate the findings of Id PCIT, which are as follows: (i)Rashtriya Samajwadi Party (Secular) is a Registered Unrecognized Political Party and it is one of the 23 RUPPs covered in the RUPPs Group of Ahmedabad. This party was established on 21.10.2008 and its registered address as per its website is Samruddhi Complex, Opp- Sakar-3, Income Tax Circle, Ahmedabad. However, during pre-search enquiry, no party office is found at the aforesaid address. (ii) The modus-operandi of this political party is that the donation is 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. 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. (iii) 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 President of the Rashtriya Samajwadi Party (Secular). As evident from the declaration made on oath by Smt. Sandhya Singh that although she is national party president of the party, however, all the work related with party is being looked-after by her husband Shri Bishwajeet Singh. She was not aware about any activity of the party. Further, vide Q. No. 18 and 19, she was categorically asked 6 | P a g e regarding details of bank accounts, books of accounts, nature and quantum of the expenditures of the Rashtriya, Samajwadi Party. In reply to the same, she again stated that she is not aware of any details regarding these subjects. She stated that all these things are being handled by her husband Shri Bishwajeet Singh (iv) It is on record that statement of Shri Bishwajeet Singh, on oath u/s 132(4) of the IT. Act, was recorded on 07.09.2022. During the statement proceedings. Shri 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 revealed that the party ie. RSP is involved in bogus donations scam across India and founder of party ie. Shri Surya Nath Chaturvedi carried out bogus donations scam since inception of the party. He further stated that after deducting certain commission donations are being returned to the donors. (v) Furthermore, Shri Bishwajeet Singh stated that these affairs are also being handled by the Shri Ritesh Shah. Siri Bishwajit Singh submitted list of some bogus entities used for cash generation, which is reproduced by id PCIT on page number 13 of his order. (vi) During the post search inquiries, statement of Shri Amitkumar Chaturvedi (AHLPC7736R), past president of political party was also recorded, he categorically admitted that the party was engaged in bogus donations scam. (vii). It is relevant to refer to the fact that on verification with the website of regional Chief Electoral Officer where the party is registered i.e. CEO, Gujarat State, it has been found that Rashtriya Samajwadi Party (Secular) has not filed any contribution report, since F.Y. 2013-14 onward. (viii). The party been claiming wrong and invalid exemption, over the years under section 13A of the I.T. Act but it has also been, mentioning in its Income Tax Return of F.Y. 2018-19 that no contribution report has been filed u/s 29C of the R.P. Act, 1951. (ix) Rashtriya Samajwadi Party (Secular) is not registered, as of today, as informed by Id Counsel for the assessee, with Election Commission of India/R.P. Act, 1951. (x) There is no retraction of statements given by Smt. Sandhay Singh, Shri Bishwajeet Singh and Shri Amit Kumar, hence their statements are correct and valid

7 | P a g e On analysis of gathered data of the conducted search, it was learnt that these RUPP's are either not carrying out any sort of genuine political or social activity or they are carrying out such activities to project themselves as genuine parties. However, in reality these political parties are being used as a vehicle of accommodation entries under the garb of political activities. The biggest advantage of creating a façade of a political party to propagate the accommodation entry scam is the fact that the income of political party is completely exempt from taxation as long as conditions laid down in section 13A of the Act, are satisfied. The persons making donations to such organizations, at the same time received back the donations made by them in the form of cash after deduction of certain percentage of commission. By this way, the assessee ie, the donor becomes eligible for the deduction u/s 80GGC of the Act and evades the income tax liability by claiming 100% deduction on donated amount irrespective of his/her ITR. In this connection, further reference is invited to the decision in the case of Milind Pankajbhai Shroff, vs The Pr. CIT 1, Rajkot in dtd 20/05/2024 where in, it has been stated: 23. From the above facts, it is abundantly clear that donation received by "Rashtriya Samajwadi Party" is bogus. The assessee has claimed deduction under Section 80GGC of the Act, and 80G(5) of the Act, which is also bogus and to that extent Assessment Order passed by assessing officer is erroneous and prejudicial to the interest of Revenue. There is a saying that The 'tail' cannot wag the 'dog'. When there is a fraud, then the details and documents submitted by the assessee, before the assessing officer, during the assessment proceedings, do not assist the assessee in any manner, that is, the assessee cannot take the plea that he has submitted enough documents and details before the assessing officer and assessing officer has taken the plausible view. For that reliance can be placed on the judgment of the Coordinate Bench of ITAT Pune, in the case of Abhishek Ashok Lohade in order dated 22.11.2022, the findings of the Coordinate Bench of ITAT Pune, are reproduced below: "9. There is yet one more reason as to why we are inclined to confirm the addition made by Assessing Officer, in view of the well settled principle of law that fraud vitiate everything and even principle of natural justice have no application and such transaction is void ab initio. The Hon'ble Supreme Court in the case of Friends Trading Co. vs. Union of India in Civil Appeal No.5608 of 2011 vide order dated 23.09.2022 held in the context of availment of alleged forged DEPB under the Customs Act, wherein, it was found DEPB licenses were forged and it was held that the exemption benefit availed on such 8 | P a g e forged DEPB are void ab initio on the principle that fraud vitiate everything and the period of limitation was held to have no application and the Department was held to be justified in invoking the extended period of limitation and the fact that whether the beneficiary had no knowledge of about the fraud/forged and fake DEPB licenses have no bearing the imposition of custom duty. The ratio of judgement is squarely applicable to the transaction under consideration before us. Further, the application of principle of the fraud under judicial Acts was considered by the Hon'ble Supreme Court in the case of Smt Badami (Deceased) By her L.R. vs. Bhali in Civil Appeal No. 1723 of 2008 dated 22.05.2012, wherein, the Hon'ble Apex Court held as follows: "20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L. Rs. and others [AIR 1994 SC 853] this court commenced the verdict with the following words:- "Fraud-avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eyes of law. Such a judgment/decree by the first court or by the highest court has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings."

9 | P a g e "In Lazaurs Estate Ltd. v. Beasley ((1956) 1 QB 702] Lord Denning observed at pages 712 & 713, "No judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything." In the same judgment Lord Parker LJ observed that fraud vitiates all transactions known to the law of however high a degree of solemnity."

24. Yet in another decision Hamza Haji v. State of Kerala & Anr. [AIR 2006 SC 3028] it has been held that no court will allow itself to be used as an instrument of fraud and no court, by way of rule of evidence and procedure, can allow its eyes to be closed to AO the fact it is being used as an instrument of fraud. The basic principle is that a party who secures the judgment by taking recourse to fraud should not be enabled to enjoy the fruits thereof."