Political Donation Deduction Cannot be Denied on General Presumptions Alone: ITAT allows S. 80GGC Claim [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Raipur Bench, has held that deduction claimed for political donations under Section 80GGC of the Income Tax Act, 9161 cannot be denied merely on the basis of general allegations or presumptions arising from third-party investigations.

An appeal was filed by the Assistant Commissioner of Income Tax against the order of the CIT(A)/NFAC for Assessment Year 2019-20 in the matter of Anuj Prakash Gupta, the assessee.

The assessee had claimed a deduction of ₹2,00,000 under Section 80GGC for a political donation made to Rashtriya Samajwadi Party (Secular).

The Assessing Officer, however, disallowed the deduction after reopening the assessment under Sections 147/148 based on information from the Investigation Wing, Ahmedabad where it was allegedly revealed that some entities were engaged in providing accommodation entries in the guise of political donations.

The officer, based on these investigation findings, concluded that the political party to which the donation was made was a tainted entity and part of a broader racket involving bogus donations and refund of funds after retaining commission.

The assessee appealed before the CIT(A). The first appellate authority deleted the addition. It was noted that the assessee had made the payment through proper banking channels and had obtained a printed receipt from the political party.

While the investigation reports suggested systemic irregularities and accommodation entry operations by certain political entities, there was no direct evidence linking the assessee’s specific donation to any refund arrangement or bogus transaction.

The CIT(A) noted that there was no bank trail, confirmation, or statement established that the assessee received money back or that the particular donation was non-genuine. It was also observed that the assessee was not confronted with any specific material nor granted an opportunity to cross-examine persons whose statements were relied upon by the department.

The bench of Partha Sarathy Chaudhary (Judicial member) agreed with the CIT(A). It observed that although the department alleged that the political party was involved in providing bogus accommodation entries, no evidence was produced to show that commission was retained and cash was returned to this particular assessee.

The Tribunal held that disallowance based purely on general presumption and broad investigation reports, without corroborative evidence against the assessee’s own transaction, is unsustainable in law.

Since the Assessing Officer failed to bring any proper material establishing that the assessee derived any backdoor benefit or that the donation was a sham, the deletion of the addition by the CIT(A) was upheld.

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