The Income Tax Department has completed a search-linked block assessment without making any addition to an Ahmedabad taxpayer’s income, after a show cause notice proposed treating receipts totalling ₹17.32 crore from a political party and a charitable trust as unexplained income.

In an assessment order dated September 30, 2026, the Assistant Commissioner of Income Tax, Central Circle-1(2), Ahmedabad, accepted the taxpayer’s return declaring nil undisclosed income for the block period from April 1, 2019, to September 23, 2025. The assessing officer recorded that the taxpayer’s submissions and documents had been carefully examined and that no adverse inference was drawn.

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Search Linked To Alleged Donation Accommodation Entries

The proceedings followed a search under Section 132 of the Income-tax Act, 1961, at the taxpayer’s residence on September 23, 2025, in connection with an investigation involving Bhartiya Sant Mat Party and Karmaputra Charitable Trust. According to the assessment order, no documents or valuables were seized from the residential premises.

The order described the wider investigation as a coordinated action against certain Registered Unrecognised Political Parties, charitable trusts and associated entities allegedly involved in facilitating inadmissible tax deductions through donation accommodation entries.

According to the department’s account of the investigation, funds were allegedly routed through political parties, trusts and other entities before being converted into cash after deduction of commission. The order referred to alleged misuse of deductions under Sections 80GGB, 80GGC, 80G and 35(1)(ii) of the Act.

These allegations formed the background to the assessment proceedings. The final order, however, made no addition in the individual taxpayer’s case.

Notice Proposed ₹17.32 Crore Addition Under Section 69A

A show cause notice dated September 26, 2026, questioned two sets of alleged receipts: ₹14,51,27,789 from Satta Kalyan Party during financial year 2021–22 and ₹2,81,00,200 from Karmaputra Charitable Trust during financial year 2022–23.

The notice asked the taxpayer to explain why the combined amount of ₹17,32,27,989 should not be treated as unexplained receipts under Section 69A and added to income for the relevant assessment years.

For the alleged receipts from Satta Kalyan Party, the notice referred to information arising from an earlier search conducted on September 7, 2022, involving a group of Registered Unrecognised Political Parties in Ahmedabad.

The department also relied on an extract of the charitable trust’s audit report to question the second set of receipts and sought a written explanation supported by documentary evidence.

Earlier Scrutiny Had Identified An Assessment-Year Mismatch

The September 26 notice recorded that the alleged political-party transactions had previously been examined during scrutiny for assessment year 2023–24.

According to the notice, an earlier assessment order dated March 10, 2025, had found that the ₹14.51 crore transactions related to financial year 2021–22, corresponding to assessment year 2022–23, rather than the year under scrutiny.

Consequently, the amount was not added in assessment year 2023–24, and the returned income of ₹4,27,600 was accepted. The September 2026 notice sought to examine the transactions in the block assessment on the ground that they fell within the block period.

Taxpayer’s Explanation Accepted In Final Assessment

Following the September 2025 search, the department issued a notice under Section 158BC dated July 6, 2026. The taxpayer filed a block return on September 15, 2026, declaring nil undisclosed income.

The final order recorded several notices and responses during the assessment proceedings, including a response dated September 28, 2026, to the September 26 show cause notice.

After examining the material on record and the taxpayer’s submissions, the assessing officer accepted the returned income and made no addition for the block period. The order determined both the undisclosed income declared by the taxpayer and the undisclosed income assessed by the department at nil.

The assessment was completed under Section 143(3), read with Section 158BC, with prior approval of the Additional Commissioner of Income Tax, Central Range-1, Ahmedabad. The accompanying demand notice under Section 156 specified nil payable, and the computation sheet recorded zero tax liability.

The final order does not explain in detail how the taxpayer answered each allegation concerning the ₹17.32 crore receipts. Its stated conclusion is that examination of the submissions and documents warranted no adverse inference. The outcome is therefore specific to this taxpayer’s block assessment and does not constitute a general finding on donations to political parties or charitable trusts.

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