The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance of a ₹6 lakh deduction claimed under Section 80GGC of the Income Tax Act, ruling that a donation made to the Rashtriya Samajwadi Party (Secular) did not qualify for tax deduction. 

The bench of Madhumita Roy (Judicial Member) and Renu Jauhri (Accountant Member) has observed   that the political party had failed to satisfy the statutory conditions prescribed under Section 13A of the Act and that the case was covered by earlier judicial precedents involving the same political party and identical facts. 

The assessee had filed the income tax return for the Assessment Year 2019-20 declaring a total income of ₹47.53 lakh and claimed a deduction of ₹6 lakh under Section 80GGC on account of a political contribution. Subsequently, based on information received from the Investigation Wing alleging that the donation formed part of a bogus political donation racket, the Assessing Officer reopened the assessment under Section 148 of the Income Tax Act.

Buy Now: INCOME TAX E-COMPILATION – JUNE 2026

After completing reassessment proceedings under Sections 147 read with 144B, the Assessing Officer disallowed the deduction claimed under Section 80GGC. The National Faceless Appeal Centre (NFAC) affirmed the addition, prompting the assessee to approach the ITAT. 

Before the Tribunal, the assessee contended that the donation had been made entirely through banking channels and that every statutory requirement for claiming deduction under Section 80GGC had been fulfilled.

The assessee further argued that the disallowance was primarily based on statements recorded from third parties and that despite specifically seeking an opportunity to cross-examine those individuals, no such opportunity was granted. Reliance was placed on the Supreme Court’s decision in Andaman Timber Industries to contend that denial of cross-examination violated the principles of natural justice.

The assessee also cited several coordinate bench decisions where similar deductions under Section 80GGC had been allowed on comparable facts. 

The department defended the reassessment, relying upon the Investigation Wing’s findings regarding an alleged nationwide bogus political donation scheme involving the Rashtriya Samajwadi Party (Secular).

It also relied on a recent decision of the Mumbai Bench of the ITAT in Prasad Siddharth Thorat v. ITO, where deduction claimed for donation to the same political party during the same assessment year had been rejected after examining the investigation findings. 

After examining the rival submissions and earlier judicial precedents, the Tribunal noted that although the donation had been made through banking channels, that fact alone was insufficient to establish eligibility under Section 80GGC.

The Bench observed that the Rashtriya Samajwadi Party (Secular) had failed to file the mandatory contribution reports required under Section 29C of the Representation of the People Act, 1951 since Financial Year 2013-14. Consequently, by virtue of the second proviso to Section 13A of the Income Tax Act, the political party itself was not entitled to exemption under Section 13A during the relevant year.

The Tribunal held that where the recipient political party does not satisfy the statutory conditions governing political party exemptions, donations made to such a party cannot qualify for deduction under Section 80GGC. 

The Tribunal extensively relied upon the Mumbai Bench’s decision in Prasad Siddharth Thorat v. ITO, which had examined the Investigation Wing’s findings regarding the functioning of the same political party.

That decision referred to search proceedings in which statements of office-bearers allegedly revealed that the party operated a scheme whereby donations received through banking channels were layered through intermediary entities before being returned to donors in cash after deduction of commission. It also noted that the party had not filed mandatory contribution reports under the Representation of the People Act for several years.

The Delhi Bench found that the present case involved the same political party, the same assessment year and materially identical facts. Accordingly, it followed the earlier precedent. 

The Tribunal concluded that the Assessing Officer had rightly disallowed the deduction of ₹6 lakh claimed under Section 80GGC and that the Commissioner (Appeals) had correctly upheld the reassessment order.

Finding no reason to interfere with the lower authorities’ conclusions, the Tribunal dismissed the assessee’s appeal and confirmed the denial of the deduction.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: Predominantly Charitable Trusts Can’t Lose S. 80G Benefit Over Minor Religious Expenditure: ITAT