ITAT Ahmedabad Sends Back Section 80GGC Political Donation Dispute for Fresh Examination

The ITAT Ahmedabad, in a recent ruling, favoured the case of Karsanbhai Natvarlal Ravat concerning the disallowance of a political donation deduction claimed under Section 80GGC of the Income Tax Act for Assessment Year 2019-20.

The assessee, Karsanbhai Natvarlal Ravat, had claimed a deduction amounting to Rs 2 lakh for donations made to a political party during the year in consideration. During the assessment of the case, the tax authorities observed that a political party named “Yuva Jan Jagrrirti Party” was allegedly involved in issuing fake donation receipts. According to the department, donors would transfer money through banking channels and later receive cash back after deduction of commission.

Based on information received through the Insight portal and post-search enquiries, the tax authorities reopened the assessee’s case under Section 147 of the Income Tax Act and disallowed Rs 1.55 lakh claimed as a deduction under Section 80GGC, holding that the assessee failed to properly explain the source of the donation amount.

The assessee argued before the tribunal that he was a salaried individual with an income of about Rs 17.70 lakh and had already submitted bank statements and transaction details during assessment proceedings.

After hearing both sides, the tribunal observed that certain cash deposits and an NEFT transaction appearing in the bank account required further verification. Since these transactions could not be fully verified from the records available, the Tribunal sent the matter back to the assessing officer for fresh examination and proper adjudication after giving the assessee a fair opportunity of hearing. Consequently, the appeal was partly allowed for statistical purposes.