ITAT Denies Rs 1.90 Lakh Section 80GGC Deduction Over Donation to Apna Desh Party, Relies on Supreme Court Judgement:

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has dismissed an appeal filed by Nikunj Mahendrabhai Adani for Assessment Year 2019-20, upholding a Section 69A unexplained money addition of Rs 1.90 lakh made after disallowing a deduction claimed under Section 80GGC of the Income Tax Act, 1961, for a donation made to Apna Desh Party.

During the Assessment Year 2019-20, Nikunj Mahendrabhai Adani (assessee) had declared an aggregate income amounting to Rs 9.81 lakh after claiming a deduction amounting to Rs 1.90 lakh under Section 80GGC of the Act, in respect of a donation made to a Registered Unrecognised Political Party (RUPP) named Apna Desh Party.

However, during the assessment of the return, the Assessing Officer (AO) relied upon the findings of the Investigation Wing regarding the alleged accommodation-entry activities of the Apna Desh Party and disallowed the deduction of Rs 1.90 lakh claimed under Section 80GGC of the Act and made an addition of the same to the assessee's income under Section 69A r.w.s. 115BBE of the Act. Thereafter, the total income was assessed at Rs 11.71 lakh.

The aggrieved assessee filed an appeal before the first appellate authority, i.e., the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the impugned disallowance was sustained after noting that the "Investigation Wing had established the modus operandi of the Apna Desh Party in providing accommodation entries and that the assessee had failed to establish the genuineness of the donation beyond the primary documentary evidence."

Subsequently, the assessee approached the Income Tax Appellate Tribunal (ITAT), Ahmedabad, challenging the CIT(A)'s order. The tribunal noted that the issue similar to the present case has been covered by the Honourable Supreme Court in the cases of CIT v. Durga Prasad More and Sumati Dayal v. CIT, holding "the taxing authorities are not required to put on blinkers while examining a transaction merely because it is supported by documentary evidence. They are entitled to look beyond the apparent, examine the surrounding circumstances, apply the test of human probabilities and ascertain the real nature of the transaction."

The ITAT concluded that the donation receipt and bank payment alone could not establish genuineness in light of the investigation material and the recipient party’s alleged modus operandi. Accordingly, it dismissed the assessee’s appeal on October 16, 2026.