ITAT Remands Section 80GGC Political Donation Case for Fresh Verification

The ITAT Ahmedabad remanded the matter to the tax authorities for fresh verification of the assessee’s Rs 5 lakh political donations claimed under Section 80GGC of the Income Tax Act.

In the present case, the tax authorities had reopened the assessee’s case on the grounds that during the year in consideration, i.e., AY 2019-20, it had made donations amounting to Rs 5 lakh to three distinct parties, among which one party, the Yuva Jan Jagrity Party, was also known to be involved in activities involving aiding and abetting tax evasion. Thereafter, availed a deduction on the same under Section 80GGC of the Act.

In conclusion, the tax authorities issued a notice under Section 142(1), in response to which the assessee furnished copies of donation receipts issued by the three parties, including the Yuva Jan Jagrity Party, the Manavadhikar National Party and the Apna Desh Party. Thereafter, the assessee was issued show cause notices dated November 29, 2024, in response to which the assessee claimed that “it had received LIC receipt amounting to Rs 30,347/-, Sukanya Pass Book Showing deposits of Rs. 1,21,000/- EPFO statement showing contribution of Rs. 1,16,395/- self health insurance policy claim of Rs. 15,614/- and health insurance policy of Rs. 28,475/- for claim of his father health insurance.”

After considering the assessee’s response, the tax authorities ruled that the assessee had not furnished relevant details related to the donations made by it and, in conclusion, made an addition of Rs 5 lakh to the assessee’s income. It was also noted by the officer that despite facing financial difficulties, the assessee had made substantial donations to political parties. The assessee argued that all donation receipts and supporting documents had been submitted and also claimed that no opportunity for cross-examination of the concerned parties was provided.

The matter reached the ITAT after appeal proceedings. The Tribunal noted that the tax authorities had not relied only on third-party statements but had also examined the financial circumstances of the assessee. It further observed that merely citing decisions from other tribunal cases would not automatically support the taxpayer’s claim because each case depends on its own facts.

Finally, the ITAT remanded the matter back to the assessing officer for fresh verification and proper adjudication. The appeal was therefore partly allowed for statistical purposes.