Section 80GGC Deduction Cannot Be Denied Without Evidence, Rules ITAT Jodhpur

The ITAT Jodhpur has allowed a taxpayer’s claim for deduction under Section 80GGC of the Income Tax Act for a donation made to a political party. The appeal was filed by Mr Mukesh Somani against an order of the National Faceless Appeal Centre (NFAC), which had upheld the disallowance of a deduction of Rs 1 lakh.

The assessee had donated to a political party named Rashtriya Samajwadi Party (Secular), on which he had claimed a deduction under Section 80GGC while filing an income tax return (ITR) for the Assessment Year 2019-20. During the assessment of return, the Assessing Officer (AO) had disallowed the Section 80GGC deduction merely on alleging accommodation entries, but no evidence showed a refund of donation or any direct nexus of benefit to the assessee; such disallowance was unjustified and liable to be deleted.

However, during the proceedings, it was noted that the Department had not produced any evidence to show that the political party had returned the donated amount to the taxpayer or that the taxpayer had received any benefit in exchange for the donation.

The Tribunal relied on an earlier ruling of the ITAT Ruling in the case titled ACIT Vs Anuj Prakash Gupta, which held that merely alleging that a political party was involved in accommodation entries is not enough to deny a deduction. There must be solid evidence proving that the donation was not genuine or that the donor received money back through indirect means.

Since no such evidence was brought on record, the tribunal held the impugned disallowance as unjustified. Accordingly, it deleted the addition of Rs 1 lakh made by the tax authorities. Accordingly, the assessee’s appeal was allowed.