Tax & ITR · Case Law
Two Recent ITAT Rulings on Section 80GGC: When a Political-Donation Deduction Can’t Be Denied
In short
Thousands of taxpayers have received notices disallowing their Section 80GGC deduction for donations to political parties. In 2026, two ITAT benches pushed back. In ACIT vs Anuj Prakash Gupta (ITAT Raipur, Feb 2026) and Mukesh Somani vs AO (ITAT Jodhpur, Jun 2026), the Tribunal held that a deduction cannot be denied just because the recipient party is under investigation. The department must show that particular donor got the money back. No such proof, no disallowance.
If you donated to a political party, paid by cheque or bank transfer, and claimed a deduction under Section 80GGC — only to receive a notice or an SMS saying the claim is bogus — you are not alone. The Income Tax Department has reopened a large number of such cases. Two recent Tribunal rulings clarify an important point for genuine donors: suspicion against the party is not the same as proof against you.
First, what is Section 80GGC?
Section 80GGC of the Income Tax Act, 1961 lets any person other than a company (individuals, HUFs, firms and similar — companies use the parallel Section 80GGB) claim a deduction for amounts contributed to:
- a political party registered under Section 29A of the Representation of the People Act, 1951, or
- an electoral trust.
The key conditions are simple: the contribution must not be paid in cash (it has to go through a banking channel), and the deduction is claimed under the old tax regime — most Chapter VI-A deductions, including 80GGC, are not available under the default new regime. There is no statutory requirement for the donor to police how the party later spends the money.
Why so many 80GGC notices went out
The Investigation Wing flagged a cluster of registered unrecognised political parties (RUPPs) that were allegedly used as conduits: a donor would pay by cheque, claim the 80GGC deduction, and then receive the cash back after the operator retained a commission. On the strength of those investigation reports, Assessing Officers reopened assessments under Sections 147/148 and issued notices to donors — often without any evidence specific to the individual donor. Genuine contributors were swept up alongside the bad actors.
The two rulings, side by side
| ACIT vs Anuj Prakash Gupta | Mukesh Somani vs AO | |
|---|---|---|
| Bench | ITAT Raipur | ITAT Jodhpur |
| Citation / order | ITA No. 11/RPR/2026; order dated 5 Feb 2026 | Order reported June 2026 |
| Year & amount | AY 2019-20; ₹2,00,000 | AY 2019-20; ₹1,00,000 |
| Department's case | Reopened on Investigation Wing report; party allegedly a conduit for bogus donations | Disallowed on a general allegation of accommodation entries |
| Result | Revenue's appeal dismissed; deduction allowed | Addition deleted; assessee's appeal allowed |
Ruling 1 — ACIT vs Anuj Prakash Gupta (ITAT Raipur)
The taxpayer had claimed a ₹2,00,000 deduction under 80GGC for a donation to a registered party, paid through banking channels, with a receipt on record. The Assessing Officer reopened the assessment under Sections 147/148 on the basis of an Investigation Wing report and disallowed the claim, treating the party as a tainted entity.
The first appellate authority (CIT(A)/NFAC) deleted the addition, noting there was no bank trail, confirmation or statement showing the donor got money back, and that the assessee had not been confronted with the material or given a chance to cross-examine the people whose statements the department relied on. The Raipur Bench (Judicial Member Partha Sarathi Chaudhury) agreed and dismissed the Revenue's appeal, holding that a disallowance built purely on general presumption and broad investigation reports — with nothing connecting it to the assessee's own transaction — is unsustainable in law. (2026 TAXSCAN (ITAT) 204.)
Ruling 2 — Mukesh Somani vs AO (ITAT Jodhpur)
Here the taxpayer had claimed a ₹1,00,000 deduction for a donation to the same category of registered party, again for AY 2019-20. The Assessing Officer disallowed it on a bare allegation of accommodation entries, and the NFAC upheld the disallowance. On further appeal, the Jodhpur Bench deleted the ₹1,00,000 addition and allowed the assessee's appeal, expressly relying on the Raipur ruling in Anuj Prakash Gupta. The Tribunal again stressed that the department had produced no evidence that the party returned the money or that the donor got any benefit in exchange — so the disallowance could not stand.
The common principle for donors
Read together, the two rulings establish a clear and useful standard:
- An investigation against the recipient party is a process, not a finding of fact — it cannot, by itself, defeat a donor's claim.
- Once you show a non-cash payment to a registered party with a receipt, you have a prima facie genuine claim. The burden then shifts to the Revenue to prove the contrary.
- The department must bring assessee-specific evidence — proof that you received a refund, commission or quid pro quo. Vague references to a wider racket are not enough.
- If statements of third parties are used against you, you are entitled to that material and an opportunity to respond or cross-examine.
Important: these rulings are not a free pass
This is the part many headlines skip. The Tribunal protected genuine donors who could show clean banking-channel payments and no money coming back. It did not bless the racket. In other cases — where the department has actually traced the cheque being layered through bank accounts and cash returning to the donor — Tribunals have upheld the disallowance and confirmed penalties. If your donation was, in substance, a way to convert taxable income into a deduction and get cash back, no case law will save it. The lesson is precise: genuineness, properly documented, wins; sham arrangements do not.
What to do if you receive an 80GGC notice or SMS
Don’t ignore it
Respond within the time allowed. A non-response is treated as acceptance and makes an appeal harder.
Pull your evidence together
Bank statement showing the non-cash payment, the donation receipt, the party’s Section 29A registration certificate, and the ITR where you claimed the deduction.
Show that nothing came back
This is the crux of both rulings. Be ready to demonstrate — from your own bank records — that no refund, cash or benefit returned to you.
Get a CA to draft the reply or appeal
A well-argued reply that cites the right precedents can resolve matters at the assessment or CIT(A) stage, before it ever reaches the Tribunal.
The bottom line
For honest taxpayers, these two 2026 rulings are reassuring: a legitimate Section 80GGC deduction cannot be wiped out on suspicion alone. But the protection only works if your paperwork holds up and the money genuinely never returned. If you have a notice in hand, treat it seriously and respond with evidence. Our Saket team handles exactly these matters as part of ITR & tax advisory for clients across Delhi NCR.
This article is general information, not tax or legal advice. Tribunal decisions are fact-specific, may be appealed, and the law is subject to amendment. Confirm the position for your own case before acting.
How Startup Advisory Can Help
Startup Advisory is a CA-led firm in Saket, New Delhi that represents individuals and businesses across Delhi NCR in income-tax notices, scrutiny and appeals — including the wave of Section 80GGC disallowances. If you have a notice or just want certainty before you respond, we can help:
- Review your 80GGC notice or SMS and assess where your case actually stands.
- Draft a documented, precedent-backed reply to the Assessing Officer or NFAC.
- Represent you at assessment, CIT(A) and ITAT stages where required.
- Keep your records and filings clean so future claims stand up to scrutiny.
Call 9311972982 or book a free consultation to discuss your 80GGC notice with a named CA.
