ACIT, PAREL PIRAMAL CHAMBER V. BHAVIN KUMAR RAMESHKUMAR JAIN, PAREL

ITA 6174/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the decision of the Commissioner of Income-tax (Appeals) which had deleted an addition made by the Assessing Officer. The addition pertained to a commission payment of Rs. 15,000 made to the political party Rashtriya Samajwadi Party (Secular) for facilitating a bogus deduction under section 80GGC of the Income-tax Act. The Revenue contended that the commission was linked to bogus deduction entries and thus should be treated as unexplained expenditure under section 69C. However, the Tribunal agreed with the CIT(A) that the commission was paid out of the assessee's own disclosed income, which had been subjected to tax, and therefore, section 69C did not apply.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830656 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 30-09-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Keywords: Opportunity of being heard; Reassessment proceedings; Unexplained expenditure; Search and seizure; Accommodation entries; Wrong claim; Source of fund; Loose papers; Bogus
• Section: 148; 132; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H (SMC)” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 6174/MUM/2025 Assessment Year: 2019-2020 ACIT, 322, 3rd floor, Piramal Chamber, Parel, Mumbai-400012. Vs. Bhavin Kumar Rameshkumar Jain, 501, Orient Arcade, A Wing, 5th floor, Drt. BA Road, Chinchpolki, Mumbai-400012. PAN NO. AGOPJ 6911 H Appellant Respondent Assessee by : None Revenue by : Mr. Pravin Salunkhe, Sr. DR Date of Hearing : 12/01/2026 Date of pronouncement : 20/01/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 02.07.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2019-2020, raising following grounds: 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 15,000/- made by the Assessing Officer under section 69C of the Income-tax Act, 1961 on Printed from counselvise.com account of commission paid to the political party Rashtriya Samajwadi Party (Secular) for arranging/facilitating bogus deduction u/s 80GGC, ignoring the evidence gathered by the Investigation Wing and the sworn statement of the ex the political party recorded u/s 132(4) of the Act. 2. That the Ld. CIT(A) erred in holding that the commission expenditure of Rs. 15,000/ admitted income and th without appreciating that the assessee had failed to offer any satisfactory explanation regarding such expenditure and that the transaction itself was sham, being linked to bogus deduction entries. 3. That the Ld. CI specifically provides that where the source of expenditure is not explained satisfactorily, the same shall be deemed to be the income of the assessee, and in the present case, the assessee's explanation was neither genuine nor acceptable in view of the findings of the Investigation Wing regarding the modus operandi of the political party in providing accommodation entries. 4. That the Ld. CIT(A) failed to appreciate that the assessee himself had revised his withdrew the bogus claim of deduction of Rs 3.00.000/ thereby admitting to having originally hence the assessing officer was justified in bringing to tax the commission el under section.69C. 5. That the id. CIT A erred in holding that penalty proceeding initiated under Section 271AAC should be dropped merely because the addition under section.69C was deleted without that the deletion itself is not sustainable. 2. The facts, in brief, are that the assessee filed his return of income electronically on ₹36,29,172/- and total taxable income of 2.1 Subsequently, a search and seizure action under section 132 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was conducted in the case of a political party, namely Bhavin Kumar Rameshkumar Jain ITA No. 6174/MUM/2025 account of commission paid to the political party Rashtriya Samajwadi Party (Secular) for arranging/facilitating bogus deduction u/s 80GGC, ignoring the evidence gathered by the gation Wing and the sworn statement of the ex the political party recorded u/s 132(4) of the Act. 2. That the Ld. CIT(A) erred in holding that the commission expenditure of Rs. 15,000/- was incurred out of the assessee's admitted income and therefore not liable to addition u/s 69C, without appreciating that the assessee had failed to offer any satisfactory explanation regarding such expenditure and that the transaction itself was sham, being linked to bogus deduction 3. That the Ld. CIT(A) erred in not appreciating that section 69C specifically provides that where the source of expenditure is not explained satisfactorily, the same shall be deemed to be the income of the assessee, and in the present case, the assessee's explanation either genuine nor acceptable in view of the findings of the Investigation Wing regarding the modus operandi of the political party in providing accommodation entries. 4. That the Ld. CIT(A) failed to appreciate that the assessee himself had revised his return of income in response to notice u/s 148 and withdrew the bogus claim of deduction of Rs 3.00.000/ thereby admitting to having originally misreported income and hence the assessing officer was justified in bringing to tax the commission element of Rs. 15000 as unexplained expenditure under section.69C. That the id. CIT A erred in holding that penalty proceeding initiated under Section 271AAC should be dropped merely because the addition under section.69C was deleted without that the deletion itself is not sustainable. The facts, in brief, are that the assessee filed his return of income electronically on 08.08.2019, declaring gross total income of and total taxable income of ₹29,17,550/ Subsequently, a search and seizure action under section 132 tax Act, 1961 (hereinafter referred to as “the Act”) was conducted in the case of a political party, namely Bhavin Kumar Rameshkumar Jain 2 ITA No. 6174/MUM/2025 account of commission paid to the political party Rashtriya Samajwadi Party (Secular) for arranging/facilitating bogus deduction u/s 80GGC, ignoring the evidence gathered by the gation Wing and the sworn statement of the ex-president of 2. That the Ld. CIT(A) erred in holding that the commission was incurred out of the assessee's erefore not liable to addition u/s 69C, without appreciating that the assessee had failed to offer any satisfactory explanation regarding such expenditure and that the transaction itself was sham, being linked to bogus deduction T(A) erred in not appreciating that section 69C specifically provides that where the source of expenditure is not explained satisfactorily, the same shall be deemed to be the income of the assessee, and in the present case, the assessee's explanation either genuine nor acceptable in view of the findings of the Investigation Wing regarding the modus operandi of the political 4. That the Ld. CIT(A) failed to appreciate that the assessee himself return of income in response to notice u/s 148 and withdrew the bogus claim of deduction of Rs 3.00.000/- u/s 80GGC misreported income and hence the assessing officer was justified in bringing to tax the ement of Rs. 15000 as unexplained expenditure That the id. CIT A erred in holding that penalty proceeding initiated under Section 271AAC should be dropped merely because the addition under section.69C was deleted without appreciating The facts, in brief, are that the assessee filed his return of , declaring gross total income of 29,17,550/-. Subsequently, a search and seizure action under section 132 tax Act, 1961 (hereinafter referred to as “the Act”) was conducted in the case of a political party, namely Rashtriya Printed from counselvise.com Samajwadi Party (Secular) number of incriminating materials were found and seized, including bogus donation receipts, diaries containing details of commission charged, loose papers reflecting vital information, and WhatsApp chats retrieved from the mobile phones of office beare handlers of the political party. These materials revealed that the said political party was engaged in providing bogus deductions under sections 80GGB/80GGC of the Act to various beneficiaries. 2.2 During the course of the search proceedings, th and digital evidence so gathered was confronted to key persons of the party, and their statements were recorded on oath under section 132(4) of the Act. In particular, the statement of Sandhya Singh, President of Rashtriya Samajwadi Part was recorded on 07.09.2022. She stated that she had joined the party at the instance of her husband, that she was not aware of the affairs, finances, bank accounts, or expenditures of the party, which were being enti her husband. 2.3 Consequently, the statement of also recorded on oath under section 132(4) of the Act on the same date. He categorically admitted that the party was involved in a bogus donation racket across the co had been carried out since the inception of the party. He explained Bhavin Kumar Rameshkumar Jain ITA No. 6174/MUM/2025 Samajwadi Party (Secular). During the course of the search, a la number of incriminating materials were found and seized, including bogus donation receipts, diaries containing details of commission charged, loose papers reflecting vital information, and WhatsApp chats retrieved from the mobile phones of office beare handlers of the political party. These materials revealed that the said political party was engaged in providing bogus deductions under sections 80GGB/80GGC of the Act to various beneficiaries. During the course of the search proceedings, th and digital evidence so gathered was confronted to key persons of the party, and their statements were recorded on oath under section 132(4) of the Act. In particular, the statement of , President of Rashtriya Samajwadi Part was recorded on 07.09.2022. She stated that she had joined the party at the instance of her husband, Shri Bishwajeet Singh that she was not aware of the affairs, finances, bank accounts, or expenditures of the party, which were being entirely managed by Consequently, the statement of Shri Bishwajeet Singh also recorded on oath under section 132(4) of the Act on the same date. He categorically admitted that the party was involved in a bogus donation racket across the country and that such activities had been carried out since the inception of the party. He explained Bhavin Kumar Rameshkumar Jain 3 ITA No. 6174/MUM/2025 During the course of the search, a large number of incriminating materials were found and seized, including bogus donation receipts, diaries containing details of commission charged, loose papers reflecting vital information, and WhatsApp chats retrieved from the mobile phones of office bearers and key handlers of the political party. These materials revealed that the said political party was engaged in providing bogus deductions under sections 80GGB/80GGC of the Act to various beneficiaries. During the course of the search proceedings, the documentary and digital evidence so gathered was confronted to key persons of the party, and their statements were recorded on oath under section 132(4) of the Act. In particular, the statement of Smt. , President of Rashtriya Samajwadi Party (Secular), was recorded on 07.09.2022. She stated that she had joined the Shri Bishwajeet Singh, and that she was not aware of the affairs, finances, bank accounts, or rely managed by Shri Bishwajeet Singh was also recorded on oath under section 132(4) of the Act on the same date. He categorically admitted that the party was involved in a untry and that such activities had been carried out since the inception of the party. He explained Printed from counselvise.com the modus operandi, stating that donations were received through banking channels, commission was deducted, and the balance amount was returned to the donors layered transactions involving dummy entities. He further disclosed that Shri Riteshkumar S. Shah bogus donations through a network of chartered accountants across India. 2.4 Based on the se available on the Insight Portal, the Investigation Wing prepared a list of beneficiaries who had availed bogus deductions under section 80GGC/80GGB of the Act. 2.5 Upon receipt of information through the Insight Por Assessing Officer examined the return of income filed by the assessee and found that the assessee had claimed a deduction of ₹3,00,000/- under section 80GGC Rashtriya Samajwadi Party (Secular). 2.6 In view of the fin statements recorded under section 132(4) of the Act, proceedings under section 148A were initiated. After granting an opportunity of being heard under section 148A(b), an order under section 148A(d) was passed on 30.03.2023 section 148 on 31.03.2023 Bhavin Kumar Rameshkumar Jain ITA No. 6174/MUM/2025 the modus operandi, stating that donations were received through banking channels, commission was deducted, and the balance amount was returned to the donors through cash withdrawals and layered transactions involving dummy entities. He further disclosed Shri Riteshkumar S. Shah played a key role in arranging such bogus donations through a network of chartered accountants Based on the seized material, bank statements, and data available on the Insight Portal, the Investigation Wing prepared a list of beneficiaries who had availed bogus deductions under section 80GGC/80GGB of the Act. Upon receipt of information through the Insight Por Assessing Officer examined the return of income filed by the assessee and found that the assessee had claimed a deduction of under section 80GGC on account of donation made to Rashtriya Samajwadi Party (Secular). In view of the findings of the Investigation Wing and the statements recorded under section 132(4) of the Act, proceedings under section 148A were initiated. After granting an opportunity of being heard under section 148A(b), an order under section 148A(d) 03.2023, followed by issuance of notice under 31.03.2023. Bhavin Kumar Rameshkumar Jain 4 ITA No. 6174/MUM/2025 the modus operandi, stating that donations were received through banking channels, commission was deducted, and the balance through cash withdrawals and layered transactions involving dummy entities. He further disclosed played a key role in arranging such bogus donations through a network of chartered accountants ized material, bank statements, and data available on the Insight Portal, the Investigation Wing prepared a list of beneficiaries who had availed bogus deductions under section Upon receipt of information through the Insight Portal, the Assessing Officer examined the return of income filed by the assessee and found that the assessee had claimed a deduction of on account of donation made to dings of the Investigation Wing and the statements recorded under section 132(4) of the Act, proceedings under section 148A were initiated. After granting an opportunity of being heard under section 148A(b), an order under section 148A(d) , followed by issuance of notice under Printed from counselvise.com 2.7 In response to the notice under section 148, the assessee filed a return of income and voluntarily offered the amount of ₹3,00,000/-, being the earlier claimed deduction under sec 80GGC, for taxation. Consequently, no addition was made by the Assessing Officer on account of the bogus donation during the reassessment proceedings. 2.8 However, relying on the statement of Chaturvedi, former President of Rashtriya Sa (Secular), recorded on 15.12.2022, wherein it was stated that commission ranging from 4.5% to 5% was charged on such bogus donations, the Assessing Officer made an addition of (being 5% of ₹3,00,000/ same as unexplained expenditure towards commission. Penalty proceedings under section 271AAC of the Act were also initiated. 2.9 On appeal, the learned Commissioner (Appeals) deleted the addition of ₹15,000/ assessee had initially claimed deduction under section 80GGC, the amount of ₹3,00,000/ return filed in response to notice under section 148. It was further observed that the source of the alleged commission out of the assessee’s own disclosed income, and therefore, the provisions of section 69C were not attracted. Bhavin Kumar Rameshkumar Jain ITA No. 6174/MUM/2025 In response to the notice under section 148, the assessee filed a return of income and voluntarily offered the amount of being the earlier claimed deduction under sec 80GGC, for taxation. Consequently, no addition was made by the Assessing Officer on account of the bogus donation during the reassessment proceedings. However, relying on the statement of Shri Amitkumar , former President of Rashtriya Sa (Secular), recorded on 15.12.2022, wherein it was stated that commission ranging from 4.5% to 5% was charged on such bogus donations, the Assessing Officer made an addition of 3,00,000/-) under section 69C of the Act, same as unexplained expenditure towards commission. Penalty proceedings under section 271AAC of the Act were also initiated. On appeal, the learned Commissioner (Appeals) deleted the 15,000/-. The CIT(A) observed that although assessee had initially claimed deduction under section 80GGC, the 3,00,000/- had subsequently been offered to tax in the return filed in response to notice under section 148. It was further observed that the source of the alleged commission out of the assessee’s own disclosed income, and therefore, the provisions of section 69C were not attracted. Bhavin Kumar Rameshkumar Jain 5 ITA No. 6174/MUM/2025 In response to the notice under section 148, the assessee filed a return of income and voluntarily offered the amount of being the earlier claimed deduction under section 80GGC, for taxation. Consequently, no addition was made by the Assessing Officer on account of the bogus donation during the Shri Amitkumar , former President of Rashtriya Samajwadi Party (Secular), recorded on 15.12.2022, wherein it was stated that commission ranging from 4.5% to 5% was charged on such bogus donations, the Assessing Officer made an addition of ₹15,000/- ) under section 69C of the Act, treating the same as unexplained expenditure towards commission. Penalty proceedings under section 271AAC of the Act were also initiated. On appeal, the learned Commissioner (Appeals) deleted the . The CIT(A) observed that although the assessee had initially claimed deduction under section 80GGC, the had subsequently been offered to tax in the return filed in response to notice under section 148. It was further stood explained out of the assessee’s own disclosed income, and therefore, the Printed from counselvise.com 3. We have heard the learned Departmental Representative and perused the material available on record. Despite service of notice, none appeared on behalf of the assessee, and therefore, the appeal was heard ex-parte qua the assessee 3.1 The only issue arising for our consideration is whether the addition of ₹15,000/- commission paid for obtaining bogus donation receipt was justified. 3.2 Section 69C of the Act provides for deeming unexplained expenditure as income where the assessee either offers no explanation about the source of such expenditure or t explanation offered is found unsatisfactory. A plain reading of the provision makes it abundantly clear that the sine qua non for invoking section 69C is the absence of explanation regarding the source of the expenditure. 3.3 In the present case, the am claimed as deduction under section 80GGC has been admittedly offered to tax by the assessee in the reassessment proceedings. Thus, the source of funds out of which the alleged commission is presumed to have been paid stands f assessee’s disclosed and taxed income. Once the source is explained, no separate addition under section 69C can be sustained. Bhavin Kumar Rameshkumar Jain ITA No. 6174/MUM/2025 We have heard the learned Departmental Representative and perused the material available on record. Despite service of notice, none appeared on behalf of the assessee, and therefore, the appeal qua the assessee. The only issue arising for our consideration is whether the - under section 69C of the Act commission paid for obtaining bogus donation receipt was justified. Section 69C of the Act provides for deeming unexplained expenditure as income where the assessee either offers no explanation about the source of such expenditure or t explanation offered is found unsatisfactory. A plain reading of the provision makes it abundantly clear that the sine qua non for invoking section 69C is the absence of explanation regarding the of the expenditure. In the present case, the amount of ₹3,00,000/ claimed as deduction under section 80GGC has been admittedly offered to tax by the assessee in the reassessment proceedings. Thus, the source of funds out of which the alleged commission is presumed to have been paid stands fully explained from the assessee’s disclosed and taxed income. Once the source is explained, no separate addition under section 69C can be Bhavin Kumar Rameshkumar Jain 6 ITA No. 6174/MUM/2025 We have heard the learned Departmental Representative and perused the material available on record. Despite service of notice, none appeared on behalf of the assessee, and therefore, the appeal The only issue arising for our consideration is whether the towards alleged commission paid for obtaining bogus donation receipt was justified. Section 69C of the Act provides for deeming unexplained expenditure as income where the assessee either offers no explanation about the source of such expenditure or the explanation offered is found unsatisfactory. A plain reading of the provision makes it abundantly clear that the sine qua non for invoking section 69C is the absence of explanation regarding the 3,00,000/- originally claimed as deduction under section 80GGC has been admittedly offered to tax by the assessee in the reassessment proceedings. Thus, the source of funds out of which the alleged commission is ully explained from the assessee’s disclosed and taxed income. Once the source is explained, no separate addition under section 69C can be Printed from counselvise.com 3.4 The addition made by the Assessing Officer is purely based solely on generalized statements recorded d proceedings in the case of third parties of such alleged expenditure stands explained received back by the assessee from the concerned political party 3.5 In view of the above facts and legal position infirmity in the order of the learned Commissioner (Appeals) in deleting the addition. 3.6 The grounds raised by the Revenue are 4. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 20/01/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Bhavin Kumar Rameshkumar Jain ITA No. 6174/MUM/2025 The addition made by the Assessing Officer is purely based solely on generalized statements recorded d proceedings in the case of third parties. But otherwise, the source of such alleged expenditure stands explained as out of cash received back by the assessee from the concerned political party In view of the above facts and legal position infirmity in the order of the learned Commissioner (Appeals) in . Accordingly, the same is upheld. The grounds raised by the Revenue are dismissed In the result, the appeal of the Revenue is dismissed. ounced in the open Court on 20/01/2026. Sd/ (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Bhavin Kumar Rameshkumar Jain 7 ITA No. 6174/MUM/2025 The addition made by the Assessing Officer is purely based solely on generalized statements recorded during search otherwise, the source as out of cash received back by the assessee from the concerned political party. In view of the above facts and legal position, we find no infirmity in the order of the learned Commissioner (Appeals) in , the same is upheld. dismissed. In the result, the appeal of the Revenue is dismissed. /01/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "