Genuineness of political donations under section 80GGC fails when banking proof cannot rebut accommodation-entry evidence.

Deduction under section 80GGC was denied where investigation material, search findings, bank-trail analysis and recorded statements indicated that the alleged political donation was part of an accommodation-entry mechanism. The ITAT held that payment through banking channels and production of donation receipts did not, by themselves, prove genuineness when the Revenue had shown layering of funds and cash returned through shell entities, and the assessee failed to rebut that material with cogent evidence. It also held that mere registration of the political party under the Representation of the People Act did not validate a non-genuine transaction for income-tax purposes. The disallowance was upheld.

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Issues: Whether the assessee was entitled to deduction under section 80GGC of the Income-tax Act, 1961 for the donation allegedly made to a political party, and whether the disallowance sustained by the lower authorities was justified.

Analysis: The Tribunal found that mere payment through banking channels and production of donation receipts did not establish the genuineness of the contribution when the Revenue had brought on record investigation material, search findings, bank trail analysis, and statements recorded during search indicating that the recipient political party was used as a conduit for accommodation entries. It held that the assessee had not rebutted the material showing layering of funds and return of cash through shell entities. The Tribunal further held that registration of the political party under the Representation of the People Act did not, by itself, validate a transaction found to be non-genuine for income-tax purposes. Applying the test of surrounding circumstances and preponderance of probabilities, the Tribunal rejected the reliance placed on authorities dealing with different factual situations.

Conclusion: The assessee failed to prove that the donation was a genuine voluntary contribution eligible for deduction under section 80GGC, and the disallowance was upheld.

Ratio Decidendi: Where credible investigation material shows that a donation to a political party was part of an accommodation entry mechanism, the assessee must rebut that material with cogent evidence, and banking proof alone is insufficient to establish eligibility for deduction under section 80GGC.

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