Got an Income Tax Notice Over a Political Party Donation? What 7 Recent ITAT Rulings Say

By Abhinav Chhabra, Ledger Brigade | Published October 2026

Many taxpayers who donated to political parties are now receiving notices from the Income Tax Department. Some are reassessment notices under section 148A or 148. Others arrive as scrutiny notices for the year in which the donation was claimed. The message in most of them is the same: the Department believes the donation was not genuine, and proposes to withdraw the deduction claimed under section 80GGC.

If you have received one of these notices, don’t panic, and don’t ignore it. The Income Tax Appellate Tribunal (ITAT) has now decided a number of these cases, and the reasoning in those orders shows exactly where donors win, where they lose, and why. This article walks through seven recent orders in detail, quoting the Tribunal’s own words, and explains what each one means for you. Every order is linked so you can read it in full.

Why these notices are being issued

Section 80GGC allows individuals to claim a full deduction for donations to a political party registered under section 29A of the Representation of the People Act, 1951, as long as the donation is not made in cash.

On 7 September 2022, the Department searched a group of Registered Unrecognised Political Parties (RUPPs) based in Ahmedabad. According to the Department, some of these parties accepted donations by cheque or bank transfer, passed the money through shell entities, and returned it to donors in cash after keeping a commission. The donor then claimed a full tax deduction for money that had effectively come back to them.

The notices now being issued are largely based on that investigation. In many cases, the notice relies on general findings about the party, not on any specific evidence that the individual donor received cash back. As the rulings below show, that difference often decides the case.

How to read these rulings

Donors have won these cases in three different ways:

• On the merits: the Tribunal accepted that the donation was genuine because the donor proved the payment and the Department had no specific evidence against them.
• On procedure: the Tribunal held that the reassessment was invalid because the Department made a fundamental error in starting it.
• On the deadline: the Tribunal held that the reassessment notice was issued too late, without deciding whether the donation was genuine.

Knowing which route applies to your case is the first step in deciding how to respond.

Part A: Donors who won on the merits

1. Nihil Nitinbhai Bhuptani v. ITO

ITAT Rajkot, ITA No. 479/RJT/2025, AY 2019-20, order dated 30 October 2025

The Department disallowed a ₹1,40,000 donation. The Tribunal held that the case was squarely covered by an earlier ruling of the Delhi bench in Ashish Dubey v. ACIT (ITA No. 222/Del/2020, 8 May 2024), and quoted it with approval. In Ashish Dubey, the donor had produced the party’s receipt, its PAN, its Election Commission registration letter, an email confirmation from the party and his own bank statement, but the Department rejected the claim because the party had not shown the donation in its own return.

What the Tribunal said (quoting Ashish Dubey):

“We are of the considered view that once the assessee had established, on the basis of material evidences, the fact of payment of the donation and the receipt acknowledged to the assessee then the mere fact that the political party on its part has failed to account for the donation received, the assessee as a donor cannot be faulted so as to deny the deduction.”

And on the Department’s case before it:

“…the Revenue is unable to produce any materials to controvert the aforesaid findings of the Co-ordinate Bench in case of Ashish Dubey (supra)…”

What this means for you: The donor’s job is to prove the payment and the party’s acknowledgment of it. If the party later failed to report the donation or kept poor records, that failure belongs to the party, not to you. This ruling is strongest where the Department’s only point is that the party’s own records or returns don’t match.

Read the full order (PDF)

2. Nitin T. Bhuptani v. ACIT

ITAT Rajkot, ITA No. 878/Rjt/2026, AY 2019-20, order dated 11 September 2026

A ₹1,80,000 donation to Yuva Jan Jagruti Party was disallowed. This time, the Assessing Officer went further than in Nihil’s case and made a specific finding about the party itself.

What the Assessing Officer alleged (as recorded in the order):

“The said party (YJJP) facilitates bogus donations to the donors for claiming bogus deduction u/s 80GGC/80GGB of the Act which are then re-routed back to the donors in cash/RTGS/NEFT or other banking channels…”

What the Tribunal said:

“…there is no change in facts and law and the revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). I find no reason to interfere in the said order of the Division Bench. Therefore, respectfully following the binding precedent of the co-ordinate Bench (supra), I allow the appeal of the assessee.”

What this means for you: An allegation that the party as a whole was involved in a scheme is not, on its own, enough to deny your deduction. The Rajkot bench allowed the claim because nothing placed before it showed that this particular donor received money back.

Read the full order (PDF)

3. Malhar Nitin Bhuptani v. ACIT

ITAT Rajkot, ITA No. 1054/Rjt/2026, AY 2019-20, order dated 9 October 2026

A ₹1,40,000 disallowance was deleted, again following Nihil Bhuptani.

What the Tribunal recorded about the Department’s case:

“On the other hand, Ld. DR for the revenue relied on the findings of the Assessing Officer.”

And its conclusion:

“…there is no change in facts and law and the Revenue is unable to produce any materials to controvert the aforesaid findings of the ITAT Rajkot Bench…”

What this means for you: Notice what the Department brought to the hearing: nothing beyond the Assessing Officer’s own findings. The Rajkot rulings are short, and they rest on precedent rather than a detailed review of evidence. That makes them powerful where the Department’s file is thin, but, as Part D shows, a different bench reached the opposite result where the Department produced detailed search evidence.

Read the full order (PDF)

Part B: A donor who won on procedure, and on the merits

4. Abhishek Jayketu Joshi v. ACIT

ITAT Mumbai “A” Bench, ITA No. 5775/Mum/2025, AY 2019-20, order dated 13 January 2026

This is one of the most detailed rulings for donors. The taxpayer donated ₹5,00,000 by cheque to Kisan Party of India. The Department relied on statements recorded during the search and noted that his name appeared on the Investigation Wing’s list of beneficiaries. It refused his request to cross-examine the people whose statements were used against him. The Tribunal still ruled in his favour, on three separate grounds.

First, the notice named the wrong organisation. The show-cause notice under section 148A(b) repeatedly alleged donations to “Aadhar Foundation”, which the taxpayer had never paid. The Assessing Officer later admitted the mistake. The Tribunal said:

“Such an error cannot be treated as a mere clerical lapse, as the assumption of jurisdiction under section 147 is contingent upon correct and specific information suggesting escapement of income in the case of the assessee.”

Second, the evidence was never shared. The Department relied on search statements but never gave them to the taxpayer, taking the stand that it had no legal duty to do so. The Tribunal disagreed, following the Bombay High Court in Anurag Gupta v. ITO (2023) 454 ITR 326:

“Mere reference to the existence of information or statements, without furnishing the underlying material, renders the opportunity illusory.”

Third, on the merits, there was no evidence against this donor:

“The Assessing Officer has not brought on record any tangible evidence to demonstrate that the donation amount was returned to the assessee, either in cash or through any other mode.”

“Mere suspicion, conjectures, or application of human probabilities, in the absence of any corroborative material, cannot be a ground to deny a statutory deduction expressly provided under the Act.”

What this means for you: Read your notice line by line. If it names the wrong party, the wrong amount or the wrong year in a way that goes to the substance, that can invalidate the whole reassessment. Always ask in writing for the statements and reports relied on against you; if the Department refuses, that refusal can itself be a ground of challenge. And being named on an Investigation Wing list is not, by itself, proof that you received money back.

Read the full order (PDF)

Part C: Donors who won because the notice was too late

Both of these cases involved donations to Rashtriya Samajwadi Party (Secular), the party at the centre of the September 2022 search. In both, the Tribunal quashed the reassessment on the deadline alone and expressly left the merits open.

5. Jackey Jeswani v. ITO

ITAT Mumbai, ITA No. 3498/Mum/2026, AY 2019-20, order dated 1 October 2026

A ₹4,00,000 donation was reopened. The normal three-year limit for AY 2019-20 ended on 31 March 2023. The show-cause notice went out on 29 March 2023 with a reply date of 14 April. After excluding that reply period, the law allowed the Department until 21 April 2023 to issue the section 148 notice. It was issued on 24 April, three days late. The appeal officer had also wrongly treated the earlier show-cause date as the date of the section 148 notice.

What the Tribunal said:

“The sixth proviso extends the short remaining period to seven days. It does not provide an additional seven days over and above that remaining period.”

“Issuance of the preliminary notice within the ordinary three-year period did not dispense with the requirement to issue the subsequent notice under section 148 within the limitation computed after the applicable statutory exclusions and extension.”

Following the Bombay High Court in Gurpreet Singh v. DCIT [2025] 176 taxmann.com 673, the Tribunal also held that the one-month period the officer has to decide under section 148A(d) does not extend the overall deadline. On the donation itself, it was careful:

“We express no opinion on the genuineness of the donation or the admissibility of the deduction on merits.”

What this means for you: Deadlines are counted from the section 148 notice itself, not from the earlier show-cause notice, and the extensions in the law are narrower than the Department sometimes assumes. Count the days yourself. A notice that is even a few days late is invalid, however strong the Department’s case on the merits.

Read the full order (PDF)

6. Piyush Maheshwari v. Assessment Unit

ITAT Jaipur “B” Bench, ITA No. 1529/JPR/2025, AY 2019-20, order dated 8 October 2026

A ₹2,50,000 donation was disallowed even though the officer accepted that it was paid by bank and that the party was still registered. The three-year limit ended on 31 March 2023. The Department issued a show-cause notice on 30 March and then counted the donor’s reply time to issue the section 148 notice on 12 April 2023.

The Tribunal held that, because the information came from a search on a third party after 1 April 2021, the law excluded this kind of case from the show-cause procedure altogether. So there was no reply period that could stretch the deadline.

What the Tribunal said:

“In the classes of cases covered by the proviso, no show cause notice under section 148A(b) of the Act is contemplated. It follows that in such cases there is no time allowed to the assessee under such a notice that can be excluded under the provisos to section 149(1) of the Act.”

“When the statute excludes a procedure, following it anyway cannot produce a consequence which the statute attaches only to that procedure, namely the exclusion of time for computing limitation. To hold otherwise would allow the Revenue to choose its route according to the time left on the clock. Limitation is a matter of jurisdiction, and the absence of prejudice to the assessee cannot cure it.”

It also rejected the argument that the donor had accepted the process by taking part in it:

“Participation by the assessee in the proceedings cannot confer a jurisdiction which the statute does not give.”

The Tribunal followed Amit Pahuja v. DCIT [2026] 187 taxmann.com 961 (Mumbai Tribunal).

What this means for you: This is potentially the most widely useful ruling here. Many notices for AY 2019-20 were issued in early April 2023, just after the three-year limit, based on the September 2022 party searches. If your notice fits that pattern, the deadline argument may be available to you even if you replied to the show-cause notice and took part in the proceedings.

Read the full order (PDF)

Part D: The other side, when donors have lost

Not every case has gone the donor’s way, and it’s important to be realistic.

7. Prasana Jayantkumar Bhatt v. DCIT

ITAT Ahmedabad “D” Bench, ITA No. 426/Ahd/2026, AY 2019-20, order dated 6 July 2026

A salaried employee claimed ₹12,00,000 under section 80GGC for a donation to Rashtriya Samajwadi Party (Secular). He relied on his bank payment, the party’s receipt, its registration, and the Rajkot ruling in Nihil Bhuptani. He lost.

The difference was the evidence. Before the Ahmedabad bench, the Department produced search material, bank trail analysis and statements recorded under section 132(4) from the party’s own office bearers, admitting that donations were returned to donors after deducting commission.

What the Tribunal said:

“Mere proof of payment through banking channels or production of donation receipts cannot by itself establish the genuineness of the transaction when subsequent investigation reveals that the recipient political party itself was merely acting as a conduit for providing accommodation entries.”

“In matters involving tax evasion and accommodation entries, direct evidence is rarely available.”

“Eligibility under Section 80GGC depends upon the genuineness of the contribution and not merely upon the legal existence of the recipient.”

It expressly distinguished Nihil Bhuptani and similar rulings:

“…the other decisions were rendered on their own factual matrix where either the investigation material presently available was absent or the Tribunal was dealing with different issues.”

The Tribunal also referred to several other rulings against donors, including Milind Pankajbhai Shroff v. PCIT (ITA No. 93/RJT/2023), Saurabh Pravinbhai Patel v. ITO (ITA No. 1017/Ahd/2023), Rajen Jayantilal Merchant v. ITO (ITA No. 1683/Ahd/2025) and Ritesh Sugan Jain v. ITO (ITA No. 8546/Mum/2025).

What this means for you: Where the Department has detailed evidence about your party, a bank statement and a receipt may not be enough on their own. In that situation, the procedural and deadline grounds in Parts B and C often become your strongest defence, and they should be checked first.

Read the full order (PDF)

Reading the rulings together

The pattern is clear. A bank payment and a receipt are necessary, but they are not always enough. Donors have won on the merits where the Department relied on general allegations it could not link to the individual. They have won on procedure and deadlines regardless of the merits. And they have lost on the merits where the Department produced detailed evidence about the specific party.

Notice the three Rashtriya Samajwadi Party (Secular) cases in particular. Two donors won, but only because their notices were late; the merits were left open. The one case that reached the merits went against the donor. If your donation was to this party, check the procedural and deadline grounds first.

Most of these rulings concern AY 2019-20, but the same principles are being applied to notices for later years.

What to check if you’ve received a notice

1. Read the notice carefully. Does it correctly identify the political party, the amount and the assessment year? In Abhishek Jayketu Joshi, the notice cited an organisation the taxpayer had never donated to, and the Tribunal held this was not a mere clerical lapse but went to the root of the reassessment. A minor typing error that doesn’t affect the substance of the notice is unlikely to have the same effect.
2. Check the dates. Count the days from the end of the assessment year to the date of the section 148 notice itself, not the earlier show-cause notice. Notices that arrived close to a deadline, such as late March or early April 2023 for AY 2019-20, are worth checking day by day. Where the information came from a search on the political party, the Department may not be able to rely on a show-cause notice to stretch the deadline at all (see Piyush Maheshwari).
3. Check who issued the notice. Since 2022, reassessment notices are meant to be issued through the faceless system under section 151A. The Bombay and Punjab & Haryana High Courts have quashed notices issued directly by the local Jurisdictional Assessing Officer instead. The Delhi High Court has taken a different view and the question is before the Supreme Court, so check the current position before relying on this argument. (In Jeswani and Piyush Maheshwari, the Tribunal left this point open.)
4. Ask for the evidence. If the notice relies on statements or investigation reports, ask in writing for copies so you can respond to them and, where relevant, request cross-examination. In Anurag Gupta v. ITO, the Bombay High Court held that not supplying the material relied on makes section 148A proceedings unsustainable.
5. Gather your documents: the donation receipt, the party’s PAN and registration details, your bank statement showing the payment, and any correspondence with the party.
6. Reply on time. Notices under section 148A(b) usually give a short window to respond. Missing it can lead to an assessment based only on the Department’s version.

A word of caution: these rulings help genuine donors. If a donation was not genuine, for example if any money came back in cash, contesting the notice is not the right approach, and penalties for misreporting income can be significant. Speak to a professional about the best way forward.

How Ledger Brigade can help

We help taxpayers respond to political donation notices: reviewing the notice, checking it for legal and procedural defects, preparing your reply with supporting documents and case law, and following through until the matter is closed.

Our fee: ₹7,500 per financial year, which covers:

• one substantial response to the show cause notice, and
• two follow-up responses to follow-up notices.

Any further responses on the matter are charged as follows:

• Each additional substantial response: ₹5,000
• Each additional follow-up response: ₹2,500

If you have notices for more than one year, each year is charged separately. Appeals to the CIT(A) or ITAT are quoted separately.

To get started, email hello@ledgerbrigade.com or book a briefing, with a copy of your notice.

This article is general information, not legal or tax advice. Every case depends on its own facts, and the outcome of any notice cannot be guaranteed. Quotations are taken from the orders linked above; please read the full orders before relying on them.