The Income Tax Department has identified the donors who had claimed deductions for the alleged bogus donations made to Registered Unrecognised Political Parties (RUPPs) based on their bank account statements. Notices under section 148A of the Income Tax Act have been issued to the donors, and the reassessment proceedings will be initiated on the beneficiaries.
Background:
The Income Tax Department has identified the donors who had claimed deductions for the alleged bogus donations made to Registered Unrecognised Political Parties (RUPPs) based on their bank account statements. Notices under section 148A of the Income Tax Act have been issued to the donors, and the reassessment proceedings will be initiated on the beneficiaries.
Why has the Income Tax Department issued notices under Section 148A?
The Income Tax Department has issued notices under Section 148A to reassess the income of taxpayers who claimed political party donations as a deduction in AY 19-20. The department has deemed these donations as bogus and is treating them as income that has escaped assessment.
The department’s search operation under Section 132A on 23 RUPPs in Gujarat triggered these notices. During the search, it was found that agents charged commissions of up to 5%, and returned the remaining amount in cash to the Donor.
What happens if taxpayers fail to prove the genuineness of their claim for political party donations?
Taxpayers who fail to prove the genuineness of their claim may have to pay approximately 2.1 lakh rupees in tax, interest, and penalty for a donation of Rs. 2 lakh.
What should taxpayers do?
For Ay 2019-20, During the assessment proceedings, taxpayers have the right to request all records and cross-examine the statements used against them.
Taxpayers may consider filing updated returns without claiming political party donations for AY 20-21 and 21-22.
What is Section 80GGC of the Income Tax Act?
Section 80GGC provides tax deductions to individuals, Hindu Undivided Families, firms, AOPs, BOIs, and artificial juridical persons for contributions made to political parties or electoral trusts. Donations must not be made in cash but rather through cheques, demand drafts, bank transfers, debit or credit cards, or internet banking.
What is the difference between Section 80GGC and Section 80GGB of the Income Tax Act?
Section 80GGC is different from Section 80GGB, which allows companies to claim deductions for political party donations.
About the Author: CA Milind Wadhwani DISA(ICAI), FAFD(ICAI), CCCA(ICAI),Phd(Research Scholar) milind.wadhwani20@gmail.com
Pdf file of article: Not Available
Posted on: April 6th, 2023
The article is illuminating.However ,some points I am unable to understand.Kindly add to my understanding.
1.IS THERE ANY NOTICE U/S 148a(b) or (d) to exemplify the exact reasoning behind issuance of these notices.?A template(removing name of assessee)would help readers further in understanding the nuances.
2.Is there no action against RUPPs?Any provision in the IT ACT to take action against them?
3.What is proposed action ,if any,against intermediaries?
4.Which section of IT Act is proposed to be utilized against alleged beneficiaries for adding unexplained income?
5.Since alleged return back is in cash is the addition going to be based solely on statements of intermediaries?
Penalty will be waived if one choose to file Return for AY 2019-20 under section 148 without claiming deduction under section 80GGC ?
What is the basis of waiving penalty for assessee by Department if assessee is now accepting that the the deducition taken was incorrect?
I DONT RECEIVED ANY AMOUNT FROM POLITICAL PARTY IN CASH AGAINST DONATION MADE BY BANK THEN WHY SHOULD INCOME TAX DEPARTMENT ISSUE ME NOTICE US 148 AND HOW TO I HAVE FIGHT WITH DEPARTMENT AGAINST THIS
Sir If we pay tax & interest before issuance of notice under section 148 but unable to revise the return. can it be useful.