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March 31, 2023

Taxpayers who have donated to this 23 political parties have received notice u/s 148 Check if you have donated ?

by Admin in Income Tax

Taxpayers who have donated to this 23 political parties have received notice u/s 148 Check if you have donated ?

Taxpayer who have donated in 23 political parties are receiving the below notice:

Notice under clause(b) of section 148A of the Income-tax Act,1961

Sir/Madam/M/s

Whereas I have information which suggests that income chargeable to tax for the Assessment Year 2019-20 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. The details of the information/ enquiry conducted on which reliance is being placed, along with supporting documents, are enclosed with this notice.

You are required to show-cause as to why, in view of the details contained in enclosures mentioned in point number 1 above, a notice section 148 of the Income tax Act, 1961 should not be issued.

You may submit your reply to this notice, along with supporting documents (if any) on the above mentioned issues on or before DD/MM/YYYY electronically at www.incometax.gov.in.

ANNEXURE

In your cases, information is flagged on Insight portal under the category of High Risk CRIU/VRU for A.Y. 2019-20 on 27.03.2023.

The information has been received on the basis of the search u/s 132 of the Act, in the case of RUPPs group of Ahmedabad on 07.09.2022. In this search, a total of 23 Registered Unrecognized Political Parties, 35 bogus intermediary entities and 3 major exit providers were covered which was combinedly called as RUPP group of Ahmedabad. The 23 RUPPs, inter alia, covered in the action are as hereunder:

  S.No.  Related Party Name  PAN
  1  Bhartiya Rashtriya Tantra Party  AAABB3797P
  2  Rashtrawadi Jantaraj Party  AAAJR1481J
  3  Navsarjan Bharat Party  AAEAN5387L
  4  Jantawadi Congress Party  AAJAJ0413M
  5  SattaKalyan Party  ABRAS6162Q
  6  Bharatiya Jan Kranti Dal (Democratic)  AAEAB7390P
  7  ApnaDesh Party  AADAA0672J
  8  Rashtriya Samajwadi Party (Secular)  AAAAR7090L
  9  SardarVallbhbhai Patel Party  AADAS3620A
  10  LokKalyan Party  AACAL8619H
  11  Rashtriya Krantikari Samajwadi Party  AABTR7907G
  12  Jan SangharshVirat Party  AABAJ6067E
  13  Yuva Jan Jagruti Party  AAAAY6318A
  14  Saurashtra Janta Paksha  ADYFS7965H
  15  Motherland National Party  AAJAM9531E
  16  Loktantra Jagrut Party  AADAL0354J
  17  Bhartiya Kisan Parivartan Party  AACTB7511M
  18  Rashtriya Komi Ekta Party  AABAR0883N
  19  Lok Shahi Satta Party  AAAJL2386C
  20  Garvi Gujarat Party  AAFAG1608L
  21  Indian Swarna Samaj Party  AACAI0784Q
  22  Jan Man Party  AAABJ4925D
  23  Gujarat Janta Panchayat Party  AAABG3949A

2. During the course of search action, large number of incriminating documents related to bogus donation receipts, diaries containing details of commission charged, loose papers containing vital information and WhatsApp chats in the mobile phones of the office bearers of the RUPPs and their key handlers confirming the allegations, were found. Documentary and digital evidences collected during the course of search action, were confronted with the key persons of the group and subsequently seized.

3. The modus operandi detected in the course of the ongoing search operation revealed that the donation is received through cheque/RTGS/NEFT in the RUPP’s bank account. This money is then re-routed through various layers, and returned to the original donors, primarily in the form of cash, in lieu of some commission that ranges from 3.5% to 5%. It is pertinent to mention here that the political party doesn’t pay any tax since it is exempt u/s 13A of the Act. Further, the donors claim deduction u/s 80GGB/80GGC of the Income Tax Act, 1961. Thereby, the income earned by the donors is escaped from the tax-net in the guise of political donations.

4. Such amounts are routed to an intermediary in the form of expenses towards political and social welfare activities. Such intermediaries are shell entities which are specifically formed for the purpose of layering funds through their bank accounts without carrying out any business activities. These entities are either formed and controlled by the same persons running the political parties or by certain other individuals who create and manage multiple bogus entities by using credentials of other men/women of no means by paying them meagre amounts. These bogus entities have no physical/business existence, and they are solely used for providing accommodation entries. It is also observed that bank accounts of new intermediary entities are created for this purpose, used for few years to route crores of funds and then bank accounts are either closed suo-moto by the handlers to escape the eyes of law or closed subsequent to actions by Law enforcement agencies. Thus, the handlers of the intermediaries keep forming new namesake/bogus entities and open their bank accounts, use it for providing accommodation entries, close it down and start with new bogus entities. These bogus entities are formed on one hand to layer unaccounted moneys and evade tax and on the other hand earn commission on all the funds routed through it. Huge funds get transferred to these bogus intermediary entities from the bank accounts of the RUPPs under the veil of political and social expenditure. However, the said expenses shown in the books of account of the RUPPs are bogus and non-genuine and these are done only to transfer the moneys into the account of the intermediary in order to return the same to the original donors and earn commission in the process. Such individuals/ proprietary concerns/companies are active agents in this scam and comprise the points at which either cash is withdrawn or again transferred to another bogus layering entity to get converted to cash or to return to the original donors through banking channel. Thus, the whole process is bogus and non-genuine.

Further, during the course of pre as well as post search it has been established that these RUPPs were involved in the activity of providing accommodation entry by way of bogus donation. Thereafter, on the basis of bank account statements of these RUPPs, beneficiaries/donors who had availed deduction for the bogus donation made to these RUPPs have been identified.

5. As per information, assessee _____________________ has obtained accommodation entry in form of political donation/donation of Rs. ______________/- during FY 2018-19 relevant to AY 2019-20. Further, on going through return of income filed by you for AY 2019-20, it is noticed that you have claimed donation of Rs._____________/- u/s 80GGB/80GGC/80G of the Act. Thus, donation shown to above mentioned Political Parties by you is bogus and claim of deduction u/s 80GGB/80GGC of the Act on the basis of such bogus donation is not allowable.

6. As stated in preceding paras, there is sufficient information available on records which clearly suggest that income chargeable to tax to the extent of Rs.____________/- has been escaped the assessment within the meaning of provision of section 147 of the IT Act, 1961 for the assessment year 2019-20.

7. In view of above, an opportunity of being heard is provided to you vide this Show Cause notice and you are requested to submit your explanation alongwith supporting documents.

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