AHMEDABAD: The Income Tax Department has lodged a complaint with the CID (Crime) against eight accused in Gujarat over an alleged Rs 843.97-crore bogus political donation racket that reportedly caused a loss of more than Rs 250 crore to the government exchequer.
The complaint alleges that the New Naroda-based Aam Janmat Party, which was purportedly operating only on paper, issued bogus donation receipts and maintained fabricated financial records to facilitate fraudulent tax deductions.
The complaint, filed on Thursday, names the party, its national president, treasurer, a chartered accountant, financial transfer managers and auditors. The alleged racket involved routing funds through bank accounts and shell entities, withdrawing the money in cash and returning it to the original contributors after deducting commissions.
According to the Income Tax Department's findings, the scheme was designed to help major taxpayers claim illegitimate tax benefits while disguising the movement of unaccounted money through apparently legitimate political donations.
The alleged fraud came to light during an investigation into data and information recovered in an Income Tax Department raid in Ranchi, Jharkhand.
Investigators found that the Aam Janmat Party, registered in New Naroda, Gujarat, allegedly had little genuine political or electoral activity and was primarily used to generate bogus financial transactions.
The department's complaint alleges that the party's office existed only on paper and that it was established to collect commissions by facilitating fraudulent donation transactions rather than pursuing legitimate political activities.
Under the alleged arrangement, major taxpayers from across the country transferred money to the party through banking channels. In return, they received bogus donation receipts that enabled them to claim tax deductions under Section 80GGC of the Income-Tax Act.
The transactions reportedly covered the financial years 2022-23 and 2023-24. By creating a formal banking trail and issuing donation receipts, the accused allegedly made the transactions appear legitimate, even though the money was subsequently returned to the contributors through informal channels.
Investigators allege that the money did not remain with the political party. Instead, after entering its bank accounts, the funds were transferred to entities identified in the complaint as Prenit Corporation, Hashaz Corporation, Ayan Enterprise and Shri Ramdev Enterprise.
These transfers were allegedly presented as payments for purchases and supported by fabricated invoices to give the transactions a legitimate commercial appearance.
Once the money reached these entities, it was allegedly withdrawn in cash. The funds were then returned to the original contributors through angadia firms, which operate as traditional informal money-transfer networks, after deducting a pre-agreed commission.
The complaint also points to alleged hawala-style financial entries used to disguise the movement of money and create a misleading picture of legitimate transactions.
The arrangement, investigators allege, allowed contributors to obtain tax benefits on paper while recovering the donated money in cash, less the commission charged for facilitating the transaction.
The investigation has also raised questions about the role of chartered accountants and auditors who allegedly helped sustain the scheme by preparing and certifying financial records without adequate verification.
According to the complaint, false contribution reports and balance sheets were prepared and digitally signed before being uploaded to the Income-Tax Department's portal. The documents were allegedly certified without proper documentary scrutiny or physical verification.
Investigators further allege that expenses were fabricated under heads such as election campaigns and rallies, even though the records lacked supporting vouchers. Such entries allegedly helped the party present itself as an active political organisation and lent an appearance of credibility to its financial statements.
The alleged certification of these records enabled bogus financial disclosures to enter the official tax system, according to the department's complaint.
Eight accused named in CID (Crime) complaint
The Income Tax Department has named the following individuals and entities in its complaint:
- Aam Janmat Party: The political party allegedly used to facilitate the transactions.
- Gaurav Y. Mishra: National president.
- Dharmendra Jeevanprakash Vaishnav: National treasurer.
- Four others: The complaint also names four additional accused.
The department alleges that the transactions collectively resulted in a loss of more than Rs 250 crore to the public exchequer through fraudulent tax deductions and related financial irregularities.
The complaint has now brought the alleged political donation racket within the purview of the CID (Crime), which will investigate the allegations and the roles of the accused.
Earlier, the Gujarat Police had registered four separate cases against state-based Registered Unrecognised Political Parties (RUPPs) for alleged forgery and misuse of political party status to facilitate money laundering by high-value donors.
The case centres on an alleged system in which political donations were used not to support genuine electoral activity but to generate tax benefits, move funds through questionable entities and return money in cash. The allegations, if established through investigation and prosecution, could expose serious loopholes in the verification of political donations, financial disclosures and tax deduction claims.
