The Income Tax department today issued a notice to the Aam Aadmi Party (AAP) asking why it should not be prosecuted for alleged falsification of account books and "wilful attempt" to evade tax on donations received by it.
The department has issued the show cause notice to the party's supremo - Delhi Chief Minister Arvind Kejriwal- and three others and has sought the party's reply in this regard by first half of this month.
The tax department has charged the party with not filing a "true and correct" contribution report for donations received for the assessment year 2014-15 which have been found to be over Rs 30.08 crore after year long investigations.
The taxman said the first audit report filed by the party to it and the Election Commission, under the provisions of the Representation of People Act, were "incorrect and fabricated".
The notice said that in view of these charges, the department seeks to file a prosecution complaint (charge sheet) under I-T laws in a court under sections 277A (false statement in verification) and 276C (wilful attempt to evade tax).
A maximum of three years rigorous imprisonment and a fine can be levied on an accused once the charges are proved in court.
It said that the exemption enjoyed by the Kejriwal-led AAP from paying income tax on donations could also be withdrawn as these privileges have been "wrongly claimed".
Political parties enjoy tax exemption under section 13A of the Income Tax Act.
The notice while acknowledging that the party had accepted that there were "certain errors" in its first report filed in this regard, added that this admission by the AAP was itself an evidence that its audit report was fabricated initially but was corrected after the taxman began investigations of its audit books and accounts.
The tax department, early this year, had submitted these findings to the Election Commission too.