The Congress party’s appeal against a Rs 199.15 crore income tax demand for the financial year 2018–19 has been dismissed by the Income Tax Appellate Tribunal (ITAT), which held that the party failed to meet key legal conditions required to claim exemption under the Income Tax Act.
In an order issued on Monday, a two-member ITAT bench ruled that Congress was ineligible for tax exemption under Section 13A, which grants relief to political parties, primarily due to late filing of its income tax return and violation of donation norms.
The tribunal observed that the party filed its return on February 2, 2019, well after the extended due date of December 31, 2018, under Section 139(1) for that financial year. The return had declared nil income, claiming exemption for Rs 199.15 crore under Section 13A. However, as per Section 139(4B), political parties must file returns within the prescribed due date to avail the benefit.
Congress had argued that the rule allowing belated returns for charitable trusts under Section 12A should also apply to political parties, but the tribunal rejected this reasoning. It emphasised that Section 13A requires stricter compliance, especially with regard to timelines.
In addition to the delayed filing, the assessment flagged cash donations worth Rs 14.49 lakh, with individual contributions exceeding the legally permissible limit of Rs 2,000. This was found to be a breach of clause (d) of the first proviso to Section 13A, which bars political parties from receiving large cash donations to qualify for exemption.
The ITAT had earlier refused to grant interim relief to Congress in the matter. With this order, the party remains liable to pay the Rs 199 crore tax demand.
(With agency inputs)
