Delhi High Court
Janata Party vs Asstt. Cit on 23 November, 2001
Equivalent citations: (2002) 76 TTJ Del 116

ORDER C.L. Bokolia, A.M.

This appeal by a political party is directed against the order of the Commissioner (Appeals)XVII, New Delhi, dated 16-2-2000. Several grounds of appeal mainly impinging on the exemption under section 13A of the Income Tax Act, 1961, are being pressed. Grounds on interest also exist. Since the grounds were too numerous in number and were repetitive in content, the appellant was directed to file concise grounds of appeal, which has been complied with. On that basis, this appeal is being decided.

2. The appellant is an Association of Person comprising of individual citizens of India associated for political activities and is registered with the Election Commission of India. The assessing officer put the appellant on notice to submit audited accounts including the P&L a/c and balance sheet for the subject year and also for the preceding two years, details of bank accounts, immovable properties, donations received, investments and other aspects of the appellant’s case for the aforesaid periods. These were examined on the basis of audited books of account and other details, which were also admittedly produced before the assessing officer. It revealed that the return filed reported the income of the Central Office along with those of some other state units of the party but not of the totality of units. The audit report certified that there was no voluntary contribution received individually exceeding Rs. 10,000 at a time. The total collection of voluntary contribution was reported to be sum of Rs. 68,64,800. During the assessment proceedings, the assessing officer received information from DIT (Investigation), Chennai, about the appellant having a bank account in Vijaya Bank, Welder Street, Mount Road, Chennai. On examination, it was found that this bank account was not included in the accounts. When the party was confronted with this fact, it submitted that that was true and apart from the said bank account there were found more bank accounts, two at Chennai and one each at Bombay and Bangalore, which it had subsequently discovered. It was also lack of knowledge thereof, consequent to the successive splits undergone by the party from time to time. It was not known who had taken over which unit and with which account or accounts, and further, with whom he had allegiance and so the initial omission. It was, however, assured that the main entries in these new bank accounts were cross-entries of those in the central office accounts. On further scrutiny, the assessing officer found that all contributions had been received through the regular receipt books that were all manually numbered. It was also found by the assessing officer on scrutiny of the receipt books that all denominations of the receipts were less than Rs. 10,000 each. All the receipts were signed by party volunteers and each collection book reflected receipt-vide collection. The assessing officer asked the appellant to furnish the names of the party functionaries who had received the contributions and also the transport through which they had brought the monies for deposit to Delhi. The appellant had replied that the party functionaries had gone over to Delhi for various party matters from time to time and at that time, they had carried with them, the monies to Delhi. This submission was however, not backed by evidence to the satisfaction of the assessing officer. The assessing officer, therefore, took the view that the party was unable to furnish proper books of accounts and other documents, which would enable him to properly determine the income. He also observed that the party had not disclosed truly, all the accounts at the time of filing of the return. It was also after the department had made enquiries and discovered the bank account of the party at Chennai that it had come forward at the fag end of the limitation period to furnish fresh audited accounts after consolidating the accounts of all other state units. The party’s claim that the revised statement of income and accounts be accepted was devoid of merit for it was neither bona fide nor done on the basis of the assessed’s own discovery. Relying upon the decision of the Delhi High Court in O.P. Malhotra v. CIT (1981) 129 ITR 379 (Del), the assessing officer also observed that no valid revised return under section 139(5) of the Act could be filed in a case where the return had not been filed originally under section 139(1) read with section 139(4B) of the Act. The return was indeed filed in response to notice under section 142(1), which did not admit of any revision. The assessing officer adverted to the special provisions governing the political parties. After noticing the decision of the Apex Court in Common Cause v. Union of India & Ors. (1996) 222 ITR 260 (SC) and also the provision of section 13A of the Act, the assessing officer concluded that in view of the failure of the party to comply with the letter of law, it was not entitled to the exemption under the Act and a sum of Rs. 1,23,72,370 was to be assessed as income. The assessment in that manner was completed on 31-3-1998.

2. The appellant is an Association of Person comprising of individual citizens of India associated for political activities and is registered with the Election Commission of India. The assessing officer put the appellant on notice to submit audited accounts including the P&L a/c and balance sheet for the subject year and also for the preceding two years, details of bank accounts, immovable properties, donations received, investments and other aspects of the appellant’s case for the aforesaid periods. These were examined on the basis of audited books of account and other details, which were also admittedly produced before the assessing officer. It revealed that the return filed reported the income of the Central Office along with those of some other state units of the party but not of the totality of units. The audit report certified that there was no voluntary contribution received individually exceeding Rs. 10,000 at a time. The total collection of voluntary contribution was reported to be sum of Rs. 68,64,800. During the assessment proceedings, the assessing officer received information from DIT (Investigation), Chennai, about the appellant having a bank account in Vijaya Bank, Welder Street, Mount Road, Chennai. On examination, it was found that this bank account was not included in the accounts. When the party was confronted with this fact, it submitted that that was true and apart from the said bank account there were found more bank accounts, two at Chennai and one each at Bombay and Bangalore, which it had subsequently discovered. It was also lack of knowledge thereof, consequent to the successive splits undergone by the party from time to time. It was not known who had taken over which unit and with which account or accounts, and further, with whom he had allegiance and so the initial omission. It was, however, assured that the main entries in these new bank accounts were cross-entries of those in the central office accounts. On further scrutiny, the assessing officer found that all contributions had been received through the regular receipt books that were all manually numbered. It was also found by the assessing officer on scrutiny of the receipt books that all denominations of the receipts were less than Rs. 10,000 each. All the receipts were signed by party volunteers and each collection book reflected receipt-vide collection. The assessing officer asked the appellant to furnish the names of the party functionaries who had received the contributions and also the transport through which they had brought the monies for deposit to Delhi. The appellant had replied that the party functionaries had gone over to Delhi for various party matters from time to time and at that time, they had carried with them, the monies to Delhi. This submission was however, not backed by evidence to the satisfaction of the assessing officer. The assessing officer, therefore, took the view that the party was unable to furnish proper books of accounts and other documents, which would enable him to properly determine the income. He also observed that the party had not disclosed truly, all the accounts at the time of filing of the return. It was also after the department had made enquiries and discovered the bank account of the party at Chennai that it had come forward at the fag end of the limitation period to furnish fresh audited accounts after consolidating the accounts of all other state units. The party’s claim that the revised statement of income and accounts be accepted was devoid of merit for it was neither bona fide nor done on the basis of the assessed’s own discovery. Relying upon the decision of the Delhi High Court in O.P. Malhotra v. CIT (1981) 129 ITR 379 (Del), the assessing officer also observed that no valid revised return under section 139(5) of the Act could be filed in a case where the return had not been filed originally under section 139(1) read with section 139(4B) of the Act. The return was indeed filed in response to notice under section 142(1), which did not admit of any revision. The assessing officer adverted to the special provisions governing the political parties. After noticing the decision of the Apex Court in Common Cause v. Union of India & Ors. (1996) 222 ITR 260 (SC) and also the provision of section 13A of the Act, the assessing officer concluded that in view of the failure of the party to comply with the letter of law, it was not entitled to the exemption under the Act and a sum of Rs. 1,23,72,370 was to be assessed as income. The assessment in that manner was completed on 31-3-1998.

3. The Commissioner (Appeals) before whom the first appeal was filed observed that there were three statutory conditions for availing of the benefit of section 13A of the Act and that none of those conditions had been satisfied by the appellant and that the party’s plea that it was not aware of the need to file the accounts of all the units was bereft of merit in view of the decision of Gujarat High Court in CIT v. Gujarat Pradesh Congress Samiti (1994) 207 ITR 622 (Guj). Since proper books of accounts were not maintained to enable the assessing officer to deduce the income of the party and that since the party had not filed its return voluntarily under section 139(1) of the Act, it could not have revised its income at all. On these premises, the Commissioner (Appeals) upheld the action of the assessing officer and dismissed the appeal.

3. The Commissioner (Appeals) before whom the first appeal was filed observed that there were three statutory conditions for availing of the benefit of section 13A of the Act and that none of those conditions had been satisfied by the appellant and that the party’s plea that it was not aware of the need to file the accounts of all the units was bereft of merit in view of the decision of Gujarat High Court in CIT v. Gujarat Pradesh Congress Samiti (1994) 207 ITR 622 (Guj). Since proper books of accounts were not maintained to enable the assessing officer to deduce the income of the party and that since the party had not filed its return voluntarily under section 139(1) of the Act, it could not have revised its income at all. On these premises, the Commissioner (Appeals) upheld the action of the assessing officer and dismissed the appeal.

4. In the course of the hearing, the appellant was represented by Shri K. Sampath, C.A., and the department by special counsel and senior advocate Shri B.B. Ahuja. Both have also filed paper books and some written submissions.

4. In the course of the hearing, the appellant was represented by Shri K. Sampath, C.A., and the department by special counsel and senior advocate Shri B.B. Ahuja. Both have also filed paper books and some written submissions.

5. Shri Sampath vehemently submitted that a political party was not like a business organisation so as to have a systematised and regimented collection system. It was explained that a political party always functioned through volunteers who collected funds for the party on a door-to-door basis. In the case of the appellant, due to repeated splits from 1979 onwards, there was a multiplicity of points at which there were units and bank accounts with numerous authorised signatories. For this reason, the party found it somewhat difficult to identify and locate them after the successive splits, yet however, even in these accounts that were not reported originally, there were remittances to Delhi to the credit of the Central Office account and the other credits were less than Rs. 10,000 each. In that way in the accounts there was neither any left over of income, nor any leakage of funds. By reporting the Central Party account all such accounts had already been reported for assessment and with which no fault had been found at all. It was further submitted that the. authorities below were wrong in believing that the appellant had proposed a revision of the return originally filed. Return was not required to be revised for the reason that the income reported originally was nil and even after inclusion of the left over accounts it remained at nil so as to obviate the need for any revision. Yet, the return was pursuant to notice under section 142(1), which admitted of a revised return. Appellant had only updated the accounts to include some left over bank accounts and in those too apart from Central Office transfers there were no entries exceeding Rs. 10,000 requiring any certification, identification, or validation in terms of the section 13A of the Act. Shri Sampath submitted that the scheme of assessment of political parties was distinct and different from those of other assesseds. Citing from Board Circular, it was submitted that it was not the intention to levy any tax on the political parties, which it had been realised were themselves dependent on voluntary donations from the public. Section 13A of the Act was engrafted to instil some financial discipline amongst political parties. Shri Sampath further submitted that even the decision of the Apex Court in Common Cause v. Union of India & Ors. (supra) was only with a view to bring, accountability in the election expenditure incurred by political parties and not at all with a view to make the political parties a source for collection of taxes. It was submitted that the appellant had complied with the crucial requirements of section 13A of the Act inasmuch as it had kept and maintained proper books of accounts to enable the assessing officer to deduce the income so much so that the final consolidated accounts submitted on 28-3-1998, was correct and complete and were taken on record by the assessing officer and duly acknowledged as such without any adverse remarks or objections. It was submitted that it was established law that the audited accounts could be submitted prior to assessment without jeopardy to the exemption. On this point decision under section 12A in Swajan Pariwar Trust v. Assistant Commissioner 49 ITR 68 (sic), and decisions of the Calcutta High Court in CIT v. Rai Bahadur Bissesswar Lal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) and CIT v. Hardeodas (1992) 198 ITR 511 (Cal) were cited. It was submitted that the requirement of law in this connection had been fully satisfied. No donation in excess of Rs. 10,000 was reported which fact had been testified by the assessing officer himself in the body of the assessment order though with certain qualifications which qualifications indeed were irrelevant to the central issue of exemption from taxability under section 13A of the Act. Apart from the one account that was pointed out by the assessing officer initially, in the final analysis, there is no reporting by the assessing officer of any other unit account having been missed out. It was also submitted that there was a presumption of the correctness of books of accounts and that book result could not be light-heartedly disturbed, especially in a situation where the accounts were duly audited without any qualifications. The accounts had been audited and with that, the requirements of section 13A of the Act having been satisfied, there was no question thereafter of assessing any income to tax. Learned counsel also submitted that though there could be a decision of any High Court on a point of law concerning, the assessment of a unit of political party, yet unless the political party itself was shown to be aware of it, no adverse conclusion on this count was warranted in the other cases. Learned counsel also drew our attention to a decision of Delhi Bench of the Tribunal in the case of Indian National Congress where it had been held that where audited accounts were available for assessment with a political party, then the exemption under section 13A of the Act was required to be considered and admitted. The objection taken by the assessing officer as to the receipt books being manually numbered was not fatal to the exemption under section 13A of the Act inasmuch as there was no statutory requirement under the Income Tax Act warranting the automatic machine numbering of the receipt books by a political party. That argument, therefore, was devoid of any substance. With arguments such as these, it was submitted that the assessment was erroneous and untenable.

5. Shri Sampath vehemently submitted that a political party was not like a business organisation so as to have a systematised and regimented collection system. It was explained that a political party always functioned through volunteers who collected funds for the party on a door-to-door basis. In the case of the appellant, due to repeated splits from 1979 onwards, there was a multiplicity of points at which there were units and bank accounts with numerous authorised signatories. For this reason, the party found it somewhat difficult to identify and locate them after the successive splits, yet however, even in these accounts that were not reported originally, there were remittances to Delhi to the credit of the Central Office account and the other credits were less than Rs. 10,000 each. In that way in the accounts there was neither any left over of income, nor any leakage of funds. By reporting the Central Party account all such accounts had already been reported for assessment and with which no fault had been found at all. It was further submitted that the. authorities below were wrong in believing that the appellant had proposed a revision of the return originally filed. Return was not required to be revised for the reason that the income reported originally was nil and even after inclusion of the left over accounts it remained at nil so as to obviate the need for any revision. Yet, the return was pursuant to notice under section 142(1), which admitted of a revised return. Appellant had only updated the accounts to include some left over bank accounts and in those too apart from Central Office transfers there were no entries exceeding Rs. 10,000 requiring any certification, identification, or validation in terms of the section 13A of the Act. Shri Sampath submitted that the scheme of assessment of political parties was distinct and different from those of other assesseds. Citing from Board Circular, it was submitted that it was not the intention to levy any tax on the political parties, which it had been realised were themselves dependent on voluntary donations from the public. Section 13A of the Act was engrafted to instil some financial discipline amongst political parties. Shri Sampath further submitted that even the decision of the Apex Court in Common Cause v. Union of India & Ors. (supra) was only with a view to bring, accountability in the election expenditure incurred by political parties and not at all with a view to make the political parties a source for collection of taxes. It was submitted that the appellant had complied with the crucial requirements of section 13A of the Act inasmuch as it had kept and maintained proper books of accounts to enable the assessing officer to deduce the income so much so that the final consolidated accounts submitted on 28-3-1998, was correct and complete and were taken on record by the assessing officer and duly acknowledged as such without any adverse remarks or objections. It was submitted that it was established law that the audited accounts could be submitted prior to assessment without jeopardy to the exemption. On this point decision under section 12A in Swajan Pariwar Trust v. Assistant Commissioner 49 ITR 68 (sic), and decisions of the Calcutta High Court in CIT v. Rai Bahadur Bissesswar Lal Motilal Malwasie Trust (1992) 195 ITR 825 (Cal) and CIT v. Hardeodas (1992) 198 ITR 511 (Cal) were cited. It was submitted that the requirement of law in this connection had been fully satisfied. No donation in excess of Rs. 10,000 was reported which fact had been testified by the assessing officer himself in the body of the assessment order though with certain qualifications which qualifications indeed were irrelevant to the central issue of exemption from taxability under section 13A of the Act. Apart from the one account that was pointed out by the assessing officer initially, in the final analysis, there is no reporting by the assessing officer of any other unit account having been missed out. It was also submitted that there was a presumption of the correctness of books of accounts and that book result could not be light-heartedly disturbed, especially in a situation where the accounts were duly audited without any qualifications. The accounts had been audited and with that, the requirements of section 13A of the Act having been satisfied, there was no question thereafter of assessing any income to tax. Learned counsel also submitted that though there could be a decision of any High Court on a point of law concerning, the assessment of a unit of political party, yet unless the political party itself was shown to be aware of it, no adverse conclusion on this count was warranted in the other cases. Learned counsel also drew our attention to a decision of Delhi Bench of the Tribunal in the case of Indian National Congress where it had been held that where audited accounts were available for assessment with a political party, then the exemption under section 13A of the Act was required to be considered and admitted. The objection taken by the assessing officer as to the receipt books being manually numbered was not fatal to the exemption under section 13A of the Act inasmuch as there was no statutory requirement under the Income Tax Act warranting the automatic machine numbering of the receipt books by a political party. That argument, therefore, was devoid of any substance. With arguments such as these, it was submitted that the assessment was erroneous and untenable.

6. Shri B.B. Ahuja, senior learned counsel for the department, submitted that the appellant had not maintained proper books of accounts to enable the assessing officer to deduce the income of the appellant and to determine whether the appellant was entitled to the exemption under section 13A of the Act. He further submitted that the appellant had maintained only cash book and full set of books of like ledger and other registers were not maintained. In the absence of the same, the assessing officer was unable to determine the income of the appellant. He further submitted that the appellant had opened many bank accounts and it was not clear as to which account was opened by whom and at what point of time. Even the names of the persons who were duly authorised to open such accounts were not made available despite repeated requests. He submitted that apparently, anybody could open a bank account in the name of the appellant without even an authorisation from it, and deal with such money as he pleased. It was further submitted by Shri Ahuja that particulars of name and address of the party functionaries who used to bring money to Delhi was not submitted by the appellant despite specific insistence of the assessing officer. It was also not clear as to who were authorised to collect money on behalf of the party and issue receipts for the same. In other words, it was apparently a situation where any worker of the appellant could collect donations and also issue receipts. Furthermore, the receipts were not mechanically numbered. The method of remitting the collection of donation to the central office of the appellant at Delhi was also not satisfactorily explained. The appellants functionaries could transfer the money through DD’s or TT’s instead of taking the same personally to the central office at Delhi. It was not clear as to why this method was adopted and why money could not be transferred to banks from various places to the central office. He further submitted that the mode of transport of the party functionaries who used to visit Delhi Central Office for party matters was not submitted despite several opportunities provided by the assessing officer. No expenditure under the head TA/DA has also been shown in the books. Shri Ahuja further submitted that the appellant has not filed proper accounts like balance-sheet, P&L a/c, apart from details of assets, immovable properties, investments, and income there from. The appellant has only submitted accounts showing receipts and payments of the party, which was not sufficient for the purpose of determining the income of the appellant. In sum, Shri B.B. Ahuja, senior counsel for the department submitted that political parties wanted to take the government for a ride. Repetitive non-cooperation and non-compliance by the appellant was patent in the circumstances of the case. In the circumstances, the assessing officer correctly rejected the books of accounts and refused exemption under section 13A of the Income Tax Act. The learned special counsel submitted that the auditor had adopted a casual approach to the task of certification of documents and so, his reports could not be relied upon. The auditor even omitted to include regular bank accounts in the report. The approach of the appellant had not only been callous and non- cooperative, but also evasive. Citing these arguments, the learned special counsel strongly supported the orders of the assessing officer and the Commissioner (Appeals).

6. Shri B.B. Ahuja, senior learned counsel for the department, submitted that the appellant had not maintained proper books of accounts to enable the assessing officer to deduce the income of the appellant and to determine whether the appellant was entitled to the exemption under section 13A of the Act. He further submitted that the appellant had maintained only cash book and full set of books of like ledger and other registers were not maintained. In the absence of the same, the assessing officer was unable to determine the income of the appellant. He further submitted that the appellant had opened many bank accounts and it was not clear as to which account was opened by whom and at what point of time. Even the names of the persons who were duly authorised to open such accounts were not made available despite repeated requests. He submitted that apparently, anybody could open a bank account in the name of the appellant without even an authorisation from it, and deal with such money as he pleased. It was further submitted by Shri Ahuja that particulars of name and address of the party functionaries who used to bring money to Delhi was not submitted by the appellant despite specific insistence of the assessing officer. It was also not clear as to who were authorised to collect money on behalf of the party and issue receipts for the same. In other words, it was apparently a situation where any worker of the appellant could collect donations and also issue receipts. Furthermore, the receipts were not mechanically numbered. The method of remitting the collection of donation to the central office of the appellant at Delhi was also not satisfactorily explained. The appellants functionaries could transfer the money through DD’s or TT’s instead of taking the same personally to the central office at Delhi. It was not clear as to why this method was adopted and why money could not be transferred to banks from various places to the central office. He further submitted that the mode of transport of the party functionaries who used to visit Delhi Central Office for party matters was not submitted despite several opportunities provided by the assessing officer. No expenditure under the head TA/DA has also been shown in the books. Shri Ahuja further submitted that the appellant has not filed proper accounts like balance-sheet, P&L a/c, apart from details of assets, immovable properties, investments, and income there from. The appellant has only submitted accounts showing receipts and payments of the party, which was not sufficient for the purpose of determining the income of the appellant. In sum, Shri B.B. Ahuja, senior counsel for the department submitted that political parties wanted to take the government for a ride. Repetitive non-cooperation and non-compliance by the appellant was patent in the circumstances of the case. In the circumstances, the assessing officer correctly rejected the books of accounts and refused exemption under section 13A of the Income Tax Act. The learned special counsel submitted that the auditor had adopted a casual approach to the task of certification of documents and so, his reports could not be relied upon. The auditor even omitted to include regular bank accounts in the report. The approach of the appellant had not only been callous and non- cooperative, but also evasive. Citing these arguments, the learned special counsel strongly supported the orders of the assessing officer and the Commissioner (Appeals).

7. We have considered the rival submissions and the material on record to which our attention was drawn, including paper books and written submissions. The basic facts required to be noted for the consideration in the issue are that the appellant had pursuant to notice under section 142(1) of the Act submitted a return of income on 19-2-1996. This return was duly accompanied with the auditor’s certificate as required under section 13A of the Act.

7. We have considered the rival submissions and the material on record to which our attention was drawn, including paper books and written submissions. The basic facts required to be noted for the consideration in the issue are that the appellant had pursuant to notice under section 142(1) of the Act submitted a return of income on 19-2-1996. This return was duly accompanied with the auditor’s certificate as required under section 13A of the Act.

Such return, which was originally submitted, was corrected by filing the consolidated accounts on 28-3-1998. No fault has been found with that statement. The appellant is registered with the Election Commission of India. Further, the appellant had reportedly produced its books of account before the assessing authority who had scrutinised and found that the collections were fully accounted for through receipts that were duly numbered. The objection taken by the assessing authority is that the receipt numbers were manually numbered. We thus have a situation where the accounting part of the obligation under law has been more or less complied with though in stages. Before examining the issue any further, it is necessary to examine the requirements of section 13A of the Act, which reads :

8. “Section 13AAny income of a political party, which is chargeable under the head “Income from house property” or “Income from other sources” or any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party;

Provided that :

Provided that :

(a) such political party keeps and maintains such books of account and other documents as would enable the assessing officer to properly deduce its income there from.,

(b) in respect of each such voluntary contribution in excess of ten thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution; and

(c) the accounts of such political party are audited by an accountant as defined in the Explanation below sub-section (2) of the section 288.

Explanation : For the purposes of this section,” political party” means an association or body of individual citizens of India registered with the Election Commission of India as a political party under para 3 of the Election Symbols (Reservation and Allotment) order 1968, and includes a political party deemed to be registered with that Commission under the proviso to sub-para (2) of that paragraph.”

Explanation : For the purposes of this section,” political party” means an association or body of individual citizens of India registered with the Election Commission of India as a political party under para 3 of the Election Symbols (Reservation and Allotment) order 1968, and includes a political party deemed to be registered with that Commission under the proviso to sub-para (2) of that paragraph.”

8. Applying this section to the given facts of the case, it is noticed that the appellant did not have any income from house property. Whether it had income from interest from bank is not mentioned anywhere in the order. The major income was by way of voluntary contributions. The dispute hinges only on this item. Be that as it may, voluntary contributions received by the appellant which were included in the total income of the previous year was (sic-not) chargeable to tax provided such voluntary contributions were recorded in the books of accounts and other documents as would enable the assessing officer to deduce the income there from. In case such voluntary contributions were in excess of Rs. 10,000, the appellant was further required to maintain a record of such contributions like names and addresses of the persons who had made such contributions. A further condition is that the accounts ought to be audited by a chartered accountant. When we apply these tests to the facts of the case, we find that the books of accounts have been maintained which have been audited by a chartered accountant and reported and which report has been filed. The voluntary contributions are stated to be less than Rs. 10,000 each. The assessing officer has not been able to pinpoint even one case where the voluntary contribution was in excess of Rs. 10,000. Thus, the conditions stipulated in section 13A of the Act are satisfied. Further, the Explanation to section 13A defining a political party is also satisfied inasmuch as the appellant is registered with the Election Commission of India. It is in the background of these facts we are of the view that the denial of exemption to the appellant is incorrect. Once the appellant has maintained the accounts and such accounts had been duly audited and that none of the entries has been found to be more than Rs. 10,000, nothing further was required to be proved. Nothing further by way of Explanation was required from the side of the appellant. Books of account cannot be rejected on the mere ipse dixit of the revenue authorities. Defects are required to be located and established. Nothing of this nature has been done by the assessing officer anywhere in the order, apart from taking certain objections, which we find erroneous and untenable.

8. Applying this section to the given facts of the case, it is noticed that the appellant did not have any income from house property. Whether it had income from interest from bank is not mentioned anywhere in the order. The major income was by way of voluntary contributions. The dispute hinges only on this item. Be that as it may, voluntary contributions received by the appellant which were included in the total income of the previous year was (sic-not) chargeable to tax provided such voluntary contributions were recorded in the books of accounts and other documents as would enable the assessing officer to deduce the income there from. In case such voluntary contributions were in excess of Rs. 10,000, the appellant was further required to maintain a record of such contributions like names and addresses of the persons who had made such contributions. A further condition is that the accounts ought to be audited by a chartered accountant. When we apply these tests to the facts of the case, we find that the books of accounts have been maintained which have been audited by a chartered accountant and reported and which report has been filed. The voluntary contributions are stated to be less than Rs. 10,000 each. The assessing officer has not been able to pinpoint even one case where the voluntary contribution was in excess of Rs. 10,000. Thus, the conditions stipulated in section 13A of the Act are satisfied. Further, the Explanation to section 13A defining a political party is also satisfied inasmuch as the appellant is registered with the Election Commission of India. It is in the background of these facts we are of the view that the denial of exemption to the appellant is incorrect. Once the appellant has maintained the accounts and such accounts had been duly audited and that none of the entries has been found to be more than Rs. 10,000, nothing further was required to be proved. Nothing further by way of Explanation was required from the side of the appellant. Books of account cannot be rejected on the mere ipse dixit of the revenue authorities. Defects are required to be located and established. Nothing of this nature has been done by the assessing officer anywhere in the order, apart from taking certain objections, which we find erroneous and untenable.

9. Adverting to the objections of the assessing officer with regard to the non-furnishing of names and address of persons who had visited central office at Delhi, it is noteworthy that the persons carried only such monies comprising of donation which each individually were less than Rs. 10,000. It is also noteworthy that the party had undergone many splits over the years and naturally a political party of an All India status would have bank accounts in different states and different districts and taluks in each such state, manned by several representatives and after the splits it may be anybody’s guess as to the number of units left owing allegiance to it. In such circumstances, no exception can be taken for the failure to recall the names of persons who used to travel to the central office to lodge the collections. It is again well known that political workers visiting the capital do not travel with the solitary aim of depositing money with the party but have a multiple agenda, and in most cases, the persons back home who entrust jobs to such political workers defray the expenses. In such circumstances, to take exception on the point of non-furnishing particulars of the persons carrying the sums, and deny exemption under section 13A of the Income Tax Act merely for the factum that the TA/DA have not been incurred would again be erroneous in law, especially when no contribution exceeding Rs. 10,000 has been found anywhere,

9. Adverting to the objections of the assessing officer with regard to the non-furnishing of names and address of persons who had visited central office at Delhi, it is noteworthy that the persons carried only such monies comprising of donation which each individually were less than Rs. 10,000. It is also noteworthy that the party had undergone many splits over the years and naturally a political party of an All India status would have bank accounts in different states and different districts and taluks in each such state, manned by several representatives and after the splits it may be anybody’s guess as to the number of units left owing allegiance to it. In such circumstances, no exception can be taken for the failure to recall the names of persons who used to travel to the central office to lodge the collections. It is again well known that political workers visiting the capital do not travel with the solitary aim of depositing money with the party but have a multiple agenda, and in most cases, the persons back home who entrust jobs to such political workers defray the expenses. In such circumstances, to take exception on the point of non-furnishing particulars of the persons carrying the sums, and deny exemption under section 13A of the Income Tax Act merely for the factum that the TA/DA have not been incurred would again be erroneous in law, especially when no contribution exceeding Rs. 10,000 has been found anywhere,

10. It is pointed out that on behalf of the appellant that it has been held by the Tribunal in Delhi in the case of Indian National Congress that where audited accounts are available with the political party, then the exemption under section 13A is required to be considered and admitted. That being the situation in law, there is no reason why exemption under section 13A of the Act should not be allowed. It also correctly argued that the factum of the receipt books being not mechanically numbered could not be fatal to the grant of the exemption under the Act. There is no requirement under Income Tax Actfor a political party to do mechanical numbering by machines to the receipt books. Under such circumstances, no objection can be raised on that point also.

10. It is pointed out that on behalf of the appellant that it has been held by the Tribunal in Delhi in the case of Indian National Congress that where audited accounts are available with the political party, then the exemption under section 13A is required to be considered and admitted. That being the situation in law, there is no reason why exemption under section 13A of the Act should not be allowed. It also correctly argued that the factum of the receipt books being not mechanically numbered could not be fatal to the grant of the exemption under the Act. There is no requirement under Income Tax Actfor a political party to do mechanical numbering by machines to the receipt books. Under such circumstances, no objection can be raised on that point also.

11. Other objection is with regard to the books of account. It is the case of the department that proper books of account have not been maintained as would enable the assessing officer to properly deduce the income. The question arises as to what is the income that a political party is taxable for. Such income could be income from house property or income from other sources or income from voluntary contributions. So far as property income is concerned, there is no complexity involved and computation has to be done notionally in accordance with the provisions of sections 22 to 25A. Books of account have a limited role in such a situation. As to income from other sources, what is permitted as deduction against the income is only a direct outflow relatable to the income. Thus, on that front also, no major book keeping hassles would be involved. What is left thereafter, is voluntary contributions. There too, particulars of donors are required if amounts exceed Rs, 10,000. So long as such particulars are available or insofar as individual donations are less than Rs. 10,000 each, this item also would not present any book-keeping complication. Perhaps, as appellant’s counsel points out, it is in recognition of this apparent simplicity that there is no provision similar to section 44AA applicable for political parties. That being the situation in law, it will be wrong to suggest that exhaustive books of account as normally understood in commercial parlance ought compulsorily to be maintained to avail the exemption under section 13A of the Act. So long as the auditor has found the accounting version amenable to verification and audit and the report is not qualified, the purpose of law is well subserved. We, therefore, do not see much merit in the argument.

11. Other objection is with regard to the books of account. It is the case of the department that proper books of account have not been maintained as would enable the assessing officer to properly deduce the income. The question arises as to what is the income that a political party is taxable for. Such income could be income from house property or income from other sources or income from voluntary contributions. So far as property income is concerned, there is no complexity involved and computation has to be done notionally in accordance with the provisions of sections 22 to 25A. Books of account have a limited role in such a situation. As to income from other sources, what is permitted as deduction against the income is only a direct outflow relatable to the income. Thus, on that front also, no major book keeping hassles would be involved. What is left thereafter, is voluntary contributions. There too, particulars of donors are required if amounts exceed Rs, 10,000. So long as such particulars are available or insofar as individual donations are less than Rs. 10,000 each, this item also would not present any book-keeping complication. Perhaps, as appellant’s counsel points out, it is in recognition of this apparent simplicity that there is no provision similar to section 44AA applicable for political parties. That being the situation in law, it will be wrong to suggest that exhaustive books of account as normally understood in commercial parlance ought compulsorily to be maintained to avail the exemption under section 13A of the Act. So long as the auditor has found the accounting version amenable to verification and audit and the report is not qualified, the purpose of law is well subserved. We, therefore, do not see much merit in the argument.

12. On the point of no valid revised return filed, we find that the authorities below omitted to take note that the return was filed pursuant to section 142(1) of the Act. No variation of income was sought. Consistently, the appellant had been canvassing nil income. The case is thus academic. The other point that has been raised on behalf of the department is about the transfer of money being effected through DD’s or TT’s instead of manually delivering them to the Central Office. While it will be an ideal circumstance for transfers to be made through normal banking, channels to avoid risks and administrative complications, yet, as long as the Act itself does not prescribe any compulsory mode of remittance, it will be wrong on the part of the revenue authorities to give preference to a certain mode over another, which in their opinion is more advisable and to reject the accounting, version on that basis.

12. On the point of no valid revised return filed, we find that the authorities below omitted to take note that the return was filed pursuant to section 142(1) of the Act. No variation of income was sought. Consistently, the appellant had been canvassing nil income. The case is thus academic. The other point that has been raised on behalf of the department is about the transfer of money being effected through DD’s or TT’s instead of manually delivering them to the Central Office. While it will be an ideal circumstance for transfers to be made through normal banking, channels to avoid risks and administrative complications, yet, as long as the Act itself does not prescribe any compulsory mode of remittance, it will be wrong on the part of the revenue authorities to give preference to a certain mode over another, which in their opinion is more advisable and to reject the accounting, version on that basis.

13. We accept the argument on behalf of the appellant that it was not aware of the Gujarat High Court decision in (1994) 207 ITR 622 (Guj) (supra). Nothing has been placed on record by way of a rebuttal and show such knowledge of the appellant. We also accept the plea that the issue was quite complicated inasmuch as it required an authority as high as the High Court to clarify the proposition. However, inasmuch as consolidated accounts have already been filed and taken on record without any demur by the assessing officer on 28-3-1998, and no defect or deficiency has been found therein, and insofar as such accounts are duly supported by the auditor’s report, the requirement of law has been met though belatedly. The authorities cited on the point of belated filing of accounts on behalf of the appellant and the due indulgence shown by the courts in the stipulated circumstances are binding on us, which we respectfully follow. Taking an overall view, the appellant is entitled to the exemption under section 13A of the Act. In sum, the assessment is set aside. Income to be taken as nil since no contribution exceeding Rs. 10,000 has been reported. So it is directed. This ground of appeal is allowed.

13. We accept the argument on behalf of the appellant that it was not aware of the Gujarat High Court decision in (1994) 207 ITR 622 (Guj) (supra). Nothing has been placed on record by way of a rebuttal and show such knowledge of the appellant. We also accept the plea that the issue was quite complicated inasmuch as it required an authority as high as the High Court to clarify the proposition. However, inasmuch as consolidated accounts have already been filed and taken on record without any demur by the assessing officer on 28-3-1998, and no defect or deficiency has been found therein, and insofar as such accounts are duly supported by the auditor’s report, the requirement of law has been met though belatedly. The authorities cited on the point of belated filing of accounts on behalf of the appellant and the due indulgence shown by the courts in the stipulated circumstances are binding on us, which we respectfully follow. Taking an overall view, the appellant is entitled to the exemption under section 13A of the Act. In sum, the assessment is set aside. Income to be taken as nil since no contribution exceeding Rs. 10,000 has been reported. So it is directed. This ground of appeal is allowed.

14. The other ground is with regard to the levy of interest. Counsel for the appellant invited our attention to the assessment order where the assessing officer has remarked, “charge interest”. Relying upon the decision of the Hon’ble Patna High Court in Uday Mistan Bhandar v. CIT (1996) 222 ITR 44 (Pat) is pointed out that the order is both casual and mechanical, passed without application of mind, and cannot stand the test of judicial scrutiny. It is further pointed out that the decision of the Hon’ble Patna High Court has now been confirmed by the Apex Court in CIT v. Ranchi Club Ltd. (2001) 247 ITR 209 (SC). The Tribunal, Bombay, in Dy. CIT v. Amir Morani (2001) 70 TTJ (Mumbai) 950 has relying upon the aforesaid two decisions vacated the charge of interest. As against this, learned counsel supported the order of the Income Tax Officer.

14. The other ground is with regard to the levy of interest. Counsel for the appellant invited our attention to the assessment order where the assessing officer has remarked, “charge interest”. Relying upon the decision of the Hon’ble Patna High Court in Uday Mistan Bhandar v. CIT (1996) 222 ITR 44 (Pat) is pointed out that the order is both casual and mechanical, passed without application of mind, and cannot stand the test of judicial scrutiny. It is further pointed out that the decision of the Hon’ble Patna High Court has now been confirmed by the Apex Court in CIT v. Ranchi Club Ltd. (2001) 247 ITR 209 (SC). The Tribunal, Bombay, in Dy. CIT v. Amir Morani (2001) 70 TTJ (Mumbai) 950 has relying upon the aforesaid two decisions vacated the charge of interest. As against this, learned counsel supported the order of the Income Tax Officer.

15. After considering the facts of this ground of appeal and the case law relied upon by the learned authorised representative and the latest decision of the Apex Court in the case of CIT v. Anjum M.H. Ghaswala (2001) 252 ITR 1 (SC), the assessed deserves to succeed to only limited extent. Assessing officer while giving effect to this order would allow consequential relief. We order accordingly.

15. After considering the facts of this ground of appeal and the case law relied upon by the learned authorised representative and the latest decision of the Apex Court in the case of CIT v. Anjum M.H. Ghaswala (2001) 252 ITR 1 (SC), the assessed deserves to succeed to only limited extent. Assessing officer while giving effect to this order would allow consequential relief. We order accordingly.

16. In the result, the appeal stands allowed.

16. In the result, the appeal stands allowed.

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