Income Tax Appellate Tribunal: In an appeal filed by Indian National Congress (‘INC’) against the impugned order passed by Commissioner of Income Tax (Appeals) (‘CITA’) rejecting its claim for exemption under Section 13A of the Income Tax Act, 1961 (‘the IT Act’), the Two-Member Bench of Satbeer Singh Godara*, Judicial Member, and M. Balaganesh, Accountant Member, rejected the appeal, holding that since INC had not filed its income tax return (‘ITR’) in the prescribed time under Section 13A, it was not entitled for any deductions.
Background
INC had filed its ITR for the assessment year (‘AY’) 2018-19, declaring nil income after claiming exemption of Rs 199.15 Crores under Section 13A of the Act. The Assessing Officer (‘AO’) issued a notice to the INC under Section 142(1) seeking to disallow the claim of exemption, stating that the ITR was not filed on or before the due date under Section 139(4B) of the IT Act. INC denied any such delay. The AO issued another notice under Section 142(1) stating that donations of Rs. 32.45 Crores had been made under different heads and sought a response from the INC about the relevant details.
Thereafter, the AO rejected the INC’s exemption claim, holding that the ITR was filed beyond the prescribed due date and the donations were violative of Section 13A Third Proviso of the IT Act. Aggrieved, the INC filed the first appeal before the CITA, which was rejected.
Hence, the present appeal.
Issues and Analysis
1. Whether the ITR filed on 02-02-2019 was time-barred in light of Section 13A Third Proviso read with Section 139(4B) and 139(1) of the Act?
At the outset, the Income Tax Appellate Tribunal (‘ITAT’) reiterated that INC could claim the exemption under Section 13A of the Act, subject to certain conditions enumerated therein, including the Third Proviso, which states that a return has to be furnished per Section 139(4B) of the IT Act. Section 139(4B) of the IT Act envisages the authorized person of such a political party to furnish an ITR in the prescribed form and verified in the prescribed manner, and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under Section 139(1) of the IT Act. Section 139(1) Explanation 2 of the IT Act prescribes the “due” date as up to 31st October of the AY concerned.
The ITAT rejected the INC’s contention that, as per Section 139(4) of the IT Act, those who missed the due date of 31st October could file their ITR before the end of the relevant AY or before completion of the assessment, whichever is earlier. The ITAT reiterated that, so far as an interpretation of such an exemption provision in a fiscal statute was concerned, a stricter interpretation had to be employed rather than a liberal one. In this regard, the Court referred to Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1 and CIT v. Indian National Congress (I), (2016) 383 ITR 99. Thus, ITAT opined that Section 139(4B) of the IT Act restricted any liberal interpretation as the moment there is a violation of such a “due” date, Section 13A Third Proviso of the IT Act gets attracted, which results in the denial of exemption to the political party concerned.
Accordingly, the ITAT held that the INC’s ITR was not filed within the “due” date to make it eligible for the said exemption.
2. In case the above first question is adjudicated in INC’s favour, whether its impugned claim of Section 13A exemption is hit by the First Proviso read with Section 13A First Proviso’s clauses (b) and (d) of the IT Act?
Since the first issue was decided against INC, the ITAT rejected this issue/claim.
3. Whether the INC’s gross receipts herein are liable to be assessed on a netting basis, thereby allowing its expenditure?
The ITAT decided this issue against INC by placing reliance on CIT (supra) wherein it was held that the legal position is that no deduction can be allowed with respect to the expenditure incurred by the political party for any purpose whatsoever if it fails to comply with the basic requirements of Section 13A of the ITAct.
Accordingly, the ITAT dismissed the present appeal.
[Indian National Congress v. DCIT, ITA No.1609/Del/2023, decided on 21-07-2025]
*Order authored by: Judicial Member Satbeer Singh Godara
Advocates who appeared in this case:
For the assessee: Sr. Adv. P.C. Sen, Prasanna, N. Bhalla, and Chartered Accountant L.M. Garg
For the department: Special Counsel Zoheb Hossain, Sr. Standing Counsel Vipul Agrawal, Sanjeev Menon, ACIT Purvi Nanda
