Denies benefit under section 13A to political party as bogus donation returned to donors after deducting commission
Delhi ITAT partly allows Assessee’s appeal observing that the addition under section 68 cannot be sustained, however, ITAT opines that there is no error in Assessing Officer’s conclusion that the Assessee is not entitled to benefit under section 13A since the cash was released to the donors after deduction of 5-7% commission; Therefore, ITAT directs Assessing Officer to take Assessee’s income at 6% of total donations/contributions received in respective years and consider the same as ‘income from other sources’ under section 56(1); ITAT states that the Assessee has very vaguely contested the factual assertions made by the Assessing Officer in the remand report, and that the Assessee is unable to demonstrate substantial compliance of filing return under section 139(4B) before the ‘due date’, the maintenance of audited books of account and filing of contribution report for the relevant Financial year; ITAT highlights that the remand report reflects the statements recorded of donors and the founder of the Assessee under section 132(4) and establishes that the cash was released to the donors after deducting commission in the range of 5-8%; Apart from the non-compliance of mandate of law to avail benefit of exempt income provisions, Tribunal opines that when the donors are established to be bogus and donations are accepted to merely assist the donors in receiving deduction under section 80GGB/80GGC to reduce their taxable income then that in itself is sufficient enough to deny the political party the benefit of Section 13A;

As per sub-section 3 of section 29C of Representation of the People Act, 1951, a political party has to compulsorily submit a report in the prescribed format i.e. Form 24A (Contribution Report) under Rule 85B of Conduct of Elections Rule, 1961, before the due date for furnishing the Income Tax return of that financial year under section 139 of the Income Tax Act, 1961, to the Election Commission. The form calls for details like name, PAN, amount donated, mode of donations etc., of all the donors donating amounts more than Rs. 10,000/- and getting the accounts audited. The said form has to be submitted by all the registered political parties to the Hon’ble Election Commission of India, before filing their return of income for the corresponding Financial years.

Highlighting Delhi High Court decision in CIT, Delhi-Xi v. Indian National Congress (I) and others decided on 23.03.2016 vide ITA 145/2001, ITAT accedes with Assessee’s submission that the addition could not have been made under section 68 as donation or alleged commission cannot be considered as unexplained credit; Tribunal observes that the deeming income provisions cannot be invoked in regard to donation claims which are rejected on the basis of non-compliance of Section 13A and alleging that the donations were not voluntary contributions being modus operandi to benefit the donors by returning a major part of donations after keeping a part of it as a commission income. [Partly allowed in favour of assessee] (Related Assessment years : 2015-16 to 2022-23) - [Public Political Party v. DCIT(C) [TS-1678-ITAT-2025(DEL)] – Date of Judgement : 17.12.2025 (ITAT Delhi)]

KEY CASE REFERENCES (FOR INTERNAL LINKING / AUTHORITY SIGNALS)

  • Income Tax Appellate Tribunal – ITAT Delhi

  • Delhi High Court – CIT, Delhi-XI v. Indian National Congress (I) (23.03.2016)