The New Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) refused to stay recovery against the Indian National Congress ( INC ) and ruled that ( ITR ) filing by due date under Section 139 of the Income Tax Act, 1961 is mandatory for political party to claim exemption under Section 13A of the Income Tax Act, 1961.
The difference between the returned and assessed income is solely for the reason that assessee’s claim for exemption under section 13A of the Income Tax Act has been denied by the Assessing Officer, and, accordingly, the entire income of Rs.1,99,15,26,560/- has been held to be taxable.
The Assessing Officer has faulted the claim of exemption under Section 13A of the Income Tax Act on two grounds viz., that the return of income filed by the assessee on 2nd February, 2019 under Section 139(4) of the Income Tax Act contravenes the time limit prescribed in the third Proviso to Section 13A of the Income Tax Act; and, that clause (d) of the first Proviso to Section 13A of the Income Tax Act has been violated since the assessee has received donations of Rs.14,49,000/- in cash from various persons, each donation being in excess of Rs.2,000/-.
The Senior Counsel for the Applicant opened his arguments by stressing upon the hardship created for the assessee, which is a National Political Party, in view of the forthcoming Parliamentary Elections, alleging that the initiation of the recovery proceedings under section 226 (3) of the Income Tax Act on 13th February, 2024 are so timed that the assessee would not be left with enough resources to contest the Parliamentary Elections.
Attributing malice to the action of the Assessing Officer in exercising his power of recovery under Section 226(3) of the Income Tax Act, the Senior Counsel submitted that the intention is not merely to recover the outstanding demand, but to bring the activities of the assessee to a standstill, as it would not be able to meet out even the basic maintenance and establishment expenditure.
This was countered by the Standing Counsel for the Revenue by asserting that the assessee was unnecessarily attributing motives to the action of the Assessing Officer, who has evidently proceeded in accordance with and as per the due process of law. According to him, the applicant-assessee was trying to take benefit of its own wrongs and delay, and has not approached this Court with clean hands. The chronology of events starting from the passing of assessment order on 6th July, 2021 has been referred in support.
A Two-Member Bench comprising observed that “On the basis of the aforesaid discussion, and having regard to the legal position and the material on record, it is reasonable to conclude that the income tax authorities have not made any error in denying the exemption claimed by the assessee under Section 13A of the Income Tax Act due to violation of clause (d) of the first Proviso as well as third Proviso to Section 13A of the Income Tax Act. Consequently, in our view, the Applicant has been unable to make out a strong prima facie case against the interpretation of Section 13A of the Income Tax Act as adopted by the Revenue to deny the exemption, so far it is relevant for the purposes of examining the merits of the present Application.”
“Each Application for stay has to be decided on its own facts and circumstances, and there can be no generalized approach. The Stay Application is without merit and, it is dismissed accordingly” the Court noted.
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