ITAT Dismisses Congress’ Appeal Against Rs 199 Crore Tax Demand

The Income Tax Appellate Tribunal (ITAT) on Monday, 21 July 2025, dismissed an appeal filed by the Indian National Congress (INC) challenging a tax demand of Rs 199.15 crore for the Assessment Year 2018–19.

The bench comprising Judicial Member Satbeer Singh Godara and Accountant Member M. Balaganesh rejected the party's claim for exemption under Section 13A of the Income Tax Act, noting violations including late filing of income tax returns and breach of cash donation limits.

"The assessee's return filed on 02.02.2019 is not within the 'due' date to make it eligible for the impugned exemption," the Tribunal stated

The Congress party had filed its income tax return on February 2, 2019, declaring 'nil' income and claiming a tax exemption of Rs 199.15 crore under Section 13A. However, the Tribunal noted that the return was not filed within the due date of December 31, 2018, thereby violating the second proviso to Section 13A.

In September 2019, the Assessing Officer, during scrutiny, also found that the party had received cash donations totalling Rs 14.49 lakh, with some individual contributions exceeding Rs 2,000. This violated clause (d) of the first proviso to Section 13A, which bars political parties from accepting cash donations above Rs 2,000 from any one person.

Before the Tribunal, the Congress party had argued that the return was still within the extended timeline under Section 139(4) and should be treated as valid. It added that the cash amounts were voluntary contributions, not donations.

Rejecting these contentions, the Tribunal said, “All these assessee’s vehement submissions fail to evoke our concurrence. Section 13A has to be strictly complied with, and as held by the Hon’ble Supreme Court in Commissioner v. Dilip Kumar and Co. (2018), exemption provisions in taxing statutes must be interpreted strictly, not liberally.”

It observed that under Section 139(4B) read with Section 139(1), political parties must file their returns within the “due date” to claim exemption under Section 13A.

“The moment there is violation of such a ‘due’ date, Section 13A third proviso gets attracted, so as to result in denial of exemption. We thus conclude that the assessee’s return filed on 02.02.2019 is not within the ‘due’ date to make it eligible for the impugned exemption. Its further plea that we ought to go by the alleged corresponding pari materia provision in Section 12A(1)(ba) hereinabove, it is manifestly clear that the legislature has incorporated the statutory expression therein as ‘within the time allowed under that section’ that is, Section 139(1) as well as Section 139(4), unlike Section 13A third proviso read with Section 139(4B), Section 139(1) and Explanation (2) applicable herein,” the Tribunal added

“We thus reject the assessee’s instant first and foremost substantive grievance in very terms and decide the above first question framed between the parties in the department’s favour,” ITAT concluded.

Case Title: Indian National Congress, All India Congress Committee versus Deputy Commissioner of Income Tax

Order Date: July 21, 2025

Bench: Satbeer Singh Godara (Judicial Member) and M. Balaganesh (Accountant Member)